<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.__)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[ X ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
CITADEL COMMUNICATIONS CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------
(3) Filing Party:
---------------------------------------------------
(4) Date Filed:
-----------------------------------------------------
<PAGE> 2
[Citadel logo] Citadel Communications Corporation
-----------------------------------------
Notice of 1999 Annual Meeting
and Proxy Statement
<PAGE> 3
CITADEL COMMUNICATIONS CORPORATION
CITY CENTER WEST
SUITE 400
7201 WEST LAKE MEAD BOULEVARD
LAS VEGAS, NV 89128
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 1999
Dear Stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Citadel Communications Corporation ("Citadel Communications") that will be held
on July 27, 1999 at 10:00 a.m. (local time), at River Bend Ranch, 1015 Eastman
Drive, Bigfork, Montana 59911, for the following purposes, as set forth in the
accompanying Proxy Statement:
1. To elect five directors.
2. To consider and vote upon a proposal to approve the Citadel
Communications Corporation 1999 Long-Term Incentive Plan.
3. To consider and vote upon a proposal to approve an amendment to the
Citadel Communications Corporation 1996 Equity Incentive Plan to
increase the number of shares of common stock available under this
plan.
4. To ratify the Board of Directors' appointment of KPMG LLP as
independent public accountants for Citadel Communications for the
year ending December 31, 1999.
5. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Board of Directors has established the close of business on June 24,
1999, as the record date for the determination of stockholders entitled to
receive notice of and to vote at the annual meeting and any adjournment or
postponement thereof.
YOU ARE URGED TO REVIEW CAREFULLY THE ACCOMPANYING PROXY STATEMENT AND TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
Your proxy may be revoked by you at any time before it has been voted. You
are cordially invited to attend the annual meeting in person if it is convenient
for you to do so.
By order of the Board of Directors,
/s/ Donna L. Heffner
Donna L. Heffner
Secretary
June 25, 1999
<PAGE> 4
CITADEL COMMUNICATIONS CORPORATION
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is provided to the stockholders of Citadel
Communications Corporation ("Citadel Communications") in connection with the
solicitation by the Board of Directors of Citadel Communications of proxies for
use at the Annual Meeting of Stockholders of Citadel Communications to be held
on July 27, 1999 at 10:00 a.m. (local time), at River Bend Ranch, 1015 Eastman
Drive, Bigfork, Montana 59911, and any adjournments or postponements thereof. A
form of proxy is enclosed for use at the annual meeting. Proxies properly
executed and returned in a timely manner will be voted at the annual meeting in
accordance with the directions specified therein. If no direction is indicated,
they will be voted for the election of the nominees named herein as directors,
for the proposal to approve the Citadel Communications Corporation 1999
Long-Term Incentive Plan (the "1999 Incentive Plan"), for the proposal to
approve an amendment to the Citadel Communications Corporation 1996 Equity
Incentive Plan (the "1996 Equity Plan"), for the ratification of the appointment
of KPMG LLP as Citadel Communications' independent public accountants and, on
other matters presented for a vote, in accordance with the judgment of the
persons acting under the proxies. The persons named as proxies were selected by
the Board of Directors and are present members of executive management of
Citadel Communications.
Citadel Communications' executive offices are located at City Center West,
Suite 400, 7201 West Lake Mead Boulevard, Las Vegas, Nevada, 89128, and its
telephone number is (702) 804-5200. Proxy materials are first being mailed to
stockholders beginning on or about June 30, 1999.
SHARES OUTSTANDING, VOTING RIGHTS AND VOTE REQUIRED
Only stockholders of record at the close of business on June 24, 1999 are
entitled to vote at the annual meeting. The only voting stock of Citadel
Communications outstanding and entitled to vote at the annual meeting is its
common stock, $.001 par value per share (the "Common Stock"), of which
26,277,723 shares were outstanding as of the close of business on June 24, 1999.
Each share of Common Stock issued and outstanding is entitled to one vote on
matters properly submitted at the annual meeting. Cumulative voting is not
permitted under Citadel Communications' Certificate of Incorporation.
The presence, in person or by proxy, of the holders of a majority of the
total issued and outstanding shares of Common Stock entitled to vote at the
annual meeting is necessary to constitute a quorum for the transaction of
business at the annual meeting. Abstentions and broker non-votes will be counted
for purposes of determining the presence or absence of a quorum. A broker
non-vote occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner. Abstentions will be counted in tabulating votes cast on
proposals presented to stockholders, whereas broker non-votes will not. Votes
cast in person or by proxy at the annual meeting will be tabulated by the
election inspectors appointed for the meeting.
Directors will be elected by a plurality of the votes of the shares present
or represented by proxy at the meeting and entitled to vote on the election of
directors. That is, the nominees receiving the greatest number of votes will be
elected. If a quorum is present, abstentions and broker non-votes will have no
effect on the voting for the election of directors. Approval of the 1999
Incentive Plan and approval of the amendment to the 1996 Equity Plan requires
the affirmative vote of a majority of the votes cast in person or by proxy at
the annual meeting. Ratification of the appointment of independent public
accountants requires the affirmative vote of a majority of the shares present or
represented at the meeting. If a quorum is present, non-votes will have no
effect on the voting for approval of the 1999 Incentive Plan, approval of the
amendment to the 1996 Equity Plan and ratification of the appointment of
independent public accountants. However, abstentions will have the effect of a
negative vote. Stockholders voting by proxy may revoke that proxy at any time
before it is voted at the annual meeting by delivering written notice to the
Secretary of Citadel Communications, by delivering a proxy bearing a later date
or by attending the annual meeting in person and casting a ballot. The Board of
Directors recommends voting (1) FOR the election of the nominees named herein
for director, (2) FOR approval of the 1999 Incentive
2
<PAGE> 5
Plan, (3) FOR approval of the amendment to the 1996 Equity Plan and (4) FOR
ratification of the appointment of KPMG LLP as Citadel Communications'
independent public accountants for 1999.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors of Citadel Communications currently consists of five
members, four of whom are non-employee directors. The Chairman and Chief
Executive Officer of Citadel Communications is a member of the Board. All
directors are elected for a one-year term and hold office until the next annual
meeting of stockholders following election and until their successors are duly
elected and qualified. All officers serve at the discretion of the Board and are
elected by the Board each year. There are no family relationships among Citadel
Communications' directors and executive officers.
The persons named below have been designated by the Board of Directors as
nominees for election as directors, for terms expiring at the 2000 Annual
Meeting of Stockholders. All nominees currently serve as directors of Citadel
Communications.
Lawrence R. Wilson, age 54, co-founded and was a general partner of Citadel
Communications' predecessor, Citadel Associates Limited Partnership and Citadel
Associates Montana Limited Partnership, from 1984 to July 1992 and has been the
Chief Executive Officer, President and Chairman of Citadel Communications since
it was incorporated in 1993 and Chief Executive Officer and Chairman of the
Board of Citadel Broadcasting Company ("Citadel Broadcasting"), the operating
subsidiary of Citadel Communications, since it was incorporated in 1991. Mr.
Wilson also served as President of Citadel Broadcasting from 1991 to October
1998. From 1974 to 1979, Mr. Wilson was Executive Vice President and General
Counsel of Combined Communications Corporation, a national media company, where
he handled all acquisitions and mergers and oversaw the broadcast, newspaper and
outdoor billboard divisions as a part of a five person management committee.
From 1979 to 1986, he was engaged in the private practice of law.
Patricia Diaz Dennis, age 52, became a director of Citadel Communications
and Citadel Broadcasting in November 1997. Since November 1998, Ms. Dennis
serves as Senior Vice President -- Regulatory and Public Affairs of SBC
Communications Inc., a company which provides telecommunications products and
services, and from September 1995, she served as Senior Vice President and
Assistant General Counsel for regulation and public policy of SBC Communications
Inc. From March 1993 until joining SBC Communications Inc., Ms. Dennis served as
special counsel for communications matters for the law firm of Sullivan &
Cromwell. Ms. Dennis served as a commissioner of the Federal Communications
Commission from June 1986 to September 1989 and as Assistant Secretary of State
for Human Rights and Humanitarian Affairs in the United States Department of
State from August 1992 to January 1993. Ms. Dennis also serves as director for
various entities, including Massachusetts Mutual Life Insurance Company and
National Public Radio.
Ike Kalangis, age 62, became a director of Citadel Communications and
Citadel Broadcasting in May 1999. Mr. Kalangis has over 30 years' experience in
the banking industry, most recently, from 1989 until his retirement in 1997, as
Chairman, President and Chief Executive Officer of Boatman's Sunwest, Inc., a
bank holding company with community banks in New Mexico and Texas, which is now
a part of Bank of America.
Ted L. Snider, Sr., age 70, became a director of Citadel Communications and
Citadel Broadcasting in November 1997 following Citadel Communications' October
1997 acquisition of Snider Corporation. Mr. Snider had been Chairman of Snider
Corporation since its incorporation in 1971. Snider Corporation owned two FM and
two AM radio stations, the right to construct an additional FM radio station and
the Arkansas Radio Network.
John E. von Schlegell, age 45, has served as a member of the Board of
Directors of Citadel Communications and Citadel Broadcasting since January 1997.
He co-founded and, since 1991, has managed, The Endeavour Capital Fund Limited
Partnership, a firm that invests equity capital in privately held businesses
throughout the northwest. Prior to 1991, Mr. von Schlegell was a general partner
at Golder, Thoma & Cressey, a private equity firm based in Chicago.
3
<PAGE> 6
Four of the five persons presently constituting the Board of Directors of
Citadel Communications were elected under the terms of a Fourth Amended and
Restated Voting Agreement dated as of October 15, 1997, by and among Citadel
Communications, the voting trustee under the Amended and Restated Voting Trust
Agreement dated October 15, 1997 and certain other stockholders of Citadel
Communications. In connection with Citadel Communications' initial public
offering in July 1998, the Fourth Amended and Restated Voting Agreement and a
related stockholders agreement among Citadel Communications and certain of its
stockholders were terminated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE ABOVE NAMED NOMINEES
If you do not wish your shares to be voted for particular nominees, you may
so indicate on the proxy. If, for any reason, any of the nominees shall become
unavailable for election, the individuals named in the enclosed proxy may
exercise their discretion to vote for any substitutes proposed by the Board of
Directors, unless the Board of Directors should decide to reduce the number of
directors to be elected at the annual meeting. At this time, the Board of
Directors knows of no reason why any nominee might be unavailable to serve.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business affairs of Citadel Communications are managed under the
direction of the Board of Directors. During 1998, Citadel Communications' Board
of Directors held five meetings and took action by unanimous written consent in
lieu of meetings eight times.
The Board of Directors has established two committees, the Audit Committee
and the Compensation Committee. The Board has no standing nominating committee.
The Audit Committee provides oversight of the financial reporting process
and management's responsibility for the integrity, accuracy and objectivity of
financial reports and accounting and financial reporting and practices. The
Audit Committee has the power to recommend the retention of the independent
public accountants for Citadel Communications and to consult with such
independent accountants concerning the plan of audit, their report of audit and
the adequacy of internal controls. The Audit Committee is currently composed of
three independent, non-employee directors, Ted L. Snider, Sr. (Chairman), John
E. von Schlegell and Ike Kalangis. The Audit Committee met one time during 1998.
The Compensation Committee reviews and makes recommendations to the Board
of Directors concerning the compensation and benefit policies and practices of
Citadel Communications. The Compensation Committee is currently composed of
three non-employee directors, John E. von Schlegell (Chairman), Patricia Diaz
Dennis and Ted L. Snider, Sr. The Compensation Committee met two times during
1998.
EXECUTIVE OFFICERS
Information concerning Mr. Wilson, Citadel Communications' Chairman,
President and Chief Executive Officer, is included above in the biographic
summaries of the nominees for director. Information with regard to the remaining
executive officers of Citadel Communications who are not also directors follows.
Donna L. Heffner, age 40, joined Citadel Associates Limited Partnership and
Citadel Associates Montana Limited Partnership in 1988 as Controller. Ms.
Heffner has served as Secretary of Citadel Communications since it was
incorporated in 1993 and of Citadel Broadcasting since it was incorporated in
1991. She has served as Chief Financial Officer of Citadel Communications and
Citadel Broadcasting since 1993 and 1992, respectively. In January 1997, Ms.
Heffner became Vice President of Citadel Communications and Citadel
Broadcasting. Ms. Heffner also served as Treasurer of Citadel Communications
from 1993 to 1999 and as a director of Citadel Communications for several months
in 1993. She served as Treasurer of Citadel Broadcasting from 1991 to 1999 and
as a director of Citadel Broadcasting from 1992 to 1993. From 1982 to 1985 and
in 1987, she was employed by Price Waterhouse, and in 1986, she was employed by
Lowrimore, Warwick & Company as an accountant.
4
<PAGE> 7
D. Robert Proffitt, age 47, joined Citadel Associates Limited Partnership
and Citadel Associates Montana Limited Partnership in 1988 as Vice
President -- General Manager of KKFM-FM in Colorado Springs, Colorado. In 1991,
he was appointed Vice President of Citadel Broadcasting, and in 1993, he was
appointed Vice President of Citadel Communications. Mr. Proffitt took over as
General Manager of Citadel Communications' Albuquerque operations in 1994. Mr.
Proffitt served as President of the Central Region for Citadel Broadcasting from
June 1997 to October 1998, and he became President and Chief Operating Officer
of Citadel Broadcasting in October 1998.
Stuart R. Stanek, age 43, joined Citadel Associates Limited Partnership and
Citadel Associates Montana Limited Partnership in 1986 as a General Manager of
KKFM-FM in Colorado Springs, Colorado. In 1988, he became General Manager of
KBEE-AM/KUBL-FM in Salt Lake City, Utah, in 1991, he was appointed Vice
President of Citadel Broadcasting, in 1992 he was elected to the Board of
Directors of Citadel Broadcasting and in 1993, he was appointed Vice President
and elected to the Board of Directors of Citadel Communications. He served as a
Director of Citadel Communications and Citadel Broadcasting until August 1996.
Mr. Stanek became President of the East Region for Citadel Broadcasting in June
1997.
Peter J. Benedetti, age 35, joined Citadel Communications in April 1995 as
Sales Manager for KMGA-FM in Albuquerque, New Mexico and also became Sales
Manager for KHFM-FM in Albuquerque upon Citadel Communications' acquisition of
that station in June 1996. From January 1997 to July 1997, Mr. Benedetti was
Director of Sales of Citadel Communications' Salt Lake City radio station group,
and from July 1997 to October 1998, he served as Vice President and General
Manager of that radio station group. In October 1998, Mr. Benedetti became Vice
President of Citadel Communications and Vice President and President of the
Central Region for Citadel Broadcasting. Prior to joining Citadel
Communications, he served as an account executive for a Jacor Communications'
radio station in Denver, Colorado.
Edward T. Hardy, age 50, founded and was elected President and Chief
Executive Officer of Deschutes River Broadcasting, Inc. ("Deschutes") in 1994.
Mr. Hardy joined Citadel Communications in January 1997 as President of
Deschutes following Citadel Communications' acquisition of Deschutes. Mr. Hardy
became President of West Region for Citadel Broadcasting and Vice President of
Citadel Communications and Citadel Broadcasting in June 1997 when Deschutes was
merged with and into Citadel Broadcasting. From 1984 to 1993, Mr. Hardy was Vice
President -- General Manager of two radio stations in Portland, Oregon.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid to Citadel Communications' Chief Executive Officer and each of the other
four most highly compensated executive officers of Citadel Communications during
1998. Information with respect to 1996 compensation is not given for Mr.
Proffitt as he did not begin service as an executive officer of Citadel
Communications until 1997. Information with respect to 1996 and 1997
compensation is not given for Mr. Benedetti as he did not begin service as an
executive officer of Citadel Communications until 1998. Unless the context
otherwise requires, references to Citadel Communications in this Executive
Compensation section include Citadel Communications' subsidiary, Citadel
Broadcasting.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------
------------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
------------------ ---- -------- -------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence R. Wilson............. 1998 $358,319 $214,370(2) -0- 60,000 $3,046(3)
Chairman, Chief Executive 1997 341,256 120,000(4) -0- -0- 3,278(3)
Officer and President 1996 325,000 81,250(5) $412,041 (6) 450,000 2,786(3)
Donna L. Heffner............... 1998 $175,000 $ 80,000(2) -0- 12,000 $4,537(7)
Vice President and 1997 140,535 50,000(4) -0- -0- 3,086(7)
Chief Financial Officer 1996 120,000 20,000(5) -0- 66,000 2,505(7)
D. Robert Proffitt............. 1998 $200,000 $ 40,000(2) -0- 12,000 $3,161(8)
Vice President 1997 192,211 15,000(4) -0- -0- 2,541(8)
Stuart R. Stanek............... 1998 $210,000 $ 50,000(2) -0- 12,000 $2,635(9)
Vice President 1997 190,007 30,000(4) -0- -0- 2,529(9)
1996 165,000 35,000(5) -0- 72,000 2,553(9)
Peter J. Benedetti............. 1998 $150,000 $ 65,000(2) -0- 21,005 $2,093(10)
Vice President
</TABLE>
- ---------------
(1) In accordance with applicable regulations, the amounts set forth in this
column do not include perquisites and other personal benefits received by
the executive officers unless the aggregate value of such perquisites and
other benefits exceeded the lesser of $50,000 or 10% of the total salary
and bonus reported for the executive officer.
(2) Bonuses were earned in 1998 and paid in 1998 or will be paid in 1999. Does
not reflect bonuses earned in 1997 but paid in 1998.
(3) Represents Citadel Communications' contribution of $2,986, $3,200 and
$2,708 in 1998, 1997 and 1996, respectively, to Citadel Communications'
401(k) Plan, which contributions vest over five years, and Citadel
Communications' payment of $60 in 1998 and $78 in each of 1997 and 1996 of
premiums for term life insurance.
(4) Bonuses were earned in 1997 and paid in 1997 and 1998. Does not reflect
bonuses earned in 1996 but paid in 1997.
(5) Bonuses were earned in 1996, but paid in 1997. Does not reflect bonuses
earned in 1995 but paid in 1996.
(6) Represents $3,404 for personal use of company-provided vehicle and for
goods and services received through Citadel Communications' trade
agreements, and the forgiveness of $408,637 of indebtedness in 1996.
(7) Represents Citadel Communications' contribution of $4,477, $3,008 and
$2,427 in 1998, 1997 and 1996, respectively, to Citadel Communications'
401(k) Plan, which contributions vest over five years, and Citadel
Communications' payment of $60 in 1998 and $78 in each of 1997 and 1996 of
premiums for term life insurance.
(8) Represents Citadel Communications' contribution of $3,101 and $2,463 in
1998 and 1997, respectively, to Citadel Communications' 401(k) Plan, which
contribution vests over five years, and Citadel Communications' payment of
$60 in 1998 and $78 in 1997 of premiums for term life insurance.
(9) Represents Citadel Communications' contribution of $2,575, $2,451 and
$2,475 in 1998, 1997 and 1996, respectively, to Citadel Communications'
401(k) Plan, which contributions vest over five years, and Citadel
Communications' payment of $60 in 1998 and $78 in each of 1997 and 1996 of
premiums for term life insurance.
(10) Represents Citadel Communications' contribution of $2,033 to Citadel
Communications' 401(k) Plan, which contribution vests over five years, and
Citadel Communications' payment of $60 of premiums for term life insurance.
6
<PAGE> 9
The following table summarizes individual grants of options to purchase
shares of Common Stock of Citadel Communications to the executive officers
listed in the Summary Compensation Table during the year ended December 31,
1998:
OPTIONS GRANTED IN FISCAL 1998
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL EXERCISE MARKET POTENTIAL REALIZABLE VALUE AT ASSUMED
SECURITIES OPTIONS OR PRICE ON RATES OF STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO BASE DATE OF OPTION TERM(2)
OPTIONS EMPLOYEES PRICE GRANT EXPIRATION ---------------------------------------
NAME GRANTED IN 1998 ($/SH) ($/SH)(1) DATE 0%($) 5%($) 10%($)
---- ---------- ---------- -------- --------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence R.
Wilson(3)............ 60,000 29.4% $16.00 $25.813 9/09/08 $588,780 $1,562,820 $3,057,120
Donna L. Heffner(3).... 12,000 5.9 16.00 25.813 9/09/08 117,756 312,564 611,424
D. Robert
Proffitt(3).......... 12,000 5.9 16.00 25.813 9/09/08 117,756 312,564 611,424
Stuart R. Stanek(3).... 12,000 5.9 16.00 25.813 9/09/08 117,756 312,564 611,424
Peter J.
Benedetti(3)......... 16,005 7.8 16.00 16.000 6/30/08 -0- 161,042 408,128
Peter J.
Benedetti(3)......... 5,000 2.5 16.00 25.813 9/09/08 49,065 130,235 254,760
</TABLE>
- ---------------
(1) For options granted on September 9, 1998, the indicated market price on the
date of the grant was the closing market price of the Common Stock. For the
option granted on June 30, 1998, the indicated market price on the date of
the grant was the initial public offering price in Citadel Communications'
initial public offering.
(2) The potential realizable value is based on the term of the option at the
time of grant, which is ten years for each of the options set forth in the
table. An assumed stock price appreciation of 0%, 5% and 10% is used
pursuant to rules promulgated by the Securities and Exchange Commission. The
potential realizable value is calculated by assuming that the market price
on the date of grant appreciates at the indicated rate, compounded annually,
for the entire term of the option and that the option is exercised and sold
on the last day of its term at this appreciated stock price. The potential
realizable value is not intended to forecast the future appreciation of the
Common Stock.
(3) Options vest 20% on each of the first through fifth anniversaries of the
date of grant. Vesting accelerates in the event of a change in control of
Citadel Communications, as provided for in the relevant option agreements.
The following table shows the number and value of unexercised stock options
to purchase shares of Common Stock of Citadel Communications (rounded to the
nearest whole share) held by the executive officers listed in the Summary
Compensation Table as of December 31, 1998. No options were exercised by these
executive officers in 1998.
7
<PAGE> 10
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS(1)
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
<S> <C> <C>
Lawrence R. Wilson(2)........................ 479,636/322,312 $10,982,914/$5,878,524
Donna L. Heffner............................. 139,243/79,811 3,283,559/1,604,401
D. Robert Proffitt........................... 106,420/77,606 2,469,932/1,532,262
Stuart R. Stanek............................. 140,827/83,207 3,315,737/1,678,070
Peter J. Benedetti........................... 1,800/28,205 28,575/321,724
</TABLE>
- ---------------
(1) These values have been calculated on the basis of the December 31, 1998
closing price per share of $25.875, less the applicable exercise price.
(2) Includes options held by Rio Bravo Enterprise Associates, L.P. Mr. Wilson
owns all of the capital stock of Rio Bravo, Inc., the sole general partner
of Rio Bravo Enterprise Associates, L.P.
EMPLOYMENT AGREEMENT
In June 1996, Citadel Communications entered into an employment agreement
with Lawrence R. Wilson which has an initial term ending in June 2001. Mr.
Wilson's current annual base salary under the agreement is $376,234 which is to
be increased by 5% in January of each year during the term of the agreement. The
agreement also provides for an annual bonus calculated as a percentage of Mr.
Wilson's base salary in effect at the end of the year and based on annual
performance criteria of Citadel Communications.
Mr. Wilson's employment with Citadel Communications will terminate upon Mr.
Wilson's becoming permanently disabled or upon (1) a liquidation or dissolution
of Citadel Communications, (2) a sale, transfer or other disposition of all of
the assets of Citadel Communications on a consolidated basis or (3) any
transaction or series of transactions whereby any person or entity other than
ABRY Broadcast Partners II, L.P. or its affiliates or affiliates of Citadel
Communications, becomes the direct or indirect beneficial owner of securities of
Citadel Communications or Citadel Broadcasting representing 50% or more of the
combined voting power of Citadel Communications' or Citadel Broadcasting's then
outstanding securities. In such event, Mr. Wilson or his beneficiary will be
entitled to receive Mr. Wilson's then base salary through the end of the month
in which the termination occurs. In addition, upon the affirmative vote or
written consent of not less than 66 2/3% of the members of the Citadel
Communications Board of Directors, Mr. Wilson's employment may be terminated
with or without cause. If any such termination is without cause, Mr. Wilson will
be entitled to receive his then current base salary through the end of the then
current term of the employment agreement.
1996 EQUITY INCENTIVE PLAN
Citadel Communications adopted the 1996 Equity Plan under which employees,
officers, directors (excluding non-employee directors), consultants, independent
contractors and advisors of Citadel Communications and its subsidiaries are
eligible to receive awards in the form of incentive stock options and options
that are not incentive stock options to purchase Common Stock of Citadel
Communications. Awards may also be in the form of stock appreciation rights,
restricted securities and other stock-based awards as determined by the Board of
Directors, none of which have been granted to date. The 1996 Equity Plan is
administered by the Compensation Committee of the Board of Directors and in
certain cases the Board. The Compensation Committee or the Board has authority
under the 1996 Equity Plan to designate participants, determine the terms and
conditions of awards to be granted to each participant and decide all matters
relating to any award. At June 24, 1999, the total number of shares of Common
Stock of Citadel Communications that remained reserved and available for
issuance under the 1996 Equity Plan, or which may be used to provide a basis of
measurement for an award, was 1,428,532 shares, including shares underlying
outstanding grants. The Board of Directors has adopted an amendment to the 1996
Equity Plan to increase the number of shares available under the plan to
2,400,585 shares, which, together with shares underlying outstanding options
granted outside of the 1996 Equity Plan, is the number of shares equal to ten
percent of the outstanding Common Stock on a fully-diluted basis as of
8
<PAGE> 11
the June 25, 1999 closing of a public offering by Citadel Communications and
certain of its stockholders of shares of the Common Stock (the "Public
Offering"), but not including in the fully-diluted calculation the 1,750,000
shares reserved for issuance under the 1999 Incentive Plan. This amendment is
contingent upon approval of the amendment by Citadel Communications'
stockholders. See Proposal 3.
Shares subject to any expired, terminated or lapsed awards are available
for subsequent grants under the 1996 Equity Plan. The exercise price of
incentive stock options granted under the plan may not be less than the fair
market value of the Common Stock as of the date of grant (110% of the fair
market value of the Common Stock in the case of an incentive stock option to an
individual who at the time of the grant owns more than ten percent of the
combined voting power of Citadel Communications' capital stock). The Board may
provide that an optionee may pay for shares upon exercise of an option in cash
or by check or through cashless exercise procedures or other medium or
combination of media as authorized by the Board. The grant of an option may be
accompanied by a reload option, which gives an optionee who pays the exercise
price of an option with shares of Common Stock an additional option to acquire
the same number of shares that was used to pay for the original option at an
exercise price of not less than the fair market value of Common Stock as of the
reload option grant date. In the event a participant's employment with Citadel
Communications is terminated due to disability, retirement or any other reason,
a participant may exercise an option only to the extent it was exercisable on
the termination date of the participant's employment. An incentive stock option
must be exercised prior to the earlier of the expiration of three months (six
months in the case of disability) after the termination date or the expiration
date of the options set forth in the award agreement. A non-incentive stock
option must be exercised within the applicable time period for exercise set
forth in the award agreement. In the event of the death of the participant
before an option lapses, an option may be exercised only to the extent it was
exercisable on the date of death. However, such exercise must be made prior to
the earlier of the first anniversary of the participant's death or the
expiration date of the option.
1999 LONG-TERM INCENTIVE PLAN
The Board of Directors has adopted the 1999 Incentive Plan, which is
intended to be the primary long-term incentive vehicle for senior management of
Citadel Communications and any of its subsidiaries. The 1999 Incentive Plan
provides opportunities for participants to acquire shares of Citadel
Communications' Common Stock upon the exercise of options granted under the 1999
Incentive Plan if performance goals (measured solely by the increase in the
price of the Common Stock) and continued employment requirements are met. All or
part of any options granted under the 1999 Incentive Plan may be incentive stock
options or options that are not incentive stock options. A total of 1,750,000
shares of Common Stock are available for issuance under the 1999 Incentive Plan.
The 1999 Incentive Plan operates over a five-year performance period
beginning at the date of grant of the option. Under the 1999 Incentive Plan,
each participant receives an option to acquire a certain number of shares of
Common Stock which can be earned during the performance period. The exercise
price of options granted effective as of the consummation date of the Public
Offering is $29.25 per share, the price per share to the public in the Public
Offering. If any shares become available for additional grants, the exercise
price of any option granted will be equal to the fair market value of Citadel
Communications' Common Stock on the date the option is granted (110% of the fair
market value of the Common Stock in the case of an incentive stock option
granted to an individual who at the time of the grant owns more than ten percent
of the combined voting power of Citadel Communications' capital stock). If the
number of shares subject to an option is not fully earned during the performance
period, any remaining opportunity for the unearned shares is forfeited.
For the full number of shares subject to an option to be earned, the
average stock price at any time during the performance period must be twice the
exercise price of the option. During the performance period, the shares subject
to the option are earned in one-fifth increments for each increase in average
stock price equal to one-fifth of the difference between the option's doubled
exercise price and the option exercise price. When an increment of the number of
shares subject to an option is earned, that increment will be subject to a
five-year vesting period.
Shares subject to any expired, terminated or lapsed options are available
for subsequent grants. The Committee may provide that an optionee may pay for
shares upon exercise of an option in cash or by check or
9
<PAGE> 12
through certain cashless exercise procedures or other medium or combination of
media as authorized by the Committee.
In the event a participant's employment with Citadel Communications is
terminated due to disability, retirement or any other reason, a participant may
exercise an option only to the extent it was exercisable on the termination date
of participant's employment. An incentive stock option must be exercised prior
to the earlier of (i) the expiration of three months (six months in the case of
disability) after the termination date or (ii) the expiration date of the
options set forth in the award agreement. An option that is not an incentive
stock option must be exercised within the applicable time period for exercise
set forth in the award agreement. In the event of the death of the participant
before an option lapses, an option may be exercised only to the extent it was
exercisable on the date of death. However, such exercise must be made prior to
the earlier of the first anniversary of the participant's death or the
expiration date of the option.
At the time that the Board of Directors adopted the 1999 Incentive Plan,
the Compensation Committee approved the grant of the following options that
became effective as of the closing of the Public Offering, subject to
stockholder approval of the 1999 Incentive Plan: Lawrence R. Wilson -- 875,000
shares; Donna L. Heffner -- 250,000 shares; D. Robert Proffitt -- 250,000
shares; Stuart R. Stanek -- 250,000 shares; and Peter J. Benedetti -- 125,000
shares. The exercise price for the options granted is $29.25 per share, the
price per share to the public in the Public Offering.
The 1999 Incentive Plan and the grants made to date are subject to
stockholder approval of the 1999 Incentive Plan. See Proposal 2.
401(K) PLAN
Effective in 1993, Citadel Communications adopted the Citadel
Communications Corporation 401(k) Retirement Savings Plan for the purpose of
providing, at the option of the employee, retirement benefits to full-time
employees of Citadel Communications and its subsidiaries who have been employed
for a period of one year or longer. Contributions to the 401(k) plan are made by
the employee and, on a voluntary basis, by Citadel Communications. Citadel
Communications currently matches 100% of that part of the employee's elective
deferrals up to 2% of the employee's salary.
A contribution to the 401(k) plan of $400,000 was made by Citadel
Communications during the year ended December 31, 1998.
DIRECTOR COMPENSATION
Ms. Dennis received an annual fee of $20,000 for her services as a director
of Citadel Communications and Citadel Broadcasting in 1998, and the other
non-employee directors of Citadel Communications and Citadel Broadcasting during
1998 received or will receive an annual fee of $6,000 for their services as
directors of Citadel Communications and Citadel Broadcasting in 1998. Currently,
all of the non-employee directors are entitled to receive an annual fee of
$20,000 for their services as directors. Directors who are also employees of
Citadel Communications do not receive additional consideration for serving as
directors, except that all directors are entitled to reimbursement for travel
and out-of-pocket expenses in connection with their attendance at Board and
committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, John E. von Schlegell, Patricia Diaz Dennis and former
director, Scott E. Smith, were members of the Compensation Committee of the
Citadel Communications Board of Directors, which determines, or makes
recommendations with respect to, compensation matters for Citadel
Communications.
Registration Rights Agreement. Citadel Communications is a party to a
Registration Rights Agreement, dated June 28, 1996, as amended, with Lawrence R.
Wilson, Rio Bravo Enterprise Associates, L.P., ABRY Broadcast Partners II, L.P.,
Baker, Fentress & Company, Edward T. Hardy, The Endeavour Capital Fund Limited
Partnership, Ted L. Snider, Sr. and others, which requires Citadel
Communications to register certain of the stockholders' shares of Common Stock
under the Securities Act of 1933, as amended (the "Securities Act"), for
10
<PAGE> 13
offer and sale to the public (including by way of an underwritten public
offering), upon a demand by certain of such stockholders, and which entitles
certain of such parties to join in any registration of Common Stock of Citadel
Communications. Various stockholders exercised their rights under this agreement
and participated in the Public Offering, including ABRY Broadcast Partners II,
L.P., Baker, Fentress & Company, Edward T. Hardy, The Endeavour Capital Fund
Limited Partnership and its general partner and Ted L. Snider, Sr. ABRY
Broadcast Partners II, L.P. is a significant stockholder of Citadel
Communications. See "Security Ownership of Certain Beneficial Owners and
Management." Mr. Smith is an Executive Vice President of Baker, Fentress &
Company and Mr. von Schlegell is President and a shareholder of the general
partner of The Endeavour Capital Fund Limited Partnership. Mr. Wilson owns all
of the capital stock of Rio Bravo, Inc., the sole general partner of Rio Bravo
Enterprise Associates, L.P.
Deschutes Transactions. In connection with the acquisition of Deschutes
River Broadcasting, Inc., Citadel Communications entered into an Agreement Not
to Compete with DVS Management, Inc., the general partner of The Endeavour
Capital Fund Limited Partnership, a shareholder of Deschutes prior to its
acquisition by Citadel Communications, pursuant to which DVS Management, Inc.
agreed not to compete in radio broadcasting in any geographic area or market
served or competed in by one or more of Citadel Communications' stations. In
consideration for such agreement not to compete with Citadel Communications'
stations, Citadel Communications paid DVS Management, Inc. $100,000 in each of
1997 and 1998. John E. von Schlegell, a director of Citadel Communications, is
President and a shareholder of DVS Management, Inc. This agreement has now
expired.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors approves the
compensation programs for Citadel Communications' executive officers and certain
other members of senior management. During 1998, the Committee consisted of
three non-employee directors.
The Committee intends for Citadel Communications' compensation programs to
provide strong incentives to senior management to pursue actions that will
directly benefit Citadel Communications and its stockholders. The principles
underlying Citadel Communications' executive compensation program are:
(1) Citadel Communications must offer competitive salaries to be able to
attract and retain highly-qualified and experienced executives and
other management personnel;
(2) Executive cash compensation in excess of base salaries should be tied
to the performance of Citadel Communications and the individual
executive; and
(3) The financial interests of the executives should be aligned with the
financial interests of the stockholders.
In developing compensation programs, the Committee utilizes the services of
an outside consultant who specializes in executive compensation matters. The
consultant advises the Committee about comparable publicly-traded radio
broadcasting companies' compensation programs.
The Committee intends that a major portion of total compensation for senior
management be based on attainment of performance objectives. Depending on the
situation, such objectives will measure performance across Citadel
Communications' business or by an identifiable portion of the operations over
which the individual has managerial responsibility. Another, smaller portion of
compensation is based on the individual's attainment of specific personal
performance objectives. In addition to these formal procedures, at any time the
Committee may and has rewarded a particularly outstanding performance
achievement by an individual member of management.
In 1998, the three primary forms of compensation paid or awarded to Citadel
Communications' executive officers were salary, bonuses and stock options.
Base salaries for the Chief Executive Officer and other executive officers
are established at levels appropriate for the duties and scope of
responsibilities of each officer's position and are intended to be competitive
with comparable radio broadcasting companies. The Chief Executive Officer's base
salary is provided for in his
11
<PAGE> 14
employment agreement with Citadel Communications. The Chief Executive Officer's
base salary for 1998 was $358,319. Salaries for all executives are reviewed
periodically and adjusted as warranted to reflect sustained individual officer
performance.
All additional cash compensation paid to executive officers for 1998 was
tied to the performance of Citadel Communications and the individual. The Chief
Executive Officer's annual bonus potential is provided for in his contract with
Citadel Communications and is based on achieving budgeted operating cash flow
levels for the year determined in accordance with the agreement. In 1998, the
Chief Executive Officer earned a $134,370 bonus under his employment agreement.
Under Citadel Communications' annual bonus arrangements applicable to other
executive officers in 1998, a portion of the annual bonuses awarded were
dependent on Citadel Communications achieving certain performance criteria, with
the balance based on criteria developed by the Committee through consultation
with the Chief Executive Officer. Such criteria for 1998 included the
individual's area of responsibility and the increased level of responsibility
delegated to the individual. Each executive officer earned a bonus with respect
to 1998.
In addition to the annual bonuses awarded to the executives with respect to
1998, the Chief Executive Officer was awarded an $80,000 bonus and two other
executive officers were awarded bonuses in recognition of the contributions made
by these individuals in connection with the successful completion of Citadel
Communications' initial public offering in July 1998.
Stock ownership is a fundamental principle underlying Citadel
Communications' executive compensation policies. The Committee believes that
management's having an equity interest in Citadel Communications more closely
aligns the interests of stockholders and management. The stock options granted
to executives and other key employees in 1998 generally vest over five years.
This approach is designed to increase stockholder value over a long term since
the full benefit of the compensation package cannot be realized unless stock
price appreciation occurs over a number of years.
In connection with the initial public offering, stock options were granted
to various employees including one person who later became an executive officer.
Subsequently, the Committee desired to grant additional options at the initial
public offering price to reward certain individuals. In September 1998, options
to acquire 60,000 shares of Common Stock were granted to the Chief Executive
Officer at the initial public offering price of $16.00, which was below the per
share market price of $25.813 of the Common Stock on the date of the grant. Each
of the other executive officers also received such a stock option grant in
September 1998. These options were granted in recognition of the contributions
made by the individuals in successfully implementing Citadel Communications'
acquisition and operational strategies and improving financial results.
The Internal Revenue Code (the "Code") contains a provision that limits the
tax deductibility of certain compensation paid to certain executive officers and
disallows the deductibility of certain compensation in excess of $1,000,000 per
year unless it is considered performance-based compensation under the Code.
Citadel Communications' policies and practices generally ensure the maximum
deduction possible under Section 162(m) of the Code. However, Citadel
Communications reserves the right to forego any or all of the tax deduction if
believed to be in the best interest of Citadel Communications and its
stockholders.
Members of the Compensation Committee
John E. von Schlegell
Patricia Diaz Dennis
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the cumulative total return on Citadel
Communications' Common Stock, The Nasdaq Stock Market (U.S.) Index and a peer
group of radio broadcasting companies (Chancellor Media Corp., Clear Channel
Communications Inc., Cox Radio Inc., Emmis Communications Corp and Jacor
Communications Inc.) for the period from July 1, 1998, the first day of trading
of Citadel Communications' Common Stock, through December 31, 1998.
<TABLE>
<CAPTION>
CITADEL COMMUNICATIONS NASDAQ STOCK MARKET
CORPORATION PEER GROUP (U.S.)
---------------------- ---------- -------------------
<S> <C> <C> <C>
7/1/98 100.00 100.00 100.00
9/30/98 128.00 79.00 89.00
12/31/98 162.00 97.00 116.00
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------
7/1/98 9/30/98 12/31/98
------ ------- --------
<S> <C> <C> <C>
Citadel Communications Corporation.......................... $100 $128 $162
Nasdaq Stock Market (U.S.) Index............................ 100 89 116
Peer Group.................................................. 100 79 97
</TABLE>
The graph and chart assume that $100 was invested on July 1, 1998 with
dividends, if any, reinvested. Peer returns are weighted by market
capitalization. The total stockholder returns are not necessarily indicative of
future returns.
13
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The only outstanding capital stock of Citadel Communications is its Common
Stock. The following table sets forth information with respect to the beneficial
ownership of Citadel Communications' Common Stock as of June 15, 1999 by (1)
each person, entity or group known to Citadel Communications to beneficially own
more than five percent of the Common Stock, (2) each director of Citadel
Communications, (3) each executive officer listed in the Summary Compensation
Table and (4) all directors and executive officers of Citadel Communications as
a group.
Except as indicated below, the persons named have sole voting and
investment power with respect to the shares shown as beneficially owned by them.
The percentages are rounded to the nearest tenth of a percent. Holders of the
Common Stock are entitled to one vote per share on all matters submitted to a
vote of stockholders generally.
The number of shares and percentages are calculated in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on a stockholder by stockholder basis, assuming that each stockholder
converted all securities owned by such stockholder that are convertible into
Common Stock at the option of the holder within 60 days of June 15, 1999, and
that no other stockholder so converts. The numbers and percentages of shares
owned assume that outstanding options have been exercised as follows: Lawrence
R. Wilson -- 573,480 shares (including options held by Rio Bravo Enterprise
Associates, L.P.); Donna L. Heffner -- 162,727 shares; D. Robert
Proffitt -- 128,501 shares; Stuart R. Stanek -- 165,307 shares; Peter J.
Benedetti -- 5,001 shares; Patricia Diaz Dennis -- 7,500 shares; Rio Bravo
Enterprise Associates, L.P. -- 515,817 shares; and all directors and executive
officers as a group -- 1,083,763 shares.
14
<PAGE> 17
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP OF
COMMON STOCK
--------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ --------- -------
<S> <C> <C>
Lawrence R. Wilson(1)....................................... 2,812,155 10.5%
City Center West
Suite 400
7201 West Lake Mead Boulevard
Las Vegas, NV 89128
Donna L. Heffner(2)......................................... 200,886 *
D. Robert Proffitt(3)....................................... 200,430 *
Stuart R. Stanek(4)......................................... 232,380 *
Peter J. Benedetti(5)....................................... 10,628 *
Patricia Diaz Dennis........................................ 7,500 *
Ike Kalangis................................................ 0 *
John E. von Schlegell(6).................................... 230,079 *
Ted L. Snider, Sr.(7)....................................... 340,785 1.3
Rio Bravo Enterprise Associates, L.P.(1).................... 2,754,492 10.3
City Center West
Suite 400
7201 West Lake Mead Boulevard
Las Vegas, NV 89128
Baker, Fentress & Company................................... 1,813,017 6.9
200 West Madison
Suite 3510
Chicago, IL 60602
ABRY Broadcast Partners II, L.P.(8)......................... 8,460,839 32.2
18 Newbury Street
Boston, MA 02116
Harlan A. Levy(9)........................................... 8,468,436 32.2
1585 Broadway
19th Floor
New York, NY 10036
ABRY Capital, L.P.(9)(10)................................... 8,468,436 32.2
18 Newbury Street
Boston, MA 02116
Putnam Investments, Inc.(11)................................ 2,079,763 7.9
One Post Office Square
Boston, MA 02109
All directors and executive officers as a group (10 4,209,310 15.4
persons)(12)..............................................
</TABLE>
15
<PAGE> 18
- ---------------
* Less than 1%
(1) Includes 2,238,675 shares of outstanding Common Stock and 515,817 shares of
Common Stock which may be acquired upon exercise of options that are
currently exercisable or that are exercisable within 60 days of June 15,
1999, which shares and options are owned by Rio Bravo Enterprise
Associates, L.P. Mr. Wilson owns all of the capital stock of Rio Bravo,
Inc., the sole general partner of Rio Bravo Enterprise Associates, L.P.
(2) Ms. Heffner's shares are jointly owned by Ms. Heffner and her spouse.
(3) Mr. Proffitt's shares are jointly owned by Mr. Proffitt and his spouse.
(4) Mr. Stanek's shares are jointly owned by Mr. Stanek and his spouse. Does
not include 1,781 shares owned by Mr. Stanek's wife.
(5) Mr. Benedetti's shares are jointly owned by Mr. Benedetti and his spouse.
(6) Represents 5,574 shares held by The Endeavour Capital Fund Limited
Partnership and 224,505 shares held by DVS Management, Inc. Mr. von
Schlegell, a director of Citadel Communications, is the Managing Partner of
The Endeavour Capital Fund Limited Partnership and the President and a
shareholder of DVS Management, Inc., the general partner of The Endeavour
Capital Fund Limited Partnership.
(7) Does not include 121,713 shares owned by Mr. Snider's spouse.
(8) These shares are held under an Amended and Restated Voting Trust Agreement
dated October 15, 1997. By its terms, the Amended and Restated Voting Trust
Agreement shall continue in effect until terminated upon the written
agreement of Citadel Communications and the holders of voting trust
certificates which represent a majority of the shares held in the voting
trust as determined in accordance with the Amended and Restated Voting
Trust Agreement. The voting trust also terminates with respect to any
shares upon transfer of such shares to a person who is not an affiliate of
ABRY Broadcast Partners II, L.P. or upon a distribution of shares by ABRY
Broadcast Partners II, L.P. to its partners. During the term of the Amended
and Restated Voting Trust Agreement, the voting trustee has the right to
vote the shares of stock subject to that agreement and to take part in any
shareholders' meetings, including the right to vote the shares for the
election of directors of Citadel Communications. The voting trustee may
assign his rights and delegate his obligations to a successor voting
trustee, who shall be a back-up trustee or other person appointed in the
manner provided under the terms of the Amended and Restated Voting Trust
Agreement. Dispositive power with respect to these shares is held by Royce
Yudkoff, the President of ABRY Holdings, Inc., the general partner of ABRY
Capital, L.P., the general partner of ABRY Broadcast Partners II, L.P.
(9) Represents shares held by Mr. Levy as voting trustee under the Amended and
Restated Voting Trust Agreement. See footnote (8).
(10) Includes 8,460,839 shares beneficially owned by ABRY Broadcast Partners II,
L.P. and 7,597 shares beneficially owned by ABRY Capital, L.P., which
shares are held by Harlan A. Levy as voting trustee under the Amended and
Restated Voting Trust Agreement. See footnotes (8) and (9).
(11) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 4, 1999 (dated January 26, 1999) by Putnam
Investments, Inc. on behalf of itself and Marsh & McLennan Companies, Inc.,
Putnam Investment Management, Inc. and Putnam Advisory Company, Inc., the
shares indicated are under shared voting and dispositive power among Putnam
Investments, Inc., Putnam Investment Management, Inc. and Putnam Advisory
Company, Inc. Putnam Investment Management, Inc. and Putnam Advisory
Company, Inc. are subsidiaries of Putnam Investments, Inc., and Putnam
Investments, Inc. is a subsidiary of Marsh & McLennan Companies, Inc. The
number of shares shown assume that there has been no change in the number
of shares beneficially owned since the filing of the Schedule 13G. Pursuant
to Rule 13d-4 under the Exchange Act, Marsh & McLennan Companies, Inc. and
Putnam Investments, Inc. declared that their filing of the Schedule 13G
shall not be deemed to be an admission of beneficial ownership of the
shares reported.
(12) Includes shares discussed in footnotes (1) and (6).
The number of shares and percentages in the foregoing table and footnotes
do not give effect to the issuance by Citadel Communications of 5,000,000 shares
in the Public Offering or the sale of shares in the Public
16
<PAGE> 19
Offering as follows: Rio Bravo Enterprise Associates, L.P. -- 450,000 shares;
Donna L. Heffner -- 20,000 shares; D. Robert Proffitt -- 20,000 shares; Stuart
R. Stanek -- 20,000 shares; The Endeavour Capital Fund Limited Partnership and
DVS Management, Inc. -- 124,702 shares; Ted L. Snider, Sr. -- 95,000 shares; all
directors and executive officers as a group -- 741,702 shares; Baker, Fentress &
Company -- 982,660 shares; and ABRY Broadcast Partners II, L.P. and ABRY
Capital, L.P. -- 4,589,923 shares.
CERTAIN TRANSACTIONS
In December 1995, Citadel Broadcasting sold to Wilson Aviation, L.L.C., a
company then owned by Mr. Wilson and his spouse and currently owned by Rio Bravo
Enterprise Associates, L.P., an airplane formerly owned by Citadel Broadcasting,
for a cash purchase price of approximately $1.3 million. Contemporaneously with
the sale of the airplane, Citadel Broadcasting entered into an agreement to
lease the airplane from Wilson Aviation, L.L.C. from December 29, 1995 to
December 31, 2001. The parties subsequently amended the lease to extend the term
through December 31, 2003. Under the terms of the lease, as amended, Citadel
Broadcasting paid monthly rent in the amount of $17,250 through December 31,
1998 and is required to pay monthly rent in the amount of $21,000 thereafter. In
addition, Citadel Broadcasting bears all of the costs of the maintenance, repair
and operation of the airplane during the term of the lease. The sale and
leaseback were not independently established in an arm's length transaction;
however, the original transaction was reviewed and approved by Citadel
Broadcasting's senior lender and Citadel Communications believes, based upon
such review, that the terms of the transaction are reasonable and at least as
favorable to Citadel Communications as could be obtained generally from
unaffiliated parties. Citadel Broadcasting's Board of Directors approved the
amendment to this lease. Mr. Wilson is a director and an executive officer of
each of Citadel Communications and Citadel Broadcasting. Mr. Wilson owns all of
the capital stock of Rio Bravo, Inc., the sole general partner of Rio Bravo
Enterprise Associates, L.P.
CORPORATE EVENT COSTS
During 1998, Citadel Broadcasting paid an aggregate of $75,964 in respect
of accommodation and activity costs in connection with three corporate events
held at a facility owned indirectly by Rio Bravo Enterprise Associates, L.P.
Citadel Broadcasting's Board of Directors approved the charges. Citadel
Communications believes that these charges are reasonable and reflect terms at
least as favorable to it as could be obtained generally from unaffiliated
providers of similar services.
PROPOSAL TO APPROVE THE CITADEL COMMUNICATIONS CORPORATION
1999 LONG-TERM INCENTIVE PLAN
(PROPOSAL 2)
The Board of Directors has adopted, subject to stockholder approval, the
1999 Incentive Plan, which is intended to be the primary long-term incentive
vehicle for senior management. The Board believes that the 1999 Incentive Plan
would advance the interests of Citadel Communications by encouraging senior
management to seek ways to improve efficiencies, spend capital wisely, reduce
debt and generate cash, all of which should combine to cause stock price
appreciation.
A copy of the 1999 Incentive Plan will be provided to stockholders without
charge upon written request to the Secretary of Citadel Communications
Corporation, City Center West, Suite 400, 7201 West Lake Mead Boulevard, Las
Vegas, Nevada 89128. A summary of the principal features of the 1999 Incentive
Plan follows.
SUMMARY DESCRIPTION OF 1999 INCENTIVE PLAN
The 1999 Incentive Plan provides opportunities for participants to acquire
shares of Citadel Communications' Common Stock upon the exercise of options
granted under the 1999 Incentive Plan if performance goals (measured solely by
the increase in the price of Common Stock) and continued employment requirements
are met. A total of 1,750,000 shares of Common Stock are available for issuance
under the 1999 Incentive Plan. As of June 24, 1999, such shares would have had a
market value of $52,718,750, based on the $30.125 closing price
17
<PAGE> 20
of the Common Stock as reported on The Nasdaq Stock Market's National Market on
such date. If any award granted under the 1999 Incentive Plan expires or
otherwise terminates for any reason without having been vested in full, the
forfeited stock again becomes available for issuance under the 1999 Incentive
Plan.
The 1999 Incentive Plan will be administered by the Compensation Committee
of the Board of Directors, which has discretion to select participants and
determine: (i) when to grant a stock option award; (ii) the exercise price and
the amount of Common Stock subject to each award; and (iii) the vesting schedule
of the award. The Compensation Committee also has authority to construe and
amend the 1999 Incentive Plan and all awards granted under it, to prescribe,
amend and rescind rules and regulations relating to the 1999 Incentive Plan, to
determine (subject to the 1999 Incentive Plan) the terms and provisions of the
awards granted under the 1999 Incentive Plan and to make all other
determinations necessary or advisable for administering the 1999 Incentive Plan.
Awards may be granted under the 1999 Incentive Plan only to executive officers
and senior managers of Citadel Communications or any of its subsidiaries.
Members of the Compensation Committee are not eligible to receive awards.
Citadel Communications currently has six executive officers and 36 senior
managers.
Awards under the 1999 Incentive Plan may be in the form of incentive stock
options ("ISOs") within the meaning of section 422 of the Code and options that
are not incentive stock options ("non-ISOs") (collectively, "Options").
The 1999 Incentive Plan operates over a five-year performance period
beginning at the date of grant of an Option. Under the 1999 Incentive Plan, each
participant receives an Option to acquire a certain number of shares of Common
Stock which can be earned during the performance period. The number of shares
subject to an Option granted to a participant is established to provide a
long-term incentive opportunity which is competitive with the practice of a
cross-section of U.S. companies. The exercise price of Options granted effective
as of the consummation of the Public Offering is $29.25 per share, the price per
share to the public in the Public Offering. If any shares become available for
additional grants, the exercise price of any Option granted will be equal to the
fair market value of the Common Stock on the date the Option is granted (110% of
the fair market value of the Common Stock in the case of an ISO granted to an
individual who at the time of the grant owns more than ten percent of the
combined voting power of Citadel Communications' capital stock). Fair market
value will be determined by reference to the average of the bid and asked prices
of the Common Stock on the date of the grant. If the number of shares subject to
an Option is not fully earned during the performance period, any remaining
opportunity for the unearned shares is forfeited. For the full number of shares
subject to an Option to be earned, the average stock price at any time during
the performance period must be twice the exercise price of the Option.
During the performance period, the shares subject to the option are earned
in one-fifth increments for each increase in average stock price equal to
one-fifth of the difference between the Option's doubled exercise price and the
Option's exercise price. When an increment of the number of shares subject to an
Option is earned, that increment will be subject to a five-year vesting period.
Shares earned under the 1999 Incentive Plan will immediately vest prior to the
end of the vesting period in the event of certain changes in control (as defined
in the 1999 Incentive Plan) of Citadel Communications.
Shares subject to any expired, terminated or lapsed Options are available
for subsequent grants. The Committee may provide that an optionee may pay for
shares upon exercise of an Option in cash or by check or through certain
cashless exercise procedures or other medium or combination of media as
authorized by the Committee.
In the event a participant's employment with Citadel Communications is
terminated due to disability, retirement or any other reason, a participant may
exercise an Option only to the extent it was exercisable on the termination date
of participant's employment. An ISO must be exercised prior to the earlier of
(i) the expiration of three months (six months in the case of disability) after
the termination date or (ii) the expiration date of the Options set forth in the
award agreement. An Option that is not an incentive stock option must be
exercised within the applicable time period for exercise set forth in the award
agreement. In the event of the death of the participant before an Option lapses,
an Option may be exercised only to the extent it was exercisable on the date of
death. However, such exercise must be made prior to the earlier of the first
anniversary of the participant's death or the expiration date of the Option.
18
<PAGE> 21
The Committee may adjust the number of shares of Common Stock under the
1999 Incentive Plan or subject to Options granted under the 1999 Incentive Plan
at any time to reflect any change in the capital structure of Citadel
Communications affecting all outstanding shares of Common Stock, whether through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares
or other like change in the capital structure of Citadel Communications. With
respect to outstanding awards, such adjustment shall be made such that the
participant shall be made whole and suffer no dilution.
An employee shall have no right to sell, assign, transfer, pledge or
otherwise dispose of or encumber any Option granted under the 1999 Incentive
Plan except by will or the laws of descent and distribution, and, if any
employee earns any shares of Common Stock during the first six months of any
performance period, the employee shall hold such stock until the end of such
six-month period. During the vesting period, however, a participant may transfer
all or any portion of the participant's earned Options to any of the following:
a revocable living trust primarily for the benefit of a participant, an
irrevocable trust in which the participant is the settlor or a partnership in
which the participant is a general partner.
At the time that the Board of Directors adopted the 1999 Incentive Plan,
the Compensation Committee approved the grant of the following Options effective
as of the closing of the Public Offering, subject to stockholder approval of the
1999 Incentive Plan, with an exercise price equal to $29.25 per share, the price
per share to the public in the Public Offering.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE (1) NUMBER OF OPTIONS
- ----------------- ---------------- -----------------
<S> <C> <C>
Lawrence R. Wilson,
Chairman, Chief Executive
Officer and President...................... $ 875,000 875,000
Donna L. Heffner,
Vice President and
Chief Financial Officer.................... 250,000 250,000
D. Robert Proffitt,
Vice President............................. 250,000 250,000
Stuart R. Stanek,
Vice President............................. 250,000 250,000
Peter Benedetti,
Vice President............................. 125,000 125,000
Executive Officer Group...................... 1,750,000 1,750,000
Non-Executive Director Group................. 0 0
Non-Executive Officer Employee Group......... 0 0
</TABLE>
- ---------------
(1) The "Dollar Value" for Options is defined as the fair market value of
the Common Stock on the date of grant less the Option exercise price.
Because the Options granted to date under the 1999 Incentive Plan are
contingent upon stockholder approval of the 1999 Incentive Plan, each
of Messrs. Wilson, Proffitt, Stanek and Benedetti and Ms. Heffner have
a substantial interest in the stockholders' vote on this matter.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current tax law and interpretations.
19
<PAGE> 22
ISOs
In general, the value of an ISO is not included in the participant's income
at the time of grant, and the participant does not recognize income on exercise
of an ISO for the purpose of computing regular federal income tax. However, when
calculating income for alternative minimum tax purposes, the excess, if any, of
the fair market value of the shares acquired over the exercise price (the
"spread") generally will be considered part of income. At the subsequent sale of
Common Stock received through the exercise of an ISO, all gain on the sale of
the Common Stock (as long as the Common Stock has been held for one year after
exercise and two years after grant) will be characterized as capital gain or
loss, and Citadel Communications will not be entitled to any federal income tax
deduction with respect to such gain. If the Common Stock has been held for at
least one year, the capital gain or loss will be taxed as long-term capital gain
or loss. If a participant disposes of ISO Common Stock before the holding period
has expired (a "disqualifying disposition"), the spread (up to the amount of the
gain on disposition) will be ordinary income at the time of such disqualifying
disposition, and Citadel Communications will be entitled to a federal income tax
deduction in or like amount. A participant must recognize as ordinary income the
gain on the disposition.
Non-ISOs
In general, the value of a non-ISO is not included in the participant's
income at the time of grant, unless the non-ISO Common Stock has a "readily
ascertainable fair market value" at the date of grant. It is not anticipated
that any non-ISO will have a "readily ascertainable fair market value" at the
date of grant. On exercise, the difference between the exercise price of a
non-ISO and the fair market value of the Common Stock received generally will be
recognized as ordinary income, subject to federal income tax withholding, and
will be allowed as a deduction to Citadel Communications. At the subsequent sale
of Common Stock received through the exercise of a non-ISO, all gain on the sale
of the Common Stock will be characterized as capital gain or loss. If the Common
Stock has been held for at least one year, the capital gain or loss will be
taxed as long-term capital gain or loss.
Additional special rules apply to both ISOs and non-ISOs if the exercise
price is paid in Citadel Communications' Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE PROPOSAL TO APPROVE THE CITADEL COMMUNICATIONS CORPORATION
1999 LONG-TERM INCENTIVE PLAN
PROPOSAL TO APPROVE AN AMENDMENT TO THE
CITADEL COMMUNICATIONS CORPORATION 1996 EQUITY INCENTIVE PLAN
(PROPOSAL 3)
At June 24, 1999, without regard to the proposed amendment, a total of
1,428,532 shares of Common Stock remained reserved for issuance under the 1996
Equity Plan. The Board of Directors has adopted, subject to stockholder
approval, an amendment to the 1996 Equity Plan to increase the number of shares
of Common Stock available for issuance (or which may be used to provide a basis
for measurement of an award) under the 1996 Equity Plan by 972,053 shares to a
total of 2,400,585 shares, which, together with shares underlying outstanding
options granted outside of the 1996 Equity Plan, is the number of shares equal
to ten percent of the outstanding Common Stock on a fully-diluted basis as of
the closing of the Public Offering, but not including in the fully-diluted
calculation the 1,750,000 shares reserved for issuance under the 1999 Incentive
Plan.
The Board of Directors believes that ownership of common stock by key
employees serves to provide those employees with a personal financial interest
in Citadel Communications' success. The adoption of the amendment by the Board
of Directors reflects a determination by the Board that ensuring the continued
availability of a sufficient number of shares under the 1996 Equity Plan is
important to Citadel Communications' ability to attract, retain and motivate key
employees.
20
<PAGE> 23
A copy of the 1996 Equity Plan will be provided to stockholders without
charge upon written request to the Secretary of Citadel Communications
Corporation, City Center West, Suite 400, 7201 West Lake Mead Boulevard, Las
Vegas, Nevada 89128. If the proposed amendment is not approved, the 1996 Equity
Plan will continue in effect in its present form. A summary of the principal
features of the 1996 Equity Plan follows.
SUMMARY DESCRIPTION OF 1996 EQUITY PLAN
The 1996 Equity Plan provides for stock-based awards to employees,
officers, directors, consultants, independent contractors and advisors of
Citadel Communications and its subsidiaries. Citadel Communications and its
subsidiaries currently employ approximately 1,770 persons. Non-employee
directors are not currently eligible to participate in the 1996 Equity Plan.
As of June 24, 1999, the aggregate number of shares reserved under the 1996
Equity Plan, as proposed to be amended, would have a market value of
$72,317,623, based on the $30.125 closing price of the Common Stock as reported
on The Nasdaq Stock Market's National Market on such date. Shares subject to any
expired, terminated or lapsed awards are available for subsequent awards under
the 1996 Equity Plan.
The 1996 Equity Plan is administered by the Compensation Committee of the
Board of Directors, and in certain cases, by the Board. The Compensation
Committee or the Board has authority under the 1996 Equity Plan to designate
participants, determine the terms and conditions of awards to be granted to each
participant and decide all matters relating to any award.
Awards under the 1996 Equity Plan may be made in the form of incentive
stock options ("ISOs") within the meaning of section 422 of the Code and options
that are not incentive stock options ("non-ISOs") (collectively, "Options").
Awards also may be in the form of stock appreciation rights, restricted
securities and other stock-based awards, none of which have been granted to
date. ISOs may be awarded only to employees.
Options under the 1996 Equity Plan become exercisable at the time or times
determined by the Board or the Compensation Committee. However, no Option may be
exercisable prior to six months following the date of the grant of such Option,
and an ISO granted to an owner of more than ten percent of the combined voting
power of Citadel Communications' capital stock may not be exercisable after the
expiration of five years from the date of its grant.
The exercise price of an Option under the 1996 Equity Plan shall be
determined by the Compensation Committee or, in certain cases, the Board.
However the exercise price for ISOs granted under the 1996 Equity Plan may not
be less than the fair market value of the Common Stock as of the date of the
grant (110% of the fair market value of the Common Stock in the case of an ISO
granted to an individual who at the time of the grant owns more than ten percent
of the combined voting power of Citadel Communications' capital stock).
The Board may provide that an optionee may pay for shares upon exercise of
an Option in cash or by check or through cashless exercise procedures or other
medium or combination of media authorized by the Board. The Board has authorized
Lawrence R. Wilson, Chairman, Chief Executive Officer and President, to act on
behalf of the Board on requests by any optionees who are not "insiders" (as
defined in the Exchange Act) to pay the exercise price of an Option through one
of two specified cashless exercise procedures. The grant of an Option may be
accompanied by a reload option, which gives an optionee who pays the exercise
price of an Option with shares of Common Stock an additional Option to acquire
the same number of shares that was used to pay for the original Option of an
exercise price not less than the fair market value of Common Stock as of the
reload option grant date.
The term of each Option under the 1996 Equity Plan shall be determined by
the Committee or, in certain cases, the Board. However, in no event may any
Option under the 1996 Equity Plan be exercisable for more than ten years from
the date of its grant (five years in the case of an ISO granted to an individual
who at the time of the grant owns more than ten percent of the combined voting
power of Citadel Communications' capital stock).
In general, during the lifetime of a participant, Options shall be
exercisable only by the participant, and Options shall not be assignable or
transferable by the participant other than by will, the laws of descent and
21
<PAGE> 24
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules promulgated thereunder.
The Common Stock issuable under the 1996 Equity Plan may consist, in whole
or in part, of authorized but unissued shares of Common Stock, treasury shares
or shares of Common Stock acquired by Citadel Communications on the open market.
The Common Stock currently available for issuance under the 1996 Equity Plan is
registered under the Securities Act and has been approved for inclusion in The
Nasdaq Stock Market's National Market. Citadel Communications anticipates that
the additional shares contemplated by the proposed amendment to the 1996 Equity
Plan will also be registered under the Securities Act prior to issuance and will
be approved for inclusion in The Nasdaq Stock Market's National Market.
The number of shares subject to the 1996 Equity Plan and to Options granted
thereunder generally shall be adjusted in the event the stock is changed by any
stock dividend, stock split or reverse stock split, reorganization,
recapitalization, combination of shares, merger, consolidation or any other
increase or decrease in the number of shares.
In the event a participant's employment with Citadel Communications is
terminated due to disability, retirement or any other reason, a participant may
exercise an Option only to the extent it was exercisable on the termination date
of participant's employment. An ISO must be exercised prior to the earlier of
(i) the expiration of three months (six months in the case of disability after
the termination date) or (ii) the expiration date of the Options set forth in
the award agreement. A non-ISO must be exercised within the applicable time
period for exercise set forth in the award agreement. In the event of the death
of the participant before an Option lapses, an Option may be exercised only to
the extent it was exercisable on the date of death. However, such exercise must
be made prior to the earlier of the first anniversary of the participant's death
or the expiration date of the Option.
At the discretion of the Board, Citadel Communications may reserve to
itself or to its assignees in any award a right to repurchase any Common Stock
held by a participant upon the participant's termination of employment or other
relationship with Citadel Communications or any subsidiary for any reason, at a
price for such Common Stock as determined by the Board. In the case of
termination of the participant's employment for cause (as defined in the 1996
Equity Plan), the purchase price shall be the lower of the exercise price or the
fair market value per share of the Common Stock. In the case of termination for
any other reason, the purchase price shall be the fair market value per share.
The Board may amend or discontinue the 1996 Equity Plan at any time.
However, no amendments or discontinuance shall be made without the requisite
approval of the stockholders of Citadel Communications if stockholder approval
is required as a condition to the plans' complying with the provisions of Rule
16b-3 under the Exchange Act, as such rule may be amended from time to time, or
continuing to comply with Section 162(m) of the Code, as such section may be
amended from time to time. No termination, amendment or modification of the 1996
Equity Plan shall adversely affect in any material way any award previously
granted under the 1996 Equity Plan, without the written consent of the
participant.
As future awards under the 1996 Equity Plan will be discretionary, Citadel
Communications cannot currently determine the recipients and the number of
awards that will be made pursuant to the 1996 Equity Plan, as amended. Future
grants and the terms thereof will be determined by the Compensation Committee or
the Board in accordance with the terms of the 1996 Equity Plan. However, the
following table sets forth information concerning awards made under the 1996
Equity Plan in 1998:
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE (1) NUMBER OF OPTIONS
- ----------------- ---------------- -----------------
<S> <C> <C>
Lawrence R. Wilson,
Chairman, Chief Executive
Officer and President..................................... $ 588,780 60,000
Donna L. Heffner,
Vice President and
Chief Financial Officer................................... 117,756 12,000
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE (1) NUMBER OF OPTIONS
- ----------------- ---------------- -----------------
<S> <C> <C>
D. Robert Proffitt,
Vice President............................................ 117,756 12,000
Stuart R. Stanek,
Vice President............................................ 117,756 12,000
Peter Benedetti,
Vice President............................................ 0 16,005
49,065 5,000
Executive Officer Group..................................... 1,108,869 129,005
Non-Executive Director Group................................ 0 0
Non-Executive Officer Employee Group........................ 9,813 74,995
</TABLE>
- ---------------
(1) The "Dollar Value" for Options is defined as the fair market value of the
Common Stock on the date of grant less the Option exercise price.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current tax law and interpretations.
ISOs
In general, the value of an ISO is not included in the participant's income
at the time of grant, and the participant does not recognize income on exercise
of an ISO for the purpose of computing regular federal income tax. However, when
calculating income for alternative minimum tax purposes, the excess, if any, of
the fair market value of the shares acquired over the exercise price (the
"spread") generally will be considered part of income. At the subsequent sale of
Common Stock received through the exercise of an ISO, all gain on the sale of
the Common Stock (as long as the Common Stock has been held for one year after
exercise and two years after grant) will be characterized as capital gain or
loss, and Citadel Communications will not be entitled to any federal income tax
deduction with respect to such gain. If the Common Stock has been held for at
least one year, the capital gain or loss will be taxed as long-term capital gain
or loss. If a participant disposes of ISO Common Stock before the holding period
has expired (a "disqualifying disposition"), the spread (up to the amount of the
gain on disposition) will be ordinary income at the time of such disqualifying
disposition, and Citadel Communications will be entitled to a federal income tax
deduction in a like amount. A participant must recognize as ordinary income the
gain on the disposition.
Non-ISOs
In general, the value of a non-ISO is not included in the participant's
income at the time of grant, unless the non-ISO Common Stock has a "readily
ascertainable fair market value" at the date of grant. It is not anticipated
that any non-ISO will have a "readily ascertainable fair market value" at the
date of grant. On exercise, the difference between the exercise price of a
non-ISO and the fair market value of the Common Stock received generally will be
recognized as ordinary income, subject to federal income tax withholding, and
will be allowed as a deduction to Citadel Communications. At the subsequent sale
of Common Stock received through the exercise of a non-ISO, all gain on the sale
of the Common Stock will be characterized as capital gain or loss. If the Common
Stock has been held for at least one year, the capital gain or loss will be
taxed as long-term capital gain or loss.
Additional special rules apply to both ISOs and non-ISOs if the exercise
price is paid in Citadel Communications' Common Stock.
23
<PAGE> 26
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE PROPOSAL TO APPROVE THE AMENDMENT TO THE
CITADEL COMMUNICATIONS CORPORATION 1996 EQUITY INCENTIVE PLAN
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
The Board of Directors of Citadel Communications has selected KPMG LLP to
serve as the independent public accountants to examine the financial statements
of Citadel Communications and its subsidiaries for the year ending December 31,
1999. KPMG LLP has been employed to perform this function for Citadel
Communications since its formation in 1993. A representative of KPMG LLP is
expected to be present at the annual meeting for the purpose of making a
statement, should he or she so desire, and to respond to appropriate questions.
If the stockholders should not ratify the appointment, the Audit Committee
of the Board will investigate the reasons for rejection by the stockholders and
the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS CITADEL COMMUNICATIONS'
INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1999.
OTHER INFORMATION
DIRECTOR NOMINEES
Any stockholder entitled to vote for the election of directors may nominate
persons for election to the Board of Directors. Generally such nominations with
respect to an election to be held at an annual meeting must be submitted in
writing to the Secretary of Citadel Communications at Citadel Communications'
principal offices at least 90 days before the anniversary date of the preceding
annual meeting, and the notice must provide information as required by Citadel
Communications' Bylaws. A copy of these Bylaw requirements will be provided upon
request in writing to the Secretary at the principal offices of Citadel
Communications. This requirement does not affect the deadline for submitting
stockholder proposals for inclusion in the proxy statement, nor does it apply to
questions a stockholder may wish to ask at the meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that Citadel Communications'
directors and executive officers, and any persons who own more than ten percent
of Citadel Communications' Common Stock, file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Common Stock and other equity securities of Citadel Communications. Such
persons are required by Securities and Exchange Commission regulations to
furnish Citadel Communications with copies of all Section 16(a) forms they file.
To Citadel Communications' knowledge, based solely on the review of the
copies of such reports and written representations that no other reports were
required, during or with respect to the year ended December 31, 1998, all such
section 16(a) filing requirements were met, except each of ABRY Broadcast
Partners II, L.P., ABRY Capital L.P., ABRY Holdings, Inc., Royce Yudkoff and
Harlan Levy, in his capacity as voting trustee under the Amended and Restated
Voting Trust Agreement, filed one late report with respect to the conversion of
shares of Citadel Communications' then outstanding convertible preferred stock
into shares of Citadel Communications' Common Stock.
24
<PAGE> 27
ANNUAL REPORT
Citadel Communications has enclosed its Annual Report for the year ended
December 31, 1998 with this proxy statement, which includes Citadel
Communications' 1998 Annual Report to the Securities and Exchange Commission on
Form 10-K, without exhibits. Stockholders are referred to the report for
financial and other information about Citadel Communications, but such report is
not incorporated in this proxy statement and is not a part of the proxy
soliciting material.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Any proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by Citadel Communications, City Center
West, Suite 400, 7201 West Lake Mead Boulevard, Las Vegas, Nevada, 89128, no
later than February 25, 2000 in order to be included in the proxy materials for
such meeting. It is suggested that a proponent submit any proposal by Certified
Mail -- Return Receipt Requested to the Secretary of Citadel Communications.
Such proposals must meet the requirements set forth in the rules and regulations
of the Securities and Exchange Commission in order to be eligible for inclusion
in Citadel Communications' 2000 proxy materials.
All other stockholder proposals to be presented at the 2000 Annual Meeting
of Stockholders must be submitted in writing to the Secretary of Citadel
Communications at Citadel Communications' principal offices no later than April
28, 2000, and the notice must provide information as required by Citadel
Communications' Bylaws. A copy of these Bylaw requirements will be provided upon
request in writing to the Secretary at the principal offices of Citadel
Communications.
If there should be any change in the foregoing submission deadlines,
Citadel Communications intends to publicly disseminate information concerning
the change.
OTHER MATTERS
The Board does not intend to present, and does not have any reason to
believe that others will present, any item of business at the annual meeting
other than those specifically set forth in the notice of the meeting. However,
if other matters are properly brought before the meeting, the persons named on
the enclosed proxy will have discretionary authority to vote all proxies in
accordance with their best judgment.
SOLICITATION OF PROXIES
All costs and expenses of this solicitation, including the cost of
preparing and mailing this proxy statement will be borne by Citadel
Communications. In addition to the use of the mails, certain directors, officers
and regular employees of Citadel Communications may solicit proxies personally,
or by mail, telephone or otherwise, but such persons will not be compensated for
such services. Arrangements will be made with brokerage firms, banks,
fiduciaries, voting trustees or other nominees to forward the soliciting
materials to each beneficial owner of stock held of record by them, and Citadel
Communications will reimburse them for their expenses in doing so.
By order of the Board of Directors
/s/ Donna L. Heffner
Donna L. Heffner
Secretary
June 25, 1999
25
<PAGE> 28
1792-PS99
<PAGE> 29
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
CITADEL COMMUNICATIONS CORPORATION
THIS PROXY IS SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 1999
The undersigned hereby appoints Lawrence R. Wilson and Donna L.
Heffner, or either of them, as proxies with full power of substitution, to
represent the undersigned at the Annual Meeting of Stockholders of Citadel
Communications Corporation to be held at River Bend Ranch, 1015 Eastman Drive,
Bigfork, Montana 59911, on Tuesday, July 27, 1999, at 10:00 a.m., local time,
and at any adjournments or postponements thereof, and to vote all shares of
Common Stock of Citadel Communications Corporation which the undersigned would
be entitled to vote if personally present, on all the matters set forth on the
reverse side.
The undersigned acknowledges receipt of the Notice of Annual Meeting
and the Proxy Statement together with this Proxy.
- --------------- ---------------
| SEE REVERSE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE |
| SIDE | | SIDE |
- --------------- ---------------
<PAGE> 30
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES AND FOR PROPOSALS 2, 3 AND 4.
<TABLE>
<S> <C>
FOR AGAINST ABSTAIN
1. Election of five directors for a one-year 2. Approval of the Citadel Communications [ ] [ ] [ ]
term until the next annual meeting. Corporation 1999 Long-Term Incentive
NOMINEES: Lawrence R. Wilson, Patricia Plan.
Diaz Dennis, Ike Kalangis, Ted L. Snider, Sr.
and John E. von Schlegell. 3. Approval of the amendment to the Citadel [ ] [ ] [ ]
Communications Corporation 1996 Equity
FOR [ ] [ ] WITHHELD Incentive Plan.
ALL FROM ALL
NOMINEES NOMINEES 4. Ratification of the appointment of KPMG [ ] [ ] [ ]
LLP as independent public accountants
for the year ending December 31, 1999.
[ ] ______________________________________
For all nominees except as noted above 5. In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting or any postponements or
adjournments thereof.
MARK HERE [ ] MARK HERE [ ]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) hereon.
All holders must sign. When signing in a fiduciary
capacity, please indicate full title as such. If a
corporation or partnership, please sign in full corporate
or partnership name by authorized person.
Signature: _________________________ Date: _____________________ Signature: ________________________ Date: ______________________
</TABLE>
<PAGE> 31
Annex A
CITADEL COMMUNICATIONS CORPORATION
1999 LONG-TERM INCENTIVE PLAN
SECTION I. PURPOSE
The Citadel Communications Corporation Long-Term Incentive Plan (the
"Plan") is intended to be the primary long-term incentive vehicle for senior
management. The Plan is designed to advance the interests of Citadel
Communications Corporation (the "Company") by encouraging senior management to
seek ways to improve efficiencies, spend capital wisely, reduce debt and
generate cash, all of which should combine to cause stock price appreciation.
The Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") nor is it qualified under section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
The Company's address is City Center West, 7201 Lake Mead Boulevard,
Suite 400, Las Vegas, Nevada 89128.
SECTION II. ADMINISTRATION
a. The Plan is administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). All members of the Committee are
required to be "nonemployee directors" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and "outside
directors" within the meaning of section 162(m)(4)(C)(i) of the Code. For
additional information about the Committee, participants should contact the
Company at the address and telephone number listed above.
b. The Committee selects the participants and determines: (i) when to
grant a stock option award; (ii) the exercise price and the amount of Common
Stock subject to each award; and (iii) the vesting schedule of the award. The
Committee also has authority to construe and amend the Plan and all awards
granted under it, to prescribe, amend and rescind rules and regulations relating
to the Plan, to determine (subject to sections VI, VII and VIII) the terms and
provisions of the awards granted under the Plan (which need not be identical)
and to make all other determinations necessary or advisable for administering
the Plan.
SECTION III. SHARES SUBJECT TO THE PLAN
a. Options for a total of 1,750,000 shares of the Company's $.001 par
value Common Stock (the "Common Stock") may be granted pursuant to the terms of
the Plan. The Common Stock subject to the Plan may be unissued shares of Common
Stock or shares of issued Common Stock held in the Company's treasury, or both.
<PAGE> 32
b. The number of shares of the Company's Common Stock available upon
the exercise of options granted under the Plan, the maximum number of shares for
which awards may be granted to any one individual and the number of shares of
outstanding awards are subject to appropriate adjustment by the Committee in
accordance with section X.
c. If any award granted under the Plan expires or otherwise terminates
for any reason without having been vested in full, the shares of Common Stock
subject to such awards again become available for issuance upon exercise of
options granted under the Plan.
SECTION IV. DURATION, AMENDMENT, AND TERMINATION
a. The termination or any amendment of the Plan may not impair or
adversely affect, without the consent of the participants, the rights of holders
of outstanding awards. The Board of Directors may terminate the Plan at any
time.
b. The Board of Directors may, from time to time, amend the Plan
without stockholder approval except to the extent that any such amendment fails
to comply with any applicable provision of the Code, ERISA, the Exchange Act or
the rules of Nasdaq or causes the Plan to fail to be treated as qualified
performance-based compensation under applicable Treasury Regulations.
SECTION V. ELIGIBILITY
a. Awards may be granted under the Plan only to executive officers and
senior managers of the Company or any of its subsidiaries. Members of the
Committee are not eligible to receive awards.
b. All awards shall be evidenced by a written Award Agreement between
the Company and the participant that will contain such provisions, in addition
to those contained in the Plan, as may be approved by the Committee.
SECTION VI. TERMS AND CONDITIONS OF AWARDS
a. The Plan provides opportunities for participants to acquire shares
of the Company's Common Stock upon the exercise of options granted under the
Plan if performance goals and continued employment requirements are met. All or
part of any options granted under the Plan may be "incentive stock options," as
defined in Section 422 of the Code, or options that are not "incentive stock
options."
b. The Plan operates over a five-year performance period beginning at
the date of the grant of the option (the "Performance Period"). Under the Plan,
each participant receives an option to acquire a certain number of shares of
Common Stock which can be earned during the Performance Period. The exercise
price of an option initially granted effective as of the consummation of the
Proposed Public Offering, as defined in Section XIV, will be the price per share
to the public in the Proposed Public
A-2
<PAGE> 33
Offering. The exercise price of any option granted thereafter will be equal to
the mean between the bid and ask quotations for the Company's Common Stock
(referred to herein, together with the price per share to the public in the
Proposed Public Offering, as the "fair market value") on the date the option is
granted, or, if there are no bid or asked quotations on that date, the bid and
ask quotations on the next preceding date for which quotations are available.
The number of shares subject to an option granted to a participant is
established to provide a long-term incentive opportunity which is competitive
with the practices of a cross-section of U.S. companies. If the number of shares
subject to option is not fully earned during the Performance Period, any
remaining opportunity for that option is forfeited.
c. For the full number of shares subject to an option to be earned, the
average stock price (with the average calculated over 20 consecutive trading
days) at any time during the Performance Period must be twice the exercise price
of the option. During the Performance Period, the shares subject to the option
are earned in one-fifth increments for each increase in average stock price
equal to one-fifth of the difference between the option's doubled exercise price
and the option exercise price.
For example, if the exercise price of the option is $30, a participant
would earn the full number of shares subject to the option if the average stock
price at any time during the Performance Period is at least $60. During the
Performance Period, the shares subject to the option are earned in one-fifth
increments as the average stock price increases by an amount equal to $6, which
is one-fifth of the difference between the options doubled exercise price ($60)
and the option's exercise price ($30).
d. Absent any action by the Committee to the contrary, when an
increment of the number of shares subject to an option is earned, that increment
will be subject to a five-year vesting period (the "Vesting Period"). Under the
Vesting Period, one-fifth of the number of shares earned vests, and therefore
becomes exercisable, on each anniversary date after that increment was earned.
The Committee has discretionary authority to alter the normal vesting period
relating to any participant's award or to accelerate the vesting period relating
to any participant's award.
SECTION VII. INCENTIVE STOCK OPTIONS
The terms of any incentive stock options granted under the Plan must
comply with the following additional rules:
a. Employees Only. Incentive stock options may only be granted to
employees (including officers and directors who are also employees) of the
Company or subsidiary.
b. Exercise Price. The exercise price per share of Common Stock shall
be set by the Committee, provided that the exercise price for any incentive
stock option may not be less than the fair market value as of the effective date
of the grant.
A-3
<PAGE> 34
c. Exercise. In no event may any incentive stock option be exercisable
for more than ten years from the date of its grant.
d. Individual Dollar Limitation. The aggregate fair market value
(determined as of the time an award is made) of all shares of Common Stock with
respect to which incentive stock options are first exercisable by a Participant
in any calendar year may not exceed $100,000.00.
e. Ten Percent Owners. An incentive stock option may be granted to a
"ten percent owner," as defined in Code Section 422, provided that at the time
such option is granted, the exercise price per share of Common Stock shall not
be less than 110% of the fair market value and such option by its terms is not
exercisable after the expiration of five (5) years from the date of its grant.
f. Expiration of Incentive Stock Options. No award of an incentive
stock option may be made pursuant to this Plan after the expiration of ten (10)
years from the effective date of the Plan as determined in Section XIV.
g. Right to Exercise. During a participant's lifetime, an incentive
stock option may be exercised only by the participant.
SECTION VIII. TERMINATION OF PARTICIPATION
Notwithstanding the exercise periods set forth in any Award Agreement,
options shall be subject to the following:
a. An option shall lapse ten years after it is granted, unless an
earlier time is set in the Award Agreement.
b. If a participant's employment is terminated due to (i) disability,
(ii) retirement, or (iii) for any other reason, such participant may exercise
his or her incentive stock options only to the extent that such incentive stock
options would have been exercisable on the termination date; provided, that such
exercise is made prior to the earlier of (i) the expiration of three (3) months
(six (6) months in the case of disability) after the termination date or (ii)
the expiration of the option set forth in the Award Agreement.
c. If a participant's employment, contractual or other relationship
with the Company is terminated due to (i) disability, (ii) retirement, or (iii)
for any other reason, such participant may exercise his or her non-qualified
stock options, only to the extent that such options would have been exercisable
on the termination date; provided, that such exercise is made within the
applicable time period for exercise as set forth in the Award Agreement.
d. If a participant dies before his or her options lapse pursuant to
this Section, then the participant's options may be exercised, only to the
extent that such options would have been exercisable on the date of the
Participant's death; provided
A-4
<PAGE> 35
that such exercise is made prior to the earlier of (i) the first anniversary of
such Participant's death or (ii) the expiration date of the Option set forth in
the Award Agreement. Upon the participant's death, any exercisable options may
be exercised by the Participant's legal representative or representatives.
SECTION IX. PAYMENT FOR STOCK PURCHASES; WITHHOLDING TAXES
a. Payment for Common Stock purchased pursuant to the exercise of an
option granted under the Plan may be made in cash (by check) or, where expressly
approved for the participant by the Committee, in an Award Agreement or
otherwise in writing and where permitted by law:
(i) by cancellation of indebtedness of the Company to the
participant;
(ii) by surrender of Common Stock that either: (1) has been
owned by the participant for more than six (6) months and has been paid
for within the meaning of Rule 144 promulgated under the Securities
Act; (2) was obtained by the participant in the public market; or (3)
is otherwise acceptable to the Committee in its discretion;
(iii) by waiver of compensation due or accrued to participant
for services rendered;
(iv) by tender of property acceptable to the Committee;
(v) through a "same day sale" commitment from participant and
a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer") whereby participant irrevocably
elects to exercise the option and to sell a portion of the Common Stock
so purchased to pay for the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Common Stock to forward the
exercise price directly to the Company;
(vi) through a "margin" commitment from participant and a NASD
Dealer whereby the participant irrevocably elects to exercise the
option and to pledge the Common Stock so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Stock to forward the exercise price
directly to the Company;
(vii) through any other "cashless exercise" procedure approved
by the Committee; or
(viii) by any combination of the foregoing, or any other
method of payment acceptable to the Committee in its sole discretion.
b. The Committee may, in its discretion and consistent with its
obligations to its existing lenders and all other applicable restrictions, help
the participant pay for
A-5
<PAGE> 36
Common Stock purchased under the Plan by authorizing a guarantee by the Company
of a third-party loan to the participant.
c. The Company or any subsidiary shall have the authority and the right
to deduct or withhold, or require a participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes (including the
participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
SECTION X. ADJUSTMENTS
The Committee may adjust the number of shares of Common Stock under the
Plan or subject to options granted under the Plan at any time to reflect any
change in the capital structure of the Company affecting all outstanding shares
of Common Stock, whether through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in the capital
structure of the Company. With respect to outstanding awards, such adjustment
shall be made such that the participant shall be made whole and suffer no
dilution in relation to the outstanding shares of Common Stock immediately prior
to any such change.
SECTION XI. CHANGE IN CONTROL
a. In the event of a Change in Control (as defined herein), the Company
will require any successor to fulfill the terms and conditions of the Plan in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. In addition, vesting shall
automatically be deemed to occur on the date which is 30 days prior to a "Change
in Control."
b. For purposes of this Plan, "Change in Control" means each of the
following:
(1) Any transaction, or series of transactions, whereby any
person (as that term is used in section 13 and 14(d)(2) of the Exchange
Act), excluding affiliates of the Company, is or becomes the beneficial
owner (as that term is used in section 13(d) of the Exchange Act),
directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
securities;
(2) Any merger, consolidation, or liquidation of the Company
in which the Company is not the continuing or surviving corporation or
pursuant to which the Common Stock would be converted into cash,
securities, or other property, other than a merger or consolidation
with a wholly owned subsidiary, a reincorporation of the Company in a
different jurisdiction, or other transaction in which there is not
substantial change in the shareholders of the Company and all then
outstanding awards under the Plan are assumed by the successor
corporation, which assumption shall be binding on all Participants; or
A-6
<PAGE> 37
(3) The sale, transfer, or other disposition of all or
substantially all of the assets of the Company.
SECTION XII. RESTRICTIONS ON RESALES
a. An employee shall have no right to sell, assign, transfer, pledge or
otherwise dispose of or encumber any options granted under the Plan except by
will or the laws of descent and distribution, and, if any employee earns any
shares of Common Stock during the first six months of any Performance Period,
the employee shall hold (within the meaning of Rule 16b-3 of the Exchange Act)
such stock at least until the end of such six month period.
b. Since the participants in the Plan would generally be considered
"affiliates" of the Company, as that term is defined in the Rules and
Regulations under the Securities Act of 1933 (the "Securities Act"), shares of
the Company's Common Stock acquired under awards may be subject to restrictions
on resale imposed by the Securities Act. Such shares could be resold under the
terms of Rule 144 of the Rules and Regulations, pursuant to another applicable
exemption, if any, from the registration requirements of the Securities Act, or
pursuant to an effective registration statement, should the Company elect to
prepare and file one with the Securities and Exchange Commission. Rule 144
limits the number of shares which may be sold by an affiliate within a
three-month period. An "affiliate" of the Company is defined by the Rules and
Regulations as a person that "directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
"the Company. Directors, officers, substantial stockholders and others, who by
one means or another have the ability to exercise control over the Company,
maybe deemed to be "affiliates." In connection with the awards, the Company may,
in order to ensure that resales are made in compliance with the Securities Act,
imprint a legend on certificates representing shares awarded to the effect that
the shares may not be resold in the absence of compliance with the applicable
restrictions or a determination that no restrictions are applicable.
c. Notwithstanding any language to the contrary, during the vesting
period a participant shall have the right (subject to section XII(a)) to
transfer all or any portion of the participant's earned options to any of the
following: a revocable living trust primarily for the benefit of the
participant, an irrevocable trust in which the participant is the settlor, or a
partnership in which the participant is a general partner.
SECTION XIII. MISCELLANEOUS
a. No award payable under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan unless the Company shall determine otherwise.
b. The Plan and the grant of awards shall be subject to all applicable
federal and state laws, rules and regulations and to such approval by any
governmental or regulatory agency as may be required.
A-7
<PAGE> 38
c. The terms of the Plan shall be binding upon the Company and its
successors and assigns.
d. Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or intent of any
provision hereof.
e. Nothing contained in this Plan shall prevent the Company from
adopting or continuing in effect other or additional compensation arrangements.
SECTION XIV. EFFECTIVE DATE
The effective date of the Plan shall be May 24, 1999, subject to (i)
shareholder approval and (ii) the consummation of the Company's currently
proposed public offering of the Common Stock approved by the Company's Board of
Directors on April 28, 1999 (the "Proposed Public Offering"). No awards will be
granted under the Plan after the expiration of ten years from the effective
date.
A-8
<PAGE> 39
Annex B
CITADEL COMMUNICATIONS CORPORATION
1996 EQUITY INCENTIVE PLAN
AS AMENDED THROUGH JUNE 25, 1999
NOTE: OTHER THAN SECTION 3.1, THIS 1996 EQUITY INCENTIVE PLAN HAS NOT
BEEN RESTATED SINCE ITS ORIGINAL ADOPTION IN JUNE 1996. SECTION 3.1 HAS
BEEN RESTATED TO REFLECT THE PROPOSED AMENDMENT TO INCREASE THE NUMBER
OF SHARES AVAILABLE UNDER THE PLAN. REFERENCES IN THIS PLAN TO "STOCK"
MEAN CITADEL COMMUNICATIONS CORPORATION'S COMMON STOCK, PAR VALUE $.001
PER SHARE, AND SUCH OTHER SECURITIES OF CITADEL COMMUNICATIONS
CORPORATION THAT MAY BE SUBSTITUTED FOR THE COMMON STOCK PURSUANT TO
ARTICLE 12.
ARTICLE 1: PURPOSE
1.1 General. The purpose of the Citadel Communications Corporation 1996
Equity Incentive Plan (the "Plan") is to promote the interests of Citadel
Communications Corporation (the "Company"), by enabling the Company to motivate,
attract, and retain the services of persons upon whose judgment, efforts, and
contributions the success of the Company's business depends. The plan is further
intended to align the personal interests of such persons with the interests of
shareholders of the Company through equity participation in the Company's growth
and success. Capitalized terms not otherwise defined in the text are defined in
Article 15.
ARTICLE 2: EFFECTIVE DATE; TERM
2.1 Effective Date. The effective date of the Plan is June 28, 1996
(the "Effective Date"), which is the date as of which the Plan was approved by
the Board of Directors and stockholders of the Company.
2.2 Term. This Plan shall terminate on the tenth (10th) anniversary of
the Effective Date, subject to Article 13.
ARTICLE 3: SHARES SUBJECT TO THE PLAN
3.1 Number of Shares. As of June 25, 1999, the aggregate number of
shares of Stock reserved and available for Awards or which may be used to
provide a basis of measurement or valuation of an Award (such as a Performance
Unit Award) shall be 2,400,585 shares (the "Shares").
B-1
<PAGE> 40
3.2 Lapsed Awards. To the extent that an Award terminates, expires or
lapses for any reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan, in each case to the full
extent available pursuant to the applicable rules and interpretations of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
3.3 Payments in Stock. Any shares of Stock tendered to or withheld by
the Company in connection with payment for Stock purchased pursuant to the Plan
or withholding taxes thereon shall be deducted from the aggregate number of
shares reserved and available for Awards under the Plan.
3.4 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock,
or Stock purchased on the open market.
ARTICLE 4: ELIGIBILITY
4.1 General. Awards may be granted only to an individual who is an
employee (including an employee who also is an officer or director), officer,
director, consultant, independent contractor, or adviser of the Company or a
Subsidiary, as determined by the Board; provided, however, that if the Board
shall appoint a Committee to administer the Plan as provided in Article 5,
non-employee directors shall no longer be eligible to receive Awards hereunder.
ARTICLE 5: ADMINISTRATION
5.1 Board. The Plan shall be administered by the Board or a Committee
appointed by the Board to administer the Plan at any time or from time to time;
provided, however, that all matters relating to Awards of current directors
shall be administered by a committee appointed by the Board in accordance with
that certain Amended and Restated Voting Agreement dated as of June 28, 1996
among the company and certain shareholders of the Company. If the Company has a
class of equity securities registered under Section 12 of the Exchange Act, the
Plan shall be administered by the Board or a Committee of the Board in
accordance with Rule 16b-3, or successor legislation, under the Exchange Act.
Once appointed, the Committee shall continue to serve until otherwise directed
by the Board. From time to time, the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), appoint new members in substitution therefor, and fill vacancies
however caused; provided, however, that at no time may any person serve on the
Committee if the Company has a class of equity securities registered under
Section 12 of the Exchange Act and that person's membership would cause the
Committee not to satisfy the "disinterested administration" requirements of Rule
16b-3 or successor legislation.
B-2
<PAGE> 41
5.2 Authority of Board. The Board has the exclusive power, authority,
and discretion, subject to the terms hereof, to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock subject to an Award;
(d) Prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(e) Determine the terms and conditions of any Award granted
under the Plan, including, but not limited to, the exercise price,
grant price, or purchase price, any restrictions or limitations on the
Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award and accelerations or
waivers thereof, and any modification or amendment of any Award
previously granted, based in each case on such considerations as the
Board in its sole discretion determines;
(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as
it may deem necessary or advisable to administer the Plan;
(i) Interpret the Plan, any Award, and any Award Agreement in
its discretion; and
(j) Make all other decisions and determinations that may be
required under the Plan or as the Board deems necessary or advisable to
administer the Plan.
5.3 Decisions Binding. All decisions, interpretations, and
determinations by the Board with respect to the Plan, any Award, and any Award
Agreement are final, binding, and conclusive on all parties.
B-3
<PAGE> 42
ARTICLE 6: STOCK OPTIONS
6.1 General. The Board is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
under an Option shall be determined by the Board.
(b) Payment. Payment for Stock issued upon exercise of an
Option shall be made in accordance with Article 10 of the Plan.
(c) Time and Conditions of Exercise. The Board shall determine
the time or times at which an Option may be exercised in whole or in
part, provided that, if the Company has a class of equity registered
under the Exchange Act, no Option may be exercisable prior to six
months following the date of the grant of such Option. The Board also
shall determine the expiration date of each Option and the performance
or other conditions, if any, that must be satisfied before all or part
of an Option may be exercised.
(d) Evidence of Option. All Options shall be evidenced by a
written Award Agreement between the Company and the Participant. The
Award Agreement shall include such provisions as may be specified by
the Board.
6.2 Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Employees Only. Incentive Stock Options may only be
granted to employees (including officers and directors who are also
employees) of the Company or a Subsidiary.
(b) Exercise Price. The exercise price per share of Stock
shall be set by the Board, provided that the exercise price for any
Incentive Stock Option may not be less than the Fair Market Value as of
the date of the grant.
(c) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(d) Individual Dollar Limitation. The aggregate Fair Market
Value (determined as of the time an Award is made) of all shares of
Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.00.
(e) Ten Percent Owners. An Incentive Stock Option may be
granted to a Ten Percent Owner, provided that at the time such option
is granted, the exercise
B-4
<PAGE> 43
price per share of Stock shall not be less than 110% of the Fair Market
Value and such option by its terms is not exercisable after the
expiration of five (5) years from the date of its grant.
(f) Expiration of Incentive Stock Options. No Award of an
Incentive Stock Option may be made pursuant to this Plan after the
expiration of ten (10) years from the Effective Date.
(g) Right to Exercise. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
6.3 Termination of Participant. Notwithstanding the exercise periods
set forth in any Award Agreement, Options shall be subject to the following:
(a) An Option shall lapse ten years after it is granted,
unless an earlier time is set in the Award Agreement.
(b) If a Participant's employment is terminated due to (i)
Disability, (ii) Retirement, or (iii) for any other reason, such
Participant may exercise his or her Incentive Stock Options only to the
extent that such Incentive Stock Options would have been exercisable on
the Termination Date; provided, that such exercise is made prior to the
earlier of (i) the expiration of three (3) months (six (6) months in
the case of Disability) after the Termination Date or (ii) the
expiration date of the Option set forth in the Award Agreement.
(c) If a Participant's employment, contractual or other
relationship with the Company is terminated due to (i) Disability, (ii)
Retirement, or (iii) for any other reason, such Participant may
exercise his or her Non-Qualified Stock Options, only to the extent
that such Options would have been exercisable on the Termination Date;
provided, that such exercise is made within the applicable time period
for exercise as set forth in the Award Agreement.
(d) If a Participant dies before his or her Options lapse
pursuant to this Section, then the Participant's Options may be
exercised, only to the extent that such Options would have been
exercisable on the date of the Participant's death; provided that such
exercise is made prior to the earlier of (i) the first anniversary of
such Participant's death or (ii) the expiration date of the Option set
forth in the Award Agreement. Upon the Participant's death, any
exercisable Options may be exercised by the Participant's legal
representative or representatives.
B-5
<PAGE> 44
ARTICLE 7: PERFORMANCE UNITS
7.1 Grant of Performance Units. The Board is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Board. The Board shall have the complete discretion to determine
the number of Performance Units granted to each Participant. All Awards of
Performance Units shall be evidenced by an Award Agreement.
7.2 Right Under Performance Units. A grant of Performance Units gives
the Participant rights, valued as determined by the Board, and payable to, or
exercisable by, the Participant to whom the Performance Units are granted, in
whole or in part, as the Board shall establish at grant or thereafter. The Board
shall set performance goals and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the amount and value of cash, Stock, Awards, and/or
other property that will be paid to the Participant; provided, however, that if
the Company has a class of equity registered under Section 12 of the Exchange
Act, the time period during which the performance goals must be met shall, in
all cases, not exceed six months.
7.3 Other Terms. Performance Units may be payable in cash, Stock, or
other Awards or property, or any combination thereof, and have such other terms
and conditions as determined by the Board and reflected in the Award Agreement.
ARTICLE 8: RESTRICTED STOCK AWARDS
8.1 Restricted Stock Awards. The Board is authorized to make Awards of
Restricted Stock to Participants either in the form of a grant of Stock or an
offer to sell Stock to a Participant, in such amounts and subject to such terms,
conditions and restrictions as may be selected by the Board. All Awards of
Restricted Stock shall be evidenced by an Award Agreement.
8.2 Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, including without
limitation "vesting" or forfeiture restrictions, as the Board may impose. These
restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Board determines at
the time of the grant of the Award or thereafter.
8.3 Forfeiture. Except as otherwise determined by the Board at the time
of the grant of the Award or thereafter, upon termination of employment during
the applicable restriction period, Restricted Stock that is at that time subject
to restrictions shall be forfeited and reacquired by the Company; provided,
however, that the Board may provide in any Award Agreement that restrictions or
forfeiture conditions relating to Restricted Stock will be
B-6
<PAGE> 45
waived in whole or in part in specified circumstances, and the Board may in
other cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.
8.4 Payment and Certificates for Restricted Stock. If a Restricted
Stock Award provides for the purchase of Stock by a Participant, payment shall
be made pursuant to Article 10 of the Plan. Restricted Stock granted under the
Plan may be evidenced in such manner as the Board shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company shall retain physical possession of the certificate until such time
as all applicable restrictions lapse.
ARTICLE 9: GRANT OF STOCK-REFERENCE AWARDS
9.1 Grant of Stock-Reference Awards. The Board is authorized, subject
to limitations under applicable law, to grant to Participants such other Awards
that are payable in, valued in whole or in part by reference to, or otherwise
based on or related to shares of Stock, as deemed by the Board to be consistent
with the purposes of the Plan, including without limitation shares of Stock
awarded purely as a "bonus" and not subject to any restrictions or conditions,
other rights convertible or exchangeable into shares of Stock, and awards valued
by reference to book value of shares of Stock or the value of securities of or
the performance of specified divisions or Subsidiaries of the Company. The Board
shall determine the terms and conditions of such Awards.
ARTICLE 10: PAYMENT FOR STOCK PURCHASES;
WITHHOLDING TAXES
10.1 Payment. Payment for Stock purchased pursuant to the Plan may be
made in cash (by check) or, where expressly approved for the Participant by the
Board in an Award Agreement or otherwise in writing and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of Stock that either: (1) has been owned by
the Participant for more than six (6) months and has been paid for
within the meaning of Rule 144 promulgated under the Securities Act;
(2) was obtained by the Participant in the public market; or (3) is
otherwise acceptable to the Board in its discretion;
(c) by waiver of compensation due or accrued to Participant
for services rendered;
(d) by tender of property acceptable to the Board;
B-7
<PAGE> 46
(e) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock then exists:
(1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (a "NASD Dealer")
whereby Participant irrevocably elects to exercise the Option
and to sell a portion of the Stock so purchased to pay for the
exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Stock to forward the exercise
price directly to the Company;
(2) through a "margin" commitment from Participant
and a NASD Dealer whereby Participant irrevocably elects to
exercise the Option and to pledge the Stock so purchased to
the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the exercise price, and
whereby the NASD Dealer irrevocably commits upon receipt of
such Stock to forward the exercise price directly to the
Company; or
(3) through any other "cashless exercise" procedure
approved by the Board; or
(f) by any combination of the foregoing, or any other method
of payment acceptable to the Board in its sole discretion.
10.2 Loan Guarantees. The Board may, in its discretion and consistent
with its obligations to its existing lenders and all other applicable
restrictions, help the Participant pay for Shares purchased under the Plan by
authorizing a guarantee by the Company of a third-party loan to the Participant.
10.3 Tax Withholding. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan. Whenever,
under the Plan, payments in satisfaction of Awards are to be made in cash, such
payment shall be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements. With respect to withholding required upon
any taxable event relating to the issuance of Stock under the Plan, Participants
may elect, subject to the Board's approval and any rules or policies adopted by
the Board from time to time, to satisfy the withholding requirement, in whole or
in part, by having the Company or any Subsidiary withhold shares of Stock having
a Fair Market Value on the date of withholding equal to the amount to be
withheld for tax purposes. The Board may, at the time any Award is granted,
require that any and all applicable tax withholding requirements be satisfied by
the withholding of shares of Stock as set forth above.
B-8
<PAGE> 47
ARTICLE 11: PROVISIONS APPLICABLE TO AWARDS
11.1 Stand-Alone, Tandem, and Substitute Awards. Awards granted under
the Plan may, in the discretion of the Board, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. Awards granted in addition to or in tandem with other Awards may
be granted either at the same time as or at a different time from the grant of
such other Awards.
11.2 Exchange Provisions. The Board may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award, based on the terms and conditions the Board determines and communicates
to the Participant at the time the offer is made. Any shares so exchanged or
purchased shall be deducted from the aggregate number of shares reserved and
available for Awards under the Plan.
11.3 Term of Award. The term of each Award shall be for the period as
determined by the Board, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from the date of its grant.
11.4 Form of Payment for Awards. Subject to the terms of the Plan and
any applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the Board determines at or after the time of grant, including without
limitation, cash, Stock, other Awards, or other property, or any combination,
and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case determined in accordance with rules adopted by, and
at the discretion of, the Board.
11.5 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided below, no Award shall be
assignable or transferable by a Participant other than by will or the laws of
descent and distribution or, except in the case of an Incentive Stock Option,
pursuant to a qualified domestic relations order as defined in Section
414(p)(1)(A) of the code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder. In the Award Agreement for any Award other than an
Award that includes an Incentive Stock Option, the Board may allow a Participant
to assign or otherwise transfer all or a portion of the rights represented by
the Award to specified individuals or classes of individuals, or to a trust
benefitting such individuals or classes of individuals, subject to such
restrictions, limitations, or conditions as the Board deems appropriate. At the
discretion of the Board, the Company may reserve to itself or its assignees in
any Award (a) a right of first refusal to purchase any Stock which a Participant
may propose to transfer to a third party and/or (b) a right to repurchase any
and all Stock held by a Participant upon the Participant's termination of
employment or other relationship with the Company or its Parent or Subsidiary
for any reason, including Death or Disability, at a price for such Stock as
determined by the Board.
B-9
<PAGE> 48
11.6 Lock-up Agreement. In addition to any other restrictions on
transfer, a Participant shall not, without the prior written consent of the
Board and any underwriters in their discretion, offer or sell any Stock acquired
pursuant to the Plan for at least one hundred eighty (180) days after the
closing of the initial public offering of securities of the Company registered
under the Securities Act of 1933.
11.7 Stock Certificates. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the Board
deems necessary or advisable to comply with federal or state securities laws,
rules, and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Board may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
ARTICLE 12: CHANGES IN CAPITAL STRUCTURE; LIQUIDATION;
DISSOLUTION
12.1 General. In the event a stock dividend, stock-split or reverse
stock split is declared after the Effective Date upon the Stock, the shares of
Stock then subject to each Award and the number of shares which have been
authorized for issuance under the Plan but for which no Awards have yet been
granted, shall be increased or decreased proportionately without any change in
the aggregate purchase price therefor. In the event that after the Effective
Date the Stock shall be changed into or exchanged for a different number or
class of shares of Stock, without receipt of material consideration, whether
through reorganization, recapitalization, stock split-up, combination of shares,
merger, consolidation, or any other increase or decrease in the number issued
shares of common stock effected without consideration (provided, that conversion
of any convertible securities shall not be deemed to have been "effected without
receipt of consideration") there shall be substituted for each such share of
Stock then subject to each Award and each share of Stock issuable under the Plan
the number and class of shares of Stock into which each outstanding share of
Stock shall be so exchanged, all without any change in the aggregate purchase
price for the shares then subject to each Award. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof, shall be made with respect to the number or price
of Awards hereunder.
ARTICLE 13: AMENDMENT, MODIFICATION, AND TERMINATION
13.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Board may terminate, amend, or
modify the Plan. However, without approval of the shareholders of the Company
(if required in accordance with the Code, the Exchange Act, the rules and
regulations thereunder or other applicable law and rules), no such termination,
amendment, or modification may:
B-10
<PAGE> 49
(a) Increase the total number of shares of Stock that may be
issued under the Plan, except as provided in Section 12.1;
(b) Materially modify the eligibility requirements for
participation in the Plan; or
(c) Materially increase the benefits accruing to Participants
under the Plan.
Any such termination, amendment, or modification shall comply with such other
requirements as may be required by the Code, by the rules under Section 16 of
the Exchange Act, by any national securities exchange or system on which the
Stock is listed or reported, or by a regulatory body having jurisdiction.
13.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 14: GENERAL PROVISIONS
14.1 No Rights to Awards. No Participant or employee shall have any
claim to be granted any Award under the Plan, and neither the Company nor the
Board is obligated to treat Participants and employees uniformly.
14.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
14.3 No Right to Employment. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment or other relationship with
the Company at any time, nor confer upon any Participant any right to continue
in the employment or any other relationship of the Company or any Subsidiary.
14.4 Unfunded Status of Awards. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Subsidiary.
14.5 Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.
B-11
<PAGE> 50
14.6 Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
14.7 Titles and Headings. The titles and headings of the Articles and
Sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings, shall
control.
14.8 Fractional Shares. No fractional shares of stock shall be issued
and the Board shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up.
14.9 Securities Law Compliance. With respect to any person who is, on
the relevant date, obligated to file reports under Section 16 of the Exchange
Act, transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or any Award Agreement or any action by the Board
fails to so comply, it shall be void to the extent permitted by law and voidable
as deemed advisable by the Board.
14.10 Government and Other Regulations. The obligation of the Company
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act, any of the shares of Stock paid under the
Plan. If the shares of Stock paid under the Plan may in certain circumstances be
exempt from registration under the Securities Act, the Company may restrict the
transfer of such shares in such manner as it deems advisable to ensure the
availability of any such exemption.
14.11 Governing Law. The Plan and all Award Agreements shall be
construed in accordance with and governed by the internal laws, and not the laws
of conflicts, of the State of Arizona.
ARTICLE 15: DEFINITIONS
15.1 Definitions. The following words and phrases shall have the
following meanings for purposes of this Plan:
(a) "Award" means any Option, Restricted Stock Award,
Performance Unit, Stock-Reference Award or any other right or interest
relating to Stock, cash or property, granted to a Participant under the
Plan.
(b) "Award Agreement" means any written agreement, contract,
or other instrument or document evidencing an Award.
B-12
<PAGE> 51
(c) "Board" means the Board of Directors of the Company or, if
the context so requires, a Committee thereof appointed pursuant to
Article 5.
(d) "Cause" means (i) conviction of any crime (other than a
misdemeanor offense not involving fraud or moral turpitude), (ii)
noncompliance with reasonable directives of the Board or its designees,
(iii) violation of Company rules, policies or procedures or of the Plan
or any applicable Award Agreement.
(e) "Code" means the Internal Revenue Code of 1986, as
amended, from time to time.
(f) "Committee" means the committee of the Board described in
Article 5.
(g) "Disability" means the following: A Participant shall be
disabled if he or she is unable to perform the duties of his or her
customary position of employment by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which can be expected to last for a continuous
period of not less than 12 months. The Board may require such medical
or other evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
(h) "Fair Market Value" with respect to Stock shall be the
mean between the bid and asked quotations for the Stock on that date as
reported by the Nasdaq National Market system or, if there are no bid
or asked quotations on such date, the mean between the bid and asked
quotations on the next preceding date for which quotations are
available. If the Stock is subsequently listed and traded upon a
recognized securities exchange or shall be quoted on a recognized
national market system, the Fair Market Value shall be the closing
price on such date or, if no closing price is so reported for that
date, the closing price on the next preceding date for which a closing
price was reported. If at any time the Stock is not listed upon a
recognized securities exchange, or with respect to any other property,
Fair Market Value shall be the fair market value of such Stock or other
property determined by the Board in good faith using such methods or
procedures as may be established from time to time by the Board in its
discretion.
(i) "Incentive Stock Option" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(j) "Non-Qualified Stock Option" means an Option that is not
intended to be an Incentive Stock Option.
(k) "Option" means a right granted to a Participant under
Article 6 of the Plan to purchase Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
B-13
<PAGE> 52
(l) "Participant" means a person who, as an officer, employee,
consultant, independent contractor, or adviser of the Company or any
Subsidiary, has been granted an Award under the Plan.
(m) "Performance Unit" means a right granted to a Participant
under Article 7 to receive cash, Stock, or other Awards.
(n) "Plan" means the Citadel Communications Corporation 1996
Equity Incentive Plan, as amended from time to time.
(o) "Restricted Stock Award" means Stock granted to a
Participant or offered for sale to a Participant under Article 8.
(p) "Retirement" means a Participant's termination of
employment with the Company after attaining any normal or early
retirement age specified in any pension, profit sharing, or other
retirement program sponsored by the Company, if any.
(q) "Securities Act" means the Securities Act of 1933, as
amended.
(r) "Stock" means Class A Stock ($.001 par value) of the
Company and such other securities of the Company that may be
substituted for Stock pursuant to Article 12.
(s) "Stock-Reference Award" means a right, granted to a
Participant under Article 9.
(t) "Subsidiary" means any corporation of which a majority of
the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
(u) "Ten Percent Owner" means any individual who, at the date
of grant of an Incentive Stock Option, owns stock possessing more than
ten percent of the total combined voting power of all classes of Stock
of the Company or a Subsidiary. For purposes of determining such
percentage, the following rules shall apply:
(1) the individual with respect to whom such
percentage is being determined shall be considered as owning
the Stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood),
spouse, ancestors, and lineal descendants; and
(2) Stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its
shareholders, partners, or beneficiaries.
B-14
<PAGE> 53
(v) "Termination Date" means the date on which the employment
(or other service or relationship in the case of a Participant who is
not an employee of the Company) of a Participant terminates for any
reason or no reason.
B-15
