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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER: 000-24515
CITADEL COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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NEVADA 86-0748219
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CITY CENTER WEST, SUITE 400 89128
7201 WEST LAKE MEAD BOULEVARD, LAS VEGAS, NEVADA (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code: (702) 804-5200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: common stock, $.001
par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant, based on the closing sale price of the common
stock on March 15, 2000 as reported by The Nasdaq Stock Market, was
approximately $853,534,944. Shares of common stock held by each executive
officer and director of the registrant and by each person who owns 5% or more of
the outstanding common stock have been excluded in that such persons may be
deemed to be affiliates of the registrant. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
As of March 15, 2000, there were 36,811,670 shares of common stock, $.001
par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
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CITADEL COMMUNICATIONS CORPORATION
FORM 10-K
DECEMBER 31, 1999
INDEX
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PAGE
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PART I
Item 1 - Business.................................................. 4
Item 2 - Properties................................................ 28
Item 3 - Legal Proceedings......................................... 29
Item 4 - Submission of Matters to a Vote of Security Holders....... 29
PART II
Item 5 - Market For Registrant's Common Equity and Related
Stockholder Matters....................................... 29
Item 6 - Selected Financial Data................................... 30
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 31
Item 7A - Quantitative and Qualitative Disclosures About Market
Risk...................................................... 41
Item 8 - Financial Statements and Supplementary Data............... 41
Item 9 - Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 41
PART III
Item 10 - Directors and Executive Officers of the Registrant........ 42
Item 11 - Executive Compensation.................................... 44
Item 12 - Security Ownership of Certain Beneficial Owners and
Management................................................ 49
Item 13 - Certain Relationships and Related Transactions............ 52
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on
Form 8-K.................................................. 53
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FORWARD-LOOKING STATEMENTS
Certain matters in this Form 10-K, including, without limitation, certain
matters discussed under Item 1, Business, Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, and Item 7A,
Quantitative and Qualitative Disclosures about Market Risk, constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. We based these forward-looking statements largely on our current
expectations and projections about future events and financial trends affecting
our business. The words "believes," "may," "will," "anticipates," "intends,"
"expects" and similar words are intended to identify forward-looking statements.
In addition, any statements that refer to expectations or other
characterizations of future events or circumstances are forward-looking
statements. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and that matters referred to in such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Our forward-looking
statements are subject to risks, uncertainties and assumptions including, among
other things:
- the realization of our business strategy,
- general economic and business conditions, both nationally and in our
radio markets,
- our expectations and estimates concerning future financial performance,
financing plans and the impact of competition,
- anticipated trends in our industry,
- the impact of current or pending legislation and regulation and antitrust
considerations, and
- other risks and uncertainties discussed in Item 1, Business, under the
headings "Competition," "Federal Regulation of Radio Broadcasting" and
"Risk Factors," Item 3, Legal Proceedings, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations,
and Item 7A, Quantitative and Qualitative Disclosures about Market Risk.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this report might not transpire. We undertake no
obligation to publicly update or revise any forward-looking statements because
of new information, future events or otherwise.
INTRODUCTORY STATEMENT
Our subsidiary, Citadel Broadcasting Company, owns and operates our radio
stations. Unless the context otherwise requires, references in this report to
Citadel Communications and the terms "we," "our" and "us" include Citadel
Broadcasting.
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PART I
ITEM 1. BUSINESS
We are a radio broadcaster in the United States that focuses primarily on
acquiring, developing and operating radio stations in mid-sized markets. If we
complete all of our pending transactions, we will own or operate 138 FM and 61
AM radio stations in 42 markets, including clusters of four or more stations in
31 markets, and sell advertising in the United States for one Canadian FM radio
station.
Our primary strategy is to secure and maintain a leadership position in the
markets we serve and to expand into additional markets where we believe a
leadership position can be obtained. Upon entering a market, we seek to acquire
stations which, when integrated with our existing operations, allow us to reach
a wider range of demographic groups that appeal to advertisers, increase revenue
and achieve substantial cost savings.
Our portfolio of radio stations is diversified in terms of format, target
demographics and geographic location. Because of the size of our portfolio and
our individual radio station groups, we believe we are not unduly reliant upon
the performance of any single station. We also believe that the diversity of our
portfolio of radio stations helps insulate us from downturns in specific markets
and changes in format preferences.
A radio station's actual city of license may be different from the
metropolitan market indicated as being served by the station.
CORPORATE HISTORY
Citadel Broadcasting was formed August 21, 1991 as a Nevada corporation. In
1992 Citadel Broadcasting acquired all of the radio stations then owned or
operated by Citadel Associates Limited Partnership and Citadel Associates
Montana Limited Partnership and certain other radio stations. Lawrence R.
Wilson, Chief Executive Officer of Citadel Communications and Citadel
Broadcasting, was a co-founder and one of the two general partners of Citadel
Associates Limited Partnership and Citadel Associates Montana Limited
Partnership. In 1993, Citadel Communications was incorporated and Citadel
Broadcasting was reorganized as a wholly owned subsidiary of Citadel
Communications. Citadel Communications currently owns all of the issued and
outstanding common stock of Citadel Broadcasting.
We acquired ownership of additional radio stations in each of 1993, 1994,
1996, 1997, 1998 and 1999. In the various transactions we completed in 1999, we
acquired 57 radio stations in 14 markets and we sold 26 radio stations in seven
markets.
Beginning in late 1997, we acquired ownership of, and began operating, an
internet service provider, eFortress, which offers its subscribers a variety of
services, including electronic mail and access to the internet. In December
1999, we decided to discontinue our internet operations and adopted a plan for
the sale of eFortress. Although there can be no assurance, we expect to complete
this sale in the second quarter of 2000. For additional information about these
discontinued operations, see Note 3 of the Notes to our Consolidated Financial
Statements included in this report in Item 8, Financial Statements and
Supplementary Data.
OPERATING STRATEGY
Our operating strategy focuses on maximizing our radio stations' appeal to
advertisers, and consequently our revenue and cash flow. In order to achieve
these goals, we have implemented the strategies described below. We intend to
continue to expand our existing strategies and to develop new methods to enhance
revenue and reduce costs.
OWNERSHIP OF STRONG RADIO STATION GROUPS. We seek to secure and maintain a
leadership position in the markets we serve by owning multiple stations in those
markets. By coordinating programming, promotional and selling strategies among
each group of local stations, we attempt to capture a wide range of demographic
listener groups which appeal to advertisers. We believe that the diversification
of our programming formats and our collective inventory of available advertising
time strengthen relationships with advertisers and increase our ability to
maximize the value of our inventory. We believe that having multiple stations in
a market also enhances our
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ability to market the advantages of radio advertising versus other advertising
media, such as newspapers and television, thus potentially increasing radio's
share of total advertising dollars spent in a given market.
We believe that our ability to leverage the existing programming and sales
resources of our radio station groups enables us to enhance the growth potential
of both new and underperforming stations while reducing the risks associated
with undertaking means of improving station performance, including launching new
formats. We also believe that operating leading station groups allows us to
attract and retain talented local management teams, on-air personalities and
sales personnel, which we believe are essential to operating success.
Furthermore, we seek to achieve substantial cost savings through the
consolidation in each of our markets of facilities, management, sales and
administrative personnel and operating resources, such as on-air talent,
programming and music research.
AGGRESSIVE SALES AND MARKETING. We seek to maximize our share of local
advertising revenue in each of our markets through aggressive sales and
marketing initiatives. We provide extensive training for our sales personnel
through our proprietary interactive training program designed to improve the
selling skills of all sales personnel, both new hires and veteran sales
personnel, and we retain various independent consultants who hold frequent
seminars for, and are available for consultation with, our sales personnel. We
also emphasize regular, informal exchanges of ideas among our management and
sales personnel across our various markets. We seek to maximize our revenue by
utilizing inventory management techniques that allow us to provide our sales
personnel with frequent price adjustments based on regional and local market
conditions. To further strengthen our relationship with advertisers, we also
offer and market our ability to create customer traffic through on-site events
staged at, and broadcast from, the advertisers' business locations. We believe
that, prior to their acquisition by us, many of our acquired stations had
underperformed in sales, due primarily to undersized and under trained sales
staffs responsible for selling inventory on multiple stations. Accordingly, we
have significantly expanded the sales forces of many of our acquired stations
and implemented our training program.
TARGETED PROGRAMMING. To maintain or improve our position in each market,
we combine extensive market research with an assessment of our competitors'
vulnerabilities in order to identify significant and sustainable target
audiences. We then tailor the programming, marketing and promotion of each radio
station to maximize its appeal to its target audience. We attempt to build
strong markets by:
- creating distinct, highly visible profiles for our on-air personalities,
particularly those broadcasting during morning drive time traditionally
between 6:00 a.m. and 10:00 a.m.,
- formulating recognizable brand names for select stations such as the
"Bull" and "Cat Country," and
- actively participating in community events and charities.
DECENTRALIZED OPERATIONS. We believe that radio is primarily a local
business and that much of our success is the result of the efforts of regional
and local management and staff. Accordingly, we decentralize much of our
operations to these levels. Each of our regional and local station groups is
managed by a team of experienced broadcasters who understand the musical tastes,
demographics and competitive opportunities of the particular market. Regional
and local managers are responsible for preparing annual operating budgets, and a
portion of their compensation is linked to meeting or surpassing their operating
targets. Corporate management approves each station group's annual operating
budget and imposes strict financial reporting requirements to track station
performance. Corporate management is responsible for long range planning,
establishing corporate policies and serving as a resource to local management.
We have implemented local sales reporting systems at each station to provide
local and corporate management with daily sales information.
ACQUISITION STRATEGY
Our acquisition strategy is focused on acquiring additional radio stations
in both our existing markets and in new markets in which we believe we can
effectively use our operating strategies. We anticipate that we will continue to
focus on mid-sized markets rather than attempt to expand into larger markets.
Competition among potential purchasers for suitable radio station acquisitions
is intense throughout the United States. We expect to continue to identify and
pursue acquisition opportunities to complement and expand our station portfolio.
Although we have identified further acquisition opportunities, we cannot assure
you that we will be able to reach
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agreement with the identified candidates, that, in the future, we will be able
to identify other suitable and available acquisition opportunities or that we
will be able to complete any such acquisition opportunities. Additional risks
and uncertainties related to our acquisition strategy are discussed below under
the headings "Federal Regulation of Radio Broadcasting" and "Risk Factors."
In evaluating acquisition opportunities in new markets, we assess our
potential to build leading radio station groups in those markets over time. We
believe that the creation of strong station groups in local markets is essential
to our operating success and generally will not consider entering a new market
unless we believe we can acquire multiple stations in the market. We also
analyze a number of additional factors which we believe are important to our
success, including the number and quality of commercial radio signals
broadcasting in the market, the nature of the competition in the market, our
ability to improve the operating performance of the radio station or stations
under consideration and the general economic conditions of the market.
We believe that our acquisition strategy, if properly implemented, could
have a number of benefits, including:
- diversified revenue and broadcast cash flow across a greater number of
stations and markets,
- improved broadcast cash flow margins through the consolidation of
facilities and the elimination of redundant expenses,
- broadened range of advertising packages to offer advertisers,
- improved leverage in various key vendor negotiations,
- enhanced appeal to top industry management talent, and
- increased overall scale which should facilitate our capital raising
activities.
PENDING TRANSACTIONS
There are several transactions currently pending which, if completed, would
result in our purchasing 48 FM and 28 AM radio stations, acquiring the right to
operate one additional FM radio station, acquiring the right to sell advertising
in the United States for one Canadian FM radio station and selling two AM radio
stations. The aggregate purchase price for our pending acquisitions is
approximately $510.2 million in cash, 200,000 shares of our common stock valued
at approximately $10.1 million, based on the closing price of our common stock
on December 2, 1999, and one AM radio station in each of Albuquerque, New Mexico
and Binghamton, New York. Under certain circumstances, our common stock may not
be delivered as a portion of the aggregate purchase price. In that event,
approximately $10.1 million in cash will be substituted for our common stock.
The completion of each of our pending transactions is subject to various
conditions, including Federal Communications Commission consent to the
assignment of the station licenses to us or consent to transfer of control of
the station licenses to us, as the case may be, and the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. Although we believe these
closing conditions are generally customary for transactions of this type, there
can be no assurance that the conditions will be satisfied.
The following is a brief discussion of each of our pending transactions:
- On October 5, 1999, we entered into an asset purchase agreement with
Kenneth A. Rushton, as Trustee of the Chapter 7 bankruptcy estate of
Venture Broadcasting, Inc., to acquire one AM radio station serving the
Salt Lake City, Utah market, including the related tower site, for a
purchase price of approximately $0.6 million in cash, which has been paid
and is being held in escrow pending closing of the transaction. An
application seeking FCC approval of assignment of the station license was
filed on October 25, 1999, and an initial grant of the application was
received on February 29, 2000. The closing of this transaction had been
delayed as a petition to deny the transfer of the license had been filed
with the FCC. We now anticipate that this acquisition will close in April
2000. Pending closing of this transaction, we operate the station to be
acquired under a local marketing agreement.
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- On October 8, 1999, we entered into an exchange agreement with Titus
Broadcasting Systems, Inc. to acquire one AM radio station in Binghamton,
New York in exchange for one AM radio station in Binghamton owned by us
and approximately $0.6 million in cash. We have delivered an irrevocable
letter of credit in favor of Titus Broadcasting Systems, Inc. in the
amount of $30,000 to secure our obligations under the exchange agreement.
An application seeking FCC approval of assignment of the station licenses
was filed on October 22, 1999. The closing of this transaction has been
delayed by the FCC's analysis of market revenue share in Binghamton.
- On October 27, 1999, we entered into an asset purchase agreement with
Broadcasting Partners Holdings, L.P. to acquire 23 FM and 13 AM radio
stations in Buffalo/Niagara Falls, Syracuse and Ithaca, New York;
Atlantic City/Cape May, New Jersey; Tyler/Longview, Texas; Monroe,
Louisiana; New London, Connecticut; New Bedford/Fall River,
Massachusetts; and Augusta/Waterville, Presque Isle and Dennysville/
Calais, Maine, as well as the right to operate an additional FM radio
station in Atlantic City/Cape May under a program service and time
brokerage agreement and the right to sell advertising in the United
States for one FM radio station in Niagara Falls, Ontario under a joint
sales agreement. The aggregate purchase price is approximately $190.0
million in cash. We have delivered an irrevocable letter of credit in
favor of Broadcasting Partners Holdings in the amount of $12.0 million to
secure our obligations under the asset purchase agreement. The stations
indicated include one AM radio station in Buffalo/Niagara Falls that an
affiliate of the seller has entered into an agreement to purchase. If
this transaction has not been completed prior to our acquisition, we will
be assigned the rights under the purchase agreement. An application
seeking FCC approval of assignment of the station licenses was filed on
November 9, 1999, and an initial grant of the application was received on
February 28, 2000. The closing of this transaction had been delayed by
the FCC's analysis of market revenue share in various markets. We now
anticipate that this acquisition will close in April 2000 (other than the
acquisition of the one AM station in Buffalo/ Niagara Falls referred to
above for which we will be assigned the rights under the purchase
agreement).
- On November 16, 1999, we entered into an asset purchase agreement with
KSMB/KACY Radio Broadcasting Company, KVOL Radio Broadcasting Company and
Powell Broadcasting Company, Inc. to acquire two FM and two AM radio
stations in Lafayette, Louisiana for the purchase price of approximately
$8.5 million in cash. We have delivered an irrevocable letter of credit
in favor of KSMB/ KACY Radio Broadcasting and KVOL Radio Broadcasting in
the amount of $425,000 to secure our obligations under the asset purchase
agreement. An application seeking FCC approval of assignment of the
station licenses was filed on December 10, 1999, and an initial grant of
the application was received on March 15, 2000. The closing of this
transaction had been delayed by the FCC's analysis of market revenue
share in Lafayette. We now anticipate that this acquisition will close in
March or April 2000.
- On November 16, 1999, we entered into an asset purchase agreement with
LifeTalk Broadcasting Association to acquire one AM radio station in
Albuquerque, New Mexico in exchange for one AM radio station in
Albuquerque owned by us and approximately $5.4 million in cash, of which
$1.0 million has been paid in advance. An application seeking FCC
approval of assignment of the station licenses was filed on December 6,
1999, and an initial grant of the application was received on March 23,
2000. The closing of this transaction had been delayed by the FCC's
analysis of market revenue share in Albuquerque. We now anticipate that
this transaction will close in April or May 2000.
- On December 3, 1999, we entered into an asset purchase agreement with
Montachusett Broadcasting, Inc. to acquire one FM radio station serving
the Worcester, Massachusetts market for the purchase price of
approximately $3.5 million in cash, which has been paid and is being held
in escrow pending closing of the transaction. We have delivered an
irrevocable letter of credit in favor of Montachusett Broadcasting in the
amount of $200,000 to secure our obligations under the asset purchase
agreement. An application seeking FCC approval of assignment of the
station licenses was filed on December 9, 1999, an initial grant of the
application was received on February 4, 2000 and a final order was
received on March 20, 2000. We expect to close this transaction at such
time that an order is issued in an FCC proceeding to change the station's
city of license. Pending closing of this transaction, we operate the
station to be acquired under a local marketing agreement.
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- On December 3, 1999, we entered into an asset purchase agreement with
Liggett Broadcast, Inc. and certain of its affiliates to acquire four FM
and two AM radio stations serving the Lansing/East Lansing, Michigan
market, two FM stations serving the Saginaw/Bay City/Midland, Michigan
market and one FM radio station serving the Flint, Michigan market. The
aggregate purchase price is approximately $120.5 million, consisting of
200,000 shares of our common stock valued at $50.375 per share, based on
the closing share price of the common stock on December 2, 1999, and
approximately $110.4 million in cash. However, if the value of the common
stock at the time of closing, based on the 20-day average closing sale
price per share prior to closing, is less than $45.3375 (90% of the value
on December 2, 1999), then no common stock will be issued and the
purchase price will be paid entirely in cash. We have delivered an
irrevocable letter of credit in favor of Liggett Broadcast in the amount
of $6.0 million to secure our obligations under the asset purchase
agreement. An application seeking FCC approval of assignment of the
station licenses was filed on December 20, 1999, and an initial grant of
the full application was received on February 24, 2000.
In February 2000, we received a request for additional information and
documents from the United States Department of Justice relating to
stations in Saginaw/Bay City/Midland. Under the applicable rules, this
request extends the waiting period under the Hart-Scott-Rodino Act for a
period of 20 days after receipt by the Department of Justice of the
information and documents requested from all parties from whom such
information and documents have been requested. To resolve the Department
of Justice's concerns, we may agree to sell one or more of our existing
stations, or stations to be acquired, serving Saginaw/Bay City/Midland in
connection with our acquisition of stations from Liggett Broadcast and
its affiliates.
- On December 21, 1999, we entered into an asset purchase agreement with
WBA, Inc. to acquire one FM radio station serving the Worcester,
Massachusetts market for the purchase price of approximately $14.3
million in cash. We have delivered an irrevocable letter of credit in
favor of WBA in the amount of $712,500 to secure our obligations under
the asset purchase agreement. An application seeking FCC approval of
assignment of the station licenses was filed on January 6, 2000.
- On January 23, 2000, we entered into a stock purchase agreement with
Bloomington Broadcasting Holdings, Inc. and its stockholders to purchase
all of the issued and outstanding capital stock of Bloomington
Broadcasting Holdings. Through its subsidiaries, Bloomington Broadcasting
Holdings is expected to own and operate at closing 13 FM and seven AM
radio stations serving the Grand Rapids, Michigan; Columbia, South
Carolina; Chattanooga, Tennessee; Johnson City/Kingsport/Bristol,
Tennessee; and Bloomington, Illinois markets for the aggregate purchase
price of approximately $176.0 million in cash. This amount includes
repayment of indebtedness of Bloomington Broadcasting Holdings that may
be outstanding at the time of closing and a deferred obligation relating
to a recent radio station purchase by Bloomington Broadcasting Holdings.
Certain purchase price adjustments may also be made at closing. We have
delivered an irrevocable letter of credit in favor of Bloomington
Broadcasting Holdings in the amount of $15.0 million to secure our
obligations under the stock purchase agreement. The stations indicated
include one AM radio station serving the Johnson City/Kingsport/Bristol
market that Bloomington Broadcasting Holdings has entered into an
agreement to purchase. If this transaction has not been completed prior
to completion of our acquisition of Bloomington Broadcasting Holdings, we
will be assigned the rights under the purchase agreement. An application
seeking FCC approval of transfer of control of the station licenses was
filed on February 4, 2000. The closing of this transaction has been
delayed by the FCC's analysis of market revenue share in Grand Rapids,
Columbia, Johnson City/ Kingsport/Bristol and Bloomington.
- On January 31, 2000, we entered into an asset purchase agreement with CAT
Communications Corporation to acquire one FM radio station and one AM
radio station serving the Worcester, Massachusetts market for the
purchase price of approximately $0.9 million. We have delivered an
irrevocable letter of credit in favor of CAT Communications in the amount
of $75,000 to secure our obligations under the asset purchase agreement.
An application seeking FCC approval of assignment of the station licenses
was filed on February 10, 2000.
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We expect to close one or more of our pending transactions following
receipt of an initial grant from the FCC, but prior to receipt of a final order
from the FCC. Until an order becomes final, third parties may file a request for
reconsideration or judicial review or the FCC may reconsider the grant on its
own motion. Such action could expose us to a modification or set aside of the
initial approval. There can be no assurance that a modification or set aside
will not occur should we elect to close a transaction prior to receipt of a
final order from the FCC. See the discussion below under the heading "Federal
Regulation of Radio Broadcasting" and the subheading "Ownership Matters."
STATION PORTFOLIO
We have a national presence, and our portfolio of stations is diversified
in terms of format and target demographics, as well as geographic location. This
diversity reduces our reliance upon the performance of any single station and
helps insulate us from downturns in specific markets and changes in format
preferences.
If we complete all of our pending transactions, we will own 136 FM and 61
AM radio stations in 42 mid-sized markets, operate two additional FM radio
stations, one in Reno, Nevada and one in Atlantic City/Cape May, New Jersey,
pursuant to a local marketing agreement and a program service and time brokerage
agreement, respectively, and sell advertising in the United States for one
Canadian FM radio station. The following table shows the radio stations we will
own or operate assuming completion of the pending transactions described above.
We obtained all metropolitan statistical area rank information for all markets
from Investing in Radio 1999 Market Report (3rd ed.) published by BIA
Publications, Inc.
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NUMBER OF
STATIONS
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RANK FM AM
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Providence, RI.............................................. 33 4 2
Salt Lake City, UT(1)....................................... 35 4 3
Buffalo/Niagara Falls, NY(1)(2)............................. 43 3 2
Oklahoma City, OK........................................... 54 4 1
Wilkes-Barre/Scranton, PA................................... 64 7 4
Grand Rapids, MI(1)......................................... 66 3 1
Allentown/Bethlehem, PA..................................... 67 2 --
Albuquerque, NM(1).......................................... 71 5 3
Syracuse, NY(1)............................................. 73 3 1
Harrisburg/Lebanon/Carlisle, PA(3).......................... 76 3 1
Baton Rouge, LA............................................. 82 4 2
Little Rock, AR(4).......................................... 83 8 3
Spokane, WA................................................. 88 4 3
Columbia, SC(1)............................................. 89 3 1
Colorado Springs, CO........................................ 94 3 2
Johnson City/Kingsport/Bristol, TN(1)....................... 95 2 3
Lafayette, LA(1)............................................ 98 5 3
Chattanooga, TN(1).......................................... 102 3 1
York, PA(3)................................................. 103 -- 1
Charleston, SC.............................................. 104 5 3
Worcester, MA(1)............................................ 112 4 1
Lansing/East Lansing, MI(1)................................. 114 4 2
Flint, MI(1)................................................ 116 1 --
Portsmouth/Dover/Rochester, NH.............................. 117 4 --
Modesto, CA................................................. 122 4 1
Saginaw/Bay City/Midland, MI(1)(5).......................... 124 7 1
Boise, ID................................................... 126 4 1
Reno, NV(6)................................................. 127 4 1
Atlantic City/Cape May, NJ(1)(7)............................ 136 3 1
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NUMBER OF
STATIONS
MSA ---------
RANK FM AM
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Tyler/Longview, TX(1)....................................... 140 1 4
Portland, ME................................................ 160 6 --
New London, CT(1)........................................... 164 2 1
New Bedford/Fall River, MA(1)............................... 165 1 1
Binghamton, NY(1)........................................... 166 3 2
Bloomington, IL(1).......................................... 230 2 1
Monroe, LA(1)............................................... 233 4 --
Augusta/Waterville, ME(1)................................... 249 2 2
Ithaca, NY(1)............................................... 258 1 1
Presque Isle, ME(1)......................................... NA 3 --
Dennysville/Calais, ME(1)................................... NA 1 --
Muncie, IN.................................................. NA 1 1
Kokomo, IN.................................................. NA 1 --
--- --- --
TOTAL.................................................. 138 61
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NA -- information not available
(1) The completion of our pending transactions in these markets is subject to
various conditions. Although we believe these closing conditions are
generally customary for transactions of this type, there can be no assurance
that the conditions will be satisfied.
(2) The stations indicated do not include one FM radio station in Niagara Falls,
Ontario for which we expect to sell advertising in the United States under a
joint sales agreement.
(3) Harrisburg/Lebanon/Carlisle and York are adjacent markets with numerous
overlapping radio signals.
(4) Three of these stations primarily serve the surrounding communities outside
of Little Rock.
(5) We may agree to sell one or more of the indicated stations serving
Saginaw/Bay City/Midland in connection with our pending acquisition of
stations serving Saginaw/Bay City/Midland.
(6) We operate one of the listed FM radio stations in Reno under a local
marketing agreement. We do not own this station.
(7) We expect to operate one of the listed FM stations in Atlantic City/Cape May
under a program service and time brokerage agreement. We will not own this
station, but expect that we will have an option to purchase this station
beginning in 2001.
ADVERTISING SALES
Virtually all of our revenue is generated from the sale of local, regional
and national advertising for broadcast on our radio stations. In 1999,
approximately 81% of our net broadcasting revenue was generated from the sale of
local and regional advertising. Additional broadcasting revenue is generated
from the sale of national advertising, network compensation payments and other
miscellaneous transactions. See Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, under the heading "General." The
major categories of our advertisers include telephone companies, restaurants,
fast food, automotive and grocery. Each station's local sales staff solicits
advertising either directly from the local advertiser or indirectly through an
advertising agency. We pay a higher commission rate to the sales staff for
generating direct sales because we believe that through direct advertiser
relationships we can better understand the advertiser's business needs and more
effectively design an advertising campaign to help the advertiser sell its
product or service. We employ personnel in each of our markets to produce
commercials for the advertisers. National sales are made by a firm specializing
in radio advertising sales on the national level in exchange for a commission
from us that is based on our gross revenue from the advertising obtained.
Regional sales, which we define as sales in regions surrounding our markets to
companies that advertise in our markets, are generally made by our local sales
staff.
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<PAGE> 11
Depending on the programming format of a particular station, we estimate
the optimum number of advertisements available for sale. The number of
advertisements that can be broadcast without jeopardizing listening levels, and
the resulting ratings, is limited in part by the format of a particular station.
Our stations strive to maximize revenue by managing their on-air inventory of
advertising time and adjusting prices based on local market conditions and on
our ability, through our marketing efforts, to provide advertisers with an
effective means of reaching a targeted demographic group. Each of our stations
has a general target level of on-air inventory that it makes available for
advertising. This target level of inventory for sale may be different at
different times of the day but tends to remain stable over time. Much of our
selling activity is based on demand for our radio stations' on-air inventory
and, in general, we respond to this demand by varying prices rather than by
varying our target inventory level for a particular station. Therefore, most
changes in revenue are explained by demand-driven pricing changes rather than by
changes in the available inventory.
We believe that radio is one of the most efficient and cost-effective means
for advertisers to reach specific demographic groups. Advertising rates charged
by radio stations are based primarily on:
- a station's share of audiences in the demographic groups targeted by
advertisers, as measured by ratings surveys estimating the number of
listeners tuned to the station at various times,
- the number of stations in the market competing for the same demographic
groups,
- the supply of, and demand for, radio advertising time, and
- certain qualitative factors.
Rates are generally highest during morning and afternoon commuting hours.
A station's listenership is reflected in ratings surveys that estimate the
number of listeners tuned to the station and the time they spend listening. Each
station's ratings are used by our advertisers and advertising representatives to
consider advertising with the station and are used by us to chart audience
growth, set advertising rates and adjust programming. The radio broadcast
industry's principal ratings service is The Arbitron Company, which publishes
periodic ratings surveys for significant domestic radio markets. These surveys
are our primary source of ratings data.
COMPETITION
The radio broadcasting industry is highly competitive. The success of each
of our stations depends largely upon its audience ratings and its share of the
overall advertising revenue within its market. Our audience ratings and
advertising revenue are subject to change, and any adverse change in a
particular market affecting advertising expenditures or an adverse change in the
relative market positions of the stations located in a particular market could
have a material adverse effect on the revenue of our radio stations located in
that market. There can be no assurance that any one of our radio stations will
be able to maintain or increase its current audience ratings or advertising
revenue market share.
Our stations compete for listeners and advertising revenue directly with
other radio stations within their respective markets. Radio stations compete for
listeners primarily on the basis of program content that appeals to a particular
demographic group. By building a strong listener base consisting of a specific
demographic group in each of our markets, we are able to attract advertisers
seeking to reach those listeners. Companies that operate radio stations must be
alert to the possibility of another station changing its format to compete
directly for listeners and advertisers. Another station's decision to convert to
a format similar to that of one of our radio stations in the same geographic
area may result in lower ratings and advertising revenue, increased promotion
and other expenses and, consequently, lower broadcast cash flow for us.
Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. We attempt to improve our competitive position in each market by
extensively researching our stations' programming, by implementing advertising
campaigns aimed at the demographic groups for which our stations program and by
11
<PAGE> 12
managing our sales efforts to attract a larger share of advertising dollars.
However, we compete with some organizations that have greater financial
resources than we have.
FCC policies and rules permit ownership and operation of multiple local
radio stations. We believe that radio stations that elect to take advantage of
joint arrangements such as local marketing agreements or joint sales agreements
may in certain circumstances have lower operating costs and may be able to offer
advertisers more attractive rates and services. Although we currently operate
multiple stations in most of our markets and intend to pursue the creation of
additional multiple station groups, our competitors in certain markets include
operators of multiple stations or operators who already have entered into local
marketing agreements or joint sales agreements. We also compete with other radio
station groups to purchase additional stations. Some of these groups are owned
or operated by companies that have substantially greater financial and other
resources than we have.
Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcast station requires a
license from the FCC, and the number of radio stations that can operate in a
given market is limited by the availability of FM and AM radio frequencies
allotted by the FCC to communities in that market, as well as by the FCC's
multiple ownership rules regulating the number of stations that may be owned and
controlled by a single entity. The FCC's multiple ownership rules have changed
significantly as a result of the Telecommunications Act. For more information
about FCC regulation and the provisions of the Telecommunications Act, see the
discussion below under the heading "Federal Regulation of Radio Broadcasting."
Our stations also compete for advertising revenue with other media, including
newspapers, broadcast television, cable television, magazines, direct mail,
coupons and outdoor advertising. In addition, the radio broadcasting industry is
subject to competition from new media technologies that are being developed or
introduced, such as the delivery of audio programming by cable television
systems, by satellite and by digital audio broadcasting. Digital audio
broadcasting may deliver by satellite to nationwide and regional audiences,
multi-channel, multi-format, digital radio services with sound quality
equivalent to compact discs. The delivery of information through the Internet
has also created a new form of competition. The radio broadcasting industry
historically has grown despite the introduction of new technologies for the
delivery of entertainment and information. A growing population and greater
availability of radios, particularly car and portable radios, have contributed
to this growth. There can be no assurance, however, that the development or
introduction in the future of any new media technology will not have an adverse
effect on the radio broadcasting industry.
The FCC has recently authorized spectrum for the use of a new technology,
satellite digital audio radio services, to deliver audio programming. Digital
audio radio services may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats to local and
national audiences. It is not known at this time whether this digital technology
also may be used in the future by existing radio broadcast stations either on
existing or alternate broadcasting frequencies. The FCC has acted to create a
new low power radio service which could open up opportunities for low cost
neighborhood service on frequencies which would not interfere with existing
stations.
We cannot predict what other matters might be considered in the future by
the FCC, nor can we assess in advance what impact, if any, the implementation of
any of these proposals or changes might have on our business. See the discussion
below under the heading "Federal Regulation of Radio Broadcasting."
FEDERAL REGULATION OF RADIO BROADCASTING
INTRODUCTION. The ownership, operation and sale of broadcast stations,
including those licensed to us, are subject to the jurisdiction of the FCC. The
FCC acts under authority derived from the Communications Act of 1934, as
amended. The Communications Act was amended in 1996 by the Telecommunications
Act of 1996 to make changes in several broadcast laws. Among other things, the
FCC:
- assigns frequency bands for broadcasting,
- determines whether to approve changes in ownership or control of station
licenses,
- regulates equipment used by stations,
12
<PAGE> 13
- adopts and implements regulations and policies that directly or
indirectly affect the ownership, operation and employment practices of
stations, and
- has the power to impose penalties for violations of its rules under the
Communications Act.
The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies. Failure to
observe these or other rules and policies can result in the imposition of
various sanctions, including fines, the grant of short (less than the maximum)
license renewal terms or, for particularly egregious violations, the denial of a
license renewal application, the revocation of a license or the denial of FCC
consent to acquire additional broadcast properties. Reference should be made to
the Communications Act, FCC rules and the public notices and rulings of the FCC
for further information concerning the nature and extent of federal regulation
of broadcast stations.
LICENSE GRANT AND RENEWAL. Until recently, radio broadcast licenses were
granted for maximum terms of seven years, but acting under the authority of the
Telecommunications Act, the FCC recently revised its rules to extend the maximum
term for future renewals to eight years. Licenses may be renewed through an
application to the FCC. The Telecommunications Act prohibits the FCC from
considering any competing applications for the radio frequency if the FCC finds
that the licensee's station has served the public interest, convenience and
necessity, that there have been no serious violations by the licensee of the
Communications Act or the rules and regulations of the FCC, and that there have
been no other violations by the licensee of the Communications Act or the rules
and regulations of the FCC that, when taken together, would constitute a pattern
of abuse.
Petitions to deny license renewals can be filed by interested parties,
including members of the public. These petitions may raise various issues before
the FCC. The FCC is required to hold hearings on renewal applications if the FCC
is unable to determine that renewal of a license would serve the public
interest, convenience and necessity, or if a petition to deny raises a
substantial and material question of fact as to whether the grant of the renewal
application would be prima facie inconsistent with the public interest,
convenience and necessity. Also, during certain periods when a renewal
application is pending, the transferability of the applicant's license is
restricted.
We are not currently aware of any facts that would prevent the timely
renewal of our licenses to operate our radio stations, although there can be no
assurance that our licenses will be renewed.
The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: Class A stations, which operate on an unlimited time
basis and are designated to render primary and secondary service over an
extended area; Class B stations, which operate on an unlimited time basis and
are designed to render service only over a primary service area; or Class D
stations, which operate either during daytime hours only, during limited times
only or on an unlimited time basis with low nighttime power. A regional channel
is one on which Class B and Class D AM stations may operate and serve primarily
a principal center of population and the rural areas contiguous to it. A local
channel is one on which AM stations operate on an unlimited time basis and serve
primarily a community and the suburban and rural areas immediately contiguous
thereto. Class C AM stations operate on a local channel and are designed to
render service only over a primary service area that may be reduced as a
consequence of interference.
The minimum and maximum facilities requirements for an FM station are
determined by its class. FM class designations depend upon the geographic zone
in which the transmitter of the FM station is located. In general, commercial FM
stations are classified as follows, in order of increasing power and antenna
height: Class A, B1, C3, B, C2, C1 and C.
The following table sets forth the market, call letters, FCC license
classification, antenna height above average terrain (HAAT), power and frequency
of each of the stations we own or operate, assuming the completion
13
<PAGE> 14
of the pending transactions described above under the heading "Pending
Transactions," and the date on which each station's FCC license expires.
As you review the information in the following table, you should note the
following:
- The symbol "*" indicates a station which is the subject of one of our
pending transactions. The completion of each of the pending transactions
is subject to conditions. Although we believe these conditions are
generally customary for transactions of this type, there can be no
assurance that the conditions will be satisfied. See the discussion above
under the heading "Pending Transactions."
- A station's actual city of license may be different from the shown
metropolitan market served. In addition, three of the stations listed as
Little Rock stations primarily serve the surrounding communities outside
of Little Rock.
- Pursuant to FCC rules and regulations, many AM radio stations are
licensed to operate at a reduced power during nighttime broadcasting
hours, which results in reducing the radio station's coverage during
those hours of operation. Both power ratings are shown, where applicable.
<TABLE>
<CAPTION>
EXPIRATION
HAAT DATE OF
FCC IN POWER IN FCC
MARKET STATION CLASS METERS KILOWATTS FREQUENCY LICENSE
- ------ ------------ ----- ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Providence, RI..................... WPRO-AM B NA 5.0 630 kHz 04-01-06
WPRO-FM B 168 39.0 92.3 MHz 04-01-06
WSKO-AM B NA 5.0 790 kHz 04-01-06
WWLI-FM B 152 50.0 105.1 MHz 04-01-06
WHCK-FM A 163 2.3 99.7 MHz 04-01-06
WHKK-FM A 90 4.2 100.3 MHz 04-01-06
Salt Lake City, UT................. KBEE-AM B NA 10.0/0.195 860 kHz 10-01-05
KUBL-FM C 1140 26.0 93.3 MHz 10-01-05
KENZ-FM C 869 45.0 107.5 MHz 10-01-05
KBER-FM C 1140 25.0 101.1 MHz 10-01-05
KFNZ-AM B NA 5.0 1320 kHz 10-01-05
KBEE-FM C 894 40.0 98.7 MHz 10-01-05
*KWUN-AM (1) C NA 1.0 1230 kHz 10-01-05
Buffalo/Niagara Falls, NY(2)....... *WGRF-FM B 217 24.0 96.9 MHz 06-01-06
*WEDG-FM B 106 49.0 103.3 MHz 06-01-06
*WHTT-FM B 118 50.0 104.1 MHz 06-01-06
*WMNY-AM D NA 1.0 1120 kHz 06-01-06
*WHLD-AM B NA 5.0/0.144 1270 kHz 06-01-06
Oklahoma City, OK.................. KATT-FM C 363 100.0 100.5 MHz 06-01-05
KYIS-FM C 335.5 100.0 98.9 MHz 06-01-05
KCYI-FM A 96 6.0 97.9 MHz 06-01-05
KNTL-FM A 100 6.0 104.9 MHz 06-01-05
WWLS-AM B NA 1.0 640 kHz 06-01-05
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
EXPIRATION
HAAT DATE OF
FCC IN POWER IN FCC
MARKET STATION CLASS METERS KILOWATTS FREQUENCY LICENSE
- ------ ------------ ----- ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Wilkes-Barre/Scranton, PA.......... WAZL-AM C NA 1.0 1490 kHz 08-01-06
WXBE-FM B 222 19.5 97.9 MHz 08-01-06
WARM-AM B NA 5.0 590 kHz 08-01-06
WMGS-FM B 422 5.3 92.9 MHz 08-01-06
WBHT-FM A 336 0.50 97.1 MHz 08-01-06
WXAR-FM A 308 0.30 95.7 MHz 08-01-06
WCTP-FM A 235 0.52 94.3 MHz 08-01-06
WCTD-FM A 207 1.45 93.7 MHz 08-01-06
WKJN-AM B NA 5.0/.037 1440 kHz 08-01-06
WEMR-AM B NA 5.0/1.0 1460 kHz 08-01-06
WEMR-FM A 354 0.24 107.7 MHz 08-01-06
Grand Rapids, MI................... *WKLQ-FM B 152 50.0 94.5 MHz 10-01-04
*WBBL-AM C NA 1.0 1340 kHz 10-01-04
*WLAV-FM B 149 50.0 96.9 MHz 10-01-04
*WODJ-FM B 150 50.0 107.3 MHz 10-01-04
Allentown/Bethlehem, PA............ WCTO-FM B 152 50.0 96.1 MHz 08-01-06
WLEV-FM B 327 10.9 100.7 MHz 08-01-06
Albuquerque, NM.................... KKOB-AM B NA 50.0 770 kHz 10-01-05
KKOB-FM C 1265 20.2 93.3 MHz 10-01-05
KMGA-FM C 1259 22.5 99.5 MHz 10-01-05
KTBL-FM C 1276 20.4 103.3 MHz 10-01-05
KHFM-FM C 1260 20.0 96.3 MHz 10-01-05
KRST-FM C 1268 22.0 92.3 MHz 10-01-05
KNML-AM B NA 1.0/0.5 1050 kHz 10-01-05
*KSVA-AM B NA 5.0 610 kHz 10-01-05
Syracuse, NY....................... *WAQX-FM B1 91 25.0 95.7 MHz 06-01-06
*WLTI-FM A 61 4.0 105.9 MHz 06-01-06
*WNSS-AM B NA 5.0 1260 kHz 06-01-06
*WNTQ-FM B 201 97.0 93.1 MHz 06-01-06
Harrisburg/Lebanon/Carlisle
and York, PA..................... WRKZ-FM B 283 14.1 106.7 MHz 08-01-06
WHYL-FM A 100 H3.0/V2.75 102.3 MHz 08-01-06
WHYL-AM B NA 5.0 960 kHz 08-01-06
WQXA-AM B NA 1.0 1250 kHz 08-01-06
WQXA-FM B 215 25.1 105.7 MHz 08-01-06
Baton Rouge, LA.................... KQXL-FM C2 148 50.0 106.5 MHz 06-01-04
WXOK-AM B NA 5.0/1.0 1460 kHz 06-01-04
WEMX-FM C1 299 100.0 94.1 MHz 06-01-04
WCAC-FM C 306 100.0 103.3 MHz 06-01-04
WIBR-AM B NA 5.0/1.0 1300 kHz 06-01-04
KOOJ-FM C1 304 97.0 93.7 MHz 06-01-04
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
EXPIRATION
HAAT DATE OF
FCC IN POWER IN FCC
MARKET STATION CLASS METERS KILOWATTS FREQUENCY LICENSE
- ------ ------------ ----- ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Little Rock, AR.................... KARN-FM A 100 3.0 102.5 MHz 06-01-04
KARN-AM B NA 5.0 920 kHz 06-01-04
KKRN-FM A 100 6.0 101.7 MHz 06-01-04
KIPR-FM C1 286 100.0 92.3 MHz 06-01-04
KOKY-FM A 118 4.10 102.1 MHz 06-01-04
KLAL-FM C2 95 50.0 107.7 MHz 06-01-04
KAFN-FM A 100 6.0 102.5 MHz 06-01-04
KLIH-AM B NA 2.0/1.2 1250 kHz 06-01-04
KURB-FM C 392 100.0 98.5 MHz 06-01-04
KVLO-FM C2 150 50.0 102.9 MHz 06-01-04
KAAY-AM A NA 50.0 1090 kHz 06-01-04
Spokane, WA........................ KGA-AM A NA 50.0 1510 kHz 02-01-06
KDRK-FM C 725 56.0 93.7 MHz 02-01-06
KJRB-AM B NA 5.0 790 kHz 02-01-06
KAEP-FM C 582 100.0 105.7 MHz 02-01-06
KEYF-AM B NA 5.0 1050 kHz 02-01-06
KEYF-FM C 490 100.0 101.1 MHz 02-01-06
KWHK-FM C2 432 5.5 103.9 MHz 02-01-06
Columbia, SC....................... *WTCB-FM C1 240 100.0 106.7 MHz 12-01-03
*WOMG-FM A 94 6.0 103.1 MHz 12-01-03
*WLXC-FM A 100 6.0 98.5 MHz 12-01-03
*WISW-AM B NA 5.0/2.5 1320 kHz 12-01-03
Colorado Springs, CO............... KKFM-FM C 698 71.0 98.1 MHz 04-01-05
KKMG-FM C 695 57.0 98.9 MHz 04-01-05
KSPZ-FM C 649 72.0 92.9 MHz 04-01-05
KVOR-AM B NA 5.0/1.0 1300 kHz 04-01-05
KTWK-AM B NA 3.3/1.5 740 kHz 04-01-05
Johnson City/Kingsport/Bristol,
TN............................... *WQUT-FM C 457 99.0 101.5 MHz 08-01-04
*WKOS-FM A 150 2.75 104.9 MHz 08-01-04
*WJCW-AM B NA 5.0/1.0 910 kHz 08-01-04
*WKIN-AM B NA 5.0/0.50 1320 kHz 08-01-04
*WGOC-AM B NA 10.0/0.81 640 kHz 08-01-04
Lafayette, LA...................... KFXZ-FM A 151 2.6 106.3 MHz 06-01-04
KNEK-FM C3 100 25.0 104.7 MHz 06-01-04
KNEK-AM B NA 0.25 1190 kHz 06-01-04
KRRQ-FM C2 135 50.0 95.5 MHz 06-01-04
*KSMB-FM C 329 100.0 94.5 MHz 06-01-04
*KDYS-AM B NA 10.0/0.5 1520 kHz 06-01-04
*KVOL-FM A 132 3.4 105.9 MHz 06-01-04
*KVOL-AM B NA 5.0/1.0 1330 kHz 06-01-04
Chattanooga, TN.................... *WSKZ-FM C 329 100.0 106.5 MHz 08-01-04
*WOGT-FM C3 295 2.85 107.9 MHz 08-01-04
*WGOW-AM B NA 5.0/1.0 1150 kHz 08-01-04
*WGOW-FM A 87 6.0 102.3 MHz 08-01-04
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXPIRATION
HAAT DATE OF
FCC IN POWER IN FCC
MARKET STATION CLASS METERS KILOWATTS FREQUENCY LICENSE
- ------ ------------ ----- ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Charleston, SC..................... WSSX-FM C 317 100.0 95.1 MHz 12-01-03
WWWZ-FM C2 150 50.0 93.3 MHz 12-01-03
WMGL-FM C3 128.9 6.5 101.7 MHz 12-01-03
WSUY-FM C 539.5 100.0 96.9 MHz 12-01-03
WNKT-FM C 299.9 100.0 107.5 MHz 12-01-03
WTMA-AM B NA 5.0/1.0 1250 kHz 12-01-03
WTMZ-AM B NA 0.50 910 kHz 12-01-03
WXTC-AM B NA 5.0 1390 kHz 12-01-03
Worcester, MA...................... WXLO-FM B 172 37.0 104.5 MHz 04-01-06
*WORC-FM (3) A 125 1.85 98.9 MHz 04-01-06
*WWFX-FM A 146 2.85 100.1 MHz 04-01-06
*WCAT-FM A 124 1.85 99.9 MHz 04-01-06
*WCAT-AM D NA 2.5 700 kHz 04-01-06
Lansing/East Lansing, MI........... *WMMQ-FM B 150 50.0 94.9 MHz 10-01-04
*WJIM-FM B 156 45.0 97.5 MHz 10-01-04
*WFMK-FM B 183 28.0 99.1 MHz 10-01-04
*WITL-FM B 196 26.5 100.7 MHz 10-01-04
*WVFN-AM D NA 0.50/0.05 730 kHz 10-01-04
*WJIM-AM C NA 0.89 1240 kHz 10-01-04
Flint, MI.......................... *WFBE-FM B 150 50.0 95.1 MHz 10-01-04
Portsmouth/Dover/Rochester, NH..... WOKQ-FM B 150 50.0 97.5 MHz 04-01-06
WXBB-FM A 113.1 2.2 105.3 MHz 04-01-06
WXBP-FM A 100 3.0 102.1 MHz 04-01-06
WPKQ-FM C 1181 H22.5/V17.5 103.7 MHz 04-01-06
Modesto, CA........................ KANM-AM B NA 1.0 970 kHz 12-01-05
KATM-FM B 152 50.0 103.3 MHz 12-01-05
KHKK-FM B 152 50.0 104.1 MHz 12-01-05
KDJK-FM A 624 0.071 103.9 MHz 12-01-05
KHOP-FM B 193 29.5 95.1 MHz 12-01-05
Saginaw/Bay City/Midland, MI(4).... WKQZ-FM C2 169 39.2 93.3 MHz 10-01-04
WYLZ-FM A 151 2.6 100.9 MHz 10-01-04
WIOG-FM B 244 86 102.5 MHz 10-01-04
WILZ-FM A 126 2.9 104.5 MHz 10-01-04
WGER-FM A 116 2.05 106.3 MHz 10-01-04
WSGW-AM B NA 5.0/1.0 790 kHz 10-01-04
*WHNN-FM C 311 100.0 96.1 MHz 10-01-04
*WTCF-FM A 100 3.0 100.5 MHz 10-01-04
Boise, ID.......................... KIZN-FM C 762 44.0 92.3 MHz 10-01-05
KZMG-FM C 802 50.0 93.1 MHz 10-01-05
KKGL-FM C 768 44.0 96.9 MHz 10-01-05
KQFC-FM C 762 47.0 97.9 MHz 10-01-05
KBOI-AM B NA 50.0 960 kHz 10-01-05
Reno, NV........................... KKOH-AM B NA 50.0 780 kHz 10-01-05
KNEV-FM C 695 60.0 95.5 MHz 10-01-05
KBUL-FM C 699 72.0 98.1 MHz 10-01-05
KNHK-FM C 809 44.7 92.9 MHz 10-01-05
KATG-FM (5) A 129 3.6 93.7 MHz 10-01-05
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
EXPIRATION
HAAT DATE OF
FCC IN POWER IN FCC
MARKET STATION CLASS METERS KILOWATTS FREQUENCY LICENSE
- ------ ------------ ----- ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Atlantic City/Cape May, NJ......... *WFPG-AM C NA 1.0 1450 kHz 06-01-06
*WFPG-FM B 110 50.0 96.9 MHz 06-01-06
*WPUR-FM B1 137 13.5 107.3 MHz 06-01-06
*WKOE-FM (6) A 94 3.0 106.3 MHz 06-01-06
Tyler/Longview, TX................. *KDOK-FM C3 135 9.6 92.1 MHz 08-01-05
*KTBB-AM B NA 5.0/2.5 600 kHz 08-01-05
*KEES-AM B NA 5.0/1.0 1430 kHz 08-01-05
*KYZS-AM C NA 1.0 1490 kHz 08-01-05
*KGLD-AM D NA 1.0/0.077 1330 kHz 08-01-05
Portland, ME....................... WBLM-FM C 436 100.0 102.9 MHz 04-01-06
WCYI-FM B 195.1 27.5 93.9 MHz 04-01-06
WCYY-FM B1 147 11.5 94.3 MHz 04-01-06
WHOM-FM C 1140.9 50.0 94.9 MHz 04-01-06
WJBQ-FM B 271.3 16.0 97.9 MHz 04-01-06
WTPN-FM B 121.9 47.5 98.9 MHz 04-01-06
New London, CT..................... *WQGN-FM A 84 3.0 105.5 MHz 04-01-06
*WSUB-AM D NA 1.0/0.072 980 kHz 04-01-06
*WVVE-FM A 100 3.0 102.3 MHz 04-01-06
New Bedford/Fall River, MA......... *WFHN-FM A 106 2.4 107.1 MHz 04-01-06
*WBSM-AM B NA 5.0/1.0 1420 kHz 04-01-06
Binghamton, NY..................... WHWK-FM B 292.6 10.0 98.1 MHz 06-01-06
WYOS-FM (7) A 254 0.93 104.1 MHz 11-26-96
WAAL-FM B 332 7.1 99.1 MHz 06-01-06
WNBF-AM B NA 5.0 1290 kHz 06-01-06
*WINR-AM B NA 1.0/0.5 680 kHz 06-01-06
Bloomington, IL.................... *WJBC-AM C NA 1.0 1230 kHz 12-01-04
*WBNQ-FM B 142 50.0 101.5 MHz 12-01-04
*WBWN-FM B1 100 25.0 104.1 MHz 12-01-04
Monroe, LA......................... *KMYY-FM C 310 97.0 106.1 MHz 06-01-04
*KYEA-FM C3 106 22.0 103.1 MHz 06-01-04
*KZRZ-FM C2 150 50.0 98.3 MHz 06-01-04
*KTJC-FM C3 148 11.5 92.3 MHz 06-01-04
Augusta/Waterville, ME............. *WMME-FM B 152 50.0 92.3 MHz 04-01-06
*WEZW-AM C NA 1.0 1400 kHz 04-01-06
*WEBB-FM C1 93 61.0 98.5 MHz 04-01-06
*WTVL-AM C NA 1.0 1490 kHz 04-01-06
Ithaca, NY......................... *WIII-FM B 223 23.5 99.9 MHz 06-01-06
*WKRT-AM B NA 1.0/0.50 920 kHz 06-01-06
Presque Isle, ME................... *WBPW-FM C1 134 100.0 96.9 MHz 04-01-06
*WOZI-FM C2 368 7.9 101.9 MHz 04-01-06
*WQHR-FM C 390 95.0 96.1 MHz 04-01-06
Dennysville/Calais, ME............. *WCRQ-FM C1 139 100.0 102.9 MHz 04-01-06
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
EXPIRATION
HAAT DATE OF
FCC IN POWER IN FCC
MARKET STATION CLASS METERS KILOWATTS FREQUENCY LICENSE
- ------ ------------ ----- ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Muncie, IN......................... WMDH-FM B 152.4 50.0 102.5 MHz 08-01-04
WMDH-AM B NA 0.25 1550 kHz 08-01-04
Kokomo, IN......................... WWKI-FM B 143.3 50.0 100.5 MHz 08-01-04
</TABLE>
- ---------------
(1) Pending its acquisition, we currently operate KWUN-AM under a local
marketing agreement.
(2) The stations indicated do not include one FM radio station in Niagara Falls,
Ontario for which we expect to sell advertising in the United States under a
joint sales agreement.
(3) Pending its acquisition, we currently operate WORC-FM under a local
marketing agreement.
(4) We may agree to sell one or more of the indicated stations serving
Saginaw/Bay City/Midland in connection with our pending acquisition of
stations serving Saginaw/Bay City/Midland.
(5) We operate KATG-FM under a local marketing agreement.
(6) We expect to operate WKOE-FM under a program service and time brokerage
agreement.
(7) WYOS-FM in Binghamton operates pursuant to a construction permit. An
application for a license to cover the construction permit has been filed
with the FCC. Expiration of the construction permit is stayed during the
pendency of that application.
OWNERSHIP MATTERS. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast license without the
prior approval of the FCC. In determining whether to assign, transfer, grant or
renew a broadcast license, the FCC considers a number of factors pertaining to
the licensee, including compliance with various rules limiting common ownership
of media properties, the character of the licensee and those persons holding
attributable interests therein, and compliance with the Communications Act's
limitation on alien ownership, as well as compliance with other FCC policies.
Once a station purchase agreement has been signed, an application for FCC
consent to assignment of license or transfer of control, depending upon whether
the underlying transaction is an asset purchase or stock acquisition, is filed
with the FCC. Approximately 10 to 15 days after this filing, the FCC normally
publishes a notice assigning a file number to the application and advising that
the application has been accepted for filing. The FCC has recently instituted an
informal policy of inviting public comment on any proposed radio transaction
that would result in one broadcaster controlling at least half of all radio
advertising revenue in a market, or two broadcasters controlling 70% or more of
market revenue. This policy has resulted in delays in the FCC's acceptance of
applications for filing, and in subsequent action on assignment and transfer
applications. Notice of acceptance of an application begins a 30-day statutory
waiting period, which provides the opportunity for third parties to file formal
petitions to deny the transaction. Informal objections may be filed any time
prior to grant of an application. The FCC staff will normally review the
application in this period and seek further information and amendments to the
application if it has questions.
Once the 30-day public notice period ends, the staff will complete its
processing, assuming that no petitions or informal objections were received and
that the application is otherwise consistent with FCC rules and policies. The
staff often grants the application by delegated authority approximately 10 to 20
days after the public notice period ends. At this point, the parties are legally
authorized to close the purchase, although the FCC action is not legally a final
order. If there is a backlog of applications, the processing period can extend
to 30 days or more.
Public notice of the FCC staff grant is usually issued about a week after
the grant is made, stating that the grant was effective when made by the staff.
On the date of this notice, another 30-day period begins, within which time
interested parties can file petitions seeking either staff reconsideration or
full FCC review of the staff action. During this time the grant can still be
modified, set aside or stayed, and is not a final order. In the absence of a
stay, however, the seller and buyer are not prevented from closing despite the
absence of a final order. Also, within 40 days after the public notice of the
grant, the full FCC can review and reconsider the staff's grant on its own
motion. Thus, during the additional 10 days beyond the 30-day period available
to third parties, the grant is
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<PAGE> 20
still not final. In the event that review by the full FCC is requested and the
FCC subsequently affirms the staff's grant of the application, interested
parties may thereafter seek judicial review in the United States Court of
Appeals for the District of Columbia Circuit within 30 days of public notice of
the full FCC's action. In the event the Court affirms the FCC's action, further
judicial review may be sought by seeking rehearing en banc from the Court of
Appeals or by certiorari from the United States Supreme Court.
In the absence of the submission of a timely request for reconsideration,
administrative review or judicial review, the FCC staff's grant of an
application becomes final by operation of law. Upon the occurrence of that
event, the FCC's grant is generally no longer subject to administrative or
judicial review, although such action can nevertheless be set aside in rare
circumstances, such as fraud on the agency by a party to the application.
The pendency of a license renewal application can alter the timetables
mentioned above because the FCC normally will not issue an unconditional
assignment grant if the station's license renewal is pending.
Under the Communications Act, a broadcast license may not be granted to or
held by a corporation that has more than one-fifth of its capital stock owned or
voted by aliens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations. Under the Communications Act, a
broadcast license also may not be granted to or held by any corporation that is
controlled, directly or indirectly, by any other corporation more than
one-fourth of whose capital stock is owned or voted by aliens or their
representatives, by foreign governments or their representatives, or by non-U.S.
corporations. These restrictions apply in modified form to other forms of
business organizations, including partnerships. Each of Citadel Communications
and Citadel Broadcasting therefore may be restricted from having more than
one-fourth of its stock owned or voted by aliens, foreign governments or
non-U.S. corporations. The Certificate of Incorporation of Citadel
Communications and the Certificate of Incorporation of Citadel Broadcasting
contain provisions which permit Citadel Communications and Citadel Broadcasting
to prohibit alien ownership and control consistent with the prohibitions
contained in the Communications Act.
The Communications Act and FCC rules also generally restrict the common
ownership, operation or control of radio broadcast stations serving the same
local market, and place numerical limits on common ownership of radio and
television broadcast stations serving the same local market, and of a radio
broadcast station and a daily newspaper serving the same local market. Under
these cross-ownership rules, neither Citadel Communications nor Citadel
Broadcasting would be permitted to acquire any daily newspaper where it then
owned any radio broadcast station. While common ownership of same market radio
and television stations was previously permissible only through waiver of the
FCC's rules, the FCC recently liberalized its radio/television cross ownership
rule to provide for common ownership, operation or control of one television and
up to seven same-market radio stations, or two television and up to six
same-market radio stations, if the market has at least twenty separately owned
broadcast, newspaper and cable "voices." Common ownership of two television and
four radio stations is permissible when ten voices remain, and of one television
and one radio station regardless of voice count.
In response to the Telecommunications Act, the FCC amended its multiple
ownership rules to eliminate the national limits on ownership of AM and FM
stations. The FCC's broadcast multiple ownership rules restrict the number of
radio stations one person or entity may own, operate or control on a local
level. These limits are:
- In a market with 45 or more commercial radio stations, an entity may own
up to eight commercial radio stations, not more than five of which are in
the same service (FM or AM),
- In a market with more than 29 but less than 45 commercial radio stations,
an entity may own up to seven commercial radio stations, not more than
four of which are in the same service,
- In a market with more than 14 but less than 30 commercial radio stations,
an entity may own up to six commercial radio stations, not more than four
of which are in the same service, and
- In a market with 14 or fewer commercial radio stations, an entity may own
up to five commercial radio stations, not more than three of which are in
the same service, except that an entity may not own more than 50% of the
stations in such market.
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None of these multiple ownership rules requires any change in our current
ownership of radio broadcast stations. However, these rules will limit the
number of additional stations which we may acquire in the future in certain of
our markets.
Because of these multiple and cross-ownership rules, a purchaser of voting
stock of either Citadel Communications or Citadel Broadcasting which acquires an
attributable interest in Citadel Communications or Citadel Broadcasting may
violate the FCC's rule if it also has an attributable interest in other
television or radio stations, or in daily newspapers, depending on the number
and location of those radio or television stations or daily newspapers. Such a
purchaser also may be restricted in the companies in which it may invest, to the
extent that these investments give rise to an attributable interest. If an
attributable shareholder of Citadel Communications or Citadel Broadcasting
violates any of these ownership rules, Citadel Communications or Citadel
Broadcasting may be unable to obtain from the FCC one or more authorizations
needed to conduct its radio station business and may be unable to obtain FCC
consents for particular future acquisitions.
The FCC generally applies its television/radio/newspaper cross-ownership
rules and its broadcast multiple ownership rules by considering the
attributable, or cognizable, interests held by a person or entity. A person or
entity can have an interest in a radio station, television station or daily
newspaper by being an officer, director, partner or shareholder of a company
that owns that station or newspaper. Whether that interest is cognizable under
the FCC's ownership rules is determined by the FCC's attribution rules. If an
interest is attributable, the FCC treats the person or entity who holds that
interest as the owner of the radio station, television station or daily
newspaper in question, and therefore subject to the FCC's ownership rules.
With respect to a corporation, officers and directors and persons or
entities that directly or indirectly can vote 5% or more of the corporation's
stock, or 20% or more of the corporation's stock in the case of insurance
companies, investment companies, bank trust departments and certain other
passive investors that hold the stock for investment purposes only, generally
are attributed with ownership of whatever radio stations, television stations
and daily newspapers the corporation owns.
With respect to a partnership, the interest of a general partner is
attributable, as is the interest of any limited partner who is materially
involved in the media-related activities of the partnership. Debt instruments,
nonvoting stock, options and warrants for voting stock that have not yet been
exercised, limited partnership interests where the limited partner is not
materially involved in the media-related activities of the partnership, and
minority (under 5%) voting stock, generally do not subject their holders to
attribution.
The FCC recently revised its attribution rules to eliminate its
cross-interest policy, which generally precluded a party with an attributable
interest in one media outlet from also holding certain significant but
nonattributable interests in another same-market media entity, such as a joint
venture or key employee relationship. In its place, the FCC has adopted a new
class of attributable interests under the "equity/debt plus" rule. Under this
standard, an interest in excess of 33% of a licensee's total asset value (equity
plus debt) will be attributable if the interest holder is either a major program
supplier (providing over 15% of a station's total weekly broadcast programming
hours) or a same-market media company (including broadcasters, cable operators
and newspapers).
The FCC has also been more aggressive in examining issues of market revenue
share concentration when considering radio station acquisitions. The FCC has
delayed its approval of several pending radio station purchases by various
parties because of market concentration concerns. Moreover, the FCC has recently
followed an informal policy of giving specific public notice of its intention to
conduct additional ownership concentration analyses and soliciting public
comment on the issue of concentration and its effect on competition and
diversity in connection with applications for consent to radio station
acquisitions, where the proposed transaction would result in one broadcaster
controlling at least half of all radio advertising revenue in a market, or two
broadcasters controlling 70% or more of market revenue. This policy has resulted
in significant delays in action on FCC assignment and transfer applications and
has the potential to result in an attempt by the FCC to set applications for
hearing, prevent completion of transactions or negotiate modifications to the
proposed terms. For a discussion of the effects of this policy on some of our
pending transactions, see the discussion above under the heading "Pending
Transactions."
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<PAGE> 22
PROGRAMMING AND OPERATION. The Communications Act requires broadcasters to
serve the public interest. Licensees are required to present programming that is
responsive to community problems, needs and interests and to maintain records
demonstrating such responsiveness. Complaints from listeners concerning a
station's programming will be considered by the FCC when it evaluates the
licensee's renewal application, but such complaints may be filed and considered
at any time.
Stations also must pay regulatory and application fees and follow various
FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification and
technical operations, including limits on radio frequency radiation. In
addition, licensees must develop and implement programs designed to promote
equal employment opportunities and must submit reports to the FCC on these
matters annually and in connection with a renewal application. The broadcast of
contests and lotteries also is regulated by FCC rules.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
short (less than the maximum) renewal terms or, for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.
In 1985, the FCC adopted rules regarding human exposures to levels of radio
frequency radiation. These rules require applicants for new broadcast stations,
renewals of broadcast licenses or modifications of existing licenses to inform
the FCC at the time of filing such applications whether a new or existing
broadcast facility would expose people to radio frequency radiation in excess of
FCC guidelines. In 1997, the FCC imposed more restrictive radiation limits. We
anticipate that such regulations will not have a material effect on our
business.
LOCAL MARKETING AGREEMENTS. Over the past several years, a number of radio
stations, including several of our stations, have entered into what commonly are
referred to as local marketing agreements or time brokerage agreements. These
agreements take various forms. Separately-owned and licensed stations may agree
to function cooperatively in terms of programming, advertising sales and other
matters, subject to compliance with the antitrust laws and the FCC's rules and
policies, including the requirement that the licensee of each station maintains
independent control over the programming and other operations of its own
station. The FCC has held that such agreements do not violate the Communications
Act as long as the licensee of the station that is being substantially
programmed by another entity maintains complete responsibility for, and control
over, operations of its broadcast stations and otherwise ensures compliance with
applicable FCC rules and policies. Presently, we operate only three stations
under local marketing agreements, and two are being so operated pending our
acquisition of the stations. We expect that we will begin operating one
additional station under a local marketing agreement if we complete a particular
pending acquisition.
A station that brokers substantial time on another station in its market or
engages in a local marketing agreement with a station in the same market will be
considered to have an attributable ownership interest in the brokered station
for purposes of the FCC's ownership rules discussed above under the heading
"Ownership Matters." As a result, a broadcast station may not enter into a local
marketing agreement that allows it to program more than 15% of the broadcast
time, on a weekly basis, of another local station that it could not own under
the FCC's local multiple ownership rules. FCC rules also prohibit the broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (that is, AM-AM or FM-FM) where the two stations
serve substantially the same geographic area, whether the licensee owns the
stations or owns one and programs the other through a local marketing agreement
arrangement.
Another example of a cooperative agreement between separately owned radio
stations in the same market is a joint sales agreement, whereby one station
sells advertising time in combination, both on itself and on a station under
separate ownership. In the past, the FCC has determined that issues of joint
advertising sales should be left to antitrust enforcement. Currently, joint
sales agreements are not considered by the FCC to be attributable, but copies of
such agreements must be filed with the FCC.
PROPOSED CHANGES. Congress and the FCC from time to time have under
consideration, and may in the future consider and adopt, new laws, regulations
and policies regarding a wide variety of matters that could, directly or
indirectly, affect the operation, ownership and profitability of our radio
stations, result in the loss of
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<PAGE> 23
audience share and advertising revenue for our radio stations, and affect our
ability to acquire additional radio stations or finance such acquisitions. Such
matters include:
- proposals to impose spectrum use or other fees on FCC licensees, the
FCC's equal employment opportunity rules and matters relating to
political broadcasting,
- technical and frequency allocation matters,
- proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages on radio,
- changes in the FCC's multiple ownership and cross-ownership policies,
- changes to broadcast technical requirements,
- proposals to allow telephone or cable television companies to deliver
audio and video programming to the home through existing phone or other
communication lines, and
- proposals to limit the tax deductibility of advertising expenses by
advertisers.
In January 1995, the FCC adopted rules to allocate spectrum for satellite
digital audio radio service. Satellite digital audio radio service systems
potentially could provide for regional or nationwide distribution of radio
programming with fidelity comparable to compact discs. The FCC has issued two
authorizations to launch and operate satellite digital audio radio service. The
FCC also has undertaken an inquiry into the terrestrial broadcast of digital
audio radio service signals, addressing, among other things, the need for
spectrum outside the existing FM band and the role of existing broadcasters.
The FCC has adopted rules to license new 100 watt and 10 watt low-power FM
radio stations. These stations would have a service radius of approximately one
to three miles. The licensing process commenced in March 2000. The FCC has
authorized an additional 100 kHz of bandwidth for the AM band and on March 17,
1997, adopted an allotment plan for the expanded band which identified the 88 AM
radio stations selected to move into the band. At the end of a five-year
transition period, those licensees will be required to return to the FCC either
the license for their existing AM band station or the license for the expanded
AM band station.
We cannot predict whether any proposed changes will be adopted or what
other matters might be considered in the future, nor can it judge in advance
what impact, if any, the implementation of any of these proposals or changes
might have on our business.
The foregoing is a brief summary of certain provisions of the
Communications Act and of specific FCC rules and policies. This description does
not purport to be comprehensive and reference should be made to the
Communications Act, the FCC's rules and the public notices and rulings of the
FCC for further information concerning the nature and extent of federal
regulation of radio broadcast stations.
FEDERAL ANTITRUST CONSIDERATIONS. The Federal Trade Commission and the
United States Department of Justice, which evaluate transactions to determine
whether those transactions should be challenged under the federal antitrust
laws, have been increasingly active recently in their review of radio station
acquisitions, particularly where an operator proposes to acquire additional
stations in its existing markets.
For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules promulgated
thereunder, require the parties to file Notification and Report Forms with the
Federal Trade Commission and the Department of Justice and to observe specified
waiting period requirements before consummating the acquisition. During the
initial 30-day period after the filing, the agencies decide which of them will
investigate the transaction. If the investigating agency determines that the
transaction does not raise significant antitrust issues, then it will either
terminate the waiting period or allow it to expire after the initial 30 days. On
the other hand, if the agency determines that the transaction requires a more
detailed investigation, then, at the conclusion of the initial 30-day period, it
will issue a formal request for additional information. The issuance of a formal
request extends the waiting period until the 20th calendar day after the date of
substantial compliance by all parties to the acquisition. Thereafter, such
waiting period may only be extended by court order or with the consent of the
parties. In practice, complying with a formal request can take a significant
amount of time. In addition, if the investigating agency raises substantive
issues in connection with a
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proposed transaction, then the parties frequently engage in lengthy discussions
or negotiations with the investigating agency concerning possible means of
addressing those issues, including but not limited to persuading the agency that
the proposed acquisition would not violate the antitrust laws, restructuring the
proposed acquisition, divestiture of other assets of one or more parties, or
abandonment of the transaction. Such discussions and negotiations can be time
consuming, and the parties may agree to delay completion of the acquisition
during their pendency.
At any time before or after the completion of a proposed acquisition, the
Federal Trade Commission or the Department of Justice could take such action
under the antitrust laws as it considers necessary or desirable in the public
interest, including seeking to enjoin the acquisition or seeking divestiture of
the business acquired or other assets we own. Acquisitions that are not required
to be reported under the Hart-Scott-Rodino Act may be investigated by the
Federal Trade Commission or the Department of Justice under the antitrust laws
before or after completion. In addition, private parties may under certain
circumstances bring legal action to challenge an acquisition under the antitrust
laws.
We received early termination of the applicable waiting period under the
Hart-Scott-Rodino Act for the pending acquisition of Bloomington Broadcasting
Holdings, Inc. and the pending acquisition of radio stations from Broadcasting
Partners Holdings, L.P. We are awaiting termination of the applicable waiting
period for the pending acquisition of stations in Michigan from Liggett
Broadcast, Inc. and certain of its affiliates. In February 2000, we received a
request for additional information and documents from the Department of Justice
relating to stations in Saginaw/Bay City/Midland, Michigan. As discussed above,
this request extends the waiting period under the Hart-Scott-Rodino Act for a
period of 20 days after receipt by the Department of Justice of the information
and documents requested from all parties from whom such information and
documents have been requested.
As part of its increased scrutiny of radio station acquisitions, the
Department of Justice has stated publicly that it believes that commencement of
operations under local marketing agreements, joint sales agreements and other
similar agreements customarily entered into in connection with radio station
transfers prior to the expiration of the waiting period under the
Hart-Scott-Rodino Act could violate the Hart-Scott-Rodino Act. In connection
with acquisitions subject to the waiting period under the Hart-Scott-Rodino Act,
we will not commence operation of any affected station to be acquired under a
local marketing agreement or similar agreement until the waiting period has
expired or been terminated.
We received a civil investigative demand from the Antitrust Division of the
Department of Justice addressing our acquisition of KRST-FM in Albuquerque, New
Mexico. This matter remains open. See the discussion below under the heading
"Risk Factors" and in Item 3, Legal Proceedings.
TRADEMARKS
We own a number of trademarks and service marks, including the federally
registered marks Cat Country, Supertalk and the Cat Country logo. We also own a
number of marks registered in various states. We consider such trademarks and
service marks to be important to our business. See the discussion above under
the heading "Operating Strategy" and the subheading "Targeted Programming."
SEASONALITY
Our revenue varies throughout the year. As is typical in the radio
broadcasting industry, the first calendar quarter generally produces the lowest
revenue, and the fourth quarter generally produces the highest revenue.
ENVIRONMENTAL MATTERS
As the owner, lessee or operator of various real properties and facilities,
we are subject to various federal, state and local environmental laws and
regulations. Historically, compliance with these laws and regulations has not
had a material adverse effect on our business. There can be no assurance,
however, that compliance with existing or new environmental laws and regulations
will not require us to make significant expenditures of funds.
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<PAGE> 25
EMPLOYEES
At March 1, 2000, we employed approximately 1,970 persons. None of these
employees are covered by collective bargaining agreements, and we consider our
relations with our employees to be good.
We employ several on-air personalities with large loyal audiences in their
respective markets. We generally enter into employment agreements with these
personalities to protect our interests in those relationships that we believe to
be valuable. The loss of one of these personalities could result in a short-term
loss of audience share, but we do not believe that any such loss would have a
material adverse effect on our financial condition or results of operations.
RISK FACTORS
Any of the following risks could have a material adverse effect on our
business, financial condition or results of operations. These risks and
uncertainties are not the only ones facing us or which may adversely affect our
business.
SUBSTANTIAL INDEBTEDNESS--OUR DEBT SERVICE CONSUMES A SUBSTANTIAL PORTION
OF THE CASH WE GENERATE AND REDUCES THE CASH AVAILABLE TO INVEST IN OUR
OPERATIONS.
We have a significant amount of indebtedness. Our large amount of debt
could significantly impact our business because, among other things, it:
- requires us to dedicate a substantial portion of our operating cash flow
to pay interest expense, which reduces funds available for operations,
future business opportunities and other purposes,
- limits our ability to obtain additional financing, if we need it, for
working capital, capital expenditures, acquisitions, debt service
requirements or other purposes,
- inhibits our ability to compete with competitors who are less leveraged
than we are, and
- restrains our ability to react to changing market conditions, changes in
our industry and economic downturns.
As of December 31, 1999, we had:
- outstanding total debt of approximately $356.9 million, excluding the
discount on Citadel Broadcasting's 10 1/4% Senior Subordinated Notes due
2007 and its 9 1/4% Senior Subordinated Notes due 2008,
- Citadel Broadcasting's 13 1/4% Exchangeable Preferred Stock with an
aggregate liquidation preference of approximately $85.4 million, and
- shareholders' equity of approximately $219.2 million.
For more information about our indebtedness, see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, under
the heading "Liquidity and Capital Resources."
ABILITY TO SERVICE DEBT--IN ORDER TO SERVICE OUR DEBT, WE REQUIRE A
SIGNIFICANT AMOUNT OF CASH. HOWEVER, OUR ABILITY TO GENERATE CASH DEPENDS
ON MANY FACTORS WHICH ARE BEYOND OUR CONTROL.
Prevailing economic conditions and financial, business and other factors,
many of which are beyond our control, will affect our ability to satisfy our
debt obligations. If in the future we cannot generate sufficient cash flow from
operations to meet our obligations, we may need to refinance our debt, obtain
additional financing, delay planned acquisitions and capital expenditures or
sell assets. Any of these actions could adversely affect the value of our common
stock. We cannot assure you that we will generate sufficient cash flow or be
able to obtain sufficient funding to satisfy our debt service requirements.
RESTRICTIONS IMPOSED ON US BY OUR DEBT INSTRUMENTS--OUR EXISTING DEBT
INSTRUMENTS CONTAIN RESTRICTIONS AND LIMITATIONS WHICH COULD SIGNIFICANTLY
IMPACT OUR ABILITY TO OPERATE OUR BUSINESS AND THE VALUE OF OUR COMMON
STOCK.
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The covenants in Citadel Broadcasting's credit facility and the agreements
governing its other outstanding debt and preferred stock restrict, among other
things, Citadel Broadcasting's ability to incur additional debt, make particular
types of investments or other restricted payments, swap or sell assets or merge
or consolidate. A breach of any of the covenants contained in the credit
facility could allow the lenders to declare all amounts outstanding under the
credit facility to be immediately due and payable. In addition, the lenders
under the credit facility could proceed against the collateral granted to them
to secure that indebtedness. We have pledged the outstanding shares of common
stock of Citadel Broadcasting owned by us to secure our guarantee of the credit
facility. If the amounts outstanding under the credit facility are accelerated,
we cannot assure you that our assets will be sufficient to repay amounts due
under the credit facility and other outstanding debt obligations.
The credit facility requires Citadel Broadcasting to obtain its banks'
consent before making capital expenditures that exceed the amount permitted by
the credit facility and before making acquisitions that do not meet applicable
tests under the credit facility. The credit facility also requires Citadel
Broadcasting to maintain specific financial ratios and satisfy financial
condition tests. Events beyond our control could affect Citadel Broadcasting's
ability to meet those financial ratios and condition tests, and we cannot assure
you that it will do so.
The indentures governing Citadel Broadcasting's 9 1/4% notes and 10 1/4%
notes and its credit facility restrict, with certain exceptions, Citadel
Broadcasting's ability to pay dividends on or to repurchase, redeem or otherwise
acquire any shares of its capital stock. In the event that, after July 1, 2002,
cash dividends on Citadel Broadcasting's exchangeable preferred stock are in
arrears and unpaid for two or more semi-annual dividend periods, whether or not
consecutive, holders of the exchangeable preferred stock will be entitled to
elect two directors of Citadel Broadcasting. This right to elect directors could
limit our control over Citadel Broadcasting, and could adversely affect the
value of our common stock.
For more information about our indebtedness, see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, under
the heading "Liquidity and Capital Resources."
HISTORY OF NET LOSSES--WE HAVE A HISTORY OF NET LOSSES WHICH WE EXPECT TO
CONTINUE THROUGH AT LEAST 2000.
We had a net loss of $8.9 million and $3.9 million for the years ended
December 31, 1999 and 1998, respectively. The primary reasons for these losses
are significant charges for depreciation and amortization relating to the
acquisition of radio stations and interest charges on our outstanding debt. If
we acquire additional stations, these charges will probably increase. We expect
to continue to experience net losses through at least 2000.
LIMITATIONS ON ACQUISITION STRATEGY--OUR STRATEGY TO EXPAND OUR BUSINESS
AND INCREASE REVENUE THROUGH ACQUISITIONS MAY FAIL DUE TO A NUMBER OF RISKS
INVOLVED IN IMPLEMENTING THIS STRATEGY.
We intend to grow by acquiring radio stations in mid-sized markets.
However, our acquisition strategy may not increase our cash flow or yield other
anticipated benefits because this strategy is subject to a number of other
risks, including:
- failure or unanticipated delays in completing acquisitions due to
difficulties in obtaining regulatory approval,
- failure of certain of our acquisitions to prove profitable or for the
station or stations acquired to generate cash flow,
- difficulty in integrating the operations, systems and management of our
acquired stations,
- diversion of management's attention from other business concerns,
- loss of key employees of acquired stations,
- increases in prices for radio stations due to increased competition for
acquisition opportunities, and
- inability to obtain any required financing for acquisitions on terms
favorable to us or at all.
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<PAGE> 27
We compete and expect to continue to compete with other buyers for the
acquisition of radio stations. Some of those competitors have greater financial
and other resources than we do. We may also find fewer acceptable acquisition
opportunities in the future.
In addition, Citadel Broadcasting's credit facility permits Citadel
Broadcasting to make acquisitions of radio stations without the consent of its
banks under the credit facility only if Citadel Broadcasting maintains the
financial ratios and financial condition tests specified in the credit facility.
Consequently, we may experience difficulties in pursuing our acquisition
strategy.
POTENTIAL DIFFICULTIES IN COMPLETING PENDING AND FUTURE TRANSACTIONS DUE TO
GOVERNMENTAL REVIEW--ANTITRUST LAW AND OTHER REGULATORY CONSIDERATIONS
COULD PREVENT OR DELAY OUR STRATEGY TO EXPAND OUR BUSINESS AND INCREASE
REVENUE.
The completion of several of our pending transactions is, and future
transactions we may consider will likely be, subject to the notification filing
requirements, applicable waiting periods and possible review by the United
States Department of Justice or the Federal Trade Commission under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. All of our
pending and future radio station acquisitions and dispositions will be subject
to the license transfer approval process of the Federal Communications
Commission. Review by the Department of Justice or the Federal Trade Commission
may cause delays in completing transactions and, in some cases, result in
attempts by these agencies to prevent completion of transactions or negotiate
modifications to the proposed terms. Review by the FCC, particularly review of
concentration of market revenue share, may also cause delays in completing
transactions. Any delay, prohibition or modification could adversely affect the
terms of a proposed transaction or could require us to abandon an otherwise
attractive opportunity.
For a discussion of the delays we are experiencing in connection with some
of our pending acquisitions because of Department of Justice review and the
FCC's license transfer approval process, see "Pending Transactions" above.
IMPORTANCE OF CERTAIN MARKETS--A DOWNTURN IN ANY OF OUR KEY MARKETS COULD
ADVERSELY AFFECT OUR REVENUE AND CASH FLOW.
Our Albuquerque, Providence, Salt Lake City, Little Rock, Modesto and
Colorado Springs markets are particularly important for our financial
well-being. A significant decline in net broadcasting revenue from our stations
in these markets could have a material adverse effect on our operations and
financial condition. To illustrate, our radio stations in these markets
generated the following percentages of our total net broadcasting revenue and
broadcast cash flow in 1999:
<TABLE>
<CAPTION>
MARKET % OF NET BROADCASTING REVENUE % OF BROADCAST CASH FLOW
------ ----------------------------- ------------------------
<S> <C> <C>
Albuquerque................. 11.0% 11.8%
Providence.................. 9.9 9.2
Salt Lake City.............. 9.2 8.0
Little Rock................. 6.1 4.6
Modesto..................... 5.8 8.3
Colorado Springs............ 5.7 7.3
</TABLE>
In 1996, we received a civil investigative demand from the Department of
Justice concerning our acquisition of all of the assets of KRST-FM in
Albuquerque, New Mexico on October 9, 1996. The demand requested written answers
to interrogatories and the production of documents concerning the radio station
market in Albuquerque, in general, and the KRST acquisition, in particular, to
enable the Department of Justice to determine, among other things, whether the
KRST acquisition would result in excessive concentration in the market. We
responded to the demand. The Department of Justice requested supplemental
information in 1997, to which we also responded. This matter remains open. If
the Department of Justice were to proceed with and successfully challenge the
KRST acquisition, we may be required to divest one or more radio stations in
Albuquerque. See Item 3, Legal Proceedings.
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<PAGE> 28
SIGNIFICANT COMPETITION IN OUR INDUSTRY--BECAUSE THE RADIO BROADCASTING
INDUSTRY IS HIGHLY COMPETITIVE, WE MAY LOSE AUDIENCE SHARE AND ADVERTISING
REVENUE.
Our radio stations face heavy competition from other radio stations in each
market for audience share and advertising revenue. We also compete with other
media such as television, newspapers, direct mail and outdoor advertising for
advertising revenue. A decrease in either audience share or advertising revenue
could result in decreased cash flow, which could impair our ability to, among
other things, service our debt obligations, and which could adversely affect the
value of our common stock. The radio broadcasting industry is also facing
competition from new media technologies that are being developed such as the
following:
- audio programming by cable television systems, direct broadcasting
satellite systems and other digital audio broadcasting formats,
- satellite-delivered digital audio radio service, which could result in
the introduction of several new satellite radio services with sound
quality equivalent to that of compact discs, and
- in-band-on-channel digital radio, which could provide digital radio
services in the same frequency range currently occupied by traditional AM
and FM radio services.
We cannot predict either the extent to which such competition will
materialize or, if such competition materializes, the extent of its effect on
our business. The Internet has also created a new form of competition.
EXTENSIVE REGULATION OF OUR INDUSTRY--THE FEDERAL COMMUNICATIONS
COMMISSION'S EXTENSIVE REGULATION OF THE RADIO BROADCASTING INDUSTRY LIMITS
OUR ABILITY TO OWN AND OPERATE RADIO STATIONS AND OTHER MEDIA OUTLETS.
LICENSES. The radio broadcasting industry is subject to extensive
regulation by the FCC under the Communications Act of 1934, as amended.
Issuance, renewal or transfer of radio broadcast station operating licenses
requires FCC approval, and we cannot operate our radio stations without FCC
licenses. The failure to renew our licenses could prevent us from operating the
affected stations and generating revenue from them. If the FCC decides to
include conditions or qualifications in any of our licenses, we may be limited
in the manner in which we may operate the affected station.
For a discussion of radio licensing, see the discussion above in this Item
1 under the heading "Federal Regulation of Radio Broadcasting" and the
subheading "License Grant and Renewal."
OWNERSHIP. The Communications Act and FCC rules impose specific limits on
the number of stations and other media outlets an entity can own in a single
market. The FCC attributes interests held by, among others, an entity's
officers, directors and stockholders to that entity for purposes of applying
these ownership limitations. The existing ownership rules or proposed new rules
could affect our acquisition strategy because they may prevent us from acquiring
additional stations in a particular market. We may also be prevented from
engaging in a swap transaction if the swap would cause the other company to
violate these rules.
For a more detailed discussion of these ownership limitations and their
impact on our business, see the discussion above in this Item 1 under the
heading "Federal Regulation of Radio Broadcasting" and the subheading "Ownership
Matters."
ITEM 2. PROPERTIES
The types of properties required to support each of our radio stations
include offices, studios, transmitter sites and antenna sites. A station's
studios are generally housed with its offices in business districts. The
transmitter sites and antenna sites are generally located so as to provide
maximum market coverage.
We currently own studio facilities and transmitter and antenna sites in
various locations. We expect to acquire additional real estate in connection
with our pending acquisitions. We lease our remaining studio and office
facilities, including office space in Las Vegas, Nevada and Wexford,
Pennsylvania which is not related to the operations of a particular station, and
we lease our remaining transmitter and antenna sites. We do not anticipate any
difficulties in renewing any facility leases or in leasing alternative or
additional space, if required.
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<PAGE> 29
We own substantially all of our other equipment, consisting principally of
transmitting antennae, transmitters, studio equipment and general office
equipment.
No one property is material to our operations. We believe that our
properties are generally in good condition and suitable for our operations.
Nonetheless, we continually look for opportunities to upgrade our properties and
intend to upgrade studios, office space and transmission facilities in several
markets.
Substantially all of our properties and equipment serve as collateral for
Citadel Broadcasting's obligations under its credit facility. See Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, under the heading "Liquidity and Capital Resources."
ITEM 3. LEGAL PROCEEDINGS
We currently and from time to time are involved in litigation incidental to
the conduct of our business, but we are not a party to any lawsuit or proceeding
which, in our opinion, is likely to have a material adverse effect on us.
We received civil investigative demands from the Department of Justice
pursuant to which the Department of Justice requested information from us to
determine whether we violated particular antitrust laws. One investigative
demand was issued on September 27, 1996 and concerns our acquisition of all of
the assets of KRST-FM in Albuquerque, New Mexico on October 9, 1996. The demand
requested written answers to interrogatories and the production of documents
concerning the radio station market in Albuquerque, in general, and the KRST
acquisition, in particular, to enable the Department of Justice to determine,
among other things, whether the KRST acquisition would result in excessive
concentration in the market. We responded to the demand. The Department of
Justice requested supplemental information on January 27, 1997, to which we also
responded. This matter remains open. If the Department of Justice were to
proceed with and successfully challenge the KRST acquisition, we may be required
to divest one or more radio stations in Albuquerque.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The only outstanding common equity of Citadel Communications is its common
stock, par value $.001 per share. Our common stock is traded on the Nasdaq
National Market under the symbol "CITC." Public trading of our common stock
began on July 1, 1998. The high and low closing prices per share for our common
stock as reported by The Nasdaq Stock Market during 1998 and 1999 were as
follows:
<TABLE>
<CAPTION>
1998 HIGH LOW
- ---- ------ ------
<S> <C> <C>
Quarter Ended September 30.................................. $26.75 $17.75
Quarter Ended December 31................................... $29.38 $14.88
</TABLE>
<TABLE>
<CAPTION>
1999 HIGH LOW
- ---- ------ ------
<S> <C> <C>
Quarter Ended March 31...................................... $33.25 $22.75
Quarter Ended June 30....................................... $37.75 $27.50
Quarter Ended September 30.................................. $39.75 $28.88
Quarter Ended December 31................................... $64.88 $33.25
</TABLE>
On March 15, 2000, there were 36,811,670 outstanding shares of our common
stock and there were approximately 70 record holders of our common stock.
However, we believe the number of beneficial owners is significantly greater.
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<PAGE> 30
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain earnings to finance the growth and development of our
business and do not anticipate declaring or paying cash dividends on our common
stock in the foreseeable future. Additionally, the terms of Citadel
Broadcasting's credit facility prohibit Citadel Communications from declaring or
paying any such cash dividends without consent of the lenders under the
facility. Declaration or payment of future permitted dividends, if any, will be
at the discretion of our Board of Directors after taking into account various
factors, including our financial condition, operating results, current and
anticipated cash needs and other factors our Board of Directors deems relevant.
The terms of the various documents governing Citadel Broadcasting's indebtedness
and its exchangeable preferred stock impose significant restrictions on the
payment of dividends and the making of loans by Citadel Broadcasting to Citadel
Communications. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations. Because we are a holding company, we do not
have any other source from which to pay cash dividends on our common stock.
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated historical financial data presented below as of
and for each of the years ended December 31, 1995, 1996, 1997, 1998 and 1999 are
derived from the consolidated financial statements of Citadel Communications.
These consolidated financial statements have been audited by KPMG LLP,
independent certified public accountants. Our consolidated financial statements
as of December 31, 1998 and 1999 and for each of the years in the three-year
period ended December 31, 1999 and the independent auditors' report on those
consolidated financial statements, are included elsewhere in this report. Our
financial results are not comparable from year to year because of the
acquisition and disposition of various radio stations. As you review the
information contained in the following table, you should note the following:
-- Interest Expense. Interest expense includes debt issuance costs and
debt discount amortization of approximately $132,000, $371,000,
$441,000, $717,000 and $1,849,000 for the years ended December 31,
1995, 1996, 1997, 1998 and 1999, respectively.
-- Extraordinary Loss. On October 9, 1996, we repaid our long-term debt
of $31.3 million, payable to a financial institution, and a note
payable to a related party of $7.0 million. The early retirement of
the long-term debt resulted in a $1.8 million extraordinary loss due
to prepayment premiums and the write-off of debt issuance costs.
-- Cash Dividends. We have not declared cash dividends on our common
stock in the last two fiscal years.
-- Income (Loss) From Discontinued Operations, Net of Tax. In December
1999, we decided to discontinue the operations of our internet service
provider. The discontinued operations, net of tax have been separately
identified for all years in which we operated the internet service
provider.
-- Net Loss Per Common Share. Basic and diluted net loss per common share
are the same for all periods presented due to our net losses.
-- Other Income, Net. Other income includes gain/(loss) on sales of radio
stations and property and equipment of approximately $707,000,
$(2,000), $0, $1,045,000 and $(1,208,000) for the years ended December
31, 1995, 1996, 1997, 1998 and 1999, respectively.
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<PAGE> 31
The selected consolidated historical financial data below should be read in
conjunction with, and is qualified by reference to, Citadel Communications'
Consolidated Financial Statements and Notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this report.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1995 1996 1997 1998 1999
--------- --------- --------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net broadcasting revenue............. $ 34,112 $ 45,413 $ 89,249 $ 133,312 $ 178,495
Station operating expenses........... 26,832 33,232 64,764 91,845 115,312
Depreciation and amortization........ 4,921 5,189 14,485 25,970 35,749
Corporate general and
administrative..................... 2,274 3,248 3,530 4,295 7,010
Non-cash deferred compensation....... -- -- -- 74 1,727
--------- --------- --------- ---------- ----------
Operating income..................... 85 3,744 6,470 11,128 18,697
Interest expense..................... 5,242 6,155 12,873 18,126 25,385
Other income, net.................... 781 414 450 1,651 388
--------- --------- --------- ---------- ----------
Loss before income taxes,
extraordinary item and discontinued
operations......................... (4,376) (1,997) (5,953) (5,347) (6,300)
Income tax benefit................... -- -- (770) (1,395) (1,647)
--------- --------- --------- ---------- ----------
Loss before extraordinary item and
discontinued operations............ (4,376) (1,997) (5,183) (3,952) (4,653)
Extraordinary loss................... -- (1,769) -- -- --
Income (loss) from discontinued
operations, net of tax............. -- -- (102) 21 (4,275)
--------- --------- --------- ---------- ----------
Net loss............................. $ (4,376) $ (3,766) $ (5,285) $ (3,931) $ (8,928)
Dividend requirement for exchangeable
preferred stock.................... -- -- 6,633 14,586 14,103
--------- --------- --------- ---------- ----------
Net loss applicable to common
shares............................. $ (4,376) $ (3,766) $ (11,918) $ (18,517) $ (23,031)
========= ========= ========= ========== ==========
Basic and diluted net loss per common
share.............................. $ (1.35) $ (1.18) $ (3.72) $ (1.51) $ (.80)
Weighted average common shares
outstanding........................ 3,234,996 3,196,551 3,199,467 12,297,588 28,779,712
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1996 1997 1998 1999
------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................ $ 1,005 $ 1,588 $ 7,685 $102,655 $ 17,981
Working capital (deficiency)............. 2,928 (4,195) 22,594 153,000 54,777
Intangible assets, net................... 15,093 51,802 268,690 266,446 538,664
Total assets............................. 37,444 102,315 344,172 471,768 716,613
Long-term debt (including current
portion)............................... 43,046 90,714 189,699 211,299 345,867
Exchangeable preferred stock............. -- -- 102,010 116,775 85,362
Shareholders' equity (deficit)........... (9,177) 6,070 16,132 103,963 219,209
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Citadel Communications Corporation was formed March 24, 1993 as a Nevada
corporation and is a holding company, which owns all of the issued and
outstanding common stock of Citadel Broadcasting Company. Citadel License, Inc.
was a wholly owned subsidiary of Citadel Broadcasting. On December 28, 1999,
Citadel License was merged into Citadel Broadcasting. Citadel Broadcasting owns
and operates radio stations and holds FCC licenses in Arkansas, California,
Colorado, Idaho, Indiana, Louisiana, Maine, Massachusetts, Michigan, Nevada,
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<PAGE> 32
New Hampshire, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, South
Carolina, Utah and Washington.
In addition, Citadel Broadcasting owns and operates an internet service
provider, offering its subscribers a variety of services, including electronic
mail and access to the internet. In December 1999, Citadel Broadcasting decided
to discontinue its internet service operations.
General economic conditions have an impact on our business and financial
results. From time to time the markets in which we operate experience weak
economic conditions that may negatively affect our revenue. However, we believe
that this impact is somewhat mitigated by our diverse geographical presence. In
addition, our financial results are also dependent on a number of factors,
including the general strength of the local and national economies, population
growth, the ability to provide popular programming, local market and regional
competition, relative efficiency of radio broadcasting compared to other
advertising media, signal strength and government regulation and policies.
In the following analysis, we discuss our broadcast cash flow. The
performance of a radio station group is customarily measured by its ability to
generate broadcast cash flow. The two components of broadcast cash flow are
gross revenue, net of agency commissions, and operating expenses, excluding
depreciation and amortization, corporate general and administrative expenses and
non-cash and non-recurring charges. Broadcast cash flow assists in comparing
performance on a consistent basis across companies without regard to
depreciation and amortization, which can vary significantly depending on
accounting methods, particularly when acquisitions are involved. Earnings before
interest, taxes, depreciation and amortization, or EBITDA, consist of operating
income (loss) before depreciation and amortization. Although broadcast cash flow
and EBITDA are not measures of performance calculated in accordance with
generally accepted accounting principles, we believe that they are useful to an
investor in evaluating our company because they are measures widely used in the
broadcasting industry to evaluate a radio company's operating performance.
However, broadcast cash flow and EBITDA should not be considered in isolation or
as substitutes for net income, cash flows from operating activities and other
income or cash flow statement data prepared in accordance with generally
accepted accounting principles as a measure of liquidity or profitability.
The principal source of our revenue is the sale of broadcasting time on our
radio stations for advertising. As a result, our revenue is affected primarily
by the advertising rates our radio stations charge. Correspondingly, the rates
are based upon a station's ability to attract audiences in the demographic
groups targeted by its advertisers, as measured principally by periodic Arbitron
Radio Market Reports. The number of advertisements that can be broadcast without
jeopardizing listening levels, and the resulting ratings, is limited in part by
the format of a particular station. Each of our stations has a general
pre-determined level of on-air inventory that it makes available for
advertising, which may be different at different times of the day and tends to
remain stable over time. Much of our selling activity is based on demand for our
radio stations' on-air inventory and, in general, we respond to this demand by
varying prices rather than by changing the available inventory.
In the broadcasting industry, radio stations often utilize trade or barter
agreements to exchange advertising time for goods or services, such as other
media advertising, travel or lodging, in lieu of cash. In order to preserve most
of our on-air inventory for cash advertising, we generally enter into trade
agreements only if the goods or services bartered to us will be used in our
business. We have generally sold over 90% of our advertising time for cash,
although this percentage may fluctuate by quarter. In addition, it is our
general policy not to preempt advertising announcements paid for in cash with
advertising announcements paid for in trade. We include trade or barter amounts
in our net broadcasting revenue.
Our revenue varies throughout the year. As is typical in the radio
broadcasting industry, the first calendar quarter generally produces the lowest
revenue, and the fourth quarter generally produces the highest revenue.
The primary operating expenses incurred in the ownership and operation of
radio stations include employee salaries and commissions, programming expenses
and advertising and promotional expenses. We strive to control these expenses by
working closely with local station management. We also incur, and will continue
to incur, significant depreciation, amortization and interest expense as a
result of completed and anticipated future acquisitions of stations, and
existing and future borrowings.
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<PAGE> 33
In December 1999, we decided to discontinue the operations of our internet
service provider. As a result of this decision, we have adopted a plan for the
disposition by sale of the internet service provider. This plan includes the
sale of subscribers and all related internet equipment. We are currently in
negotiations with other internet service providers and anticipate finalizing the
sale by the end of the second quarter of 2000. However, there can be no
assurance that the sale will be completed as anticipated.
Our internet service provider recorded gross revenue and net income (loss)
of $4.5 million and $(4.3) million, respectively, for the year ended December
31, 1999 and $2.1 million and $0.02 million, respectively, for the year ended
December 31, 1998. The operations of the internet service provider have been
segregated and presented as discontinued operations, net of tax, in the
consolidated financial statements. The net loss for 1999 from discontinued
operations includes an estimate of operational losses for 2000 of approximately
$0.6 million.
In 1999, our radio stations derived approximately 81% of their net
broadcasting revenue from local and regional advertising in the markets in which
they operate, and the remainder resulted principally from the sale of national
advertising. Local and regional advertising is sold primarily by each station's
sales staff. To generate national advertising sales, we engage a national
advertising representative firm. We believe that the volume of national
advertising revenue tends to adjust to shifts in a station's audience share
position more rapidly than does the volume of local and regional advertising
revenue. Therefore, we focus on sales of local and regional advertising. During
the year ended December 31, 1999 and 1998, no single advertiser accounted for
more than 10% of our net broadcasting revenue.
Our advertising revenue is typically collected within 120 days of the date
on which the related advertisement is aired. Most accrued expenses, however, are
paid within 45 to 60 days. As a result of this time lag, working capital
requirements have increased as we have grown and will likely increase in the
future.
Historically, we have generated net losses primarily as a result of
significant charges for depreciation and amortization relating to the
acquisition of radio stations and interest charges on outstanding debt. We
amortize FCC licenses and goodwill attributable to the acquisition of radio
stations over a 15-year period. Based upon the large number of acquisitions that
were consummated within the last two years, we anticipate that depreciation and
amortization charges will continue to be significant for several years. To the
extent that we complete additional acquisitions, our depreciation and
amortization charges are likely to increase. We expect that we will continue to
incur net losses through at least 2000.
We consolidate the operations of stations operated under local marketing
agreements. The Emerging Issues Task Force is reviewing the accounting method
for contractual management arrangements and may determine that consolidation is
appropriate only if certain requirements for controlling financial interest are
met. Because the provisions of our existing local marketing agreement do not
meet the proposed control requirements, if the Emerging Issues Task Force
proposal is approved as drafted, consolidation of the station operated under the
local marketing agreement may no longer be appropriate.
RESULTS OF OPERATIONS
Our consolidated financial statements tend not to be directly comparable
from period to period due to acquisition activity. Our acquisitions during the
year ended December 31, 1999 and 1998, all of which have been accounted for
using the purchase method of accounting, and the results of operations of which
have been included since the date of acquisition, were as follows:
1998 Acquisitions and Dispositions. WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, Pennsylvania were acquired on January 2, 1998. KQFC-FM,
KKGL-FM and KBOI-AM in Boise, Idaho were acquired on February 12, 1998. WCTP-FM,
WCTD-FM and WKJN-AM in Wilkes-Barre/Scranton, Pennsylvania were acquired on
March 26, 1998. KIZN-FM and KZMG-FM in Boise, Idaho were acquired on April 21,
1998. On July 7, 1998, we sold WEST-AM in Allentown, Pennsylvania, in connection
with a prior acquisition. We also sold all of our stations in the Quincy,
Illinois market on October 7, 1998. KAAY-AM in Little Rock, Arkansas was
acquired on November 17, 1998. In conjunction with this acquisition, we sold
KRNN-AM in Little Rock, Arkansas. Digital Planet, L.C., Internet Technology
Systems, Inc., In Quo, The Johnson Connection, LLC and the
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<PAGE> 34
Friendly Net, LLC, all in Salt Lake City, Utah, were acquired on September 18,
1998, September 29, 1998, October 15, 1998, October 26, 1998 and December 8,
1998, respectively.
1999 Acquisitions and Dispositions. WBHT-FM in Wilkes-Barre/Scranton,
Pennsylvania was acquired on January 4, 1999. Prior to the acquisition, we had
operated WBHT-FM under a local marketing agreement since July 3, 1997. On
February 9, 1999 we acquired the assets of 62nd Street Broadcasting of Saginaw,
LLC. The acquisition of these assets included five FM radio stations and one AM
radio station in Saginaw/Bay City, Michigan. WHYL-AM/FM in Carlisle,
Pennsylvania were acquired on February 17, 1999. On March 17, 1999, we acquired
all of the outstanding shares of capital stock of Citywide Communications, Inc.
and all of the outstanding warrants to acquire shares of capital stock of
Citywide. In connection with the acquisition, we acquired six FM and three AM
radio stations in the Baton Rouge and Lafayette, Louisiana markets. On April 30,
1999, we purchased KVOR-AM and KTWK-AM in Colorado Springs, Colorado and
KEYF-AM/FM in Spokane, Washington. In addition, we exchanged KKLI-FM for KSPZ-FM
in Colorado Springs. On May 3, 1999, we acquired WKQV-FM in
Wilkes-Barre/Scranton, Pennsylvania and KWHK-FM in Spokane. On June 30, 1999, we
acquired substantially all of the assets of Wicks Broadcast Group Limited
Partnership and related entities. The acquisition of these assets included ten
FM and six AM radio stations serving the Charleston, South Carolina; Binghamton,
New York; Muncie, Indiana and Kokomo, Indiana markets. On August 31, 1999, we
acquired all of the outstanding shares of capital stock of Fuller-Jeffrey
Broadcasting Companies, Inc. In connection with the acquisition, we acquired ten
FM radio stations in Portsmouth, New Hampshire and Portland, Maine. On November
1, 1999 we acquired KOOJ-FM in Baton Rouge, Louisiana and on November 9, 1999,
we sold substantially all of the assets of our 18 FM and seven AM radio stations
in Eugene and Medford, Oregon; Tri-Cities, Washington; Billings, Montana; and
Johnstown and State College, Pennsylvania. On December 23, 1999, we acquired
four FM radio stations and one AM radio station in Oklahoma City, Oklahoma.
Brainiac Services, Inc., an internet service provider in Riverside, Rhode
Island, was acquired on March 1, 1999.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Net Broadcasting Revenue. Net broadcasting revenue increased $45.2 million
or 33.9% to $178.5 million for the year ended December 31, 1999 from $133.3
million for the year ended December 31, 1998, primarily due to the inclusion of
revenue from the acquisition of radio stations acquired in 1999. Barter revenue,
which is included in net broadcasting revenue, increased $7.3 million to $18.3
million for the year ended December 31, 1999 from $11.0 million for the year
ended December 31, 1998. For stations owned and operated over the comparable
period in 1999 and 1998, net broadcasting revenue improved $18.0 million or
15.9% to $131.1 million in 1999 from $113.1 million in 1998, primarily due to
increased ratings and improved selling efforts.
Station Operating Expenses. Station operating expenses increased $23.5
million or 25.6% to $115.3 million for the year ended December 31, 1999 from
$91.8 million for the year ended December 31, 1998. Barter expenses, which are
included in station operating expenses, increased $2.2 million to $11.7 million
for the year ended December 31, 1999 from $9.5 million for the year ended
December 31, 1998. The increase in station operating expenses was primarily
attributable to the inclusion of station operating expenses of the radio station
acquisitions completed in 1999.
Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow increased $21.7 million or 52.3% to $63.2 million for the year ended
December 31, 1999 from $41.5 million for the year ended December 31, 1998. For
stations owned and operated over the comparable periods in 1999 and 1998,
broadcast cash flow increased $9.8 million or 25.9% to $47.6 million in 1999
from $37.8 million in 1998. As a percentage of net broadcasting revenue,
broadcast cash flow improved to 35.4% for the year ended December 31, 1999
compared to 31.1% for the year ended December 31, 1998.
Corporate General and Administrative Expenses (Includes Non-Cash Deferred
Compensation). Corporate general and administrative expenses increased $4.3
million or 97.7% to $8.7 million for the year ended December 31, 1999 from $4.4
million for the year ended December 31, 1998. The increase was due primarily to
a $1.7 million increase in non-cash deferred compensation related to stock
options as well as an increase in staffing levels and associated costs needed to
support our growth, increased professional fees and expenses due to public
company reporting requirements and costs incurred in unsuccessful acquisitions.
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EBITDA. As a result of the factors described above, EBITDA increased $17.3
million or 46.6% to $54.4 million for the year ended December 31, 1999 from
$37.1 million for the year ended December 31, 1998.
Depreciation and Amortization. Depreciation and amortization expense
increased $9.8 million or 37.7% to $35.8 million for the year ended December 31,
1999 from $26.0 million for the year ended December 31, 1998, primarily due to
radio station acquisitions completed during 1999.
Interest Expense. Interest expense increased approximately $7.3 million or
40.3% to $25.4 million for the year ended December 31, 1999 from $18.1 million
for the year ended December 31, 1998, primarily due to interest expense
associated with Citadel Broadcasting's 9 1/4% Senior Subordinated Notes issued
on November 19, 1998.
Loss (Gain) on Sale of Assets. The loss on sale of assets in 1999 of $1.2
million resulted primarily from the loss on the sale of 25 radio stations in six
markets in November 1999 and the loss on the sale of certain real estate of
approximately $.9 million and $.3 million, respectively. The gain on sale of
assets in 1998 resulted primarily from the gain on the sale of four radio
stations in Quincy, Illinois aggregating approximately $1.3 million, offset by
certain other dispositions of assets resulting in losses.
Income Tax Benefit. The income tax benefit in 1999 and 1998 represents the
reversal of deferred tax liabilities established at the date of acquisition due
to differences in the tax bases and the financial statement carrying amounts of
intangibles and fixed assets acquired in stock-based acquisitions, offset by
federal alternative minimum tax and state tax expense. The increase in the net
tax benefit of $.3 million when comparing the year ended December 31, 1999 to
1998 is due to the stock acquisitions completed in 1999 offset by increased
federal alternative minimum tax and state tax expense.
Income (Loss) From Discontinued Operations, Net of Tax. The increase in
losses from discontinued operations of $4.3 million when comparing the year
ended December 31, 1999 to 1998 is primarily due to increased local and long
distance telephone charges, losses from customer accounts, sales and technical
outsourcing costs and estimated operating losses of approximately $.6 million to
be incurred in the year 2000 until the subscribers and equipment are sold and
the operations are discontinued.
Net Loss. Net loss increased $5.0 million or 128.2% to $8.9 million for the
year ended December 31, 1999 from $3.9 million for the year ended December 31,
1998. This increase in loss is primarily due to the increase in loss from
discontinued operations of $4.3 million.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Net Broadcasting Revenue. Net broadcasting revenue increased $44.1 million
or 49.4% to $133.3 million for the year ended December 31, 1998 from $89.2
million for the year ended December 31, 1997. The inclusion of revenue from the
acquisitions of radio stations and revenue generated from local marketing
agreements entered into during 1998 provided $6.3 million of the increase.
Barter revenue, which is included in net broadcasting revenue, increased $3.6
million to $11.0 million for the year ended December 31, 1998 from $7.4 million
for the year ended December 31, 1997. For stations owned and operated over the
comparable periods in 1998 and 1997, net broadcasting revenue improved $39.3
million or 64.3% to $100.4 million in 1998 from $61.1 million in 1997, primarily
due to increased ratings and improved selling efforts.
Station Operating Expenses. Station operating expenses increased $27.0
million or 41.7% to $91.8 million for the year ended December 31, 1998 from
$64.8 million for the year ended December 31, 1997. Barter expenses, which are
included in station operating expenses, increased $2.4 million to $9.5 million
for the year ended December 31, 1998 from $7.1 million for the year ended
December 31, 1997. The increase in station operating expenses was primarily
attributable to the inclusion of station operating expenses of the radio station
acquisitions and the local marketing agreements entered into during 1998.
Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow increased $17.0 million or 69.4% to $41.5 million for the year ended
December 31, 1998 from $24.5 million for the year ended December 31, 1997. As a
percentage of net broadcasting revenue, broadcast cash flow improved to 31.1%
for the year ended December 31, 1998 compared to 27.5% for the year ended
December 31, 1997.
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Corporate General and Administrative Expenses (Includes Non-Cash Deferred
Compensation). Corporate general and administrative expenses increased $0.9
million or 25.7% to $4.4 million for the year ended December 31, 1998 from $3.5
million for the year ended December 31, 1997. The increase was due primarily to
an increase in staffing levels needed to support our growth.
EBITDA. As a result of the factors described above, EBITDA increased $16.1
million or 76.7% to $37.1 million for the year ended December 31, 1998 from
$21.0 million for the year ended December 31, 1997.
Depreciation and Amortization. Depreciation and amortization expense
increased $11.5 million or 79.3% to $26.0 million for the year ended December
31, 1998 from $14.5 million for the year ended December 31, 1997, primarily due
to radio station acquisitions completed during 1998 and late 1997.
Interest Expense. Interest expense increased approximately $5.2 million or
40.3% to $18.1 million for the year ended December 31, 1998 from $12.9 million
for the year ended December 31, 1997, primarily due to interest expense
associated with additional borrowings completed in 1998 and 1997, offset by a
repayment of the borrowings in the third quarter of 1998 from the net proceeds
of our initial public offering of our common stock in July 1998.
Loss (Gain) on Sale of Assets. The gain on sale of assets in 1998 resulted
primarily from the gain on the sale of four radio stations in Quincy, Illinois
aggregating approximately $1.3 million, offset by certain other dispositions of
assets resulting in losses.
Income Tax Benefit. The income tax benefit in 1998 and 1997 represents the
reversal of deferred tax liabilities established at the date of acquisition due
to differences in the tax bases and the financial statement carrying amounts of
intangibles and fixed assets acquired in stock-based acquisitions, offset by
federal alternative minimum tax and state tax expense in 1998. For the year
ended December 31, 1997, we generated a net loss for both financial reporting
and income tax purposes; therefore, no current tax provision was recorded.
Net Loss. As a result of the factors described above, net loss decreased
$1.4 million or 26.4% to $3.9 million for the year ended December 31, 1998 from
$5.3 million for the year ended December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Overview. Recent liquidity needs have been driven by our acquisition
strategy. Our principal liquidity requirements are for acquisition financing,
debt service, working capital and general and corporate purposes, including
capital expenditures. Our acquisition strategy has required, and is expected to
continue in the foreseeable future to require, a significant portion of our
capital resources. We expect that our debt service within the next twelve
months, without regard to future acquisitions, will be approximately $30.8
million, including approximately $21.0 million for interest on Citadel
Broadcasting's 10 1/4% Senior Subordinated Notes due 2007 and 9 1/4% Senior
Subordinated Notes due 2008 and approximately $9.8 million for interest on
Citadel Broadcasting's credit facility. Citadel Broadcasting's 13 1/4%
Exchangeable Preferred Stock does not require cash dividends through July 1,
2002. Citadel Broadcasting redeemed approximately 35% of the exchangeable
preferred stock in August of 1999.
We have financed our past acquisitions through bank borrowings, sales of
equity and debt securities, internally generated funds and proceeds from asset
sales. We expect that financing for future acquisitions will be provided from
the same sources.
An important factor in management financing decisions is the maintenance of
leverage ratios consistent with our long-term growth strategy. We recognize that
we may require additional resources or may need to consider modifications to our
expansion plans. To the extent we are unable to obtain additional funding, as
needed, we have contingency plans, which include curtailing capital expenditure
activities, and reducing infrastructure costs associated with expansion and
development plans. No assurance can be given that we will be successful in
raising additional capital, as needed, achieving profitable results or entering
into new markets.
At December 31, 1999, we held approximately $17.9 million in cash and cash
equivalents and had approximately $247.6 million in unborrowed availability
under Citadel Broadcasting's credit facility. This
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unborrowed availability has been reduced for outstanding letters of credit of
approximately $20.4 million at December 31, 1999.
Net Cash Provided by Operating Activities. For the twelve months ended
December 31, 1999, net cash provided by operating activities increased $1.4
million to $15.4 million from $14.0 million in 1998. This increase is primarily
due to the operating activities of the stations acquired in 1999, offset by the
operating activities of the discontinued operations.
Net Cash Used in Investing Activities. For the twelve months ended December
31, 1999, net cash used in investing activities, primarily for station
acquisitions, increased $272.0 million to $318.4 million from $46.4 million in
1998. The increase is primarily due to the acquisition of 57 radio stations in
1999, whereas 11 radio stations were acquired in 1998.
Net Cash Provided by Financing Activities. For the twelve months ended
December 31, 1999, net cash provided by financing activities increased $91.0
million to $218.4 million from $127.4 million in 1998. This increase is
primarily the result of our stock offering completed on June 25, 1999 and
additional borrowings of $132.0 million under the credit facility offset by the
partial redemption of exchangeable preferred stock of approximately $51.7
million. We sold 5,000,000 shares of our common stock at $29.25 per share in our
June 1999 offering. The proceeds to us from the offering, net of underwriting
discounts and commissions, were approximately $140.4 million. On the same date
as the stock offering, the net proceeds we received were transferred to the
equity of Citadel Broadcasting and used by Citadel Broadcasting to redeem a
portion of its exchangeable preferred stock and to fund radio station
acquisitions completed in the second and third quarter of 1999.
2000 Stock Offering. On February 11, 2000, we sold 4,750,000 shares of our
common stock at $51.50 per share. The proceeds to us from the offering, net of
underwriting discounts and commissions, were approximately $234.8 million. A
portion of the proceeds was used to repay a portion of the indebtedness under
Citadel Broadcasting's credit facility and the remainder will be used to fund
our pending acquisitions. For further information about our pending
acquisitions, see the discussion below under the heading "Pending Acquisitions
and Recently Completed Transactions".
Credit Facility. On July 3, 1997, Citadel Broadcasting and its then
subsidiary, Citadel License, Inc., entered into an amended and restated
financing agreement, which originally allowed for revolving loan borrowings up
to a maximum of $150.0 million. Pursuant to the agreement, this amount began to
reduce quarterly on December 31, 1997. On December 17, 1999, all amounts
borrowed under this credit facility were repaid. On December 28, 1999, Citadel
License was merged into Citadel Broadcasting.
On December 17, 1999, we entered into a new credit facility with Credit
Suisse First Boston, as the lead arranger, administrative agent and collateral
agent, and the lenders named therein, which provides for the making to Citadel
Broadcasting by the lenders of term loans at any time during the period from
December 17, 1999 to December 15, 2000, in an aggregate principal amount not in
excess of $250.0 million and revolving loans at any time and from time to time
prior to March 31, 2007 (subject to extension to December 31, 2007), in the
aggregate principal amount at any one time outstanding not in excess of $150.0
million. Of the $150.0 million which is available in the form of revolving loans
under the revolving credit facility, until March 31, 2000, up to $75.0 million
of the revolving credit facility may be made available in the form of letters of
credit, and after March 31, 2000, up to $50.0 million of the revolving credit
facility may be made available in the form of letters of credit. On February 10,
2000, the credit facility was amended to increase the amount of the facility
from $400.0 million to $500.0 million. The $100.0 million increase was allocated
$75.0 million to the revolving loans and $25.0 million to the term loans. In
addition, Citadel Broadcasting may request up to $300.0 million in additional
term loans, which term loans may be made at the sole discretion of the lenders.
Of such additional $300.0 million amount, at the request of Citadel
Broadcasting, up to $100.0 million may be in the form of an increase in the
$225.0 million revolving credit commitment. The lenders are under no obligation
to make such additional $300.0 million available, whether in the form of term
loans, revolving loans or otherwise. Amounts borrowed under the credit facility
bear interest at a rate equal to an applicable margin (described below) plus
either (a) the greater of the prime rate of interest announced from time to time
by Credit Suisse First Boston, New York, New York, and the federal funds
effective rate in effect from time to time plus 0.5%, or (b) if Citadel
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Broadcasting so elects, the LIBO rate divided by one minus the eurocurrency
reserve requirements prescribed by the Federal Reserve Board or other
governmental body in effect from time to time. The applicable margin is expected
to range between 0% and 1.5% for the rate discussed in clause (a) above and
between 0.75% and 2.5% for the rate discussed in clause (b) above. The interest
rate of borrowings in December 1999 and January 2000 has ranged from 7.4% to
9.1%. Citadel Broadcasting and Citadel Communications are currently in
compliance in all material respects with the terms of the credit facility.
Draws may be made under the term loan facility solely to finance a portion
of the acquisitions currently planned by Citadel Broadcasting, to finance a
portion of future permitted acquisitions and to pay related fees and expenses.
The amount of any term loans outstanding on December 17, 2002 must be repaid in
varying quarterly installments ranging from 3.75% of the amount on March 31,
2003 to 6.25% of the amount on March 31, 2007. In addition, mandatory
prepayments must be made under the term loan facility upon the happening of
certain events.
Citadel Broadcasting used the proceeds of a $132.0 million revolving credit
loan under the credit facility to refinance its then existing $68.0 million of
revolving credit loans under its prior credit facility, to pay transaction
expenses incurred in connection with entry into the new credit facility and the
refinancing of the indebtedness under the prior credit facility and to fund
radio stations acquired in December 1999. Additional draws may be made under the
revolving credit facility, subject to the satisfaction of certain conditions,
for general corporate purposes, including for working capital, capital
expenditures, and to finance a portion of certain acquisitions contemplated by
Citadel Broadcasting and for future permitted acquisitions by Citadel
Broadcasting. At December 31, 1999, Citadel Broadcasting had approximately
$247.6 million available for borrowing under the credit facility. The revolving
credit facility must be paid in full on or before March 31, 2007 (subject to
extension until December 31, 2007). In addition, mandatory prepayments must be
made under the revolving credit facility upon the happening of certain events.
The letter of credit facility, which is a sub facility of the revolving
credit facility, provides for the issuance of letters of credit to be used by
Citadel Broadcasting as security for the obligations of Citadel Broadcasting
under agreements entered into in connection with certain radio station
acquisitions and for any other purpose related to the business of Citadel
Broadcasting.
Subject to permitted liens, the credit facility is secured by: (a) a first
priority pledge on all of Citadel Broadcasting's capital stock other than its
exchangeable preferred stock, (b) a first priority security interest in all the
existing and after-acquired property of Citadel Communications and Citadel
Broadcasting, including, without limitation, accounts, machinery, equipment,
inventory, real estate, general intangibles and investment property and (c) all
proceeds of the foregoing. The credit facility is also guaranteed by Citadel
Communications. The credit facility contains customary events of default. Upon
the occurrence of an event of default, with certain limitations, our obligations
under the credit facility, which are at that time outstanding, may become
accelerated.
The credit facility contains customary restrictive covenants, which, among
other things, and with exceptions, limit our ability to incur additional
indebtedness and liens, enter into transactions with affiliates, make
acquisitions other than acquisitions permitted under the credit facility, pay
dividends, redeem or repurchase capital stock, enter into certain sale and
leaseback transactions, consolidate, merge or effect asset sales, issue
additional equity, make capital expenditures, make investments, loans or
prepayments or change the nature of their business. We are also required to
satisfy financial covenants which will require us to maintain specified
financial ratios and to comply with financial tests, including ratios with
respect to maximum leverage, minimum interest coverage and minimum fixed charge
coverage. At December 31, 1999, Citadel Communications and Citadel Broadcasting
were in compliance with all covenants under the credit facility.
Maximum Leverage Test. The maximum leverage test requires that Citadel
Broadcasting and Citadel Communications not permit the ratio of their total debt
as of the last day of the most recently ended quarter to their consolidated
EBITDA, as adjusted for permitted acquisitions and dispositions, for the rolling
four-quarter period ending as of the last day of such quarter, to be greater
than the applicable ratio on that date. The applicable ratio through March 31,
2000 is 7.25x, and it will decline .25x for each quarter thereafter until it has
decreased to 4.00x where it will remain.
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Minimum Interest Coverage Test. The minimum interest coverage test requires
that Citadel Broadcasting and Citadel Communications not permit the ratio of
their consolidated EBITDA for any rolling four-quarter period to their
consolidated interest expense for such period, to be less than the applicable
ratio on that date. The applicable ratios range from 1.50x through December 31,
2000 to 2.50x beginning October 1, 2002.
Minimum Fixed Charges Coverage Test. The minimum fixed charges coverage
test requires that Citadel Broadcasting and Citadel Communications not permit
the ratio of their consolidated EBITDA for any rolling four-quarter period to
their fixed charges for such period to be less than 1.25 to 1.00.
Senior Subordinated Notes. On July 3, 1997, Citadel Broadcasting completed
the issuance of $101.0 million of 10 1/4% Senior Subordinated Notes due 2007.
Interest is payable semi-annually. The 10 1/4% notes may be redeemed at the
option of Citadel Broadcasting, in whole or in part, at any time on or after
July 1, 2002 at the redemption prices set forth in the indenture governing the
10 1/4% notes. In addition, at any time prior to July 1, 2000, Citadel
Broadcasting may, at its option, redeem a portion of the 10 1/4% notes with the
net proceeds of one or more Public Equity Offerings (as defined in the indenture
governing the 10 1/4% notes), at a redemption price equal to 110.25% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption.
On November 19, 1998, Citadel Broadcasting completed the issuance of $115.0
million of 9 1/4% Senior Subordinated Notes due 2008. Interest is payable
semi-annually. The 9 1/4% notes may be redeemed at the option of Citadel
Broadcasting, in whole or in part, at any time on or after November 15, 2003 at
the redemption prices set forth in the indenture governing the 9 1/4% notes. In
addition, at any time prior to November 15, 2001, Citadel Broadcasting may, at
its option, redeem a portion of the 9 1/4% notes with the net proceeds of one or
more Public Equity Offerings (as defined in the indenture governing the 9 1/4%
notes), at a redemption price equal to 109.25% of the principal amount thereof,
together with accrued and unpaid interest, if any to the date of redemption.
The indentures governing the 10 1/4% notes and the 9 1/4% notes contain
certain restrictive covenants, including limitations which restrict the ability
of Citadel Broadcasting to incur additional debt, incur liens, pay cash
dividends, or make certain other restricted payments, consummate certain asset
sales, enter into certain transactions with affiliates, merge or consolidate
with any other person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets. At December 31, 1999 Citadel
Broadcasting was in compliance with all covenants under the indentures.
Exchangeable Preferred Stock. On July 3, 1997, Citadel Broadcasting sold an
aggregate of 1,000,000 shares of its 13 1/4% Exchangeable Preferred Stock.
Dividends on the exchangeable preferred stock accrue at the rate of 13 1/4% per
annum and are payable semi-annually. On or prior to July 1, 2002, dividends are
payable in additional shares of exchangeable preferred stock having an aggregate
liquidation preference equal to the amount of such dividends, or, at the option
of Citadel Broadcasting, in cash. Thereafter, all dividends will be payable only
in cash. To date, Citadel Broadcasting has paid all dividends in additional
shares of exchangeable preferred stock. Citadel Broadcasting will be required to
redeem the exchangeable preferred stock on July 1, 2009, subject to the legal
availability of funds therefore, at a redemption price equal to the liquidation
preference thereof, plus accumulated and unpaid dividends, if any, to the date
of redemption.
Citadel Broadcasting may redeem the exchangeable preferred stock, in whole
or in part, at the option of Citadel Broadcasting, at any time on or after July
1, 2002, at declining redemption prices ranging from 107.729% to 101.104%, plus
accumulated and unpaid dividends, if any, to the date of redemption.
On August 2, 1999, Citadel Broadcasting redeemed approximately 35% of its
issued and outstanding exchangeable preferred stock. Total shares redeemed were
approximately 452,000 at a redemption price of $113.25 per share for a total of
approximately $51.2 million. In addition, Citadel Broadcasting paid
approximately $0.5 million of accrued dividends on the redeemed shares. Proceeds
from Citadel Communications' additional equity investment in Citadel
Broadcasting were utilized to complete the redemption.
The Certificate of Designation governing the exchangeable preferred stock
also contains covenants that restrict Citadel Broadcasting from taking various
actions, including, subject to specified exceptions, the incurrence of
additional indebtedness, the granting of additional liens, the making of
investments, the payment of dividends and other restricted payments, mergers,
acquisitions and other fundamental corporate changes and
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capital expenditures. At December 31, 1999, Citadel Broadcasting was in
compliance with all covenants under the Certificate of Designation.
Pending Acquisitions and Recently Completed Transactions. There are
numerous transactions currently pending which, if completed, would result in our
purchasing 48 FM and 28 AM radio stations, acquiring the right to operate one
additional FM radio station, acquiring the right to sell advertising in the
United States for one Canadian FM radio station and selling two AM radio
stations. The total cash required to fund our pending acquisitions is expected
to be approximately $510.2 million, which amount does not include 200,000 shares
of our common stock valued at $10.1 million that may be delivered in connection
with one acquisition. Under certain conditions, we may be required to pay the
$10.1 million in cash in lieu of such shares of common stock. In addition, we
purchased one FM radio station on February 10, 2000, and we sold 18 FM and seven
AM radio stations on November 9, 1999. We received approximately $26.0 million
in cash from the completed disposition; however, the cash received from this
sale plus accrued interest must be utilized as part of the purchase price for
one of our pending acquisitions as we have elected to enter into a
like-kind-exchange for federal income tax purposes. The consummation of each of
the pending transactions is subject to certain conditions, including the
approval of the FCC. Although we believe these closing conditions will be
satisfied in each case, there can be no assurance that this will be the case.
The pending acquisitions are expected to be funded from funds borrowed under
Citadel Broadcasting's credit facility, the funds received from the completed
disposition and the proceeds received from the recently completed offering of
our common stock.
Capital Expenditures. We had capital expenditures of approximately $16.6
million for the year ended December 31, 1999 compared to $4.5 million in 1998.
This increase is due primarily to the acquisition of a corporate jet, furniture
and fixtures related to the relocation of our corporate offices, the purchase of
new digital automation systems for certain markets and the construction of a new
building in Little Rock, Arkansas. Our other equipment purchases consist
primarily of broadcasting equipment and transmission tower upgrades.
In addition to acquisitions and debt service, our principal liquidity
requirements will be for working capital and general corporate purposes,
including capital expenditures, which are not expected to be material in amount.
We believe that cash from operating activities, loans under Citadel
Broadcasting's credit facility, proceeds from the November 9, 1999 disposition
and the proceeds from our recently completed offering of our common stock should
be sufficient to permit us to meet our financial obligations and to fund our
operations, including completion of our pending acquisitions, for at least the
next 12 months, although additional capital resources may be required in
connection with any further implementation of our acquisition strategy.
Year 2000 Matters. The year 2000 computer issue primarily results from the
fact that information technology hardware and software systems and other
non-information technology products containing embedded microchip processors
were originally programmed using a two digit format, as opposed to four digits,
to indicate the year. Such programming could cause a system or product failure
or other computer errors and a disruption in the operation of such systems and
products. The year 2000 issue may persist for some time after January 2000.
Our internal systems have not experienced any material year 2000 issues. We
presently believe that year 2000 issues will not pose significant operational
problems for our business going forward. We continue to monitor our operations
for year 2000 issues, and we believe that any year 2000 problems, which may
arise in our internal systems, will not have a material adverse effect on our
business, financial condition or results of operations. However, we cannot
assure you that this will be the case.
We are not aware of any material year 2000 problems encountered by our
suppliers and major advertisers to date, but have not obtained or sought
confirmations from our suppliers and major advertisers that they did not
experience year 2000 problems. Further, we cannot determine the state of their
year 2000 readiness on a going-forward basis. We cannot assure you that our
suppliers and major advertisers will be successful in ensuring that their
systems have been and will continue to be year 2000 compliant or that their
failure to do so will not have a material adverse effect on our business,
financial condition or results of operations.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk. During the normal course of business we are routinely
subjected to a variety of market risks, examples of which include, but are not
limited to, interest rate movements and collectibility of accounts receivable.
We constantly assess these risks and have established policies and practices to
protect against the adverse effects of these and other potential exposures.
Although we do not anticipate any material losses in these risk areas, no
assurance can be made that material losses will not be incurred in these areas
in the future.
Interest Rate Risk. We may be exposed to interest rate changes under
Citadel Broadcasting's credit facility, which we maintain to provide liquidity
and to fund capital expenditures and acquisitions. We constantly monitor
interest rate changes to determine the impact any change will have on our
business, financial condition or results of operations. We do not consider our
cash and cash equivalents to be subject to interest rate risk due to their short
term maturities.
Notwithstanding our efforts to manage interest rate risks, there can be no
assurance that we will be adequately protected against the risks associated with
interest rate fluctuations. Citadel Broadcasting's credit facility bears
interest equal to an applicable margin plus a variable rate. For further
discussion of Citadel Broadcasting's interest rate under the credit facility,
see Item 7, Managements' Discussion and Analysis of Financial Condition and
Results of Operations under the heading "Credit Facility." Citadel
Broadcasting's credit facility consists of revolving loans and term loans. The
revolving loans mature on March 31, 2007 (subject to extension until December
31, 2007). The term loans are subject to quarterly principle repayments starting
in March 2003 and ending December 2007. The quarterly repayments are based on a
percentage of the term loan borrowings and the percentage ranges from 3.75% in
2003 to 6.25% in 2007. At December 31, 1999, there was $132.0 million
outstanding under the revolving term loan facility at an interest rate of
8.125%. Assuming a hypothetical increase in the interest rate of 10%, the impact
on our future earnings for the next year would be approximately $1.1 million of
increased interest expense based on $132.0 million of outstanding variable debt.
In addition, the credit facility requires that no less than 50% of Citadel
Broadcasting's long-term indebtedness be subject to fixed interest rates. If
Citadel Broadcasting's total variable debt under the credit facility exceeds
this 50% threshold, Citadel Broadcasting will be required to enter into a
hedging contract that will convert a portion of the variable rate into a fixed
rate. As of December 31, 1999, Citadel Broadcasting's fixed rate debt is greater
than 50% of its outstanding indebtedness and therefore Citadel Broadcasting has
not entered into any interest rate hedging contracts.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Citadel Communications Corporation's Consolidated Financial Statements,
including the notes thereto, and supplementary financial information filed under
this Item 8 are listed in Part IV, Item 14, of this report and are included
after the signature page beginning at page F-2.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the names, ages and positions of the
directors and executive officers of Citadel Communications:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Lawrence R. Wilson 54 Chief Executive Officer, Chairman and President
Donna L. Heffner 40 Vice President, Chief Financial Officer and Secretary
D. Robert Proffitt 47 Vice President
Stuart R. Stanek 44 Vice President
Peter J. Benedetti 36 Vice President
Robert F. Fuller 59 Director
Ike Kalangis 62 Director
Ted L. Snider, Sr. 71 Director
John E. von Schlegell 45 Director
</TABLE>
Lawrence R. Wilson 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 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.
Donna L. Heffner 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.
D. Robert Proffitt joined Citadel Associates Limited Partnership and
Citadel Associates Montana Limited Partnership in 1988 as Vice President --
General Manager of KKFM-FM in Colorado Springs. 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 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 joined Citadel Associates Limited Partnership and Citadel
Associates Montana Limited Partnership in 1986 as a General Manager of KKFM-FM
in Colorado Springs. In 1988, he became General Manager of KBEE-AM/KUBL-FM in
Salt Lake City. 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 East Region for Citadel Broadcasting in June 1997.
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<PAGE> 43
Peter J. Benedetti joined Citadel Communications in April 1995 as Sales
Manager for KMGA-FM in Albuquerque 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, and in July 1999, he became President of the West Region
for Citadel Broadcasting when operations were consolidated into East and West
Regions. Prior to joining Citadel Communications, he served as an account
executive for Jacor Communications in Denver, Colorado.
Robert F. Fuller became a director of Citadel Communications and Citadel
Broadcasting in November 1999. From 1975 to 1999, he was the President and
majority owner of Fuller-Jeffrey Broadcasting Companies, Inc., a ten station
radio group purchased by Citadel Broadcasting in August 1999. Mr. Fuller brings
over 43 years of radio broadcast experience to Citadel Communications, ranging
from on-air and management positions to ownership of over 30 radio stations.
Ike Kalangis 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. 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 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.
BOARD COMPOSITION
Three 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 1998, the Fourth Amended and Restated Voting Agreement and a related
stockholders agreement among Citadel Communications and certain of its
stockholders were terminated. The Amended and Restated Voting Trust Agreement
will continue in effect until terminated in accordance with its terms.
Each director of Citadel Communications holds office until the next annual
meeting of stockholders and until his or her successor has been elected and
qualified. Officers are elected by the Board of Directors and serve at its
discretion.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 the Securities and Exchange
Commission regulations to furnish Citadel Communications with a copy of all
Section 16 forms they file.
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<PAGE> 44
To our knowledge, based solely on a review of the copies of reports filed
and written representations that no other reports were required, during or with
respect to the year ended December 31, 1999, all such Section 16(a) filing
requirements were met, except Robert F. Fuller filed a late report with respect
to one transaction and Edward T. Hardy, a former executive officer, filed a late
report with respect to two transactions.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid to our Chief Executive Officer and each of our other four most highly
compensated executive officers during 1999. Information with respect to 1997
compensation is not given for Mr. Benedetti as he did not begin service as an
executive officer until 1998.
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(2)
------------------ ---- ---------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence R. Wilson................ 1999 $ 438,319 -0- -0- 875,000 $3,413
Chairman, Chief 1998 358,319 $214,370(3) -0- 60,000 3,046
Executive Officer 1997 341,256 120,000(4) -0- -0- 3,278
and President
Donna L. Heffner.................. 1999 $ 230,000 -0- -0- 250,000 $3,489
Vice President and 1998 175,000 80,000(3) -0- 12,000 4,537
Chief Financial 1997 140,535 50,000(4) -0- -0- 3,086
Officer
D. Robert Proffitt................ 1999 $ 250,000 -0- -0- 250,000 $3,849
Vice President 1998 200,000 $ 40,000(3) -0- 12,000 3,161
1997 192,211 15,000(4) -0- -0- 2,541
Stuart R. Stanek.................. 1999 $ 230,000 -0- $26,216 250,000 $3,598
Vice President 1998 210,000 $ 50,000(3) -0- 12,000 2,635
1997 190,007 30,000(4) -0- -0- 2,529
Peter J. Benedetti................ 1999 $ 200,000 -0- $69,402 125,000 $2,202
Vice President 1998 160,000(5) $ 65,000(3) -0- 21,005 2,093
</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. The amount shown for Mr. Stanek
represents $25,309 for mortgage payments made on behalf of Mr. Stanek and
$907 for personal motor vehicle use. The amount shown for Mr. Benedetti
represents $58,568 for closing cost payments made on behalf of Mr. Benedetti
and reimbursement of the loss on the sale of a home, $7,825 for temporary
living expenses and $3,009 for personal motor vehicle use.
(2) Included for 1999 are our contributions to Citadel Communications' 401(k)
Plan (Mr. Wilson - $3,200, Ms. Heffner - $3,408, Mr. Proffitt - $3,717, Mr.
Stanek - $2,517 and Mr. Benedetti - $2,142), which contributions vest over
five years, and our payment of premiums for term life insurance (Mr. Wilson
- $213, Ms. Heffner - $81, Mr. Proffitt - $132, Mr. Stanek - $81 and Mr.
Benedetti - $60).
(3) Bonuses were earned in 1998 and paid in 1998 and 1999. Does not reflect
bonuses earned in 1997 but paid in 1998.
(4) Bonuses were earned in 1997 and paid in 1997 and 1998. Does not reflect
bonuses earned in 1996 but paid in 1997.
(5) Includes payments of $10,000 made in 1999 following a salary increase made
retroactive to November 1998.
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<PAGE> 45
The following table summarizes individual grants of options to purchase
shares of common stock of Citadel Communications to the executive officers
listed in the Summary Compensation Table during the year ended December 31,
1999:
OPTIONS GRANTED IN FISCAL 1999
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL EXERCISE MARKET POTENTIAL REALIZABLE VALUE AT ASSUMED
SECURITIES OPTIONS OR PRICE ON RATES OF STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO BASE DATE OF OPTION TERM(4)
OPTIONS EMPLOYEES PRICE GRANT EXPIRATION --------------------------------------
NAME GRANTED IN 1999 ($/SH)(1) ($/SH)(2) DATE(3) 0%($) 5%($) 10%($)
---- ---------- ---------- --------- --------- ---------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence R. Wilson(5).... 875,000 42.6% $29.25 $ 30.25 6-25-09 $875,000 $17,517,500 $43,058,750
Donna L. Heffner(5)...... 250,000 12.2 29.25 30.25 6-25-09 250,000 5,005,000 12,302,500
D. Robert Proffitt(5).... 250,000 12.2 29.25 30.25 6-25-09 250,000 5,005,000 12,302,500
Stuart R. Stanek(5)...... 250,000 12.2 29.25 30.25 6-25-09 250,000 5,005,000 12,302,500
Peter J. Benedetti(5).... 125,000 6.1 29.25 30.25 6-25-09 125,000 2,502,500 6,151,250
</TABLE>
- ---------------
(1) The exercise price equals the price to the public in Citadel Communications'
June 1999 common stock offering.
(2) The indicated market price on the date of grant was the closing market price
of the common stock.
(3) The options must be earned prior to June 25, 2004. Any portion not earned
will be forfeited. Earned options expire on the dates shown in the table.
See footnote (5).
(4) 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.
(5) The options are earned in one-fifth increments for each increase in average
stock price (calculated over 20 consecutive trading days) equal to one-fifth
of the difference between the doubled exercise price and the exercise price.
When an increment of the option is earned, the earned portion vests 20% each
year thereafter. Vesting accelerates in the event of a change in control of
Citadel Communications, as provided for in Citadel Communications' 1999
Long-Term Incentive Plan.
The following table shows the number of shares of common stock acquired and
the value realized upon exercise in 1999 of options to purchase shares of common
stock of Citadel Communications by the executive officers listed in the Summary
Compensation Table, as well as the number and value of unexercised options to
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<PAGE> 46
purchase shares of common stock of Citadel Communications (rounded to the
nearest whole share) held by such persons as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN 1999 AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END(1)
ACQUIRED ON VALUE # $
EXERCISE # REALIZED $ EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- ---------- -------------------------- -----------------------------
<S> <C> <C> <C> <C>
Lawrence R.
Wilson(2)............ 178,071 11,105,728 407,410/1,091,467 $ 24,721,516/$43,483,540
Donna L. Heffner....... 124,392 7,733,806 58,662/286,000 3,666,588/10,937,142
D. Robert Proffitt..... 124,805 7,736,520 18,421/290,800 1,119,817/11,229,342
Stuart R. Stanek....... 39,600 2,342,538 146,034/288,400 9,211,823/11,083,242
Peter J. Benedetti..... -0- -0- 7,801/147,204 402,874/5,570,746
</TABLE>
- ---------------
(1) These values have been calculated on the basis of the December 31, 1999
closing price per share of $64.875, 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, we entered into an employment agreement with Lawrence R.
Wilson which has an initial term ending in June 2001. The agreement provides for
annual base salary compensation, annual increases to base salary and an annual
bonus calculated as a percentage of base salary in effect at the end of the year
and based on our annual performance criteria. The annual performance criteria
were not achieved for the year ended December 31, 1999 and, therefore, no bonus
was earned for 1999. For 1999, the Compensation Committee of our Board of
Directors approved a base salary for Mr. Wilson in an amount greater than that
provided for in the agreement, following the Committee's review of compensation
levels at comparable public companies.
Mr. Wilson's employment will terminate upon Mr. Wilson's becoming
permanently disabled or upon a liquidation or dissolution of Citadel
Communications, a sale, transfer or other disposition of all of the assets of
Citadel Broadcasting on a consolidated basis, or 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 Incentive Plan under which
employees, officers, directors (excluding non-employee directors), consultants,
independent contractors and advisors of Citadel Communications 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
of Citadel Communications, none of which have been granted to date. The Equity
Incentive Plan is administered by the Compensation Committee of the Citadel
Communications Board of Directors and in certain cases the Citadel
Communications Board. The Compensation Committee or the Board has authority
under the Equity Incentive
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<PAGE> 47
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
December 31, 1999, the total number of shares of common stock of Citadel
Communications that remained reserved and available for issuance under the
Equity Incentive Plan, or which may be used to provide a basis of measurement
for an award, was 2,175,807 shares, including shares underlying outstanding
grants.
Shares subject to any expired, terminated or lapsed awards are available
for subsequent grants under the Equity Incentive 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, and 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 10% 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 by such other medium or
by any 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
Citadel Communications adopted the 1999 Long-Term Incentive Plan, which is
intended to be the primary long-term incentive plan for senior management. The
Long-Term Incentive Plan provides opportunities for participants to earn the
right to purchase shares of Citadel Communications' common stock if performance
goals, measured solely by the increase in the price of the common stock, and
continued employment requirements are met. Participants under the Long-Term
Incentive Plan receive an option grant based on the Citadel Communications
Compensation Committee's evaluation of the participant's ability to contribute
to Citadel Communications' overall performance. If the option is not fully
earned during the specific five-year performance period, any portion not earned
is forfeited, and the shares become available for issuance upon exercise of
other options granted under the plan. For the full option to be earned, the
average stock price (calculated over 20 consecutive trading days) over the
exercise price must double during the performance period. If any shares become
available for additional grants under this plan, the exercise price will be the
average of the bid and asked prices of the common stock on the date of the
grant. The option is earned in one-fifth increments for each increase in average
stock price (calculated over 20 consecutive trading days) equal to one-fifth of
the difference between the doubled exercise price and the exercise price. When
an increment of the option is earned, the earned portion generally vests over a
five-year period. A total of 1,750,000 shares of common stock are reserved and
available for issuance under the Long-Term Incentive Plan.
At the time that the Citadel Communications Board of Directors adopted the
Long-Term Incentive Plan, the following option grants were made to be effective
as of the closing of Citadel Communications' common stock offering in June 1999,
subject to stockholder approval of the Long-Term Incentive Plan, which was
obtained in July 1999: 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 to the public in
Citadel Communications' June 1999 common stock offering. As of March 15, 2000,
four-fifths of each of these options had been earned. No portion has yet vested.
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<PAGE> 48
401(k) PLAN
Effective in 1993, we adopted a 401(k) Retirement Savings Plan for the
purpose of providing, at the option of the employee, retirement benefits to our
employees who have been employed for a period of one year or longer and who meet
certain other requirements of the 401(k) plan. Contributions to the 401(k) plan
are made by the employee and, on a voluntary basis, by us. We currently match
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 approximately $532,000 was made by us
during the year ended December 31, 1999.
DIRECTOR COMPENSATION
Currently, all non-employee directors are entitled to receive an annual fee
of $20,000 for their services as directors of Citadel Communications and Citadel
Broadcasting. Directors who are also our employees 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.
AUDIT AND COMPENSATION COMMITTEES
Our Board of Directors has established two committees, the Audit Committee
and the Compensation 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 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 four independent, non-employee
directors, Ted L. Snider, Sr. (Chairman), John E. von Schlegell, Ike Kalangis
and Robert F. Fuller.
The Compensation Committee reviews and makes recommendations to the Board
of Directors concerning our compensation and benefit policies and practices. The
Compensation Committee is currently composed of four non-employee directors,
John E. von Schlegell (Chairman), Ike Kalangis, Robert F. Fuller and Ted L.
Snider, Sr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, John E. von Schlegell, Ted L. Snider, Sr., Ike Kalangis,
Robert F. Fuller and former directors, Scott E. Smith and Patricia Diaz Dennis,
were members of the Compensation Committee of the Citadel Communications Board
of Directors, which determines compensation matters for Citadel Communications
and Citadel Broadcasting.
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 their shares of its common stock under the Securities
Act of 1933, as amended, for offer and sale to the public (including by way of
an underwritten public offering), upon a demand by such stockholders, and which
entitles such parties to join in any registration of equity securities of
Citadel Communications. Various stockholders have exercised their rights under
this agreement and have participated in Citadel Communications' common stock
offerings, including ABRY Broadcast Partners II, L.P. and its general partner;
Baker, Fentress & Company; The Endeavour Capital Fund Limited Partnership and
its general partner; Edward T. Hardy and Ted L. Snider, Sr. ABRY Broadcast
Partners II, L.P., is a significant stockholder of Citadel Communications. For a
portion of 1999, Baker, Fentress & Company owned more than five percent of the
outstanding common stock and Mr. Smith was an Executive Vice President of Baker,
Fentress & Company. Mr. von Schlegell is President and a shareholder of the
general partner of The Endeavour Capital Fund Limited Partnership, and Edward T.
Hardy was an executive officer 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. In addition to
those parties having registration
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<PAGE> 49
rights under the Registration Rights Agreement, each of Rio Bravo Enterprise
Associates, L.P., Donna L. Heffner, D. Robert Proffitt, Stuart R. Stanek and
Peter J. Benedetti participated as selling stockholders in Citadel
Communications' common stock offerings in 1999 and/or 2000.
Transactions with Connect Communications. On October 1, 1999, Citadel
Broadcasting acquired certain assets and subscriber agreements of Connect
Communications Corporation, an internet service provider in Arkansas, in
exchange for extinguishment of approximately $0.1 million in accounts receivable
and certain equipment owned by Citadel Broadcasting. Ted Snider, Jr., the son of
Ted L. Snider, Sr., a director of Citadel Communications and Citadel
Broadcasting, is a director and shareholder of Connect Communications
Corporation.
Connect Communications Corporation also provided telephone service to
Citadel Broadcasting during 1999. The value of the service provided in 1999 was
approximately $124,000. As of December 31, 1999, Connect Communications
Corporation owed Citadel Broadcasting approximately $69,000 for third party
telephone charges, which were to be reimbursed by Connect Communications
Corporation. We believe that the terms of our transactions with Connect
Communications Corporation are at least as favorable to us as those that could
be obtained generally from unaffiliated parties.
Consulting Agreement. On August 31, 1999, Citadel Broadcasting entered into
a seven-year Consulting Agreement with Robert F. Fuller which provides for
compensation to Mr. Fuller of $250,000 each year. In 1999, Citadel Broadcasting
paid Mr. Fuller $83,333 under this Consulting Agreement. Citadel Broadcasting
originally entered into this Consulting Agreement in connection with its
acquisition of all of the issued and outstanding shares of capital stock of
Fuller-Jeffrey Broadcasting Companies, Inc. from Mr. Fuller and Joseph N.
Jeffrey, Jr., the two former stockholders of Fuller-Jeffrey Broadcasting. Mr.
Fuller became a director of each of Citadel Communications and Citadel
Broadcasting in November 1999. We believe that the terms of the Consulting
Agreement with Mr. Fuller are at least as favorable to us as those that could be
obtained generally from unaffiliated parties.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of Citadel Communications' common stock as of March 12, 2000 by (1)
each person, entity or group known to us to beneficially own more than five
percent of the common stock, (2) each of our directors, (3) each of our
executive officers listed in the Summary Compensation Table in Item 11,
Executive Compensation, and (4) all of our directors and executive officers 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 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, 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 March 12, 2000, and that no other stockholder so
converts. The numbers and percentages of shares owned assume that these
outstanding options have been exercised by such respective stockholders as
follows:
- Lawrence R. Wilson -- 407,410 shares (including options to purchase
395,410 shares held by Rio Bravo Enterprise Associates, L.P.),
- Donna L. Heffner -- 58,662 shares,
- D. Robert Proffitt -- 20,821 shares,
- Stuart R. Stanek -- 127,234 shares,
- Peter J. Benedetti -- 7,801 shares, and
- all directors and executive officers as a group -- 621,928 shares.
49
<PAGE> 50
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED
----------------------
PERCENT OF
COMMON
BENEFICIAL OWNER NUMBER STOCK
- ---------------- --------- ----------
<S> <C> <C>
Lawrence R. Wilson(1)....................................... 2,167,956 5.8%
City Center West
Suite 400
7201 West Lake Mead Boulevard
Las Vegas, NV 89128
Donna L. Heffner(2)......................................... 177,213 *
D. Robert Proffitt(3)....................................... 173,555 *
Stuart R. Stanek(4)......................................... 209,907 *
Peter J. Benedetti(5)....................................... 11,628 *
Robert F. Fuller............................................ 10,000 *
Ike Kalangis................................................ 1,000 *
Ted L. Snider, Sr.(6)....................................... 214,817 *
John E. von Schlegell(7).................................... 84,377 *
All directors and........................................... 3,050,453 8.1%
executive officers as
a group (9 persons)(8)
ABRY Broadcast Partners II, L.P.(9)......................... 3,339,144 9.1%
18 Newbury Street
Boston, MA 02116
Putnam Investments, Inc.(10)................................ 4,071,267 11.1%
One Post Office Square
Boston, MA 02109
Janus Capital Corporation (11).............................. 3,263,430 8.9%
100 Filmore Street
Suite 300
Denver, CO 80206
</TABLE>
- ---------------
* Less than 1%
(1) The numbers of shares include 1,702,883 shares held by Rio Bravo
Enterprise Associates, L.P. The numbers of shares also include 395,410
shares of common stock which may be acquired upon exercise of options held
by Rio Bravo Enterprise Associates, L.P. Rio Bravo Enterprise Associates,
L.P. therefore beneficially owns 2,098,293 shares or 5.6% of the common
stock. Mr. Wilson, a director and executive officer, owns all of the
capital stock of Rio Bravo, Inc., the sole general partner of Rio Bravo
Enterprise Associates, L.P. The remaining shares are jointly owned by Mr.
Wilson and his spouse, Claire Wilson, or may be acquired upon exercise of
options held by Mr. Wilson.
(2) Ms. Heffner's shares are jointly owned by Ms. Heffner and her spouse, Tim
Heffner.
(3) Mr. Proffitt's shares are jointly owned by Mr. Proffitt and his spouse,
Lynette Proffitt.
(4) Mr. Stanek's shares are jointly owned by Mr. Stanek and his spouse, Kim
Stanek. The number of shares shown does not include 1,781 shares owned by
Kim Stanek.
(5) Mr. Benedetti's shares are jointly owned by Mr. Benedetti and his spouse,
Krista Benedetti.
50
<PAGE> 51
(6) The number of shares shown does not include 121,713 shares owned by Mr.
Snider's spouse.
(7) Represents 2,554 shares held by The Endeavour Capital Fund Limited
Partnership and 81,823 shares held by DVS Management, Inc. Mr. von
Schlegell is the Managing Partner of The Endeavour Capital Fund and the
President and a shareholder of DVS Management, the general partner of The
Endeavour Capital Fund.
(8) Includes shares discussed in footnotes (1) and (7).
(9) All of the shares beneficially owned by ABRY Broadcast Partners II, L.P.
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 stockholders' 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. The voting trustee is Harlan A. Levy, whose address is
1585 Broadway, 19th Floor, New York, N.Y. 10036. Dispositive power with
respect to these shares is held by Royce Yudkoff, the sole trustee of ABRY
Holdings, Co., the sole member of ABRY Holdings, LLC, the general partner
of ABRY Capital, L.P., the general partner of ABRY Broadcast Partners II,
L.P.
(10) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 17, 2000 (dated February 7, 2000) by Putnam
Investments, Inc. on behalf of itself and Marsh & McLennan Companies,
Inc., Putnam Investment Management, Inc. and The Putnam Advisory Company,
Inc., 301,000 of the shares indicated are under shared voting power among
Putnam Investments, Inc. and The Putnam Advisory Company, Inc. Of the
shares indicated, 3,598,967 shares are under shared dispositive power
between Putnam Investments, Inc. and Putnam Investment Management, Inc.,
and 472,300 shares are under shared dispositive power between Putnam
Investments, Inc. and The Putnam Advisory Company, Inc. Putnam Investment
Management, Inc. and The 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 assumes that
there has been no change in the number of shares beneficially owned from
the number of shares reported as being beneficially owned in the Schedule
13G. Pursuant to Rule 13d-4 under the Securities Exchange Act, March &
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.
(11) As reported on a Schedule 13G filed with the Securities and Exchange
Commission on January 11, 2000 (dated January 10, 2000) by Janus Capital
Corporation on behalf of itself and Thomas H. Bailey, all of the shares
indicated are under shared voting and dispositive power among Janus
Capital Corporation and Mr. Bailey. Mr. Bailey owns approximately 12.2% of
Janus Capital. The number of shares shown assumes that there has been no
change in the number of shares beneficially owned from the number of
shares reported as being beneficially owned in the Schedule 13G. In the
Schedule 13G, Mr. Bailey disclaimed beneficial ownership in these shares.
Janus Capital and Mr. Bailey declared that they do not have the right to
receive any dividends from, or the proceeds from the sale of, these shares
and disclaimed any ownership associated with such rights.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SALE AND LEASEBACK OF AIRPLANE
In December 1995, Citadel Broadcasting sold to Wilson Aviation, L.L.C., a
company then owned by Lawrence R. 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.
Contempora-
51
<PAGE> 52
neously with the sale of the airplane, Citadel Broadcasting entered into an
agreement to lease the airplane from Wilson Aviation, L.L.C. Under the terms of
the lease, Citadel Broadcasting paid rent in the amount of $252,000 in 1999 and
bore the costs of the maintenance, repair and operation of the airplane. The
lease was terminated effective as of January 1, 2000. 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 we believe, based upon such review, that the terms of the transaction
were reasonable and at least as favorable to us as could have been obtained
generally from unaffiliated parties. 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.
See Item 11, Executive Compensation, under the heading "Compensation
Committee Interlocks and Insider Participation" for a description of various
other transactions involving our directors and executive officers and
significant stockholders of Citadel Communications.
52
<PAGE> 53
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements -- The following Consolidated Financial
Statements of Citadel Communications Corporation and subsidiary are
filed as part of Item 8 of this report and are included after the
signature page:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report F-2
Audited Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1998 and
1999 F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999 F-4
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1997, 1998 and 1999 F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999 F-8
Notes to Consolidated Financial Statements F-9
</TABLE>
(a)(2) Financial Statement Schedules--
Schedule II: Valuation and Qualifying Accounts. Information required
by Schedule II is included in the Notes to Citadel Communications
Corporation's Consolidated Financial Statements as Note (15).
(a)(3) Exhibits -- The Exhibits listed in the accompanying Exhibit Index
are filed as part of this report.
(b) Reports on Form 8-K -- During the quarter ended December 31, 1999,
Citadel Communications Corporation filed the following reports on
Form 8-K:
(i) Form 8-K/A filed on December 3, 1999 amending previously filed pro
forma financial information of Citadel Communications Corporation
and Subsidiary as follows:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June
30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the six months ended June 30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the twelve months ended December 31, 1998
(ii) Form 8-K filed on December 10, 1999 reporting (i) Citadel
Broadcasting Company's agreements to acquire radio stations in
Michigan, Massachusetts, New York, New Jersey, Texas, Louisiana,
Connecticut, Maine, Oklahoma, Utah and New Mexico and (ii)
appointment of Robert F. Fuller as a director of Citadel
Communications Corporation and Citadel Broadcasting Company. The
following financial information was filed with this report on Form
8-K:
BROADCASTING PARTNERS HOLDINGS RADIO GROUP
Independent Auditors' Report
Combined Balance Sheets as of December 31, 1997 and 1998 and for
September 30, 1999 (unaudited)
Combined Statements of Operations for the years ended December 31, 1997
and 1998 and for the nine months ended September 30, 1998 and 1999
(unaudited)
Combined Statements of Partners' Capital for the nine months ended
September 30, 1999 (unaudited)
Combined Statements of Cash Flows for the years ended December 31, 1997
and 1998 and for the nine months ended September 30, 1998 and 1999
(unaudited)
Notes to Combined Financial Statements
53
<PAGE> 54
LIGGETT BROADCAST, INC.
Report of Independent Auditors
Combined Balance Sheet as of December 31, 1998
Combined Statement of Shareholder's Equity for the year ended December
31, 1998
Combined Statement of Operations for the year ended December 31, 1998
Combined Statement of Cash Flows for the year ended December 31, 1998
Notes to Combined Financial Statements
Combined Balance Sheet as of September 30, 1999 (unaudited)
Combined Statement of Shareholder's Equity for the nine months ended
September 30, 1999 (unaudited)
Combined Statements of Operations for the nine months ended September
30, 1999 (unaudited)
Combined Statements of Cash Flows for the nine months ended September
30, 1999 (unaudited)
Notes to Combined Financial Statements (unaudited)
WICKS RADIO GROUP (A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
Independent Auditors' Report
Balance sheets as of December 31, 1998 and June 30, 1999 (unaudited)
Statements of Operations and Changes in Division Equity for the year
ended December 31, 1998 and for the six months ended June 30, 1998 and
June 30, 1999 (unaudited)
Statements of Cash Flows for the year ended December 31, 1998 and for
the six months ended June 30, 1998 and June 30, 1999 (unaudited)
Notes to financial statements
CITYWIDE COMMUNICATIONS, INC.
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1998
Consolidated Statement of Operations and Accumulated Deficit for the
year ended December 31, 1998
Consolidated Statement of Stockholders' Deficit for the year ended
December 31, 1998
Consolidated Statement of Cash Flows for the year ended December 31,
1998
Notes to Consolidated Financial Statements
CARIBOU COMMUNICATIONS CO.
Independent Auditors' Report
Balance Sheets as of December 31, 1997 and 1998
Statements of Operations as of December 31, 1997 and 1998
Statements of Changes in Partners' Equity for the years ended December
31, 1997 and 1998
Statements of Cash Flows for the years ended December 31, 1997 and 1998
Notes to Financial Statements
54
<PAGE> 55
TELE-MEDIA BROADCASTING COMPANY AND ITS PARTNERSHIP INTERESTS
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1995 and 1996
Consolidated Statement of Operations for the years ended December 31,
1994, 1995 and 1996
Consolidated Statement of Deficiency in Net Assets for the years ended
December 31, 1994, 1995 and 1996
Consolidated Statement of Cash Flows for the years ended December 31,
1994, 1995 and 1996
Notes to Consolidated Financial Statements
Condensed Consolidated Balance Sheet as of June 30, 1997 (unaudited)
Condensed Consolidated Statements of Operations and Changes in Deficit
for the six months ended June 30, 1996 and 1997 (unaudited)
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1997 (unaudited)
Notes to Unaudited Condensed Consolidated Financial Statements
The following pro forma financial information of Citadel Communications
Corporation and Subsidiary was filed with this report on Form 8-K:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September
30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the nine months ended September 30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the twelve months ended December 31, 1998
55
<PAGE> 56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Citadel Communications Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CITADEL COMMUNICATIONS CORPORATION
Date: March 30, 2000 By: /s/ LAWRENCE R. WILSON
------------------------------------
Lawrence R. Wilson
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Citadel
Communications Corporation and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ LAWRENCE R. WILSON Chairman of the Board, Chief Executive March 30, 2000
- --------------------------------------- Officer and President
Lawrence R. Wilson (Principal Executive Officer)
/s/ DONNA L. HEFFNER Vice President and Chief Financial March 30, 2000
- --------------------------------------- Officer (Principal Financial and
Donna L. Heffner Accounting Officer)
/s/ ROBERT F. FULLER Director March 30, 2000
- ---------------------------------------
Robert F. Fuller
/s/ IKE KALANGIS Director March 30, 2000
- ---------------------------------------
Ike Kalangis
/s/ JOHN E. VON SCHLEGELL Director March 30, 2000
- ---------------------------------------
John E. von Schlegell
/s/ TED L. SNIDER, SR. Director March 30, 2000
- ---------------------------------------
Ted L. Snider, Sr.
</TABLE>
56
<PAGE> 57
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999.......................... F-4
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1997, 1998 and 1999.............. F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999.......................... F-8
Notes to Consolidated Financial Statements.................. F-9
</TABLE>
F-1
<PAGE> 58
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Citadel Communications Corporation:
We have audited the accompanying consolidated balance sheets of Citadel
Communications Corporation and subsidiary as of December 31, 1998 and 1999 and
the related consolidated statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Citadel
Communications Corporation and subsidiary as of December 31, 1998 and 1999 and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Phoenix, Arizona
February 29, 2000
F-2
<PAGE> 59
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998 and 1999
(In thousands, except for share amounts)
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $102,655 $ 17,981
Accounts receivable, less allowance for doubtful accounts
of $1,187 in 1998 and $2,443 in 1999................... 33,673 52,728
Due from related parties.................................. 215 236
Income taxes receivable................................... -- 226
Prepaid expenses.......................................... 1,956 2,708
Net assets of discontinued operations..................... 3,618 2,275
Assets held for sale...................................... 25,938 --
-------- --------
Total current assets................................. 168,055 76,154
Property and equipment, net................................. 33,029 68,035
Intangible assets, net...................................... 266,446 538,664
Restricted cash............................................. -- 26,192
Other assets................................................ 4,238 7,568
-------- --------
$471,768 $716,613
======== ========
LIABILITIES, EXCHANGEABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 4,018 $ 1,696
Accrued liabilities....................................... 10,869 13,344
Current maturities of notes payable....................... -- 5,495
Current maturities of other long-term obligations......... 168 842
-------- --------
Total current liabilities............................ 15,055 21,377
Note payable................................................ -- 132,000
Senior subordinated notes payable, net of unamortized
discount.................................................. 210,091 210,509
Other long-term obligations, less current maturities........ 1,040 2,516
Deferred tax liability...................................... 24,844 45,640
-------- --------
Total liabilities...................................... 251,030 412,042
-------- --------
Exchangeable preferred stock................................ 116,775 85,362
Commitments and contingencies (Note 18)
Shareholders' equity:
Common stock, $.001 par value; authorized 200,000,000
shares, issued and outstanding 25,728,771 and
31,831,212 shares in 1998 and 1999, respectively....... 26 32
Additional paid-in capital................................ 137,899 287,711
Deferred compensation..................................... (1,044) (26,924)
Accumulated deficit....................................... (32,682) (41,610)
Accumulated other comprehensive loss...................... (236) --
-------- --------
Total shareholders' equity........................... 103,963 219,209
-------- --------
$471,768 $716,613
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 60
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
Consolidated Statements of Operations
Years ended December 31, 1997, 1998 and 1999
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1997 1998 1999
--------- ---------- ----------
<S> <C> <C> <C>
Gross broadcasting revenue............................. $ 98,915 $ 147,191 $ 196,204
Less agency commissions.............................. 9,666 13,879 17,709
--------- ---------- ----------
Net broadcasting revenue.......................... 89,249 133,312 178,495
--------- ---------- ----------
Operating expenses:
Station operating expenses........................... 64,764 91,845 115,312
Depreciation and amortization........................ 14,485 25,970 35,749
Corporate general and administrative................. 3,530 4,295 7,010
Non-cash deferred compensation....................... -- 74 1,727
--------- ---------- ----------
Operating expenses................................ 82,779 122,184 159,798
--------- ---------- ----------
Operating income.................................. 6,470 11,128 18,697
--------- ---------- ----------
Non-operating expenses (income):
Interest expense..................................... 12,873 18,126 25,385
Interest income...................................... (439) (822) (1,877)
Loss (gain) on sale of assets........................ -- (1,045) 1,208
Other, net........................................... (11) 216 281
--------- ---------- ----------
Non-operating expenses, net....................... 12,423 16,475 24,997
--------- ---------- ----------
Loss from continuing operations before income
taxes........................................... (5,953) (5,347) (6,300)
Income tax (benefit)................................... (770) (1,395) (1,647)
--------- ---------- ----------
Loss from continuing operations................... (5,183) (3,952) (4,653)
Income (loss) from discontinued operations, net of
tax.................................................. (102) 21 (4,275)
--------- ---------- ----------
Net loss.......................................... (5,285) (3,931) (8,928)
Dividend requirement for exchangeable preferred
stock................................................ 6,633 14,586 14,103
--------- ---------- ----------
Net loss applicable to common shares.............. $ (11,918) $ (18,517) $ (23,031)
========= ========== ==========
Basic and diluted loss from continuing operations after
dividend requirement per common share................ $ (3.69) $ (1.51) $ (.65)
Basic and diluted net loss per common share............ $ (3.72) $ (1.51) $ (.80)
Weighted average common shares outstanding............. 3,199,467 12,297,588 28,779,712
========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 61
(This page intentionally left blank)
F-5
<PAGE> 62
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1997, 1998 and 1999
(In thousands, except share amounts)
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK CLASS A
-------------------------------------------------------------------------- COMMON
SERIES A SERIES B SERIES C SERIES D SERIES E SERIES F SERIES G STOCK
-------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996............ $ 2 $ -- $ 5 $ 4 $ -- $ -- $ -- $ 3
Net loss................................. -- -- -- -- -- -- -- --
Issuance of Series E preferred stock,
1,448,187 shares....................... -- -- -- -- 1 -- -- --
Issuance of Series F preferred stock,
459,793 shares......................... -- -- -- -- -- 1 -- --
Issuance of Series G preferred stock,
1,081,908 shares....................... -- -- -- -- -- -- 1 --
Issuance of Class A common stock, 33,624
shares................................. -- -- -- -- -- -- -- --
Conversion of Series D preferred stock
1,423,702 shares....................... -- -- 1 (1) -- -- -- --
Exercise of stock options................ -- -- -- -- -- -- -- --
Exchangeable preferred stock dividend
requirement............................ -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ----
Balances at December 31, 1997............ 2 -- 6 3 1 1 1 3
Comprehensive loss:
Net loss............................... -- -- -- -- -- -- -- --
Unrealized loss on hedging contract,
net of tax........................... -- -- -- -- -- -- -- --
Total comprehensive loss............. -- -- -- -- -- -- -- --
Proceeds of initial public offering...... -- -- -- -- -- -- -- --
Initial public offering conversion and
split of common stock and preferred
stock.................................. (2) -- -- -- (1) (1) (1) (3)
Initial public offering conversion and
split of Series C and Series D
preferred stock........................ -- -- (6) (3) -- -- -- --
Conversion of preferred stock to
common stock........................... -- -- -- -- -- -- -- --
Cash payments of initial public offering
costs.................................. -- -- -- -- -- -- -- --
Exercise of options...................... -- -- -- -- -- -- -- --
Exercise of warrants..................... -- -- -- -- -- -- -- --
Deferred compensation.................... -- -- -- -- -- -- -- --
Accretion of exchangeable preferred
stock costs............................ -- -- -- -- -- -- -- --
Exchangeable preferred stock dividend
requirement............................ -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ----
Balances at December 31, 1998............ -- -- -- -- -- -- -- --
Comprehensive loss:
Net loss............................... -- -- -- -- -- -- -- --
Unrealized gain on hedging contract,
net of tax........................... -- -- -- -- -- -- -- --
Total comprehensive loss............. -- -- -- -- -- -- -- --
Proceeds from public offering, net of
offering costs of $1,366............... -- -- -- -- -- -- -- --
Exercise of options...................... -- -- -- -- -- -- -- --
Tax benefit of option exercises.......... -- -- -- -- -- -- -- --
Deferred compensation.................... -- -- -- -- -- -- -- --
Accretion of exchangeable preferred
stock costs............................ -- -- -- -- -- -- -- --
Exchangeable preferred stock dividend
requirement............................ -- -- -- -- -- -- -- --
Premium paid on partial retirement of
preferred stock........................ -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ----
Balances at December 31, 1999............ $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
==== ==== ==== ==== ==== ==== ==== ====
<CAPTION>
CLASS B CLASS C
COMMON COMMON
STOCK STOCK
------- -------
<S> <C> <C>
Balances at December 31, 1996............ $ -- $ 1
Net loss................................. -- --
Issuance of Series E preferred stock,
1,448,187 shares....................... -- --
Issuance of Series F preferred stock,
459,793 shares......................... -- --
Issuance of Series G preferred stock,
1,081,908 shares....................... -- --
Issuance of Class A common stock, 33,624
shares................................. -- --
Conversion of Series D preferred stock
1,423,702 shares....................... -- --
Exercise of stock options................ -- --
Exchangeable preferred stock dividend
requirement............................ -- --
---- ----
Balances at December 31, 1997............ -- 1
Comprehensive loss:
Net loss............................... -- --
Unrealized loss on hedging contract,
net of tax........................... -- --
Total comprehensive loss............. -- --
Proceeds of initial public offering...... -- --
Initial public offering conversion and
split of common stock and preferred
stock.................................. -- (1)
Initial public offering conversion and
split of Series C and Series D
preferred stock........................ -- --
Conversion of preferred stock to
common stock........................... -- --
Cash payments of initial public offering
costs.................................. -- --
Exercise of options...................... -- --
Exercise of warrants..................... -- --
Deferred compensation.................... -- --
Accretion of exchangeable preferred
stock costs............................ -- --
Exchangeable preferred stock dividend
requirement............................ -- --
---- ----
Balances at December 31, 1998............ -- --
Comprehensive loss:
Net loss............................... -- --
Unrealized gain on hedging contract,
net of tax........................... -- --
Total comprehensive loss............. -- --
Proceeds from public offering, net of
offering costs of $1,366............... -- --
Exercise of options...................... -- --
Tax benefit of option exercises.......... -- --
Deferred compensation.................... -- --
Accretion of exchangeable preferred
stock costs............................ -- --
Exchangeable preferred stock dividend
requirement............................ -- --
Premium paid on partial retirement of
preferred stock........................ -- --
---- ----
Balances at December 31, 1999............ $ -- $ --
==== ====
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 63
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK CONVERTIBLE ADDITIONAL OTHER TOTAL
------------------- PREFERRED PAID-IN DEFERRED ACCUMULATED COMPREHENSIVE SHAREHOLDERS'
SHARES AMOUNT STOCK CAPITAL COMPENSATION DEFICIT LOSS EQUITY
---------- ------ ----------- ---------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-- $ -- $ -- $ 29,522 $ -- $ (23,466) $ -- $ 6,071
-- -- -- -- -- (5,285) -- (5,285)
-- -- -- 7,533 -- -- -- 7,534
-- -- -- 4,249 -- -- -- 4,250
-- -- -- 9,999 -- -- -- 10,000
-- -- -- 175 -- -- -- 175
-- -- -- -- -- -- -- --
-- -- -- 20 -- -- -- 20
-- -- -- (6,633) -- -- -- (6,633)
---------- ---- -------- --------- --------- --------- ------- ---------
-- -- -- 44,865 -- (28,751) -- 16,132
-- -- -- -- -- (3,931) -- (3,931)
-- -- -- -- -- -- (236) (236)
---------
-- -- -- -- -- -- -- (4,167)
---------
7,282,119 7 -- 116,507 -- -- -- 116,514
8,516,357 9 -- -- -- -- -- --
-- -- 9 -- -- -- -- --
9,506,561 9 (9) -- -- -- -- --
-- -- -- (9,877) -- -- -- (9,877)
9,431 -- -- 52 -- -- -- 52
414,303 1 -- -- -- -- -- 1
-- -- -- 1,118 (1,044) -- -- 74
-- -- -- (180) -- -- -- (180)
-- -- -- (14,586) -- -- -- (14,586)
---------- ---- -------- --------- --------- --------- ------- ---------
25,728,771 26 -- 137,899 (1,044) (32,682) (236) 103,963
-- -- -- -- -- (8,928) -- (8,928)
-- -- -- -- -- -- 236 236
---------
-- -- -- -- -- -- -- (8,692)
---------
5,000,000 5 -- 139,029 -- -- -- 139,034
1,102,441 1 -- 2,996 -- -- -- 2,997
-- -- -- 479 -- -- -- 479
-- -- -- 27,607 (25,880) -- -- 1,727
-- -- -- (206) -- -- -- (206)
-- -- -- (14,103) -- -- -- (14,103)
-- -- -- (5,990) -- -- -- (5,990)
---------- ---- -------- --------- --------- --------- ------- ---------
31,831,212 $ 32 $ -- $ 287,711 $ (26,924) $ (41,610) $ -- $ 219,209
========== ==== ======== ========= ========= ========= ======= =========
</TABLE>
F-7
<PAGE> 64
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1997, 1998 and 1999
(In thousands)
<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (5,285) $ (3,931) $ (8,928)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Amortization of deferred revenue..................... -- -- (100)
Depreciation and amortization........................ 14,661 26,414 35,749
Deferred income taxes................................ (770) (1,806) (2,593)
Deferred compensation expense........................ -- 74 1,727
Amortization of debt issuance costs and debt
discounts.......................................... 441 717 1,849
Bad debt expense..................................... 1,016 1,201 5,787
Loss/(gain) on sale of assets........................ -- (1,045) 1,208
Changes in assets and liabilities, net of
acquisitions:
Increase in accounts receivable and notes
receivable from related parties.................. (10,214) (9,586) (18,483)
Increase in prepaid expenses....................... (230) (424) (528)
Increase (decrease) in accounts payable............ 708 359 (4,238)
Increase in accrued liabilities.................... 5,324 1,565 1,508
(Increase) decrease in net assets of discontinued
operations....................................... -- 413 2,388
--------- --------- --------
Net cash provided by operating activities.......... 5,651 13,951 15,346
--------- --------- --------
Cash flows from investing activities:
Capital expenditures...................................... (2,070) (4,511) (16,609)
Capitalized acquisition costs............................. (2,929) (1,242) (5,579)
Cash paid to acquire stations............................. (205,523) (39,128) (293,334)
Other assets, net......................................... (631) (390) (32)
Deposits for pending acquisitions......................... (650) -- (1,600)
Proceeds from sales of assets............................. -- 2,440 25,965
Cash held in escrow for future acquisitions and
prepayments............................................. -- -- (26,192)
Capital expenditures for discontinued operations.......... (450) (3,581) (1,046)
--------- --------- --------
Net cash used in investing activities................... (212,253) (46,412) (318,427)
--------- --------- --------
Cash flows from financing activities:
Principal payments on notes payable....................... (51,817) (125,084) --
Proceeds from notes payable............................... 52,500 35,000 132,000
Proceeds from senior subordinated notes payable........... 97,250 111,550 --
Proceeds from issuance of exchangeable preferred stock.... 95,377 -- --
Proceeds from public offerings............................ -- 116,514 140,400
Cash payments of public offering costs.................... -- (9,877) (1,366)
Payment of debt issuance costs............................ (1,855) (689) (3,779)
Principal payments on other long-term obligations......... (735) (442) (133)
Proceeds from other obligations........................... -- 407 --
Proceeds from issuance of common stock.................... 21,959 -- --
Payment of dividends on exchangeable preferred stock...... -- -- (515)
Redemption of exchangeable preferred stock including
premium................................................. -- -- (51,197)
Proceeds from the exercise of stock options............... 20 52 2,997
--------- --------- --------
Net cash provided by financing activities............... 212,699 127,431 218,407
--------- --------- --------
Net increase (decrease) in cash and cash equivalents.... 6,097 94,970 (84,674)
Cash and cash equivalents, beginning of year................ 1,588 7,685 102,655
--------- --------- --------
Cash and cash equivalents, end of year...................... $ 7,685 $ 102,655 $ 17,981
========= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE> 65
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Citadel Communications Corporation was formed March 24, 1993 as a Nevada
corporation and is a holding company that owns all of the issued and outstanding
common stock of Citadel Broadcasting Company. Citadel License, Inc. was a
wholly-owned subsidiary of Citadel Broadcasting Company. On December 28, 1999,
Citadel License, Inc. was merged into Citadel Broadcasting Company. Citadel
Broadcasting Company owns and operates radio stations and holds Federal
Communications Commission ("FCC") licenses in Arkansas, California, Colorado,
Idaho, Indiana, Louisiana, Maine, Massachusetts, Michigan, Nevada, New
Hampshire, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, South
Carolina, Utah and Washington.
In addition, Citadel Broadcasting Company owns and operates an internet
service provider, offering its subscribers a variety of services, including
electronic mail and access to the internet. In December 1999, Citadel
Broadcasting Company decided to discontinue its internet operations (see further
discussion at Note (3)).
Principles of Consolidation and Presentation
The accompanying consolidated financial statements include Citadel
Communications Corporation and its wholly-owned subsidiary, Citadel Broadcasting
Company (collectively referred to as the "Company"). The assets and liabilities
and operating information for Citadel Broadcasting Company are identical to
Citadel Communications Corporation. All significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities, revenue and expenses and
the disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.
Restricted Cash
On November 9, 1999, the Company sold 18 FM and 7 AM radio stations to
Marathon Media, L.P. for approximately $26.0 million. The cash received from
this sale plus accrued interest is classified as restricted cash on the
Company's balance sheet as of December 31, 1999. These funds must be utilized as
part of the purchase price of the Broadcasting Partners Holdings, L.P.
acquisition (see acquisitions and dispositions, Note (2) for further details).
Derivative Financial Instruments
During 1998 and 1999, the Company utilized an interest rate swap agreement
to hedge the effects of fluctuations in interest rates. Amounts receivable or
payable due to settlement of the interest rate swap agreement were recognized as
interest expense or income on a monthly basis. A mark-to-market adjustment was
recorded as a component of shareholders' equity to reflect the fair value of the
interest rate swap agreement. The interest rate swap agreement expired in
December of 1999.
F-9
<PAGE> 66
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Property and Equipment
Assets acquired in business combinations are accounted for using the
purchase method of accounting and are recorded at their estimated fair value
upon acquisition as determined by management or by independent appraisal.
Property and equipment additions are recorded at cost. Depreciation of property
and equipment is determined using the straight-line method over the estimated
useful lives of the related assets. Leasehold improvements are capitalized and
depreciated straight-line over the shorter of the lease terms or the estimated
useful lives of the assets. Maintenance and repairs are expensed as incurred.
Intangible Assets
Intangible assets with determinable lives have been allocated among various
categories of customer-based or market-based intangibles at their estimated fair
value upon acquisition as determined by management or by independent appraisal.
Goodwill represents the excess of cost over the fair value of tangible assets
and intangible assets with determinable lives.
Amortization is provided on the straight-line method over the estimated
useful lives of the related assets. Other intangible assets are comprised of
acquisition costs, agreements not to compete, broadcast licenses, subscriber
lists, premium lease space and subcarrier antenna income. Pending acquisition
costs are deferred and capitalized as part of completed acquisitions or expensed
in the period in which the pending acquisition is terminated. The Company's
policy is to write off intangible assets once they have become fully amortized.
Debt Issuance Costs
The costs related to the issuance of debt are capitalized and amortized to
interest expense using the effective interest method over the lives of the
related debt.
Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Stock Option Plan
Prior to January 1, 1996, the Company accounted for its stock option plans
in accordance with the provisions of APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. As such, compensation expense
would be recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. On January 1, 1996, the Company
adopted SFAS No. 123, "Accounting for Stock-Based Compensation," (SFAS No. 123)
which permits entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant. Alternatively, SFAS No.
123 also allows entities to continue to apply the provisions of APB Opinion No.
25 and provide pro forma net income and pro forma earnings per share disclosures
for employee stock option grants made in 1995 and future years as if the
fair-value based method defined in SFAS No. 123 had been applied. The Company
has elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123.
F-10
<PAGE> 67
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Earnings Per Share
Basic earnings (loss) per share is computed by dividing income (loss)
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings (loss) per share reflects the
potential dilution that could occur if securities or contracts to issue common
stock were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the Company. Assumed
exercise of outstanding stock options of 2,688,610, 2,824,633 and 3,407,419 in
1997, 1998 and 1999, respectively, have been excluded from the calculations of
diluted net loss per share as their effect is antidilutive.
Revenue Recognition
Broadcasting operations derive revenue from the sale of program time and
commercial announcements to local, regional and national advertisers. Revenue is
recognized when the programs and commercial announcements are broadcast. On-line
service revenue derived from the internet service provider is recognized over
the period in which the services are provided.
Barter Transactions
Barter contracts are agreements entered into under which the Company
provides commercial air time in exchange for goods and services used principally
for promotional, sales and other business activities. An asset and liability are
recorded at the fair market value of the advertising surrendered based on the
Company's historical practice of receiving cash for such advertising. Revenue is
recorded and the liability is relieved when commercials are broadcast and
expense is recorded and the asset is relieved when goods or services are used.
Comprehensive Loss
As of January 1, 1998, the Company adopted SFAS No. 130 "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for the reporting of
comprehensive loss and its components; however, the adoption of SFAS No. 130 had
no impact on the Company's net loss or shareholders' equity. SFAS No. 130
requires the reporting of a mark-to-market adjustment pertaining to a hedging
contract which is recorded in shareholders' equity as a component of
comprehensive loss.
Local Marketing Agreements
Fees earned or incurred pursuant to various local marketing agreements
("LMA") are recognized as gross broadcasting revenue or station operating
expenses, respectively, in the period that the services performed or received
occur. The Company's consolidated financial statements include broadcasting
revenue and station operating expenses of stations marketed under LMAs.
Joint Sales Agreements
Fees earned or incurred pursuant to various joint sales agreements ("JSA")
are recognized pursuant to the terms in the various agreements under one of two
methods: (a) the JSA fee is recognized as a reduction to sales expense (included
in station operating expenses in the Company's consolidated statements of
operations), or (b) the Company is allocated a percentage of the JSA stations'
net revenue and operating expenses and these amounts are recognized as
broadcasting revenue and station operating expenses, respectively, in the period
earned or incurred.
F-11
<PAGE> 68
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Business and Credit Concentrations
In the opinion of management, credit risk with respect to receivables is
limited due to the large number of customers and the geographic diversification
of the Company's customer base. The Company performs credit evaluations of its
customers and believes that adequate allowances for any uncollectable
receivables are maintained. At December 31, 1998 and 1999, no receivable from
any customer exceeded five percent of gross accounts receivable nor did any
customer's account exceed more than ten percent of net broadcasting revenue for
any of the periods presented.
Impairment Recognition
Management evaluates the carrying value of all long-lived assets under the
provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future undiscounted net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. Based on its most recent
analysis, management believes that no material impairment in the value of
long-lived assets existed at December 31, 1999.
Reclassifications
Certain 1997 and 1998 balances have been reclassified to conform to the
1999 presentation.
F-12
<PAGE> 69
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) ACQUISITIONS AND DISPOSITIONS
1999 ACQUISITIONS AND DISPOSITIONS
1999 Acquisitions
During 1999, the Company acquired the assets of 42 FM and 15 AM radio
stations and one internet service provider from various parties as follows:
<TABLE>
<CAPTION>
PURCHASE
ACQUISITION DATE SELLER STATIONS MARKET SERVED PRICE
- ------------------------ ------------------------ ------------- ------------------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
RADIO STATIONS:
January 4, 1999......... Fairview Communications, 1 FM Wilkes-Barre/Scranton, PA $ 1,276
Inc.
February 9, 1999........ 62nd Street Broadcasting 5 FM and 1 AM Saginaw, MI 35,000
of Saginaw, L.L.C.
February 17, 1999....... Zeve Broadcasting 1 FM and 1 AM Harrisburg/Carlisle, PA 4,500
Company
March 17, 1999.......... Citywide Communications, 3 FM and 2 AM Baton Rouge, LA 31,500
Inc 3 FM and 1 AM Lafayette, LA
April 30, 1999.......... Capstar Broadcasting 1 FM and 2 AM Colorado Springs, CO 10,000
Company 1 FM and 1 AM Spokane, WA
May 3, 1999............. AGM-Nevada, LLC 1 FM Spokane, WA 4,150
May 3, 1999............. Monroe and Delaware 1 FM Wilkes-Barre/Scranton, PA 995
Holdings, Inc.
June 30, 1999........... Wicks Broadcast Group 3 FM and 2 AM Binghamton, NY 77,000
Limited Partnership and 5 FM and 3 AM Charleston, SC
Affiliates 1 FM Kokomo, IN
1 FM and 1 AM Muncie, IN
August 31, 1999......... Fuller-Jeffery 6 FM Portland, ME 63,500
Broadcasting Companies, 4 FM Portsmouth, NH
Inc.
November 1, 1999........ KTBT Radio Broadcasting 1 FM Baton Rouge, LA 9,500
Co
December 23, 1999....... Caribou Communications 4 FM and 1 AM Oklahoma City, OK 60,000
Company
INTERNET SERVICE PROVIDERS:
March 1, 1999........... Brainiac Services, Inc N/A Rhode Island 288
</TABLE>
The acquisitions were accounted for by the purchase method of accounting
and, accordingly, each purchase price was allocated to current assets as well as
noncurrent tangible and intangible assets based on their fair values as
determined by management. The acquisitions were funded with borrowings under the
credit facility and proceeds from the Company's June 1999 stock offering. The
aggregate purchase price, including acquisition costs of $6,968,000, was
allocated as follows (numbers shown in thousands):
<TABLE>
<S> <C>
Property and equipment..................................... 25,852
Intangible assets.......................................... 275,275
Other assets............................................... 3,550
--------
$304,677
========
</TABLE>
F-13
<PAGE> 70
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1999 Dispositions
On April 30, 1999, the Company disposed of the assets of one FM station in
Colorado Springs, Colorado in exchange for one other FM station in Colorado
Springs owned by Capstar Broadcasting Company.
On November 9, 1999, the Company sold the assets of two FM and one AM
station in Eugene, OR, four FM and two AM stations in Medford, OR, four FM and
one AM station in Tri-Cities, WA, four FM and one AM station in Billings, MT,
two FM stations in Johnstown, PA and two FM and two AM stations in State
College, PA to Marathon Media for the sale price of approximately $26.0 million.
A loss of approximately $.9 million was recognized on the sale.
1998 ACQUISITIONS AND DISPOSITIONS
1998 Acquisitions
During 1998, the Company acquired the assets of seven FM and four AM radio
stations and five internet service providers from various parties as follows:
<TABLE>
<CAPTION>
PURCHASE
ACQUISITION DATE SELLER STATIONS MARKET SERVED PRICE
- ------------------------ ------------------------ ------------- ------------------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
RADIO STATIONS:
January 2, 1998......... Endless Mountain 1 FM and 1 AM Wilkes-Barre/Scranton, PA $ 815
Broadcasting, Inc.
February 12, 1998....... Pacific Northwest 2 FM and 1 AM Boise, ID 14,400
Broadcasting Corporation
March 26, 1998.......... S&P Broadcasting Limited 2 FM and 1 AM Wilkes-Barre/Scranton, PA 6,000
Partnerships
April 21, 1998.......... Wilson Group, LLC 2 FM Boise, ID 14,506
November 17, 1998....... Beasley Broadcasting of 1 AM Little Rock, AR 5,108
Arkansas, Inc.
INTERNET SERVICE PROVIDERS:
September 18, 1998...... Digital Planet, L.C N/A Salt Lake City, UT 225
September 29, 1998...... Internet Tech. Systems, N/A Salt Lake City, UT 1,535
Inc
October 15, 1998........ In Quo N/A Salt Lake City, UT 335
October 26, 1998........ The Johnson Connection, N/A Salt Lake City, UT 320
LLC
December 8, 1998........ The Friendly Net, LLC N/A Salt Lake City, UT 93
</TABLE>
The acquisitions were accounted for by the purchase method of accounting
and, accordingly, the purchase price was allocated to current assets as well as
noncurrent tangible and intangible assets based on their fair values as
determined by management. The acquisitions were funded with proceeds from debt.
The aggregate purchase price, including acquisition costs of $1,242,000, was
allocated as follows (numbers shown in thousands):
<TABLE>
<S> <C>
Property and equipment..................................... $ 3,477
Intangible assets.......................................... 41,031
Other assets............................................... 71
-------
$44,579
=======
</TABLE>
F-14
<PAGE> 71
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1998 Dispositions
In October 1998, the Company sold the assets of WQCY-FM, WTAD-AM, WBJR-FM
and WMOS-FM in Quincy, Illinois for approximately $2.3 million. A gain of
approximately $1.3 million was recognized on the sale.
In November 1998, the Company sold the assets of KRNN-AM in Little Rock,
Arkansas for approximately $190,000. A loss of approximately $5,000 was
recognized on the sale.
In October 1997, the Company entered into an agreement pursuant to which
the Company acquired WLEV-FM in exchange for approximately $23.0 million in cash
and the FCC license and studio equipment of WEST-AM. Pending FCC approval, the
disposition of WEST-AM was not recorded until the third quarter of 1998. The
disposition of WEST-AM was recorded as a purchase price adjustment aggregating
approximately $463,000.
Pro Forma
The following summary, prepared on a pro forma basis, presents the results
of operations as if all the above radio station acquisitions and dispositions
had been completed as of January 1, 1998.
<TABLE>
<CAPTION>
UNAUDITED
----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Net broadcasting revenue.......................... $174,449 $199,089
Operating income.................................. 5,950 16,482
Net loss.......................................... (11,539) (12,543)
</TABLE>
The pro forma results are not necessarily indicative of what actually would
have occurred if the radio stations had been owned for the entire periods
presented. In addition, they are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operations.
Pending Acquisitions
On October 5, 1999, the Company entered into a purchase and sale agreement
with Kenneth A. Rushton, as Trustee of the Chapter 7 Bankruptcy Estate of
Venture Broadcasting, Inc., to acquire one AM radio station serving Salt Lake
City, Utah. The purchase price for the station and a related tower site is
approximately $0.6 million in cash, which the Company has placed in an escrow
account.
On October 8, 1999, the Company entered into an exchange agreement with
Titus Broadcasting Systems, Inc. to acquire one AM radio station in Binghamton,
New York in exchange for one AM station in Binghamton owned by the Company and
approximately $.6 million in cash.
On October 27, 1999, the Company entered into a definitive agreement to
acquire from Broadcasting Partners Holdings, L.P. and its affiliates the assets
of 36 radio stations in 11 markets for approximately $190.0 million in cash.
Upon consummation of the agreement, including the completion of pending
acquisitions by the selling entities, Citadel Broadcasting will acquire five
stations in Buffalo, New York; four stations in Syracuse, New York; three
stations in Atlantic City, New Jersey; five stations in Tyler-Longview, Texas;
three stations in New London, Connecticut; two stations in New Bedford,
Massachusetts; four stations in Monroe, Louisiana; four stations in
Augusta-Waterville, Maine; two stations in Ithaca, New York; three stations in
Presque Isle-Caribou, Maine; one station in Dennysville-Calais, Maine as well as
the right to operate an additional FM radio station in Atlantic City/Cape May
under a program service and time brokerage agreement and the right to sell
advertising in the United States for one FM radio station in Niagra Falls,
Ontario under a joint sales agreement.
F-15
<PAGE> 72
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On November 16, 1999, the Company entered into a definitive agreement with
KSMB/KACY Radio Broadcasting Company, KVOL Radio Broadcasting Company and Powell
Broadcasting Company, Inc. to acquire two FM and two AM radio stations in
Lafayette, Louisiana for the purchase price of approximately $8.5 million in
cash.
On November 16, 1999, the Company entered into an exchange agreement with
LifeTalk Broadcasting Association to acquire one AM radio station in
Albuquerque, New Mexico in exchange for one AM radio station in Albuquerque
owned by the Company and approximately $5.4 million in cash, of which, the
Company has prepaid $1.0 million.
On December 3, 1999, the Company entered into an asset purchase agreement
with Liggett Broadcast, Inc. and certain of its affiliates to acquire four FM
and two AM radio stations serving the Lansing, Michigan market, two FM radio
stations serving the Saginaw, Michigan market and one FM radio station serving
the Flint, Michigan market for the aggregate purchase price of approximately
$120.5 million, consisting of 200,000 shares of common stock of the Company
valued at $50.375 per share, based on the closing share price of the common
stock on December 2, 1999, and approximately $110.4 million in cash. However, if
the value of the common stock at the time of closing, based on the 20-day
average closing sale price per share prior to closing, is less than 90% of the
value on December 2, 1999, then no common stock will be issued and the purchase
price will be paid entirely in cash.
On December 3, 1999, the Company entered into two asset purchase agreements
to acquire a total of two FM radio stations serving the Worcester, Massachusetts
market for an aggregate purchase price of approximately $24.5 million in cash.
On December 21, 1999 the Company entered into an asset purchase agreement
to acquire one FM radio station serving the Worcester, Massachusetts market for
the purchase price of approximately $14.3 million in cash.
The pending acquisitions are all subject to various conditions to closing,
including Federal Communications Commission approval.
(3) DISCONTINUED OPERATIONS
In December of 1999, the Company's management decided to discontinue the
operations of its internet service provider, eFortress. As a result of this
decision, the Company has adopted a plan for the disposition by sale of
eFortress. This plan includes the sale of subscribers and all related internet
service equipment. The Company is currently in negotiations with other internet
service providers and anticipates finalizing the sale by the end of the second
quarter of 2000.
eFortress has been accounted for as a discontinued operation and,
accordingly, its results of operations and financial position are segregated for
all periods presented in the accompanying consolidated financial statements.
Revenue, related losses and income taxes associated with the discontinued
operations are as follows:
<TABLE>
<CAPTION>
1997 1998 1999
----- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue.................................................. $ 555 $2,114 $ 4,488
----- ------ -------
Income (loss) from discontinued operations before
taxes.................................................. (102) 30 (4,437)
Income tax expense (benefit)............................. -- 9 (162)
----- ------ -------
Income (loss) from discontinued operations, net of
taxes.................................................. $(102) $ 21 $(4,275)
===== ====== =======
</TABLE>
F-16
<PAGE> 73
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The net assets of the discontinued operations at December 31, 1998 and 1999
have been reclassified in the accompanying consolidated balance sheet as
follows:
<TABLE>
<CAPTION>
1998 1999
------ ------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable, net............................... $ 524 $ 42
Other current assets................................... 187 3
Property and equipment, net............................ 1,056 1,522
Intangibles, net....................................... 2,344 2,085
Current liabilities.................................... (493) (1,377)
------ ------
Net assets of discontinued operations.................. $3,618 $2,275
====== ======
</TABLE>
(4) ASSETS HELD FOR SALE
On January 13, 1999, the Company entered into an agreement to sell
substantially all of the assets of the Company's 18 FM and 7 AM radio stations
serving the markets of Eugene, Oregon; Medford, Oregon; Tri-Cities, Washington;
Billings, Montana; Johnstown, Pennsylvania and State College, Pennsylvania for
an aggregate purchase price of approximately $26.0 million. On November 9, 1999,
the Company completed the sale and recognized a loss of approximately $ .9
million
As of December 31, 1998, the net assets of the radio stations are presented
in the accompanying consolidated balance sheet as "Assets held for sale".
(5) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 and 1999 consists of the
following:
<TABLE>
<CAPTION>
ESTIMATED
1998 1999 USEFUL LIFE
-------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Land.............................................. $ 3,891 $ 5,257 --
Buildings and improvements........................ 6,843 16,894 5-30 years
Transmitters, towers and equipment................ 27,929 45,805 5-15 years
Office furniture and equipment.................... 5,827 8,247 3-5 years
Airplane.......................................... -- 9,131 5 years
Construction in progress.......................... 1,078 1,316 --
-------- --------
45,568 86,650
Less accumulated depreciation and amortization.... (12,539) (18,615)
-------- --------
$ 33,029 $ 68,035
======== ========
</TABLE>
F-17
<PAGE> 74
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) INTANGIBLE ASSETS
Intangible assets at December 31, 1998 and 1999 consist of the following:
<TABLE>
<CAPTION>
ESTIMATED
1998 1999 USEFUL LIFE
-------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Goodwill and broadcast licenses................... $297,641 $594,801 15 years
Noncompetition agreements......................... 2,064 5,929 3-7 years
Premium lease space............................... 50 50 1-13 years
Subcarrier antenna income......................... 104 104 1-4 years
-------- --------
299,859 600,884
Less accumulated amortization..................... (33,413) (62,220)
-------- --------
$266,446 $538,664
======== ========
</TABLE>
(7) ACCRUED LIABILITIES
Accrued liabilities at December 31, 1998 and 1999 consist of the following:
<TABLE>
<CAPTION>
1998 1999
------- -------
(IN THOUSANDS)
<S> <C> <C>
Interest.................................................... $ 6,417 $ 6,815
Music license fees.......................................... 170 262
Compensation and commissions................................ 3,104 2,170
Other....................................................... 1,178 4,097
------- -------
$10,869 $13,344
======= =======
</TABLE>
(8) NOTE PAYABLE
On July 3, 1997, the Company entered into an amended and restated financing
agreement which originally allowed for revolving loan borrowings up to a maximum
of $150.0 million. Pursuant to the agreement, this amount began to reduce
quarterly on December 31, 1997.
On December 17, 1999, the Company terminated the July 3, 1997 financing
agreement, repaid all amounts borrowed under the agreement and entered into a
new credit facility ("Senior Credit Facility"), which provides for the making of
term loans at any time during the period from December 17, 1999 to December 15,
2000, in an aggregate principal amount not in excess of $250.0 million and
revolving loans at any time and from time to time prior to March 31, 2007
(subject to extension to December 31, 2007), in an aggregate principal amount at
any one time outstanding not in excess of $150.0 million. Of the $150.0 million
which is available in the form of revolving loans under the revolving credit
facility, until March 31, 2000, up to $75.0 million of the revolving credit
facility may be made available in the form of letters of credit. In addition,
the Company may request up to $300.0 million in additional term loans, which
term loans may be made at the sole discretion of the lenders. Of such additional
$300.0 million amount, at the request of the Company, up to $100.0 million may
be in the form of an increase in the $150.0 million revolving credit commitment.
The lenders are under no obligation to make such additional $300.0 million
available, whether in the form of term loans, revolving loans or otherwise.
Amounts borrowed under the Senior Credit Facility bear interest at a rate
equal to an applicable margin (described below) plus either (a) the greater of
the prime rate of interest announced from time to time by Credit Suisse First
Boston, New York, New York, and the federal funds effective rate in effect from
time to time plus 0.5%, or (b) if the Company so elects, the LIBO rate divided
by one minus the eurocurrency reserve requirements
F-18
<PAGE> 75
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
prescribed by the Federal Reserve Board or other governmental body in effect
from time to time. The applicable margin is expected to range between 0% and
1.5% for the rate discussed in clause (a) above and between 0.75% and 2.5% for
the rate discussed in clause (b) above. Interest is payable quarterly for prime
rate loans and for LIBO loans, interest payment dates can be monthly, quarterly
or semi-annually.
Draws may be made under the term loans facility solely to finance a portion
of the acquisitions currently planned by the Company, to finance a portion of
future permitted acquisitions and to pay related fees and expenses. The amount
of any term loans outstanding on December 17, 2002 must be repaid in varying
quarterly installments ranging from 3.75% of the amount on March 31, 2003 to
6.25% of the amount on March 31, 2007.
The letter of credit facility, which is a sub facility of the revolving
credit facility, provides for the issuance of letters of credit to be used by
the Company as security for the obligations of the Company under agreements
entered into in connection with certain radio station acquisitions and for any
other purpose related to the business of the Company. On December 31, 1999,
letters of credit in the aggregate amount of approximately $20.4 million were
issued and outstanding.
At December 31, 1999, the Company's outstanding balance under the Senior
Credit Facility was $132.0 million. Interest is payable at 8.125% as of December
31, 1999. As of December 31, 1998, the Company did not have an outstanding
balance under the July 3, 1997 financing agreement.
The Senior Credit Facility is secured by a pledge of property and equipment
and the common stock of Citadel Broadcasting. Various debt covenants place
restrictions on, among other things, indebtedness, acquisitions, dividends,
capital expenditures and the sale or transfer of assets. The debt covenant
provisions also include certain financial ratio covenants, such as maximum
leverage test, minimum interest coverage test and minimum fixed charges coverage
test. At December 31, 1999, the Company was in compliance with all debt covenant
provisions.
(9) SENIOR SUBORDINATED NOTES PAYABLE
On July 3, 1997, Citadel Broadcasting completed the issuance of $101.0
million of its 10 1/4% Senior Subordinated Notes ("1997 Notes") due 2007.
Interest is payable semi-annually. The 1997 Notes will be redeemable at the
option of Citadel Broadcasting, in whole or in part, at any time on or after
July 1, 2002 at a redemption price as stated in the following percentages:
<TABLE>
<CAPTION>
REDEMPTION
PRICE
----------
<S> <C>
2002....................................................... 105.125%
2003....................................................... 104.100%
2004....................................................... 103.075%
2005....................................................... 102.050%
2006....................................................... 101.025%
</TABLE>
In addition, at any time prior to July 1, 2000, subject to certain
conditions, Citadel Broadcasting may, at its option, redeem a portion of the
1997 Notes with the net proceeds of one or more Public Equity Offerings (as
defined in the indenture governing the 1997 Notes), at a redemption price equal
to 110.25% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of redemption. The 1997 Notes are shown net of unamortized
discount of $2.3 million at December 31, 1999.
The indenture governing the 1997 Notes contains certain restrictive
covenants, including limitations which restrict the ability of Citadel
Broadcasting to incur additional debt, incur liens, pay dividends or make
certain other restricted payments, consummate certain asset sales, enter into
certain transactions with affiliates, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise dispose of all or
F-19
<PAGE> 76
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
substantially all of its assets. At December 31, 1999, Citadel Broadcasting was
in compliance with all debt covenants.
On November 19, 1998, Citadel Broadcasting completed the issuance of $115.0
million of its 9 1/4% Senior Subordinated Notes ("1998 Notes") due in 2008. The
1998 Notes may be redeemed at the option of Citadel Broadcasting, in whole or in
part, at any time on or after November 15, 2003 at a redemption price as stated
in the following percentages:
<TABLE>
<CAPTION>
REDEMPTION
PRICE
----------
<S> <C>
2003....................................................... 104.625%
2004....................................................... 103.083%
2005....................................................... 101.541%
2006....................................................... 100.000%
</TABLE>
In addition, at any time prior to November 15, 2001, Citadel Broadcasting
may, at its option, redeem a portion of the 1998 Notes with the net proceeds of
one or more Public Equity Offerings (as defined in the indenture governing the
1998 Notes), at a redemption price equal to 109.25% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the redemption
date. The 1998 Notes are shown net of unamortized discount of $3.2 million at
December 31, 1999.
The indenture governing the 1998 Notes contains certain restrictive
covenants, including limitations which restrict the ability of Citadel
Broadcasting to incur additional debt, incur liens, pay cash dividends, purchase
Citadel Broadcasting's common stock or make certain other restricted payments,
consummate certain asset sales, enter into certain transactions with affiliates,
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets. At
December 31, 1999, Citadel Broadcasting was in compliance with all covenants.
The aggregate Senior Subordinated Notes payable at December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
1997 Notes................................................. $101,000 $101,000
1998 Notes................................................. 115,000 115,000
-------- --------
216,000 216,000
Less unamortized discount.................................. (5,909) (5,491)
-------- --------
$210,091 $210,509
======== ========
</TABLE>
F-20
<PAGE> 77
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) OTHER LONG-TERM OBLIGATIONS
Other long-term obligations at December 31, 1998 and 1999 consist of the
following:
<TABLE>
<CAPTION>
1998 1999
------ ------
(IN THOUSANDS)
<S> <C> <C>
Various noncompetition and consulting agreements with the
sellers of radio stations acquired, due at various dates
through August 2006, face amount of $579,000 and
$3,478,000 at December 31, 1998 and 1999, respectively,
non-interest bearing with interest imputed at 8.0% to
9.0%, net of discount of $77,000 and $660,000 in 1998 and
1999 respectively......................................... $ 503 $2,818
Prepayment premium on extinguishment of debt................ 683 --
Capital leases.............................................. 22 40
Other....................................................... -- 500
------ ------
1,208 3,358
Less current maturities..................................... (168) (842)
------ ------
Long-term portion........................................... $1,040 $2,516
====== ======
</TABLE>
The required aggregate principal payments as of December 31, 1999,
excluding the amortization of debt discount, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
2000....................................................... $ 842
2001....................................................... 762
2002....................................................... 477
2003....................................................... 439
2004....................................................... 449
Thereafter................................................. 389
------
$3,358
======
</TABLE>
(11) SHAREHOLDERS' EQUITY
Common and Preferred Stock
Prior to the consummation of the Company's initial public offering ("IPO"),
in July 1998, the Company engaged in a series of transactions (collectively, the
"Recapitalization") which resulted in the Company having outstanding capital
stock consisting of common stock and convertible preferred stock, par value
$.001 per share. In conjunction with the Recapitalization, (i) each share of
outstanding capital stock of the Company, other than those held by ABRY
Broadcast Partners II, L.P. ("ABRY II") and ABRY/Citadel Investment Partners,
L.P. ("ABRY/CIP"), was converted into three shares of new common stock, (ii)
each share of capital stock of the Company held by ABRY II or ABRY/CIP was
converted into three shares of new convertible preferred stock and (iii) each
outstanding option or warrant to acquire shares of common stock was converted
into an option or warrant to acquire three times the number of shares of new
common stock. All share amounts and earnings (loss) per share have been restated
in the accompanying consolidated financial statements with respect to the
Recapitalization.
In connection with the Recapitalization, the Company amended its
Certificate of Incorporation to authorize the Company to issue 200,000,000
shares of new common stock, 19,013,122 shares of new convertible preferred stock
and 20,000,000 shares of undesignated preferred stock.
F-21
<PAGE> 78
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
All outstanding Series A, B, E, F and G shares were converted to 5,280,726
shares of new common stock in the Recapitalization. All outstanding Series C and
D shares were converted to 9,506,561 shares of new convertible preferred stock,
which were subsequently converted into the same number of shares of new common
stock during September 1998.
The holders of the new common stock are entitled to one vote per share on
all matters submitted to a vote of shareholders. Additionally, the Company has
entered into a registration rights agreement with certain shareholders, under
which the Company may be required to register their shares of common stock upon
demand by these shareholders.
On July 7, 1998, the Company consummated an IPO of 6,880,796 shares of its
common stock at an initial public offering price of $16.00 per share. Of such
shares, 6,250,000 shares were sold by the Company and 630,796 shares were sold
by certain stockholders of the Company. On July 14, 1998, the Company sold an
additional 1,032,119 shares of its common stock at the initial public offering
price pursuant to the exercise of the underwriters' over-allotment option. Total
proceeds of the IPO, including proceeds for the shares issued upon the exercise
of the over-allotment option, were approximately $126.6 million, of which total
proceeds to the Company were approximately $106.6 million, total proceeds to the
selling stockholders were approximately $9.4 million and total underwriting
discounts, commissions and costs were approximately $10.6 million.
On June 25, 1999, the Company completed a stock offering of 11,500,000
shares of its common stock at $29.95 per share. Of such shares, 5,000,000 shares
were sold by the Company and 6,500,000 shares were sold by certain stockholders
of the Company. Total proceeds of the offering, net of underwriting discounts
and commissions, were approximately $322.9 million of which proceeds to the
Company were approximately $140.4 million and proceeds to the selling
stockholders were approximately $182.5 million. Total underwriting discounts and
commissions were approximately $13.5 million.
On the same date as the stock offering, Citadel Communications purchased
5,000 shares of common stock of Citadel Broadcasting for an aggregate purchase
price of approximately $51.7 million and contributed approximately $88.7 million
of additional paid in capital to Citadel Broadcasting. The purchase of stock and
additional capital contributions were funded by the net proceeds from Citadel
Communications' stock offering. Citadel Broadcasting utilized a portion of the
proceeds to redeem approximately 35% of its 13 1/4% exchangeable preferred stock
(see Note (12)).
Deferred Compensation
In September 1998, the Company entered into stock option award agreements
with several key employees. The terms of the agreements provide for 114,000
options to purchase new common stock at an exercise price of $16.00 per share
which vest over a five-year period. The fair market value on the date of grant
was $25.813 per share. Accordingly, the Company is amortizing to compensation
expense $1.1 million ratably over the five-year vesting period, which represents
the difference between the exercise price and fair market value. The Company
recognized compensation expense under the agreements of approximately $74,000
and $224,000 for the years ended December 31, 1998 and 1999, respectively.
In July of 1999, the shareholders approved the Company's 1999 Long-Term
Incentive Plan, (the "1999 Incentive Plan"), which is intended to be the primary
long-term incentive vehicle for senior management. Under the 1999 Incentive
Plan, each participant receives an option to acquire a certain number of shares
of common stock based on meeting certain stock price performance criteria, and
once the criteria has been met, the options vest over five years. The exercise
price of options granted is $29.25 per share. During the performance period, the
shares subject to the option are earned in one-fifth increments for each
increase in average stock price (with the average calculated over 20 consecutive
trading days) equal to one-fifth of the difference between the option's doubled
exercise price and the option exercise price.
F-22
<PAGE> 79
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A total of 1,750,000 options to purchase common stock at an exercise price
of $29.25 were authorized under the 1999 Incentive Plan. As of December 31,
1999, 1,400,000 or four-fifths of the options had met the performance criteria.
The difference between the exercise price of the options and the fair market
value of the Company's common stock, which ranged between $36.50 and $60.00 per
share, at the date the options met the performance criteria, has been recorded
as deferred compensation of approximately $27.6 million. The compensation
expense is amortized over the five year vesting period. The Company recognized
compensation expense of approximately $1.5 million for the year ended December
31, 1999.
Stock Warrants
In connection with the issuance of the Company's old senior subordinated
notes payable to a shareholder in October 1993, warrants to acquire 1,096,128
shares of the Company's Class C non-voting common stock at an exercise price of
$.001 per share were issued. The warrants entitled the holders to purchase the
Class C common stock at any time prior to October 1, 1999 or until the related
notes were paid in full, whichever was later. Subsequent to issuance, in 1993,
warrants to purchase 131,532 shares were exercised. On June 29, 1996, the
warrant holder sold to the Company a warrant to purchase 550,293 shares of Class
C common stock for an aggregate purchase price of approximately $2.9 million.
Class C common stock subject to the remaining warrant was reclassified as Class
B common stock at the same time. A warrant to purchase 414,303 shares of Class B
common stock was outstanding at December 31, 1997. During the Recapitalization,
the outstanding warrant was converted into a warrant to purchase 414,303 shares
of new common stock. In connection with the IPO, the warrant was exercised,
therefore there were no outstanding warrants remaining at December 31, 1998 and
1999.
Stock Option Plan
Prior to the adoption of the Company's 1996 Equity Incentive Plan, the
Company granted options, including performance options, to a principal
shareholder and employees. The options to acquire shares of Class A common stock
had an exercise price which represented the Company's Board of Directors'
estimate of the fair market value of the shares at the date of grant. In the
Recapitalization, these options were converted into options to purchase three
times the number of shares of new common stock. Generally, the options can be
earned over a five-year period commencing one year from the date of grant and
expire on the earlier of ten years from the date granted or termination of
employment.
On June 28, 1996, the Company adopted the Citadel Communications
Corporation 1996 Equity Incentive Plan ("Plan") pursuant to which the Company's
Board of Directors may grant stock options to officers, employees and related
parties. The Plan, which has been subsequently amended, authorizes grants of
options to purchase up to 908,792 shares of authorized but unissued new common
stock at December 31, 1999, which excludes those options granted outside the
Plan and those granted prior to the adoption of the Plan. Stock options are
generally granted with an exercise price equal to the new common stock's fair
market value at the date of grant, with the exception of the 114,000 options
granted during September 1998 for which compensation expense was recorded.
Generally, stock options will vest ratably over a five-year period, commencing
one year after the date of grant and expire on the earlier of ten years from the
date granted or termination of employment, or they will vest immediately, as
determined by the Company's Board of Directors at the date of grant.
On July 27, 1999, the Company's stockholders approved the 1999 Incentive
Plan pursuant to which the Company's Board of Directors granted 1,750,000 stock
options to certain executive officers of the Company, subject to meeting certain
performance criteria under the plan. As of December 31, 1999, 1,400,000 options
to purchase common stock have met the performance criteria under the 1999
Incentive Plan. The options vest over a five-year period commencing one year
from the date the options were earned and expire on the earlier of ten years
from the date granted or termination of employment.
F-23
<PAGE> 80
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock option activity is summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE PRICE EXERCISABLE
OPTIONS PER SHARE OPTIONS
---------- -------------- -----------
<S> <C> <C> <C>
Outstanding December 31, 1996.................. 2,325,664 $ 3.12 630,297
Granted...................................... 415,107 5.18 --
Exercised.................................... (17,757) 2.62 --
Canceled..................................... (34,404) 3.29 --
---------- ------ ---------
Outstanding December 31, 1997.................. 2,688,610 3.46 1,273,542
Granted...................................... 203,960 15.56 --
Exercised.................................... (36,377) 1.42 --
Canceled..................................... (31,560) 1.54 --
---------- ------ ---------
Outstanding December 31, 1998.................. 2,824,633 4.38 1,753,681
Granted(1)................................... 1,712,400 30.05 --
Exercised.................................... (1,102,441) 2.72 --
Canceled..................................... (27,173) 13.27 --
---------- ------ ---------
Outstanding December 31, 1999.................. 3,407,419 $17.75 1,167,002
========== ====== =========
</TABLE>
- ---------------
(1) Only 1,400,000 options, which met the performance criteria under the 1999
Incentive Plan, are reflected in the total for granted options.
The weighted average fair value of options granted in 1997, 1998 and 1999
are $2.56, $21.04 and $46.18 per share, respectively. Options held by a
principal shareholder and an entity controlled by such principal stockholder
total 1,323,880 of which 407,410 were exercisable at December 31, 1999 at a
weighted average exercise price of $4.20 per share.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- -------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AT AVERAGE
DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
1999 LIFE PRICE 1999 PRICE
-------------- ----------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ 0.97 211,156 4.0 $ 0.97 211,156 $ 0.97
$ 1.64 - $1.79 401,235 5.0 1.79 401,235 1.79
$ 4.00 - $5.72 847,578 6.6 5.67 491,911 5.67
$10.00 54,300 7.9 10.00 15,300 10.00
$16.00 - $25.25 209,400 8.7 16.88 47,400 16.00
$29.25 - $33.25 1,661,750 9.8 29.88 -- N/A
$41.88 - $50.75 22,000 9.8 46.66 -- N/A
--------- --- ------ --------- ------
$0.97 - $50.75 3,407,419 8.0 $17.75 1,167,002 $ 3.96
========= === ====== ========= ======
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions for
the year ended December 31, 1999: risk-free interest rate of 6.4 percent;
dividend yield of $0; expected life of 4 years; and volatility of 83.5 percent.
For the year ended December 31, 1998, the following assumptions were utilized:
risk-free interest rate of 4.53 percent; dividend yield of $0; expected life of
3.4 years; and volatility of 42 percent. For the year ended December 31, 1997,
the
F-24
<PAGE> 81
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
following assumptions were utilized: risk-free interest rates of 6.0 percent;
dividend yield of $0; expected life of 3.4 years; and a volatility of 0 percent
since the Company did not have publicly traded shares.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation expense has been recognized for its stock options
in the accompanying consolidated financial statements, with the exception of the
options discussed under the heading "Deferred Compensation." Had the Company
determined compensation expense based on the fair value at the grant date for
its stock options under SFAS No. 123, the Company's net loss applicable to
common shares and net loss per common share would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net loss applicable to common shares:
As reported....................................... $(11,918) $(18,517) $(23,031)
Pro forma......................................... (12,234) (19,045) (27,262)
Net loss per common share:
As reported....................................... (3.72) (1.51) (.80)
Pro forma......................................... (3.82) (1.55) (.95)
</TABLE>
(12) EXCHANGEABLE PREFERRED STOCK
On July 3, 1997, Citadel Broadcasting completed the sale of 1,000,000
shares of 13 1/4% Exchangeable Preferred Stock ("Exchangeable Preferred Stock")
for $100.0 million. The Exchangeable Preferred Stock has a liquidation
preference of $100 per share, plus accumulated and unpaid dividends. Dividends
on the Exchangeable Preferred Stock accrue at the rate of 13 1/4% per annum and
are payable semi-annually on January 1 and July 1 of each year, commencing
January 1, 1998. On or prior to July 1, 2002, dividends are payable in
additional shares of Exchangeable Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends, or, at the option
of Citadel Broadcasting, in cash. Thereafter, all dividends will be payable only
in cash. Citadel Broadcasting will be required to redeem the Exchangeable
Preferred Stock on July 1, 2009 (subject to the legal availability of funds
therefore) at a redemption price equal to the liquidation preference thereof,
plus accumulated and unpaid dividends, if any, to the date of redemption.
On August 2, 1999, Citadel Broadcasting redeemed approximately 35% of its
issued and outstanding 13 1/4% exchangeable preferred stock. Total shares
redeemed were approximately 452,000 at a redemption price of $113.25 per share
for a total of approximately $51.2 million. In addition, Citadel Broadcasting
paid approximately $0.5 million of accrued dividends on the redeemed shares.
The Exchangeable Preferred Stock is presented net of unamortized issuance
costs of approximately $4.4 million and $4.2 million at December 31, 1998 and
1999, respectively. The Exchangeable Preferred Stock includes accrued dividends
at December 31, 1999 of approximately $5.6 million which were paid in 55,621
additional shares of Exchangeable Preferred Stock on January 1, 2000. During
1999, dividends were paid in 75,267 additional shares on January 1, 1999 and
80,253 additional shares on July 1, 1999. At December 31, 1998 and 1999,
1,136,104 and 839,556 shares were issued and outstanding.
The Certificate of Designation for the Exchangeable Preferred Stock
contains certain covenants, which, among other things, restrict the ability of
Citadel Broadcasting with respect to: (i) the incurrence of additional debt;
(ii) restricted payments; (iii) issuances and sales of stock of certain
subsidiaries; and (iv) consolidations, mergers or sales of assets. Citadel
Broadcasting was in compliance with these covenants at December 31, 1999.
F-25
<PAGE> 82
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(13) INCOME TAXES
For the year ended December 31, 1997, the Company generated a net loss for
both financial reporting and income tax purposes; therefore, no current tax
provision has been recorded. The income tax benefit in 1997, 1998 and 1999
represents the reversal of deferred tax liabilities established at the date of
acquisition due to differences in the tax bases and the financial statement
carrying amounts of intangibles and fixed assets acquired in stock-based
acquisitions offset by federal alternative minimum tax and state tax expense. At
December 31, 1999, the Company has net operating loss carry forwards for federal
income tax purposes of approximately $42.2 million, which begin to expire in
2011.
On June 28, 1996, the Company underwent an ownership change in accordance
with Section 382 of the Internal Revenue Code. Due to this change, the net
operating losses of the Company generated prior to the date of the ownership
change is subject to limitation in future years. The approximate amount of the
net operating losses, which are limited at December 31, 1999, is $2.1 million,
which may be used in the year 2000.
On June 25, 1999, the Company underwent an additional ownership change in
accordance with Section 382 of the Internal Revenue Code. However, the net
operating loss limitation exceeded the Company's net operating losses and
therefore no additional limitation will be imposed on the Company's net
operating losses.
The components of the Company's income tax benefit for the year ended
December 31, 1997, 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
1997 1998 1999
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current tax expense:
Federal............................................... $ -- $ 87 $ 143
State................................................. -- 324 803
----- ------- -------
-- 411 946
----- ------- -------
Deferred tax benefit:
Federal............................................... (654) (1,535) (2,204)
State................................................. (116) (271) (389)
----- ------- -------
(770) (1,806) (2,593)
----- ------- -------
Total income tax benefit................................ $(770) $(1,395) $(1,647)
===== ======= =======
</TABLE>
A reconciliation of the Company's income tax benefit as compared to the tax
benefit calculated by applying the federal statutory rate (34%) to the loss from
continuing operations before income taxes for the years ended December 31, 1997,
1998 and 1999 are as follows:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal statutory rate applied to the loss from
continuing operations before income taxes............ $(1,856) $(1,818) $(2,142)
State tax, net of federal benefit...................... -- 214 530
Amortization of goodwill............................... 425 778 1,045
Nondeductible meals and entertainment.................. 51 88 78
Effect of the ability to utilize net operating loss
carry forwards....................................... 680 (667) (1,158)
Other.................................................. (70) 10 --
------- ------- -------
$ (770) $(1,395) $(1,647)
======= ======= =======
</TABLE>
F-26
<PAGE> 83
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets, liabilities and the valuation allowance are
as follows:
<TABLE>
<CAPTION>
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Receivables, principally due to allowance for doubtful
accounts.................................................. $ 475 $ 977
Net operating loss carry forwards........................... 9,667 16,871
Accrued liabilities not currently deductible................ 124 354
Unrealized loss on hedging contract......................... 157 --
Intangible assets; differences in book and tax
amortization.............................................. -- 3,043
Compensation related to stock options....................... -- 720
Other....................................................... -- 200
-------- --------
Total deferred tax assets.............................. 10,423 22,165
Valuation allowance......................................... (6,273) (17,798)
-------- --------
Net deferred tax assets................................ 4,150 4,367
-------- --------
Deferred tax liabilities:
Property and equipment, principally due to accelerated
depreciation.............................................. (3,423) (4,367)
Intangible assets; differences in book and tax
amortization.............................................. (727) --
Differences between the tax basis and fair value of
intangibles and fixed assets acquired in stock-based
acquisitions.............................................. (24,844) (45,640)
-------- --------
Total deferred tax liabilities......................... (28,994) (50,007)
-------- --------
Net deferred tax liability.................................. $(24,844) $(45,640)
======== ========
</TABLE>
The valuation allowance has increased (decreased) by approximately $.8
million, $(1.2) million, and $11.5 million for the years ended December 31,
1997, 1998 and 1999, respectively. Management has considered certain tax
planning strategies as permitted under SFAS No. 109, "Accounting for Income
Taxes." Management has determined that the tax benefits associated with the
recorded deferred tax assets, net of valuation allowance, are more likely than
not realizable through future taxable income and future reversals of existing
taxable temporary differences.
At December 31, 1999, the Company has an alternative minimum tax credit
(AMT) carry forward of approximately $126,000. AMT credits are available to be
carried forward indefinitely and may be utilized against regular federal tax to
the extent they do not exceed computed AMT calculations.
F-27
<PAGE> 84
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(14) QUARTERLY RESULTS (UNAUDITED)
The following table presents the Company's selected unaudited quarterly
results for eight quarters ended December 31, 1999. The Company believes that
all necessary adjustments have been made to present fairly the related quarterly
results (in thousands except for per share amounts).
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- --------
FOR THE YEAR ENDED DECEMBER 31, 1998
<S> <C> <C> <C> <C> <C>
Net broadcasting revenue (1)............ $27,836 $34,399 $35,437 $35,640 $133,312
Operating income/(loss) (1)............. (907) 2,982 3,805 5,248 11,128
Net income (loss)....................... (5,115) (1,713) 547 2,350 (3,931)
Net loss applicable to common shares.... (8,687) (5,200) (3,216) (1,414) (18,517)
Basic and diluted net loss per common
share................................. $ (2.70) $ (1.56) $ (0.20) $ (0.05) $ (1.51)
FOR THE YEAR ENDED DECEMBER 31, 1999
Net broadcasting revenue (1)............ $31,192 $41,286 $50,494 $55,523 $178,495
Operating income/(loss) (1)............. (338) 6,178 6,888 5,969 18,697
Net income (loss)....................... (5,181) 673 455 (4,875)(2) (8,928)
Net loss applicable to common shares.... (9,194) (3,340) (2,841) (7,656) (23,031)
Basic and diluted net loss per common
share................................. $ (0.36) $ (0.13) $ (0.09) $ (0.24) $ (0.80)
</TABLE>
(1) Net broadcasting revenue and operating income/(loss) amounts have been
adjusted for discontinued operations for all quarters presented above.
(2) Represents $1.7 million amortization of deferred compensation, additional
bad debt reserves, accrual of year 2000 estimated losses for discontinued
operations and increased depreciation, amortization and interest expense due
to acquisitions.
(15) SUPPLEMENTAL FINANCIAL INFORMATION
The Company paid cash of approximately $7.3 million, $16.1 million and
$23.1 million for interest and approximately $2,000, $287,000 and $675,000 for
taxes for the years ended December 31, 1997, 1998 and 1999, respectively.
Barter revenue included in gross broadcasting revenue and barter expenses
included in station operating expenses amounted to approximately $7.4 million,
$11.0 million and $18.3 million and $7.1 million, $9.5 million and $11.7 million
for the years ended December 31, 1997, 1998 and 1999, respectively.
A summary of additions and deductions related to the allowance for doubtful
accounts for the years ended December 31, 1997, 1998 and 1999 follows:
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF END OF
PERIOD ADDITIONS DEDUCTIONS PERIOD
------------ --------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Year ended December 31, 1997................ $ 621 $1,016 $ (828) $ 809
Year ended December 31, 1998................ 809 1,201 (823) 1,187
Year ended December 31, 1999................ 1,187 6,702 (5,446) 2,443
</TABLE>
F-28
<PAGE> 85
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following supplemental information is related to the consolidated
statements of cash flows. The Company recorded the following significant
non-cash items for the years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Difference between tax basis and fair value of intangible
assets and fixed assets acquired in stock-based
acquisitions.............................................. $22,400 $ 3,445 $23,857
======= ======= =======
Dividends for exchangeable preferred stock.................. $ 6,551 $14,586 $14,103
======= ======= =======
Note payable issued for property and equipment.............. $ -- $ 120 $ --
======= ======= =======
Transfer of fixed assets and intangible assets, to assets
held for sale for pending disposition..................... $ -- $25,938 $ --
======= ======= =======
Unrealized loss on hedging contract, net of tax............. $ -- $ 236 $ --
======= ======= =======
Accretion of exchangeable preferred stock issuance costs.... $ 82 $ 180 $ 206
======= ======= =======
</TABLE>
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summary presents a description of the methodologies and
assumptions used to determine the estimated fair values for the Company's
financial instruments as required by SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments."
Limitations
Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial instrument; they
are subjective in nature and involve uncertainties and matters of judgment and,
therefore, cannot be determined with precision. These estimates do not reflect
any premium or discount that could result from offering for sale at one time the
Company's entire holdings of a particular instrument. Changes in assumptions
could significantly affect these estimates.
Since the fair value is estimated as of December 31, 1999, the amounts that
will actually be realized or paid at settlement or maturity of the instruments
could be significantly different.
Cash Equivalents, Accounts Receivable, Accounts Payable, Due From Related
Parties and Accrued Liabilities
The carrying amount is assumed to be the fair value because of the
liquidity or short-term maturity of these instruments.
Senior Subordinated Notes, Note Payable, Exchangeable Preferred Stock and Other
Long-Term Obligations
The fair value of the Company's Senior Subordinated Notes, Exchangeable
Preferred Stock and other long-term obligations approximate the terms in the
marketplace at which they could be replaced. Therefore, the fair value
approximates the carrying value of these financial instruments.
In 1996, the Company entered into an interest rate swap agreement with a
financial institution. The fair value of the interest rate swap as of December
31, 1998 was approximately $(393,000) as determined by the financial
institution, and represents an unrealized loss. The fair value of the interest
rate swap is the estimated amount that the financial institution would receive
or pay to terminate the swap agreement at the reporting date, taking into
account current interest rates and the current creditworthiness of the swap
counterparties. The interest rate swap agreement was terminated on December 10,
1999.
F-29
<PAGE> 86
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(17) TRANSACTIONS WITH RELATED PARTIES
Leaseback
On December 29, 1995, the Company entered into a sale-leaseback transaction
with an entity controlled by a principal shareholder, officer and director. The
Company made payments of approximately $207,000, $207,000 and $252,000 in 1997,
1998 and 1999, respectively. This operating lease was terminated effective
January 1, 2000.
Noncompetition Agreement
In connection with an acquisition, the Company entered into a
noncompetition agreement with an entity whose president is also a director of
the Company. In consideration for such noncompetition agreement, the Company
paid the entity $100,000 in 1997 and 1998. The agreement expired during 1998.
In connection with an acquisition, the Company entered into a seven-year
noncompetition agreement with a previous owner who subsequently became a
director of the Company, which provides for compensation of $250,000 per year.
In consideration for such noncompetition agreement, the Company paid the
individual approximately $83,000 in 1999.
Transactions with Connect Communications
On October 1, 1999, the Company acquired certain assets and subscriber
agreements of Connect Communications Corporation, an internet service provider
in Arkansas, in exchange for extinguishment of approximately $100,000 in
accounts receivable and certain equipment owned by the Company. The son of a
director of the Company, is a director and shareholder of Connect Communications
Corporation.
Connect Communications Corporation also provided telephone service for the
Little Rock, Arkansas market and on a limited basis for eFortress during 1999.
The value of the telephone service provided in 1999 was approximately $124,000.
As of December 31, 1999 Connect Communications Corporation owes the Company
approximately $69,000 for third party telephone charges, which were to be
reimbursed by Connect Communications Corporation.
Corporate Events
During 1998, the Company paid an aggregate of approximately $76,000 in
respect of accommodations and activity costs in connection with corporate events
held at a facility owned by a separate entity, which is controlled by a
principal shareholder, officer and director.
(18) COMMITMENTS AND CONTINGENCIES
Liabilities for loss contingencies arising from claims, assessments,
litigation, fines and penalties, or other sources are recorded when it is
probable that a liability has been incurred and the amount of the liability can
be reasonably estimated.
Litigation
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes that such litigation and claims
will be resolved without a material effect on the Company's financial position.
The Company has received two civil investigative demands ("CIDs") from the
Antitrust Division of the U.S. Department of Justice. One CID addresses the
Company's acquisition of station KRST in Albuquerque, New
F-30
<PAGE> 87
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Mexico and the second CID addresses the joint sales agreement for stations in
Spokane, Washington and Colorado Springs, Colorado. The Company has provided the
requested information in response to each CID, and at present has been given no
indication from the Department of Justice regarding its intended future actions,
for the CID involving KRST in Albuquerque. On April 28, 1999, the Department of
Justice filed a lawsuit in the United States District Court for the District of
Columbia against the Company and Triathlon Broadcasting Company alleging that
they, as a result of a joint sales agreement, eliminated price competition
between their radio stations in Spokane and Colorado Springs. A proposed Final
Judgement, the terms of which were stipulated by the parties, was also filed
with the court on April 28, 1999. The Final Judgement was filed with the Court
on August 26, 1999, and the investigation was dropped by the Department of
Justice. The JSA involving these stations was terminated on April 30, 1999.
Local Marketing Agreements
At December 31, 1999, the Company has local marketing agreements with
KATG-FM in Reno, Nevada and KWUN-AM in Salt Lake City, UT. The agreements
principally provide for the Company to supply specified programming to the
brokered stations and enable the sales staff of the Company to sell advertising
time on the stations for fixed fees to be paid by the Company, pending its
acquisition by the Company. The Company's consolidated financial statements
include the broadcasting revenue and station operating expenses of the brokered
stations. The fees paid under local marketing agreements amounted to
approximately $1.9 million, $.8 million and $.3 million for the years ended
December 31, 1997, 1998 and 1999, respectively.
Joint Sales Agreements (JSA)
On January 15, 1996, the Company entered into a joint sales agreement to
sell advertising for radio stations KEYF-AM/FM, KUDY-AM and KKZX-FM, in Spokane,
Washington and radio stations KVOR-AM, KSPZ-FM, KTWK-AM and KVUU-FM in Colorado
Springs, Colorado. As stated in the JSA, the JSA revenue is calculated as 60% of
the broadcast cash flows of these radio stations and all Company owned radio
stations in these markets, with the exception of KKLI-FM in Colorado Springs
which is not included in the JSA calculation. The JSA was terminated on April
30, 1999.
On July 3, 1997, the Company acquired all of the issued and outstanding
capital stock of Tele-Media Broadcasting Company ("Tele-Media"). As a result of
this acquisition, the Company assumed a Tele-Media JSA for radio station WKQV-AM
in Wilkes-Barre/Scranton, Pennsylvania. As stated in the JSA, JSA revenue is
calculated as the sum of (i) a base monthly payment of $5,000, and (ii) an
additional monthly fee ranging from 5% to 8% of revenues (as defined in the JSA)
based on monthly revenues of WKQV-AM and of its simulcast station, WARM-AM. The
JSA was terminated on December 31, 1999.
LEASE COMMITMENTS
The Company leases certain tower sites, transmitters and equipment,
automobiles, office equipment and an airplane. The following is a schedule by
year of future minimum rental payments required under operating leases that have
an initial or remaining noncancelable lease term in excess of one year as of
December 31, 1999:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
2000....................................................... $ 3,753
2001....................................................... 3,508
2002....................................................... 3,244
2003....................................................... 2,993
2004....................................................... 2,575
Thereafter................................................. 4,005
--------
$ 20,078
========
</TABLE>
F-31
<PAGE> 88
CITADEL COMMUNICATIONS CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Total rental expense was approximately $2.0 million, $2.7 million and $3.5
million for the years ended December 31, 1997, 1998 and 1999, respectively.
Defined Contribution Plan
The Company has a defined contribution 401(k) plan for all employees who
are at least 21 years of age and have worked at least 1,000 hours in the year.
Under the 401(k) plan, employees can contribute up to 20% of their compensation,
subject to the maximum contribution allowed by the Internal Revenue Code.
Participants vest immediately in their contributions. The Company may make
discretionary contributions as approved by the Board of Directors. Participants'
rights to amounts contributed by the Company vest on a graded schedule over a
five-year period. During 1997, 1998 and 1999 the Company contributed $299,000,
$448,000 and $532,000, respectively, which represented a two percent matching of
employee contributions to the 401(k) plan.
(19) SUBSEQUENT EVENTS
On January 23, 2000, the Company entered into a stock purchase agreement
with Bloomington Broadcasting Holdings, Inc. and its stockholders to purchase
all of the issued and outstanding capital stock of Bloomington Broadcasting
Holdings for the aggregate purchase price of approximately $176.0 million in
cash. This amount includes repayment of indebtedness of Bloomington Broadcasting
Holdings that may be outstanding at the time of closing and a deferred
obligation relating to a recent radio station purchase by Bloomington
Broadcasting Holdings. Through its subsidiaries, Bloomington Broadcasting
Holdings is expected to own and operate at closing thirteen FM and seven AM
radio stations serving the Grand Rapids, Michigan; Columbia, South Carolina;
Chattanooga, Tennessee; Johnson City/Kingsport/Bristol, Tennessee; and
Bloomington, Illinois markets.
On January 31, 2000, the Company entered into an asset purchase agreement
to acquire one FM radio station and one AM radio station serving the Worcester,
Massachusetts market for the purchase price of approximately $0.9 million.
On February 10, 2000, the Company acquired radio station WXLO-FM in
Worcester, MA and entered into a local marketing agreement, pending acquisition,
with radio station WORC-FM, also in Worcester. The purchase price for WXLO-FM
was $21.0 million and the Company deposited into escrow the purchase price of
$3.5 million for WORC-FM. The acquisitions will be accounted for using the
purchase method of accounting.
On February 10, 2000, the Company's credit facility was amended and
restated, increasing the total commitment from $400.0 million to $500.0 million.
The $100.0 million increase was allocated $75.0 million to the revolving loans
and $25.0 million to the term loans.
On February 11, 2000, the Company completed an offering of 4,750,000 shares
of its common stock at a price of $51.50 per share. The proceeds to the Company
from the offering, net of underwriting discounts and commissions, were
approximately $234.8 million. A portion of the proceeds were used to repay a
portion of the indebtedness under the Company's credit facility and the
remainder will be used to fund pending acquisitions.
F-32
<PAGE> 89
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT(1)
- ------- -------------------------
<S> <C>
2.1 Asset Purchase Agreement dated October 27, 1999 by and
between Citadel Broadcasting Company and Broadcasting
Partners Holdings, L.P. (incorporated by reference to
Exhibit 2.1 to Citadel Communications Corporation's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1999).
2.2 Stock Purchase Agreement dated April 30, 1999 by and between
Robert F Fuller and Citadel Broadcasting Company
(incorporated by reference to Exhibit 2.1 to Citadel
Broadcasting Company's Current Report on Form 8-K filed on
September 14, 1999).
2.3 Stock Purchase Agreement dated April 30, 1999 by and between
Joseph N Jeffrey, Jr. and Citadel Broadcasting Company
(incorporated by reference to Exhibit 2.2 to Citadel
Broadcasting Company's Current Report on Form 8-K filed on
September 14, 1999).
2.4 Asset Purchase Agreement dated December 3, 1999 by and among
Liggett Broadcast, Inc., Rainbow Radio, LLC, New Tower,
Inc., LLJ Realty, LLC, Robert G. Liggett, Jr., Citadel
Communications Corporation, Citadel Broadcasting Company and
Citadel License, Inc. (incorporated by reference to Exhibit
2.4 to Citadel Communications Corporation's Current Report
on Form 8-K filed on December 10, 1999).
2.5 Purchase Agreement dated August 23, 1999 by and among Cat
Communications, Inc., Desert Communications III, Inc. and
Citadel Broadcasting Company (incorporated by reference to
Exhibit 2.1 to Citadel Communications Corporation's Current
Report on Form 8-K filed January 6, 2000).
2.6 Amendment to Purchase Agreement dated December 22, 1999 by
and among Cat Communications, Inc., Desert Communications
III, Inc. and Citadel Broadcasting Company (incorporated by
reference to Exhibit 2.2 to Citadel Communications
Corporation's Current Report on Form 8-K filed January 6,
2000).
2.7 Stock Purchase Agreement dated January 23, 2000 by and among
Bloomington Broadcasting Holdings, Inc., the stockholders of
Bloomington Broadcasting Holdings, Inc. and Citadel
Broadcasting Company.
3(i) Amended and Restated Certificate of Incorporation of Citadel
Communications Corporation (incorporated by reference to
Exhibit 3(i) to Citadel Communications Corporation's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1998).
3(ii) Bylaws of Citadel Communications Corporation (incorporated
by reference to Exhibit 3(ii) to Citadel Communications
Corporation's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1998).
4.1 Indenture dated as of July 1, 1997 among Citadel
Broadcasting Company, Citadel License, Inc. and The of New
York, as Trustee, with the forms of 10 1/4% Senior
Subordinated Notes due 2007 and 10 1/4% Series B Senior
Subordinated Notes due 2007 included therein (incorporated
by reference to Exhibit 4.1 to Citadel Broadcasting
Company's Registration Statement No 333-36771 on Form S-4).
4.2 Indenture dated as of July 1, 1997 among Citadel
Broadcasting Company, Citadel License, Inc. and The Bank of
New York, as Trustee, with the forms of 13 1/4% Exchange
Debentures due 2009 and 13 1/4% Series B Exchange Debentures
due 2009 included therein (incorporated by reference to
Exhibit 4.2 to Citadel Broadcasting Company's Registration
Statement No. 333-36771 on Form S-4).
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT(1)
- ------- -------------------------
<S> <C>
4.3 Amendment to Certificate of the Designations, Voting Powers
Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations or
Restrictions of the 13 1/4% Series A Exchangeable Preferred
Stock and the 13 1/4% Series B Exchangeable Preferred Stock
of Citadel Broadcasting Company (incorporated by reference
to Exhibit 3(i)(b) to Citadel broadcasting Company's
Registration Statement No. 333-36771 on Form S-4).
4.4 Indenture dated as of November 19, 1998 among Citadel
Broadcasting Company, Citadel License, Inc. and The Bank of
New York, as Trustee, with the form of 9 1/4% Senior
Subordinated Notes due 2008 included therein (incorporated
by reference to Exhibit 4.1 to Citadel Communications
Corporation's Current Report on Form 8-K filed November 30,
1998).
4.5 Global Assignment Agreement dated as of February 10, 2000
among Citadel Broadcasting Company, Citadel Communications
Corporation, Credit Suisse First Boston, as Administrative
Agent, Collateral Agent and Issuing Bank, and the lenders
named therein.
4.6 Amended and Restated Credit Agreement dated as of February
10, 2000 among Citadel Broadcasting Company, Citadel
Communications Corporation, Credit Suisse First Boston, as
lead Arranger, Administrative Agent and Collateral Agent,
FINOVA Capital Corporation, as Syndication Agent, First
Union National Bank and Fleet National Bank, as
Co-Documentation Agents, and the lenders named therein.
9 Amended and Restated Voting Trust Agreement dated as of
October 15, 1997 among Citadel Communications Corporation,
ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment
Partners, L.P., Harlan Levy as Trustee, and J. Walter
Corcoran and Christopher Hall (incorporated by reference to
Exhibit 9 to Citadel Broadcasting Company's Registration
Statement No. 333-36771 on Form S-4).
10.1 * Employment Agreement dated as of June 28, 1996 among
Lawrence R. Wilson, Citadel Broadcasting Company and Citadel
Communications Corporation (incorporated by reference to
Exhibit 10.1 to Citadel Broadcasting Company's Registration
Statement No. 333-36771 on Form S-4).
10.2 * Citadel Communications Corporation 1996 Equity Incentive
Plan, as amended (incorporated by reference to Exhibit 10.2
to Citadel Broadcasting Company's Registration Statement No.
333-36771 on Form S-4).
10.3 * Citadel Communications Corporation Nonqualified Stock Option
Agreement made and entered into as of June 28, 1996 between
Citadel Communications Corporation and Lawrence R. Wilson
(incorporated by reference to Exhibit 10.3 to Citadel
Broadcasting Company's Registration Statement No. 333-36771
on Form S-4).
10.4 * Form of Citadel Communications Corporation Stock Option
Agreement for grants effective as of December 21, 1994
(incorporated by reference to Exhibit 10.4 to Citadel
Broadcasting Company's Registration Statement No 333-36771
on Form S-4).
10.5 * Form of Citadel Communications Corporation Stock Option
Agreement for grants effective as of February 21, 1994
(incorporated by reference to Exhibit 10.5 to Citadel
Broadcasting Company's Registration Statement No 333-36771
on Form S-4).
10.6 * Form of Citadel Communications Corporation Stock Option
Agreement for grants effective as of January 1, 1996
(incorporated by reference to Exhibit 10.26 to Citadel
Broadcasting Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997).
10.7 Third Amended and Restated Registration Rights Agreement
dated as of June 28, 1996 among Citadel Communications
Corporation and certain of its stockholders (incorporated by
reference to Exhibit 10.24 to Citadel Communications
Corporation's Registration Statement No. 333-51011 on Form
S-1).
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT(1)
- ------- -------------------------
<S> <C>
10.8 First Amendment to Third Amended and Restated Registration
Rights Agreement dated as of December 31, 1996 among Citadel
Communications Corporation and certain of its stockholders
(incorporated by reference to Exhibit 10.25 to Citadel
Communications Corporation's Registration Statement No.
333-51011 on Form S-1).
10.9 Second Amendment to Third Amended and Restated Registration
Rights Agreement dated as of September 26, 1997 among
Citadel Communications Corporation and certain of its
stockholders (incorporated by reference to Exhibit 10.26 to
Citadel Communications Corporation's Registration Statement
No. 333-51011 on Form S-1).
10.10 Third Amendment to Third Amended and Restated Registration
Rights Agreement dated as of October 15, 1997 among Citadel
Communications Corporation and certain of its stockholders
(incorporated by reference to Exhibit 10.27 to Citadel
Communications Corporation's Registration Statement No.
333-51011 on Form S-1).
10.11 Fourth Amendment to Third Amended and Restated Registration
Rights Agreement dated as of December 2, 1999 among Citadel
Communications Corporation and certain of its stockholders.
10.12 * Citadel Communications Corporation 1999 Long-Term Incentive
Plan (incorporated by reference to Exhibit 10.33 to
Amendment No. 2 to Citadel Communications Corporation's
Registration Statement No. 333-79277 on Form S-1).
10.13 National Radio Sales Representation Agreement dated October
1, 1998 between McGavren Guild Radio, Inc. and Citadel
Broadcasting Company (incorporated by reference to Exhibit
10.35 to Amendment No. 2 to Citadel Communications
Corporation's Registration Statement No. 333-79277 on Form
S-1).
10.14 Parent Guarantee Agreement dated as of December 17, 1999
between Citadel Communications Corporation and Credit Suisse
First Boston, as Collateral Agent (incorporated by reference
to Exhibit 10.1 to Citadel Communications Corporation's
Current Report on Form 8-K filed January 6, 2000).
10.15 Consulting Agreement dated August 31, 1999 by and between
Robert F Fuller and Citadel Broadcasting Company.
10.16 Asset Purchase Agreement dated November 23, 1998 by and
among Wicks Broadcast Group Limited Partnership, WBG License
Co., L.L.C., Butternut Broadcasting Company, Inc., WBG
Binghamton License Co., Inc. and Citadel Broadcasting
Company (incorporated by reference to Exhibit 2.1 to Citadel
Broadcasting Company's Amendment No. 1 to Current Report on
Form 8-K/A filed December 16, 1998).
21 Subsidiaries of Citadel Communications Corporation.
23.1 Consent of KPMG LLP.
27 Financial Data Schedule.
</TABLE>
- ---------------
* Management contract or management compensatory plan or arrangement.
(1) In the case of incorporation by reference to documents filed by the
Registrant under the Exchange Act of 1934, as amended, the Registrant's file
number under such Act is 000-24515.
<PAGE> 1
Exhibit 2.7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), made as of the 23rd day of
January, 2000, by and among (i) BLOOMINGTON BROADCASTING HOLDINGS, INC., a
Delaware corporation ("BBH"); (ii) the Persons listed on Schedule 1 hereto
(collectively, the "Stockholders"); and (iii) CITADEL BROADCASTING COMPANY, a
Nevada corporation ("Citadel").
RECITALS:
A. The Company (as herein defined) is the licensee of and owns and
operates 19 radio stations serving the Grand Rapids, Michigan market (four
stations), the Columbia, South Carolina market (four stations), the Johnson
City-Kingsport-Bristol, Tennessee market (four stations), the Chattanooga,
Tennessee market (four stations), and the Bloomington, Illinois market (three
stations), as more particularly identified on Schedule 2 hereto (collectively,
the "Stations"), and has agreed to acquire one additional station in the Johnson
City-Kingsport-Bristol, Tennessee market.
B. The Stockholders own all of the issued and outstanding shares of
capital stock of BBH.
C. Citadel desires to purchase from the Stockholders, and the
Stockholders desire to sell to Citadel, all of the Stockholders' shares of
capital stock of BBH, on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the meanings
assigned to them below:
"Accounts Receivable" means the accounts receivable of the Company,
exclusive of Trade Receivables, existing as of the Closing.
"Act" means the Communications Act of 1934, as amended.
"Affiliate" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any
<PAGE> 2
interests of which are owned, in whole or in part, directly or indirectly, by
the first Person. For purposes of this definition, the term "control" (including
the correlative meanings of the terms "controls," "controlled by," and "under
direct or indirect control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of the Person, whether through the
ownership of voting securities or by contract or otherwise.
"Assets" means all of the property of every kind or nature of the
Company, including without limitation the Real Property, the Real Property
Leases, the Intellectual Property, the Personal Property, the Trade Receivables,
the Accounts Receivable and the Cash, and all books, records and accounts of the
Company.
"BBC" means Bloomington Broadcasting Corporation, a Delaware
corporation.
"BBH Common Stock" means common stock, par value $0.01 per share, of
BBH.
"BBH Preferred Stock" means the Series A Convertible Participating
Preferred Stock, par value $0.01 per share, of BBH.
"Broker" means First Union Securities, Inc.
"Business" means the business in which the Company is engaged as of the
date hereof.
"Cash" means the cash and cash equivalents of the Company existing as
of the Closing.
"Chattanooga Sub" means Radio Chattanooga, Inc., a Tennessee
corporation.
"Citadel's Disclosure Schedule" means Schedule 3 to this Agreement.
"Closing" means the consummation of the transactions contemplated by
this Agreement in accordance with the provisions of Section 11.
"Closing Certificate" means the certificate of the Company dated the
Closing Date and delivered to Citadel, which sets forth a true and correct
calculation, including supporting documentation, of (i) the Net Working Capital,
(ii) the Indebtedness for Borrowed Money of the Company as of the Closing and
(iii) the WODJ Amount.
"Closing Date" has the meaning specified in Section 11.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Columbia Sub" means Radio South Carolina, Inc., a South Carolina
corporation.
"Company" means, collectively, BBH, BBC and the Operating Subsidiaries,
taken as a whole.
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"Company's Disclosure Schedule" means Schedule 4 to this Agreement.
"Company's Disclosure Supplement" has the meaning specified in
Section 15.3.
"Confidential Information" has the meaning specified in Section 10.7.
"Contracts" means all (a) contracts, agreements, licenses, leases,
arrangements and other documents to which the Company is a party or by which the
Company or the assets of the Company are bound (including, in the case of loan
agreements, a description of the amounts of any outstanding borrowings
thereunder and the collateral, if any, for such borrowings) creating an
obligation of $15,000 or more on an individual basis; (b) uncompleted orders for
the purchase by the Company of materials, supplies, equipment and services
existing as of the date hereof and with respect to which the remaining
obligation of the Company is $15,000 or more on an individual basis; and (c)
contingent contractual obligations and liabilities of the Company known to the
Company existing as of the date hereof and constituting an obligation of $15,000
or more on an individual basis; provided, however, that for purposes of the
first and last sentences of Section 3.16, all references in this definition to
$15,000 shall be changed to $50,000.
"Credit Agreement" means that certain Credit Agreement dated as of June
30, 1998 by and among BBC, First Union National Bank, as Administrative Agent,
Fleet National Bank, as Documentation Agent, and the lenders party thereto, as
modified, amended or supplemented from time to time.
"Damages" has the meaning specified in Section 14.1.
"Draw Condition" has the meaning specified in Section 15.2(a).
"Environmental Claims" means and includes, without limitation: (a)
claims, demands, suits, and causes of action for personal injury or lost use of
property, to the extent any of the foregoing arise out of Environmental
Conditions; (b) claims for damages to natural resources; (c) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, response or remedial actions under CERCLA, RCRA
or other Environmental Laws; (d) a requirement to implement "corrective action"
pursuant to any order or permit issued pursuant to RCRA; (e) claims for
restitution, contribution or equitable indemnity from third parties or any
governmental agency pursuant to Environmental Laws; (f) fines, penalties or
Liens against property under any Environmental Laws; and (g) claims for
injunctive relief or other orders or notices of violation from Governmental
Authorities with respect to Environmental Conditions.
"Environmental Conditions" means conditions of the environment,
including natural resources (including flora and fauna), soil, surface water,
ground water, any present drinking water supply, subsurface strata or the
ambient air, relating to or arising out of the use, handling, storage,
treatment, recycling, generation, transportation, release, spilling, leaking,
pumping, pouring, emptying, discharging, injecting, escaping, leaching,
disposal, dumping, or threatened release of Hazardous Materials by the Company
or by a Person for whom the Company shall be liable pursuant to applicable laws.
With respect to claims by current or former employees of the
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<PAGE> 4
Company, Environmental Conditions also includes the exposure of Persons to
Hazardous Materials within work places on any real estate owned or occupied by
the Company.
"Environmental Laws" has the meaning specified in the definition of
Hazardous Materials.
"Environmental Noncompliance" means, but is not limited to: (a) the
release or threatened release as a result of the activities of a Person of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria established by any Environmental Law;
(b) any facility or operations which do not conform to the requirements of
applicable Environmental Laws; and (c) any condition noted in any environmental
site assessments, studies, tests or reports performed for the Real Property or
Leaseholds which is concluded therein to create or cause to exist a recognized
environmental condition or to pose an environmental risk.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Equity Percentage Letter" has the meaning specified in Section 2.2.
"FCC" means the Federal Communications Commission.
"FCC Applications" has the meaning specified in Section 10.1.
"FCC Approval" has the meaning specified in Section 10.1.
"FCC Licenses" means the main station license for each Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by the Company in connection with, or
pertaining to, the conduct of the business and operation of the Stations,
together with any renewals and extensions thereof and any applications therefor
pending on the Closing Date, and any and all applications made by the Company
for such consents, rights, licenses, permits and other authorizations.
"Final Order" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time for
further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
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<PAGE> 5
"Governmental Authority" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal or
instrumentality of any such governmental or political subdivision, or any other
Person exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Grand Rapids Sub" means Michigan Media, Inc., a Michigan corporation.
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituent or toxic substances, whether solids, liquids or gases,
including but not limited to substances defined as "PCBs," "hazardous wastes,"
"hazardous substances," "toxic substances," "pollutants," "contaminants,"
"radioactive materials," "petroleum," or otherwise subject to regulation under,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq.; the Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C. Section 9601; the Clean Water Act ("CWA"), 33 U.S.C.
Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq.; or any similar
state law; and in the rules, regulations or ordinances adopted pursuant to the
preceding laws or other similar laws, regulations, rules or ordinances now in
effect (collectively, the "Environmental Laws").
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended from time to time.
"HSR Filing" has the meaning specified in Section 10.6.
"Indebtedness for Borrowed Money" means, without duplication, (a) all
indebtedness of a Person in respect of money borrowed (including without
limitation indebtedness which represents the unpaid amount of the purchase price
of any property), (b) all indebtedness of a Person evidenced by a promissory
note, bond or similar written obligation to pay money, (c) all indebtedness
guaranteed by a Person or for which a Person is contingently liable, including,
without limitation, guaranties in the form of an agreement to repurchase or
reimburse, and any commitment by which any such Person assures a creditor
against loss, including contingent reimbursement obligations with respect to
letters of credit, and (d) all monetary obligations of a Person under any lease
or similar arrangement, which obligations would be classified and accounted for
as capital obligations on a balance sheet of such Person under GAAP.
"Indemnitee" has the meaning specified in Section 14.3.
"Indemnitor" has the meaning specified in Section 14.3.
"Intellectual Property" means the call letters of each Station and all
of the copyrights, service marks, trademarks, trade names, patents and other
similar rights, including applications and registrations therefor, in which the
Company has any right, title or interest.
"Interim Balance Sheet" has the meaning specified in Section 3.10.
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<PAGE> 6
"Knowledge of the Company", or words of similar meaning, means the
actual knowledge of Kenneth H. Maness, Richard D. Johnson and the Stations'
general managers.
"Leaseholds" has the meaning specified in Section 3.15(e).
"Letter of Credit" has the meaning specified in Section 2.3.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"Mandatory Consents" has the meaning specified in Section 6.12.
"Markets" means, collectively, the Grand Rapids, Michigan market, the
Columbia, South Carolina market, the Johnson City-Kingsport-Bristol, Tennessee
market, the Chattanooga, Tennessee market and the Bloomington, Illinois market.
"Material Adverse Effect" means any material adverse effect on the
business, assets, properties, liabilities, results of operations or financial
condition of the Company.
"Net Working Capital" means the current assets of the Company
(including without limitation Accounts Receivable, prepaid expenses and other
current assets, but excluding Cash and Trade Receivables) as of the Closing Date
minus the current liabilities of the Company (including without limitation
accounts payable and accrued liabilities, but excluding Trade Liabilities and
the current portion of, and accrued interest on, Indebtedness for Borrowed
Money) as of the Closing Date, determined in accordance with GAAP.
"Net Working Capital Shortfall" means the amount, if any, by which
$3,000,000 exceeds Net Working Capital.
"Obligations" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) accrued Taxes, accounts payable, accrued liabilities and all
other liabilities and obligations of the type normally required by GAAP to be
reflected on a balance sheet, (c) commitments by which a Person assures a
creditor against loss, including the face amount of all letters of credit and,
without duplication, all drafts drawn thereunder, (d) obligations guaranteed in
any manner by a Person, (e) obligations under capitalized leases in respect of
which obligations a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss, (f) obligations under acceptance facilities, (g)
obligations secured by a Lien on property of a Person, (h) obligations under
interest rate or currency exchange or swap agreements, (i) unsatisfied
obligations for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA, (j) indebtedness issued or obligation incurred in
substitution or exchange for any Obligations, (k) costs or expenses incurred by
a Person of any nature, whether or not currently payable, and (l) other
liabilities or obligations of a Person, in each of the foregoing instances
whether absolute or contingent, known or unknown, and whether or not normally
required by GAAP to be reflected on a balance sheet.
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<PAGE> 7
"Operating Subsidiaries" means, collectively, the Chattanooga Sub, the
Columbia Sub, the Grand Rapids Sub, the Tri-Cities Sub and the Twin Cities Sub.
"Pending Acquisition" has the meaning specified in Section 10.10.
"Permits" means all FCC Licenses applicable to the Stations, and all
other permits, licenses, approvals, franchises, notices and authorizations
applicable to the Stations issued by any Governmental Authorities.
"Permitted Encumbrances" means (a) Liens in favor of the Senior Lenders
which secure the Senior Debt; (b) Liens for Taxes, assessments or governmental
charges, or landlords' mechanics', workmen's, materialmen's or similar Liens, in
each case that are not delinquent or which are being contested in good faith;
and (c) with respect to the Real Property, those certain title exceptions which
do not or could not, individually or in the aggregate, interfere with the
current use of the Real Property in any material respect.
"Person" means an individual, corporation, partnership, joint venture,
joint stock company, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"Personal Property" means all of the tangible personal property,
improvements and fixtures of every kind of the Company.
"Pre-Closing Damages" has the meaning specified in Section 15.3.
"Purchase Price" has the meaning specified in Section 2.2.
"Real Property" means all of the right, title and interest of the
Company in and to real property owned by the Company.
"Real Property Leases" means all of the leasehold interests of the
Company pursuant to real property leases.
"Recipient" has the meaning specified in Section 10.7.
"Senior Debt" means the Company's Indebtedness for Borrowed Money under
the Credit Agreement.
"Senior Lenders" means the lenders under the Credit Agreement.
"Shares" has the meaning specified in Section 2.1.
"Stations" has the meaning set forth in the recitals to this Agreement.
"Stockholder Documents" means, collectively, (a) that certain
Shareholders Agreement dated June 30, 1998 among BBH and the Stockholders, (b)
that certain Bloomington
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<PAGE> 8
Broadcasting Holdings, Inc. 1998 Stock Option and Grant Plan and (c) those six
certain Restricted Stock Purchase Agreements dated June 30, 1998 between BBH and
each of Kenneth H. Maness, Richard D. Johnson, William L. McElveen, Dan Brown,
Donald Raines and Barclay A. Brandmiller.
"Stockholder Rep" means Media/Communications Partners III Limited
Partnership, as representative of the Stockholders.
"Subordinated Debt" means the Company's Indebtedness for Borrowed Money
to the Stockholders.
"Supplemental Financial Statements" has the meaning specified in
Section 6.9.
"Taxes" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll and franchise taxes, and any taxes required by law to be withheld, which
taxes are imposed by any Governmental Authority; and such term shall include any
interest, penalties, or additions to tax attributable to such assessments.
"Threshold" has the meaning specified in Section 14.5(a).
"Trade Agreements" means and includes those agreements entered into by
the Company for the sale of advertising time on the Stations for consideration
other than cash, which agreements are in effect as of the Closing.
"Trade Liabilities" means the fair market value of the Company's
liability as of the Closing for unperformed time under the Trade Agreements.
"Trade Receivables" means the fair market value of goods and services
to be received by the Company after the Closing under the Trade Agreements.
"Tri-Cities Sub" means Tri-Cities Radio Corp., a Tennessee corporation.
"Twin Cities Sub" means Twin Cities Broadcasting Corp., an Illinois
corporation.
"WGOC" has the meaning specified in Section 10.10.
"WGOC Agreement" has the meaning specified in Section 10.10.
"WGOC Owner" has the meaning specified in Section 10.10.
"WGOC TBA" has the meaning specified in Section 10.10.
"WODJ Amount" means, to the extent not paid prior to the Closing by the
Company, all liabilities and obligations of the Company pursuant to that certain
Option Agreement between
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BBC and Clear Channel Communications, Inc. relating to the Company's acquisition
of substantially all of the assets of WODJ-FM licensed to Greenville, Michigan.
SECTION 2
PURCHASE AND SALE OF SHARES; PURCHASE PRICE
2.1 Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties, covenants and agreements contained in this Agreement, at the
Closing, each Stockholder agrees to sell, assign and convey to Citadel, and
Citadel agrees to purchase, acquire and accept from each Stockholder, the number
of shares of BBH Common Stock and BBH Preferred Stock owned by such Stockholder
as set forth on Schedule 1 hereto (collectively, the "Shares").
2.2 Purchase Price. The aggregate purchase price to be paid to the
Stockholders for the purchase of the Shares shall be $175,000,000, plus, if the
Pending Acquisition is consummated prior to the Closing Date, the lesser of (x)
$850,000 or (y) the purchase price actually paid by the Company to consummate
the Pending Acquisition, minus (i) the aggregate amount of Indebtedness for
Borrowed Money of the Company as of the Closing Date (including without
limitation Senior Debt, Subordinated Debt and any prepayment penalty or premium
payable with respect thereto), (ii) the Net Working Capital Shortfall and (iii)
the WODJ Amount (such net amount, the "Purchase Price"). The Purchase Price
shall be paid at the Closing as follows: (a) $2,000,000 of the Purchase Price
shall be delivered to the Stockholder Rep (for the purpose of the payment of
professional fees and other costs and expenses incurred by the Stockholders in
connection with the transactions contemplated hereby), on behalf of the
Stockholders, in cash or by wire transfer of immediately available funds to an
account designated by the Stockholder Rep in writing to Citadel at least three
days prior to the Closing Date, and (b) the remainder of the Purchase Price
shall be paid to the Stockholders, in accordance with their percentage ownership
of BBH as of the Closing Date as set forth in the Equity Percentage Letter, in
cash or by wire transfer of immediately available funds to the respective
accounts designated by the Stockholders in writing to Citadel at least three
days prior to the Closing Date. Not later than the date which is three days
prior to the Closing Date, the Stockholder Rep shall deliver to Citadel a letter
(the "Equity Purchase Letter") setting forth each Stockholder's ownership
percentage of BBH. In the event that the Stockholder Rep fails to deliver such
letter, Citadel shall pay the Purchase Price to an account designated by the
Stockholder Rep, and the Stockholder Rep shall be solely responsible for the
delivery of the Purchase Price to the Stockholders. The Stockholders hereby (x)
irrevocably appoint the Stockholder Rep as their representative for purposes of
receiving the payment described in clause (a) of third preceding sentence and
(y) acknowledge and agree that, upon payment of the Purchase Price as described
herein, Citadel shall have no further obligation to the Stockholders in respect
of the payment of the Purchase Price.
2.3 Letter of Credit. Simultaneously with the execution of this
Agreement, Citadel shall deliver to BBH an irrevocable letter of credit in favor
of BBH, issued by Credit Suisse First Boston, in the amount of $15,000,000 which
shall be in the form attached as Exhibit A hereto (the "Letter of Credit"). The
Letter of Credit shall provide that the issuing bank shall make
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payment on the Letter of Credit upon such bank's receipt of a joint certificate
from the Chief Executive Officer of Citadel and from the President of BBH
certifying that a Draw Condition has occurred. At the Closing, BBH shall return
the original Letter of Credit to Citadel for cancellation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF BBH
In connection with the purchase and sale of the Shares and in order to
induce Citadel to enter into and consummate the transactions contemplated by
this Agreement, BBH makes the representations and warranties set forth in this
Section 3 to Citadel, as of the date of this Agreement and as of the Closing
Date (except for representations and warranties expressly and specifically
relating to a time or times other than the date hereof or thereof, which shall
be made as of the specified time or times). For purposes of this Agreement, to
the extent that any disclosure made by the Company would be required to be made
in more than one section of Company's Disclosure Schedule, such disclosure may
be made by a cross-reference to information set forth in any other sections of
Company's Disclosure Schedule.
3.1 BBH.
(a) Organization and Qualification; Authority. BBH is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full power and authority to own its assets and
properties and to conduct the Business. BBH is qualified to do business as a
foreign corporation in, and is in good standing under the laws of, the State of
Illinois and the Commonwealth of Massachusetts, and is not required to be
qualified to do business as a foreign corporation in any other state. BBH has
full power, authority and legal right and all necessary approvals, permits,
licenses and authorizations to own its properties and to conduct the Business as
currently conducted.
(b) Capitalization. The authorized capital stock of BBH
consists solely of (i) 300,000 shares of BBH Common Stock, of which 11,477.40
shares are issued and outstanding and all of which are owned, beneficially and
of record, by the Stockholders as set forth on Schedule 1 hereto, (ii) 300,000
shares of BBH Preferred Stock, of which 109,890 shares are issued and
outstanding and all of which are owned, beneficially and of record, by the
Stockholders as set forth on Schedule 1 hereto, (iii) 400,000 shares of Series B
Redeemable Preferred Stock, par value $0.01 per share, of which no shares are
issued and outstanding, and (iv) 1,000,000 shares of undesignated preferred
stock, par value $0.01 per share, of which no shares are issued and outstanding.
The issued and outstanding shares of BBH Common Stock and BBH Preferred Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable. Other than the BBH Preferred Stock, BBH does not have outstanding
any options, warrants, stock or other securities convertible or exchangeable for
any stock or other securities of BBH.
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(c) Repurchase and Other Obligations. Except as set forth in
Section 3.1 of Company's Disclosure Schedule, BBH is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its stock or other securities. Except as set forth in Section 3.1
of Company's Disclosure Schedule, no Person is entitled to any preemptive right,
right of first refusal or similar right with respect to any stock or other
securities of BBH. Except as set forth in Section 3.1 of Company's Disclosure
Schedule, there are no agreements, arrangements or trusts between or for the
benefit of BBH or the Stockholders with respect to the voting or transfer of
stock or other securities, or with respect to any other aspect of BBH's affairs.
BBH has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its stock or other
securities.
(d) Subsidiaries. BBH does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person other than BBC,
which is a wholly owned subsidiary of BBH. Except as set forth in Section 3.1 of
Company's Disclosure Schedule, BBH owns, beneficially and of record, all of the
issued and outstanding shares of capital stock of BBC, free and clear of all
Liens.
3.2 BBC.
(a) Organization and Qualification; Authority. BBC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full power and authority to own its assets and
properties and to conduct the Business. BBC is qualified to do business as a
foreign corporation in, and is in good standing under the laws of, the State of
Illinois, and is not required to be qualified to do business as a foreign
corporation in any other state. BBC has full power, authority and legal right
and all necessary approvals, permits, licenses and authorizations to own its
properties and to conduct the Business as currently conducted.
(b) Capitalization. The authorized capital stock of BBC
consists solely of 1,000 shares of common stock, par value $0.01 per share, of
which 100 shares are issued and outstanding and all of which are owned,
beneficially and of record, by BBH. The issued and outstanding shares of common
stock of BBC have been duly authorized and validly issued, and are fully paid
and nonassessable. BBC does not have outstanding any options, warrants, stock or
other securities convertible or exchangeable for any stock or other securities
of BBC.
(c) Repurchase and Other Obligations. BBC is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its stock or other securities. No Person is entitled to any
preemptive right, right of first refusal or similar right with respect to any
stock or other securities of BBC. There are no agreements, arrangements or
trusts between or for the benefit of BBC or BBH with respect to the voting or
transfer of stock or other securities, or with respect to any other aspect of
BBC's affairs. BBC has not violated any applicable federal or state securities
laws in connection with the offer, sale or issuance of any of its stock or other
securities.
(d) Subsidiaries. BBC does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person other than the
Operating Subsidiaries, which
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are wholly owned subsidiaries of BBC. Except as set forth in Section 3.2 of
Company's Disclosure Schedule, BBC owns, beneficially and of record, all of the
issued and outstanding shares of capital stock of each Operating Subsidiary,
free and clear of all Liens.
3.3 Chattanooga Sub.
(a) Organization and Qualification; Authority. The Chattanooga
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Tennessee and has full power and authority to own its
assets and properties and to conduct the Business. The Chattanooga Sub is not
required to be qualified to do business as a foreign corporation in any state.
The Chattanooga Sub has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business as currently conducted.
(b) Capitalization. The authorized capital stock of the
Chattanooga Sub consists solely of 1,000 shares of common stock, no par value
per share, of which 200 shares are issued and outstanding and all of which are
owned, beneficially and of record, by BBC. The issued and outstanding shares of
common stock of the Chattanooga Sub have been duly authorized and validly
issued, and are fully paid and nonassessable. The Chattanooga Sub does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of the Chattanooga Sub.
(c) Repurchase and Other Obligations. The Chattanooga Sub is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its stock or other securities. No Person is
entitled to any preemptive right, right of first refusal or similar right with
respect to any stock or other securities of the Chattanooga Sub. There are no
agreements, arrangements or trusts between or for the benefit of the Chattanooga
Sub, BBH or BBC with respect to the voting or transfer of stock or other
securities, or with respect to any other aspect of the Chattanooga Sub's
affairs. The Chattanooga Sub has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
stock or other securities.
(d) Subsidiaries. The Chattanooga Sub does not own, of record
or beneficially, any capital stock or equity interest or investment in any
Person.
3.4 Columbia Sub.
(a) Organization and Qualification; Authority. The Columbia
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of South Carolina and has full power and authority to own
its assets and properties and to conduct the Business. The Columbia Sub is not
required to be qualified to do business as a foreign corporation in any state.
The Columbia Sub has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business as currently conducted.
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(b) Capitalization. The authorized capital stock of the
Columbia Sub consists solely of 1,000 shares of common stock, no par value per
share, of which 200 shares are issued and outstanding and all of which are
owned, beneficially and of record, by BBC. The issued and outstanding shares of
common stock of the Columbia Sub have been duly authorized and validly issued,
and are fully paid and nonassessable. The Columbia Sub does not have outstanding
any options, warrants, stock or other securities convertible or exchangeable for
any stock or other securities of the Columbia Sub.
(c) Repurchase and Other Obligations. The Columbia Sub is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its stock or other securities. No Person is entitled to
any preemptive right, right of first refusal or similar right with respect to
any stock or other securities of the Columbia Sub. There are no agreements,
arrangements or trusts between or for the benefit of the Columbia Sub, BBH or
BBC with respect to the voting or transfer of stock or other securities, or with
respect to any other aspect of the Columbia Sub's affairs. The Columbia Sub has
not violated any applicable federal or state securities laws in connection with
the offer, sale or issuance of any of its stock or other securities.
(d) Subsidiaries. The Columbia Sub does not own, of record or
beneficially, any capital stock or equity interest or investment in any Person.
3.5 Grand Rapids Sub.
(a) Organization and Qualification; Authority. The Grand
Rapids Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan and has full power and
authority to own its assets and properties and to conduct the Business. The
Grand Rapids Sub is not required to be qualified to do business as a foreign
corporation in any state. The Grand Rapids Sub has full power, authority and
legal right and all necessary approvals, permits, licenses and authorizations to
own its properties and to conduct the Business as currently conducted.
(b) Capitalization. The authorized capital stock of the Grand
Rapids Sub consists solely of 10,000 shares of common stock, no par value per
share, of which 10,000 shares are issued and outstanding and all of which are
owned, beneficially and of record, by BBC. The issued and outstanding shares of
common stock of the Grand Rapids Sub have been duly authorized and validly
issued, and are fully paid and nonassessable. The Grand Rapids Sub does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of the Grand Rapids Sub.
(c) Repurchase and Other Obligations. The Grand Rapids Sub is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its stock or other securities. No Person is
entitled to any preemptive right, right of first refusal or similar right with
respect to any stock or other securities of the Grand Rapids Sub. There are no
agreements, arrangements or trusts between or for the benefit of the Grand
Rapids Sub, BBH or BBC with respect to the voting or transfer of stock or other
securities, or with respect to any other aspect of the Grand Rapids Sub's
affairs. The Grand Rapids Sub has not violated any
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applicable federal or state securities laws in connection with the offer, sale
or issuance of any of its stock or other securities.
(d) Subsidiaries. The Grand Rapids Sub does not own, of record
or beneficially, any capital stock or equity interest or investment in any
Person.
3.6 Tri-Cities Sub.
(a) Organization and Qualification; Authority. The Tri-Cities
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Tennessee and has full power and authority to own its
assets and properties and to conduct the Business. The Tri-Cities Sub is not
required to be qualified to do business as a foreign corporation in any state.
The Tri-Cities Sub has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business as currently conducted.
(b) Capitalization. The authorized capital stock of the
Tri-Cities Sub consists solely of 1,000 shares of common stock, no par value per
share, of which 100 shares are issued and outstanding and all of which are
owned, beneficially and of record, by BBC. The issued and outstanding shares of
common stock of the Tri-Cities Sub have been duly authorized and validly issued,
and are fully paid and nonassessable. The Tri-Cities Sub does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of the Tri-Cities Sub.
(c) Repurchase and Other Obligations. The Tri-Cities Sub is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its stock or other securities. No Person is
entitled to any preemptive right, right of first refusal or similar right with
respect to any stock or other securities of the Tri-Cities Sub. There are no
agreements, arrangements or trusts between or for the benefit of the Tri-Cities
Sub, BBH or BBC with respect to the voting or transfer of stock or other
securities, or with respect to any other aspect of the Tri-Cities Sub's affairs.
The Tri-Cities Sub has not violated any applicable federal or state securities
laws in connection with the offer, sale or issuance of any of its stock or other
securities.
(d) Subsidiaries. The Tri-Cities Sub does not own, of record
or beneficially, any capital stock or equity interest or investment in any
Person.
3.7 Twin Cities Sub.
(a) Organization and Qualification; Authority. The Twin Cities
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Illinois and has full power and authority to own its
assets and properties and to conduct the Business. The Twin Cities Sub is not
required to be qualified to do business as a foreign corporation in any state.
The Twin Cities Sub has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business as currently conducted.
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(b) Capitalization. The authorized capital stock of the Twin
Cities Sub consists solely of 10,000 shares of common stock, no par value per
share, of which 1,000 shares are issued and outstanding and all of which are
owned, beneficially and of record, by BBC. The issued and outstanding shares of
common stock of the Twin Cities Sub have been duly authorized and validly
issued, and are fully paid and nonassessable. The Twin Cities Sub does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of the Twin Cities Sub.
(c) Repurchase and Other Obligations. The Twin Cities Sub is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its stock or other securities. No Person is
entitled to any preemptive right, right of first refusal or similar right with
respect to any stock or other securities of the Twin Cities Sub. There are no
agreements, arrangements or trusts between or for the benefit of the Twin Cities
Sub, BBH or BBC with respect to the voting or transfer of stock or other
securities, or with respect to any other aspect of the Twin Cities Sub's
affairs. The Twin Cities Sub has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
stock or other securities.
(d) Subsidiaries. The Twin Cities Sub does not own, of record
or beneficially, any capital stock or equity interest or investment in any
Person.
3.8 Authority. The execution and delivery of this Agreement by
BBH, the performance by BBH of its covenants and agreements hereunder and the
consummation by BBH of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of BBH. This Agreement has been
duly executed and delivered by BBH and constitutes the valid and legally binding
agreement of BBH, enforceable against it in accordance with its terms.
3.9 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement by BBH, nor the consummation of the transactions contemplated
hereby by BBH, (a) violates or will violate any provision of any organizational
document of BBH; (b) violates or will violate any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any
Governmental Authority; or (c) violates or will violate, or conflicts with, or
will conflict with, or will result in any breach of any of the terms of, or
constitutes or will constitute a default under or results in or will result in
the termination of or the creation or imposition of any Lien pursuant to the
terms of, any contract, commitment, agreement, understanding or arrangement of
any kind to which the Company is a party or by which the Company or any of the
Assets is bound. Except for the FCC Approval, compliance with the HSR Act and
the consents disclosed in Section 3.9 of Company's Disclosure Schedule, no
consents, approvals or authorizations of, or filings with, any Governmental
Authority or any other Person are required on the part of the Company in
connection with the execution and delivery of this Agreement by BBH and the
consummation of the transactions contemplated hereby by BBH.
3.10 Financial Statements. BBH has delivered to Citadel the
following financial statements of the Company: (a) the audited balance sheets as
of December 31, 1997 and December 31, 1998 and the related statements of income
and cash flows for each of the years
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then ended; and (b) the unaudited balance sheet as of November 30, 1999 and the
related statements of income and cash flows for the 11 months then ended (the
"Interim Balance Sheet"). Each of the foregoing financial statements (including
in all cases the notes thereto, if any) (i) is accurate and complete in all
material respects, (ii) is consistent in all material respects with the books
and records of the Company (which, in turn, are accurate and complete in all
material respects), and (iii) fairly presents in all material respects the
financial condition and results of operations of the Company in accordance with
GAAP (subject to (i) the lack of footnote disclosure and (ii) other than with
respect to year-end financial statements, changes resulting from normal year-end
audit adjustments), consistently applied, as of the dates and for the periods
set forth therein.
3.11 Absence of Certain Changes. Since the date of the Interim
Balance Sheet, except as set forth in Section 3.11 of Company's Disclosure
Schedule or as does not, individually or in the aggregate, have a Material
Adverse Effect with respect to clause (a) of this Section 3.11 or as does not,
individually or in the aggregate, have a Material Adverse Effect with respect to
clauses (b) through (f) of this Section 3.11, there has not been any of the
following with respect to the Company: (a) change in the financial condition or
in the results of operations, assets, liabilities or business (other than a
change resulting solely from general economic conditions affecting the radio
broadcasting industry as a whole); (b) damage or destruction, whether or not
insured, affecting business operations; (c) actual or threatened dispute with
any material provider of software, hardware or services; (d) except in the
ordinary course of business, sale or transfer of any tangible or intangible
asset used or useful in the operation of any Station, mortgage, pledge or
imposition of any Lien (other than a Permitted Encumbrance) on any such asset,
lease of real property, machinery, equipment or buildings with respect to any
Station entered into or modification, amendment or cancellation of any of its
existing leases relating to any Station, or cancellation of any debt or claim;
(e) liability or obligation (contingent or otherwise) incurred under agreements
or otherwise, except current liabilities entered into or incurred in the
ordinary course of business consistent with past practices; or (f) dividend or
other distribution (of Cash or any other asset of the Company) declared, paid or
made to the Stockholders in respect of their equity in the Company.
3.12 Taxes. The Company has filed or caused to be filed on a timely
basis all federal, state, local and other tax returns, reports and declarations
required to be filed by it as of the date hereof and has paid all Taxes
(including without limitation income, franchise, sales, use, unemployment,
withholding, social security and workers' compensation taxes and estimated
income and franchise tax payments, penalties and fines) reflected as due on such
returns, reports or declarations, or pursuant to any assessment received by it
in connection with such returns, reports or declarations. All returns, reports
and declarations filed by or on behalf of the Company correctly state the
Company's liability for Taxes for the respective periods to which such returns,
reports and declarations relate. No deficiency in payment of any Taxes for any
period has been asserted against the Company by any taxing authority which
remains unsettled at the date hereof, and no written inquiries have been
received by the Company from any taxing authority with respect to possible
claims for Taxes. Except as set forth in Section 3.12 of Company's Disclosure
Schedule, since the date of the Interim Balance Sheet, the Company has not
incurred any liability for Taxes other than in the ordinary course of business.
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3.13 Personal Property and Stations. Section 3.13 of Company's
Disclosure Schedule contains a complete and accurate listing of each item of
Personal Property with an initial cost of $50,000 or more. Section 3.13 of
Company's Disclosure Schedule also contains a complete and accurate list of all
of the Stations, and specifies which Operating Subsidiary owns the Assets used
in connection with, and operates, each Station.
3.14 Debt. Section 3.14 of Company's Disclosure Schedule contains a
complete and accurate list of all of the Company's Indebtedness for Borrowed
Money as of the date of this Agreement and includes the names of the holders of
such debt and a list of all material documents governing or related to such
debt. Upon the payment in full of such debt, all Liens secured in connection
therewith will be released.
3.15 Title to and Condition of Property.
(a) Title. The Company will as of the Closing have good and
marketable title to and undisputed possession of all of the Assets, other than
the FCC Licenses (which are licensed by the Company), the Leaseholds (which are
leased by the Company), any leased Personal Property as described in Section
3.15(a) of Company's Disclosure Schedule (which are leased by the Company) and
the Real Property (which is discussed specifically below). Except as set forth
in Section 3.15(a) of Company's Disclosure Schedule, such Assets are owned by
the Company free and clear of all Liens other than Permitted Encumbrances. Such
Assets will, as of the Closing, be owned by the Company free and clear of all
Liens other than Permitted Encumbrances.
(b) Condition. The Personal Property is in good condition,
ordinary wear and tear excepted, adequate and suitable for the operation of each
Station as it is currently being operated, and in such condition and repair so
that such Station can operate according to the FCC Licenses, the rules,
regulations and policies of the FCC and in all other respects in compliance with
the Act and all other applicable federal and state laws.
(c) [Intentionally Omitted]
(d) Sufficiency of Assets. The Assets include all of the
assets, which are sufficient in nature, condition and quantity, necessary to
permit the operation of each Station in a manner consistent with the past
practices of the Company. The Company has not, since the date of the Interim
Balance Sheet, removed, or permitted the removal of, any material item of
Personal Property from any Station other than removals in the ordinary course of
business which were not done in contemplation of the transactions contemplated
by this Agreement.
(e) Real Property Leases.
(i) Section 3.15(e) of Company's Disclosure Schedule
contains a complete and accurate list of the Real Property Leases and the
location of the real estate leased thereunder (the "Leaseholds") and the type of
facility located on the Leaseholds. The Company has a valid leasehold interest
in each of the Leaseholds subject only to the landlord's right of reversion as
provided in the Real Property Leases.
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(ii) None of the Leaseholds is subject to any
covenant or restriction preventing or limiting in any respect the consummation
of the transactions contemplated hereby, except for any consent listed in
Section 3.9 of Company's Disclosure Schedule required of the landlords under the
Real Property Leases. The Company's right, title and interest in and to the
Leaseholds will at the Closing be held by the Company free and clear of all
Liens other than the Permitted Encumbrances and the interest of the mortgagee of
the landlord under such leases, if any.
(iii) The use for which the Leaseholds are zoned
permits the use thereof for the Business consistent with past practices, either
as an as of right use, by variance or special permit, or as a pre-existing,
non-conforming use. The use and occupancy of the Leaseholds by the Company are
in compliance in all material respects with all regulations (other than zoning
regulations, which are addressed in the immediately preceding sentence), codes,
ordinances and statutes applicable to the Company and the Business, and the
Company has not received any written notice asserting any material violation of
sanitation laws and regulations, occupational safety and health regulations, or
electrical codes.
(iv) There are no facts relating to the Company, and,
to the Knowledge of the Company, no facts relating to any other party, that
would prevent the Leaseholds from being occupied and used by Citadel after the
Closing Date in the same manner as immediately prior to the Closing.
(v) There is not under any Real Property Lease any
material default by the Company or any condition that with notice or the passage
of time or both would constitute such a default, and the Company has not
received any written notice asserting the existence of any such default or
condition.
(vi) Each Real Property Lease is valid and binding
and in full force and effect as to the Company, and to the Knowledge of the
Company, as to each other party thereto, and except as disclosed in Section
3.15(e) of Company's Disclosure Schedule, has not been amended or otherwise
modified.
(vii) The Leaseholds constitute all of the real
property (other than the Real Property) in which the Company has a leasehold
interest or other interest or right (whether as lessor or lessee) and which is
or will prior to the Closing be used in the operation of the Stations.
(f) Real Property.
(i) Section 3.15(f) of Company's Disclosure Schedule
contains a complete and accurate list of each parcel of the Real Property and
the use of such parcel. The Company will as of the Closing have good and
marketable title to the Real Property, in fee simple, subject only to the
Permitted Encumbrances.
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(ii) None of the Real Property is subject to any
covenant or restriction preventing or limiting in any respect the consummation
of the transactions contemplated hereby. The Company's right, title and interest
in and to the Real Property will at the Closing be held by the Company free and
clear of all Liens except the Permitted Encumbrances.
(iii) The use for which the Real Property is zoned
permits the use thereof for the Business consistent with past practices, either
as an as of right use, by variance or special permit, or as a pre-existing,
non-conforming use. The use and occupancy of the Real Property by the Company
are in compliance in all material respects with all regulations (other than
zoning regulations, which are addressed in the immediately preceding sentence),
codes, ordinances and statutes applicable to the Company and the Business, and
the Company has not received any written notice asserting any material violation
of sanitation laws and regulations, occupational safety and health regulations,
or electrical codes.
(iv) There are no condemnation proceedings or eminent
domain proceedings of any kind pending or, to the Knowledge of the Company,
threatened against the Real Property.
(v) All of the Real Property is occupied under a
valid and current certificate of occupancy or similar permit. There are no facts
that would prevent the Real Property from being occupied and used by Citadel
after the Closing Date in the same manner as immediately prior to the Closing.
(vi) The Real Property constitutes all of the real
property which is owned by the Company and which is or will prior to Closing be
used in the operation of the Stations, other than the real property to be
acquired in the Pending Acquisition.
3.16 Contractual and Other Obligations. Set forth in Section 3.16
of Company's Disclosure Schedule is a complete and accurate list of all
Contracts. Except as set forth in Section 3.16 of Company's Disclosure Schedule,
neither the Company, nor, to the Knowledge of the Company, any other Person, is
in material default in the performance of any covenant or condition under any
Contract, and no written claim of such a default has been made and no event has
occurred which with the giving of notice or the lapse of time would constitute
such a default under any covenant or condition under any Contract. Except as set
forth in Section 3.16 of Company's Disclosure Schedule, the Company is not a
party to any Contract which would terminate or be materially adversely affected
by the consummation of the transactions contemplated by this Agreement.
Originals or true, correct and complete copies of all Contracts have been
provided or made available to Citadel as of the date of this Agreement.
3.17 Compensation. Set forth in Section 3.17 of Company's
Disclosure Schedule is a list of (a) all agreements between the Company and its
employees or other Persons providing services for compensation with regard to
the Stations, whether individually or collectively, and (b) all employees of the
Company or other Persons providing services for the Company with respect to the
Stations entitled to receive annual compensation in excess of $35,000 and their
respective positions, job categories and salaries. Except as set forth in
Section 3.17 of Company's Disclosure Schedule, the transactions contemplated by
this Agreement will not result
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in any liability for severance pay to any such employee or other Person. The
Company has not informed any such employee or other Person that such Person will
receive any increase in compensation or benefits or any ownership interest in
the Company, Citadel, the Business or Citadel's business. Except as disclosed in
Section 3.17 of Company's Disclosure Schedule, all current employees of the
Company are "at will" employees and may be terminated by the Company upon notice
of 30 days or less, without liability or obligation except the payment of normal
compensation accrued up to the time of termination of employment.
3.18 Employee Benefit Plans.
(a) The Company does not maintain or sponsor, nor is it
required to make contributions to or to pay benefits from, any pension,
profit-sharing, savings, bonus, incentive or deferred compensation, severance
pay, medical, life insurance, welfare or other employee benefit plan which
affects the employees working, or who formerly worked, at any Station, except as
set forth in Section 3.18 of Company's Disclosure Schedule. None of the plans,
funds, policies, programs, arrangements or understandings of the Company is a
"multiemployer plan" (within the meaning of Section 3(37) of ERISA). Neither the
Company nor any ERISA affiliate of the Company has, within the last five years,
contributed to or had the obligation to contribute to any multiemployer plan.
Section 3.18 of Company's Disclosure Schedule fully discloses all of the plans,
funds, policies, programs or arrangements sponsored or maintained by the Company
pursuant to which any employee or former employee of any Station (or any
dependent or beneficiary of any such employee) might be or become entitled to
(1) retirement benefits; (2) severance or separation from service benefits; (3)
incentive, performance, stock, share appreciation or bonus awards; (4) health
care benefits; (5) disability income or wage continuation benefits; (6) life
insurance, death or survivor's benefits; or (7) any type of benefit offered
under any arrangement subject to characterization as an "employee benefit plan"
within the meaning of section 3(3) of ERISA. As to any such plan, fund, policy,
program, arrangement or understanding, all of the following are true with
respect to each Station: (A) all amounts due as contributions, insurance
premiums and benefits to the date hereof have been timely paid by the Company;
(B) all material requirements of law have been observed with respect to the
establishment, operation and, if applicable, the termination thereof, and all
material reporting and disclosure requirements have been timely satisfied; (C)
no claim or demand has been made by any employee (or beneficiary or dependent of
any employee) for benefits (other than routine claims for benefits), or by any
taxing authority for taxes or penalties which has not been satisfied in full or
which may be or become subject to litigation or arbitration; and (D) any such
plan represented by the Company to a "qualified" retirement plan satisfies, in
both form and operation, the applicable requirements of Section 401(a) of the
Code.
(b) The Company has no obligation to provide health or other
welfare benefits to any of its former, retired or terminated employees, except
as specifically required under Section 4980B of the Code. The Company has
complied with any applicable notice and continuation requirements of Section
4980B of the Code and the regulations thereunder.
(c) Each of the trusts relating to the deferred compensation
plans listed in Section 3.18 of Company's Disclosure Schedule holds assets equal
to its liabilities through the date hereof, and will hold assets equal in value
to its liabilities through the Closing Date.
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3.19 Labor Relations. Except as set forth in Section 3.19 of
Company's Disclosure Schedule, there have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions, or the terms and conditions of
employment, wages (including overtime compensation) and hours of, the Company.
Except as set forth in Section 3.19 of Company's Disclosure Schedule, the
Company is not engaged in any unfair labor practice or other unlawful employment
practice, there are no pending labor disputes and there are no charges of unfair
labor practices or other employee-related complaints pending or threatened
against the Company or any Station before the National Labor Relations Board,
the Equal Employment Opportunity Commission, the Occupational Safety and Health
Review Commission, the Department of Labor or any other Governmental Authority.
The Company is not bound by any collective bargaining agreement with respect to
its employees. There is no strike, picketing, slowdown or work stoppage or
organizational attempt pending, involving or, to the Knowledge of the Company,
threatened against any Station. No issue with respect to union representation is
pending or, to the Knowledge of the Company, threatened with respect to the
employees of the Company or any Station.
3.20 Increases in Compensation or Benefits. Subsequent to the date
of the Interim Balance Sheet, there have been no increases in the compensation
payable or to become payable to any of the employees of the Company, nor has the
Company paid or provided for any awards, bonuses, stock options, loans,
profit-sharing, pension, retirement or welfare plans or similar or other
payments or arrangements for or on behalf of such employees in each case other
than (a) pursuant to currently existing contracts, plans, policies, programs or
arrangements set forth in Section 3.20 of Company's Disclosure Schedule or
otherwise in the ordinary course of business consistent with the Company's past
practices or (b) as was required from time to time by governmental legislation
affecting wages. The vacation policies of the Company are set forth in Section
3.20 of Company's Disclosure Schedule.
3.21 Insurance. The Company maintains insurance policies covering
all of its properties and assets and the various occurrences which may arise in
connection with the operation of the Stations, each of which policies is
identified in Section 3.21 of Company's Disclosure Schedule. Such policies
maintained by the Company are in full force and effect and all installments of
premiums due thereon have been paid in full. The Company has not received any
written notices of any pending or threatened termination or material premium
increases with respect to any of such policies maintained by the Company. There
has been no casualty loss or occurrence to the Company which may give rise to
any material claim of any kind not covered by insurance, and the Company is not
aware of any casualty occurrence to the Stations which may give rise to any
material claim of any kind not covered by insurance. No third party has filed
any claim against the Company for personal injury or property damage of a kind
for which liability insurance is generally available which is not fully insured,
subject only to the deductibles set forth in Section 3.21 of Company's
Disclosure Schedule. None of the Company's insurance policies will terminate or
be adversely affected by the consummation of the transactions contemplated by
this Agreement.
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3.22 Litigation; Disputes. Except as set forth in Section 3.22 of
Company's Disclosure Schedule, there are no claims, disputes, actions, suits,
investigations or proceedings pending or, to the Knowledge of the Company,
threatened against or affecting the Company, the Shares or any Station or that
is reasonably likely to prevent or hinder the consummation of the transactions
contemplated hereby and, to the Knowledge of the Company, there is no reasonable
basis for any such claim, dispute, action, suit, investigation or proceeding.
The Company has no knowledge of any default under any such action, suit or
proceeding. The Company is not in default in respect of any judgment, order,
writ, injunction or decree of any Governmental Authority with respect to the
Company or the operation of any Station.
3.23 Trade Receivables and Accounts Receivable. All Trade
Receivables and Accounts Receivable are reflected properly on the books and
records of the Company, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in a manner
consistent with past practices at their recorded amounts, subject only to the
reserve for bad debts provided for in the financial statements of the Company.
3.24 [Intentionally Omitted]
3.25 Environmental.
(a) Prior to the execution of this Agreement, the Company has
provided to Citadel a true and correct copy of all environmental site
assessments, studies, tests and reports commissioned by or on behalf of the
Company or in the Company's possession, custody or control which relate to the
Real Property or the Leaseholds.
(b) Except as disclosed in Section 3.25 of Company's
Disclosure Schedule, to the Knowledge of the Company, (i) there are no
conditions, facts or circumstances that constitute Environmental Noncompliance
on the Real Property or any of the Leaseholds and (ii) there is no friable
asbestos-containing material present on any of the Real Property or any of the
Leaseholds that, if disturbed, threatens to release airborne asbestos fibers in
excess of applicable local, state and federal standards.
(c) Except as disclosed in Section 3.25 of Company's
Disclosure Schedule, to the Knowledge of the Company, no structure,
improvements, equipment, fixtures, activities or facilities located on the Real
Property or any of the Leaseholds uses Hazardous Materials except those used in
the ordinary course of the Business and in compliance with applicable
Environmental Laws.
(d) Except as disclosed in Section 3.25 of Company's
Disclosure Schedule, there are no underground storage tanks, or underground
piping associated with tanks, used for the management of Hazardous Materials,
and, to the Knowledge of the Company, no abandoned underground storage tanks at
the Real Property or any of the Leaseholds.
(e) The Company has not received notice of any Environmental
Claims, and no Environmental Claims have been threatened against the Company
nor, to the Knowledge of the Company, is there any reasonable basis for any such
Environmental Claims.
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3.26 Permits; Compliance with Applicable Law.
(a) General. The Company is not in default under any statutes,
ordinances, regulations, orders, judgments and decrees of any Governmental
Authority applicable to it or to the Business or the Assets as to which a
default or failure to comply might have, individually or in the aggregate, a
Material Adverse Effect. The Company has no knowledge of any reasonable basis
for assertion of any violation of the foregoing or for any claim for
compensation or damages or otherwise arising out of any violation of the
foregoing. The Company has not received any written notification of any asserted
present or past failure to comply with any of the foregoing which has not been
satisfactorily responded to in the time period required thereunder.
(b) Permits. Set forth in Section 3.26 of Company's Disclosure
Schedule is a complete and accurate list of all of the Permits held by the
Company and required or used in the operation of the Stations as currently
conducted. Each Station is operating in accordance with the Act and its FCC
Licenses and in compliance with the Act and the rules, regulations and policies
of the FCC. The Permits set forth in Section 3.26 of Company's Disclosure
Schedule are all of the Permits required for the conduct of the Business
conducted by the Stations. All of the Permits held by the Company are in full
force and effect, and the Company has not engaged in any activity which could
reasonably be expected to cause or permit revocation or suspension of any such
Permit, and to the Knowledge of the Company, no action or proceeding looking to
or contemplating the revocation or suspension of any such Permit is pending or
threatened. There are no existing defaults or events of default or events or
state of facts which with notice or lapse of time or both would constitute a
default by the Company or any other Person under any such Permit. Except as set
forth in Section 3.26 of Company's Disclosure Schedule, the Company is not
required to be licensed by, and is not subject to the regulation of, any
Governmental Authority by reason of the Business.
3.27 Intellectual Property. Section 3.27 of Company's Disclosure
Schedule lists all material Intellectual Property. The use of the Intellectual
Property in connection with the operation of the Stations or otherwise by the
Company does not infringe upon the proprietary rights of any other Person. No
director, officer or employee of the Company has any interest in any of the
Intellectual Property, all of which will, as of the Closing, be free and clear
of all Liens, other than Permitted Encumbrances. The Company has no knowledge of
any infringement by any Person upon the rights of the Company with respect to
the Intellectual Property. The Company has not granted any outstanding licenses
or other rights to any of the call letters, copyrights, trademarks, trade names
or other similar rights with regard to any of the Intellectual Property.
3.28 Books and Records. The books of account of the Company fairly
and accurately reflect in all material respects its income, expenses, assets and
liabilities and have been maintained in accordance with reasonable business
practices. All of such books and records will be located on the date of the
Closing on the business premises of the Stations. The Company's minute books and
stock ledgers accurately reflect all actions taken by the Company's board of
directors and stockholders, including all issuances and transfers of capital
stock of BBH, BBC and the Operating Subsidiaries. Section 3.28 of Company's
Disclosure Schedule lists all of the
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current officers and directors of the Company. At the Closing, the Company's
minute books and stock ledgers shall be delivered to Citadel.
3.29 Related Party Obligations. Except as set forth in Section 3.29
of Company's Disclosure Schedule, no officer, director, shareholder or Affiliate
of the Company, or any individual related by blood or marriage to any such
Person, or any entity in which any such Person or individual owns any beneficial
interest is a party to any agreement, contract, commitment, promissory note,
loan, any other actual or proposed transaction with the Company or has any
material interest in any material property used by the Company which is material
to the operation of the Stations.
3.30 Year 2000 Compliance. To the Knowledge of the Company, all
hardware and software constituting part of the Assets is able to accurately
process date/time data (including, but not limited to, calculating, comparing
and sequencing) from, into, and between the twentieth and twenty-first
centuries, and the years 1999 and 2000 and leap year calculations to the extent
that other information technology, used in combination with the information
technology being acquired, properly exchanges date/time data with it.
3.31 Disclosure. To the Knowledge of the Company, no representation
or warranty made under this Section 3 and none of the information furnished by
the Company set forth in this Agreement or in the schedules or exhibits to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements in this Agreement or in the
schedules or exhibits to this Agreement not misleading, in light of the
circumstances under which such representations and warranties are made.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
In connection with the purchase and sale of the Shares and in order to
induce Citadel to enter into and consummate the transactions contemplated by
this Agreement, each Stockholder, as to itself or himself only, makes the
representations and warranties set forth in this Section 4 to Citadel, as of the
date of this Agreement and as of the Closing Date (except for representations
and warranties expressly and specifically relating to a time or times other than
the date hereof or thereof, which shall be made as of the specified time or
times).
4.1 Authority. Each Stockholder (other than individuals) is an
entity duly organized or formed, validly existing and in good standing under the
laws of the state of its organization or formation and has full power and
authority (a) to own its assets and properties and to conduct its business as
currently conducted and (b) to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Stockholders, the performance by the Stockholders of their covenants and
agreements hereunder and the consummation by the Stockholders of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Stockholders. This Agreement has been duly executed
and delivered by the Stockholders and constitutes the valid and legally
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binding agreement of the Stockholders, enforceable against each of them in
accordance with its terms.
4.2 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement by the Stockholders, nor the consummation of the transactions
contemplated hereby by the Stockholders, (a) violates or will violate any
provision of any organizational document of any Stockholder; (b) violates or
will violate any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any Governmental Authority; or (c)
violates or will violate, or conflicts with, or will conflict with, or will
result in any breach of any of the terms of, or constitutes or will constitute a
default under or results in or will result in the termination of or the creation
or imposition of any Lien pursuant to the terms of, any contract, commitment,
agreement, understanding or arrangement of any kind to which any Stockholder is
a party or by which any Stockholder or any of the Shares is bound. Except for
the FCC Approval, compliance with the HSR Act and the consents disclosed in
Section 3.9 of Company's Disclosure Schedule, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of the Stockholders in connection with the
execution and delivery of this Agreement by the Stockholders and the
consummation of the transactions contemplated hereby by the Stockholders.
4.3 Share Ownership. Each Stockholder owns, beneficially and of
record, Shares as indicated on Schedule 1 hereto, free and clear of all Liens.
4.4 Litigation. There is no litigation, proceeding or
investigation pending or, to the knowledge of the Stockholders, threatened
against or affecting the Stockholders or the Shares that is reasonably likely to
prevent or hinder the consummation of the transactions contemplated by this
Agreement.
4.5 Disclosure. To the knowledge of the Stockholders, no
representation or warranty made under this Section 4 contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements in this Agreement or in the schedules or exhibits to this
Agreement not misleading, in light of the circumstances under which such
representations and warranties are made.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF CITADEL
In connection with the purchase and sale of the Shares and in order to
induce the Stockholders to enter into and consummate the transactions
contemplated by this Agreement, Citadel makes the representations and warranties
set forth in this Section 5 to the Stockholders as of the date of this Agreement
and as of the Closing Date (except for representations and warranties expressly
and specifically relating to a time or times other than the date hereof or
thereof, which shall be made as of the specified time or times).
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5.1 Organization; Authority. Citadel is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has full power and authority (a) to own its assets and properties and
to conduct its business as currently conducted and (b) to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Citadel, the performance by Citadel of its
covenants and agreements hereunder and the consummation by Citadel of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Citadel. This Agreement has been duly executed and
delivered by Citadel and constitutes the valid and legally binding agreement of
Citadel, enforceable against it in accordance with its terms.
5.2 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement by Citadel, nor the consummation of the transactions contemplated
hereby by Citadel, (a) violates or will violate any provision of the Articles of
Incorporation or Bylaws of Citadel; (b) violates or will violate any law, rule,
regulation, writ, judgment, injunction, decree, determination, award or other
order of any Governmental Authority; or (c) violates or will violate, or
conflicts with, or will conflict with, or will result in any breach of any of
the terms of, or constitutes or will constitute a default under or results in or
will result in the termination of or the creation or imposition of any Lien
pursuant to the terms of, any contract, commitment, agreement, understanding or
arrangement of any kind to which Citadel is a party or by which Citadel or any
of its assets is bound. Except for the FCC Approval, compliance with the HSR Act
and the consents disclosed in Citadel's Disclosure Schedule, no consents,
approvals or authorizations of, or filings with, any Governmental Authority or
any other Person are required on the part of Citadel in connection with the
execution and delivery of this Agreement by Citadel and the consummation of the
transactions contemplated hereby by Citadel.
5.3 Litigation. There is no litigation, proceeding or
investigation pending or, to Citadel's knowledge, threatened against or
affecting Citadel that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated by this Agreement.
5.4 FCC Qualifications. There are no facts currently known to
Citadel which under the Act or the rules, regulations, policies and practices
promulgated thereunder, would (a) disqualify Citadel from becoming the holder of
the FCC Licenses or an owner or operator of the Stations; (b) disqualify Citadel
from consummating the transactions contemplated hereby within the time period
contemplated hereby; or (c) otherwise impede in any material respect the
consummation of such transactions. As of the date hereof, Citadel does not own,
and has not entered into any agreement (other than this Agreement) to acquire,
any radio stations in any of the Markets.
5.5 HSR Matters. There are no facts currently known to Citadel
which, under the HSR Act or the rules, regulations, policies and practices
promulgated thereunder, would (a) disqualify Citadel from becoming the holder of
the FCC Licenses; (b) disqualify Citadel from consummating the transactions
contemplated hereby within the time period contemplated hereby; or (c) otherwise
impede in any material respect the consummation of such transactions.
5.6 Availability of Funds. At the Closing, Citadel will have
sufficient immediately available funds to purchase the Shares, pay the Purchase
Price and pay and discharge in full the
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Senior Debt and the Subordinated Debt on the terms and conditions contemplated
by this Agreement. Citadel acknowledges and agrees that Citadel's performance of
its obligations under this Agreement is not in any way contingent upon the
availability of financing to Citadel.
SECTION 6
AFFIRMATIVE COVENANTS OF BBH
From and after the date of this Agreement and until the earlier of the
Closing or the termination of this Agreement in accordance with its terms, BBH
hereby covenants and agrees to:
6.1 Compliance With Law. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
6.2 Payment of Obligations. Discharge the Obligations of the
Company (including without limitation Indebtedness for Borrowed Money and other
long-term debt and capitalized lease obligations) in the ordinary course of
business consistent with past practices so that (a) the Obligations of the
Company existing as of the Closing Date consist solely of (i) current
liabilities and obligations under executory contracts and commitments which are
reasonable and customary in the radio broadcasting industry, (ii) Senior Debt,
(iii) Subordinated Debt and (iv) items listed in Section 6.2 of Company's
Disclosure Schedule; (b) the sum of (i) the aggregate amount of Indebtedness for
Borrowed Money of the Company as of the Closing Date, (ii) the Net Working
Capital Shortfall and (iii) the WODJ Amount, does not exceed $175,000,000; and
(c) the Company does not have any capitalized lease obligations, or any
obligations to Dan Keister pursuant to his consulting agreement with the
Company. Not less than two business days before the Closing Date, the
Stockholders shall deliver to Citadel payoff letters from the Senior Lenders
with respect to the Senior Debt and from the Stockholders with respect to the
Subordinated Debt. Such payoff letters shall be in form and substance reasonably
satisfactory to Citadel and shall include (x) the amount of Senior Debt or
Subordinated Debt, as applicable, due as of the Closing Date, (y) wire
instructions for the payment thereof and (z) with respect to the Senior Debt, a
statement that all Permitted Encumbrances in favor of the Senior Lenders will be
released immediately upon the payment in full of such Senior Debt (and a copy of
all release documents shall be attached to the payoff letter).
6.3 Access. Afford Citadel and its authorized representatives,
upon reasonable notice, reasonable access during normal business hours to the
Stations and the Stations' employees, and permit Citadel and its authorized
representatives to examine all operations, equipment, properties and other
assets, logs, books, relevant records, contracts and documents pertinent to the
Stations; provided, however, that in each instance mutually satisfactory
arrangements shall be made in advance in order to avoid interruption and to
minimize interference with the normal business and operations of the Stations.
6.4 Preservation of Organization. Operate the Business and the
Stations in the ordinary course, consistent with past practices, and exercise
its commercially reasonable efforts
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to preserve in all material respects the business organization of the Stations
intact and the present relationships of the Stations with employees, suppliers,
advertisers and customers and others having material business relationships with
the Stations; provided, however, that nothing contained in this Agreement shall
(a) require the Company to expend money in fulfillment of the obligations set
forth in this Section 6.4 other than those expenditures that the Company would
have made in the ordinary course of the business of the Stations and consistent
with past practices or (b) prohibit the Company from using substantially all of
the Cash to pay down Senior Debt prior to the Closing.
6.5 Books and Records. Maintain the books and records of the
Company in accordance with reasonable business practices, on a basis consistent
with past practices, and make available to Citadel the books, records, tax
returns, leases, contracts and other documents or agreements material to the
Stations as Citadel or its counsel, accountants or other authorized
representatives may from time to time reasonably request.
6.6 Employees. Pay as and when the same shall become due and
payable, in accordance with the Company's past practices, any amounts owed by
the Company to its employees who have performed services up to the time of
Closing, whether fixed or accrued, for wages, vacation pay, sick pay, severance
pay, employee benefits, damages and otherwise.
6.7 Compliance with FCC Matters. Comply with the FCC Licenses
applicable to the Stations and with the provisions of the Act, the rules,
regulations and policies of the FCC, and comply in all material respects with
all other laws, ordinances, regulations, rules and orders of any Governmental
Authority applicable to the Company or to any Station.
6.8 Taxes. File all federal, state and municipal tax returns,
reports and declarations required to be filed by the Company prior to the
Closing, and satisfy all Taxes reflected as due on such returns, reports and
declarations related thereto, other than any Taxes being contested in good faith
and for which adequate reserves have been made on the books and records of the
Company.
6.9 Supplemental Financial Statements. Provide Citadel with copies
of (a) the reviewed balance sheet of the Company as of September 30, 1999 and
the related statements of income and cash flows for the nine-month period then
ended and (b) the monthly unaudited income statements and balance sheets
applicable to the Stations prepared by the Company in the ordinary course of
business commencing with the month ended December 31, 1999 until Closing
(collectively, the "Supplemental Financial Statements"). BBH shall provide such
Supplemental Financial Statements to Citadel promptly upon such Supplemental
Financial Statements becoming available to the Company. The Supplemental
Financial Statements shall be subject to the representations and warranties as
set forth in Section 3.10.
6.10 Further Information. Furnish to Citadel such financial
(including tax), legal and other information with respect to the Company, the
Business and the Stations as Citadel or its representatives may from time to
time reasonably request.
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6.11 Notice. Promptly notify Citadel in writing upon the occurrence
or the nonoccurrence of any event which does then, or which upon the passing of
time or the giving of notice would, constitute a breach of or default under, or
render misleading or untrue in any material respect, any agreement, covenant,
representation or warranty made by BBH in this Agreement.
6.12 Consents. Exercise all commercially reasonable efforts to
obtain, prior to the Closing, the consent and approval (in a form reasonably
approved by Citadel) of any third parties whose consent or approval is necessary
in connection with the consummation of the transactions contemplated hereby,
with respect to the Real Property Leases and Contracts which require such
consent. If any such consent or approval is not obtained, the Company will use
commercially reasonable efforts (not involving the payment of money to any
Person) to secure an arrangement reasonably satisfactory to Citadel intended to
provide for Citadel following the Closing the benefits under each Real Property
Leases and Contract for which such consent or approval is not obtained;
provided, however, that Citadel shall have the right to terminate this Agreement
as a result of any failure by the Company to obtain any such consent or approval
for each Real Property Lease and Contract marked with an asterisk in Section 3.9
of Company's Disclosure Schedule (collectively, the "Mandatory Consents"), if
alternative arrangements are not reasonably satisfactory to Citadel.
Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
6.13 Trade Schedule. Deliver to Citadel at the Closing a schedule
accurate in all material respects of Trade Liabilities and Trade Receivables
existing as of a date not more than five days prior to the Closing. As of the
Closing Date, the Trade Liabilities shall not exceed the Trade Receivables.
6.14 Phase I Site Assessments and Other Reports. Cooperate with
Citadel in performing or commissioning Phase I Site Assessments of the Real
Property and such other studies, tests or reports of the Real Property and
Leaseholds as Citadel may reasonably require and provide copies of the written
reports and/or results to Citadel promptly after they become available to the
Company. Such assessments, studies, tests and reports shall be performed by an
environmental company reasonably acceptable to BBH and Citadel. The cost and
expense of such assessments, studies, tests and reports shall be split equally
between Citadel, on the one hand, and the Company, on the other. If any of the
assessments, studies, tests or reports indicate that any Real Property contains
one or more conditions of Environmental Noncompliance, the Company shall
promptly take such actions as are necessary pursuant to applicable Environmental
Laws and shall use its commercially reasonable efforts, prior to the Closing, in
connection with the closure or remediation of such conditions as required by
applicable Environmental Laws.
6.15 Title Insurance and Surveys. Use its commercially reasonable
efforts to cooperate with Citadel in causing each parcel of the Real Property to
be surveyed by a registered professional surveyor (who shall be reasonably
acceptable to BBH and Citadel) and in causing
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such ALTA surveys (which shall be in form satisfactory to remove the standard
survey exception from the Owner's and Mortgagee's title insurance policies) to
be delivered to Citadel at or prior to the Closing. The cost and expense of such
surveys shall be split equally between Citadel, on the one hand, and the
Stockholders, on the other. Citadel shall be responsible for the cost of all
title insurance premiums. In addition, the Company shall use its commercially
reasonable efforts to cooperate with Citadel in obtaining, at or prior to
Closing, title insurance on the Real Property from a nationally recognized title
insurance company acceptable to Citadel and its lenders in their reasonable
judgment.
6.16 Profit Sharing Plan. Terminate the Bloomington Broadcasting
Corporation Profit Sharing Plan effective no later than the day prior to the
Closing (contingent on the occurrence of the Closing) and submit to the Internal
Revenue Service a determination letter application on the termination. BBH shall
deliver evidence, reasonably acceptable to Citadel, of such termination and
submission. No distributions shall be made from such plan until receipt of a
favorable determination letter from the Internal Revenue Service.
SECTION 7
NEGATIVE COVENANTS OF BBH
From and after the date of this Agreement and until the earlier to
occur of the Closing or the termination of this Agreement in accordance with its
terms, BBH shall not take, or cause or permit to be taken, any of the following
actions without the prior approval of Citadel, which may not be unreasonably
withheld:
7.1 Sales, Transfers and Liens. Make any sale, transfer,
assignment, conveyance, mortgage, hypothecation, encumbrance or other placement
of any Lien on any of the Assets, except in the ordinary course of business and
which do not materially interfere with the operations of the Stations, and
which, in the case of a sale, transfer or assignment, is replaced with a
comparable asset, and, in the case of a conveyance, mortgage, hypothecation,
encumbrance or other Lien, is released at or prior to the Closing (unless it
constitutes a Permitted Encumbrance).
7.2 Contracts. Other than in the ordinary course of business
consistent with past practices, amend, terminate, renew or fail to renew any of
the Contracts or Real Property Leases (including any renewal or termination
resulting from the failure to provide, after the date of this Agreement, timely
notice of nonrenewal or termination as required by the terms of any of the
Contracts or Real Property Leases).
7.3 Breaches; Defaults. Do any act or omit to do any act, or
permit any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it except as would not, individually or in the
aggregate, have a Material Adverse Effect.
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7.4 Obligations. Incur any Obligations (including without
limitation any additional Indebtedness for Borrowed Money) except in the
ordinary course of business in a manner consistent with past practices or
pursuant to the Credit Agreement.
7.5 Salary Increases. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of the
Company except (a) in the ordinary course of business consistent with past
practices or (b) in accordance with the existing terms of contracts entered into
prior to the date of this Agreement.
7.6 Non-Solicitation. Directly or indirectly solicit or negotiate
with any Person (other than a party hereto) or accept any proposal to acquire
the Company or any of the Stations in whole or in part, including without
limitation an acquisition of all or substantially all of the assets of the
Company or any equity in the Company (including the Shares). Prior to the
Closing, (a) BBH shall not sell, assign, pledge or otherwise transfer any of the
capital stock of BBC and (b) BBC shall not sell, assign, pledge or otherwise
transfer any of the capital stock of any of the Operating Subsidiaries, except
for the existing pledge of such stock pursuant to the Credit Agreement.
7.7 Issuance of Securities. Issue any shares of capital stock or
any other securities of BBH, BBC or any of the Operating Subsidiaries.
7.8 Dividends. Declare or pay any dividend or make any other
distribution (of Cash or any other asset of the Company) to the Stockholders in
respect of their equity in the Company.
SECTION 8
COVENANTS OF THE STOCKHOLDERS
From and after the date of this Agreement and until the earlier of the
Closing or the termination of this Agreement in accordance with its terms, each
of the Stockholders (as to itself or himself only) covenants and agrees with
Citadel as follows:
8.1 Compliance with Law. The Stockholders shall comply with all
applicable laws and regulations required for the valid and effective
consummation of the transactions contemplated hereby.
8.2 Notice. The Stockholders shall promptly notify Citadel in
writing upon the occurrence or the nonoccurrence of any event which does then,
or which upon the passing of time or the giving of notice would, constitute a
breach of or default under, or render misleading or untrue in any material
respect, any agreement, covenant, representation or warranty made by the
Stockholders in this Agreement.
8.3 Non-Solicitation. The Stockholders shall not directly or
indirectly solicit or negotiate with any Person (other than a party hereto) or
accept any proposal to acquire the
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Company or any of the Stations in whole or in part, including without limitation
an acquisition of all or substantially all of the assets of the Company or any
equity in the Company (including the Shares). Prior to the Closing, the
Stockholders shall not sell, assign, pledge or otherwise transfer any of the
Shares.
SECTION 9
COVENANTS OF CITADEL
From and after the date of this Agreement and until the earlier of the
Closing or the termination of this Agreement in accordance with its terms,
Citadel covenants and agrees with the Stockholders to:
9.1 Compliance with Law. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
9.2 Notice. Promptly notify the Stockholders in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or default
under, or render misleading or untrue in any material respect, any agreement,
covenant, representation or warranty made by Citadel in this Agreement.
SECTION 10
ADDITIONAL COVENANTS OF THE PARTIES
10.1 Application for Transfer of Control. As promptly as
practicable after the date of this Agreement, and in no event later than 10 days
after the date of this Agreement, the Company and Citadel shall file
applications (collectively, the "FCC Applications") with the FCC to approve the
transfer of control of the Stations from the Company to Citadel (the "FCC
Approval"). Citadel shall have primary responsibility for filing the FCC
Applications. The parties agree that they shall jointly prosecute the FCC
Applications (and shall cooperate with each other in the timely prosecution
thereof), in good faith and with due diligence, and within the time allowed
therefor by the rules and regulations of the FCC. The Company and Citadel shall
each promptly take all necessary actions on its or their part to obtain the FCC
Approval. Citadel shall advance the filing fee for the FCC Applications, and the
Stockholders shall reimburse Citadel for one-half of such filing fee at the
Closing (or upon the earlier termination of this Agreement). Subject to Section
16.7, all other costs and expenses incurred by each party in connection with the
filing and prosecution of the FCC Applications shall be paid by the party
incurring the cost or expense.
10.2 Brokerage. Each of the parties hereto represents and warrants
to each other that, except for Broker, no Person has provided services as a
broker, agent or finder in connection with the transactions contemplated by this
Agreement. As between the parties hereto, the
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Stockholders are fully responsible for the payment of, and shall pay at the
Closing, the entire broker's fee due to Broker in connection with the
transactions contemplated hereby. Each of the parties hereto shall each
indemnify and hold harmless the other parties hereto for any and all claims or
expenses, including attorneys' fees, asserted by any Person other than Broker
purporting to act on behalf of the respective indemnitor as a broker, agent or
finder in connection with the transactions contemplated by this Agreement.
10.3 [Intentionally Omitted]
10.4 Actions With FCC. In the event any investigation, order to
show cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Applications or otherwise), such party shall promptly notify the
other parties hereto in writing of such occurrence and shall thereafter promptly
take all reasonable measures to contest the same in good faith and seek the
removal or favorable resolution of such action, order, notice or complaint.
10.5 Cooperation. During the seven-year period immediately after
the Closing, Citadel shall cooperate with the Stockholders in providing them all
information reasonably requested and permitting them access to all records
relating to the period of ownership of the Stations prior to the Closing. The
cost and expense in providing or permitting access to information hereunder
shall be borne by the Stockholders. The Stockholders, as a condition to being
provided with access to information hereunder, shall, at the request of Citadel,
execute a confidentiality agreement in form and substance reasonably acceptable
to Citadel in its reasonable discretion. Citadel may discard any such records
after such seven-year period if (i) Citadel notifies the Stockholders of
Citadel's intent to discard such records and (ii) the Stockholders do not,
within 30 days after receipt of such notice, make arrangements to take
possession of such records from Citadel.
10.6 HSR Filing. As promptly as practicable after the date of this
Agreement, and in no event later than 15 business days after the date of this
Agreement, the parties hereto shall complete and submit any filing that may be
required pursuant to the HSR Act (the "HSR Filing"). The parties hereto shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested, in order to
comply with the requirements of the HSR Act and to secure the expiration or
termination of all applicable waiting periods under the HSR Act. The parties
hereto shall use their best efforts to resolve objections, if any, that may be
asserted under the HSR Act or any other antitrust law in connection with the
transactions contemplated hereby. Citadel shall advance the filing fee
applicable to any HSR Filing, and the Stockholders shall reimburse Citadel for
one-half of such filing fee at the Closing (or upon the earlier termination of
this Agreement). Subject to Section 16.7, all other costs and expenses incurred
by each party in connection with the filing and prosecution of any HSR Filing
shall be paid by the party incurring the cost or expense.
10.7 Confidentiality. Each of the parties hereto will hold in
confidence, and will cause its respective directors, officers, employees,
accountants, counsel, financial advisors and other representatives and
Affiliates to hold in confidence, all non-public information received from
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another party hereto (collectively, "Confidential Information "); provided,
however, that the term "Confidential Information" does not include any
information which (a) at the time of disclosure or thereafter is generally
available to and known by the public (other than as a result of a disclosure
directly or indirectly by the party hereto which received such information (the
"Recipient")), (b) was available to the Recipient from a source other than the
other parties hereto or (c) has been independently acquired or developed by the
Recipient without violating any of its obligations under this Agreement. The
obligation to keep Confidential Information confidential shall not apply to any
information that is required to be disclosed pursuant to any court action or any
proceeding before a Governmental Authority. In the event this Agreement is
terminated for any reason, each party hereto, upon the request of another party
hereto, shall promptly return to the requesting party all copies of Confidential
Information in its possession and shall destroy all analysis, studies and
documents prepared by it which contain any Confidential Information.
10.8 Public Announcements. Citadel and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national securities
exchange or the National Association of Securities Dealers, Inc. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
10.9 No Inconsistent Action. No party hereto shall take any action
(a) inconsistent with his or its obligations under this Agreement or (b) that
would hinder or delay the consummation of the transactions contemplated by this
Agreement. In furtherance of the foregoing, from and after the date of this
Agreement and until the earlier to occur of the Closing or the termination of
this Agreement in accordance with its terms, Citadel shall not acquire, or enter
into any agreement to acquire, any radio station in any of the Markets unless
Citadel has obtained the prior written consent of the Stockholder Rep, which
consent shall not be unreasonably withheld or delayed.
10.10 Pending Acquisition. Tri-Cities Sub is a party to an Asset
Purchase Agreement dated as of January 10, 2000 (the "WGOC Agreement") with J.
T. Parker Broadcasting Corporation (the "WGOC Owner"), pursuant to which
Tri-Cities Sub has agreed to acquire substantially all of the assets of WGOC(AM)
licensed to Blountville, Tennessee ("WGOC") for approximately $850,000.00 (the
"Pending Acquisition"). Tri-Cities Sub and the WGOC Owner are also parties to a
Time Brokerage Agreement dated January 10, 2000 (the "WGOC TBA"), pursuant to
which Tri-Cities Sub has agreed to provide various services to the WGOC Owner
relating to WGOC. The Company shall use commercially reasonable efforts to
consummate the Pending Acquisition prior to the Closing in accordance with and
subject to the terms and conditions of the WGOC Agreement. In the event the
Pending Acquisition has been consummated prior to the Closing, from and after
the date on which the Pending Acquisition is consummated, the term "Stations"
and "Assets" shall include, respectively, WGOC and all of the assets relating
thereto; provided, however, for purposes of such inclusion, Citadel acknowledges
that the Company intends to operate WGOC consistent with the Company's past
practices.
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10.11 Stockholder Documents. The Company and the Stockholders hereby
(a) irrevocably waive any redemption rights, conversion rights, rights of first
offer, call rights, put rights, go-along rights and other similar rights and
restrictions (but excluding any vesting rights) set forth in the Stockholder
Documents or BBH's certificate of incorporation, as amended, solely with respect
to and solely to the extent arising as a result of the execution, delivery
and/or performance of this Agreement; and (b) agree that, effective as of the
Closing and without the need for any further action, each of the Stockholder
Documents shall automatically and irrevocably terminate, and any rights and
obligations thereunder shall be deemed extinguished.
SECTION 11
THE CLOSING
11.1 Closing Date. The Closing shall occur on a date mutually
selected by the Company and Citadel which is within 10 business days following
the later of (a) the date on which the FCC Approval has become a Final Order or
(b) the date on which all applicable waiting periods under the HSR Act have
expired or been terminated. The Closing shall begin at 10:00 a.m., local time,
on the date of the Closing (the "Closing Date") at the offices of Eckert Seamans
Cherin & Mellott, LLC, 600 Grant Street, 44th Floor, Pittsburgh, Pennsylvania
15219, counsel for Citadel, or on such other date and at such other time and
place as the parties may agree in writing.
11.2 Actions to be Taken at the Closing. The following actions
shall be taken at the Closing:
(a) Delivery of Purchase Price. Citadel shall deliver to the
Stockholders the Purchase Price in accordance with Section 2.2.
(b) Payment of Senior Debt and Subordinated Debt. Citadel
shall pay and discharge in full the Senior Debt and the Subordinated Debt.
(c) Delivery of Documents. Each of the parties shall deliver
to the other parties all agreements, certificates and other documents required
to be delivered by it or him pursuant to the terms of this Agreement or as a
condition precedent to the other parties' obligations under this Agreement,
including without limitation the following:
(i) The Company shall execute and deliver the Closing
Certificate.
(ii) The Stockholders shall deliver stock
certificates evidencing the Shares, together with duly executed stock powers.
(iii) The Company shall deliver resignations of each
officer and director of BBH, BBC and the Operating Subsidiaries.
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SECTION 12
CONDITIONS TO THE OBLIGATION OF BBH AND THE STOCKHOLDERS
The obligation of BBH and the Stockholders to consummate the
transactions contemplated by this Agreement at the Closing is subject to the
following conditions precedent, any or all of which may be waived by them in
their sole discretion (other than those set forth in Sections 12.6 and 12.7):
12.1 Opinion of Citadel's Counsel. The Stockholders shall have
received an opinion of counsel for Citadel, dated the Closing Date, in form and
substance reasonably satisfactory to the Stockholders, as to the matters set
forth on Exhibit B hereto.
12.2 Representations, Warranties and Covenants. The representations
and warranties of Citadel contained herein shall be true and correct in all
material respects at and as of the Closing with the same effect as though all
such representations and warranties were made at and as of the Closing (except
for representations and warranties expressly and specifically relating to a time
or times other than the Closing, which shall be true and correct in all material
respects at and as of the time or times specified); provided, however, that to
the extent any of such representations or warranties is modified by a
materiality standard or by reference to Material Adverse Effect, such
representation or warranty shall be true and correct as set forth therein as of
the date hereof and as of the Closing Date. Citadel shall have complied in all
material respects with all of its covenants, undertakings and agreements
contained herein to be complied with at or prior to the Closing; provided,
however, that to the extent any of such covenants, undertakings or agreements is
modified by a materiality standard or by reference to Material Adverse Effect,
such covenant, undertaking or agreement shall have been complied with in all
respects. Citadel shall have delivered to the Stockholders a certificate
confirming the matters set forth in this Section 12.2, which certificate shall
be dated the Closing Date and signed by an officer of Citadel.
12.3 No Litigation. No injunction relating to any action, suit or
proceeding against Citadel, the Company or the Stockholders prohibiting the
consummation of any of the transactions contemplated by this Agreement or any
action by any Governmental Authority shall have been issued and remain in
effect.
12.4 Other Certificates. The Stockholders shall have received a
certificate as to the good standing of Citadel in the State of Nevada, as of a
date not more than 20 days before the Closing, and such other certificates,
instruments and other documents, in form and substance reasonably satisfactory
to the Stockholders, as the Stockholders shall have reasonably requested in
connection with the transactions contemplated hereby.
12.5 Corporate Action. All corporate action necessary to authorize
the execution, delivery and performance by Citadel of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by
Citadel, and Citadel shall have delivered to the Stockholders certified copies
of the resolutions of Citadel's board of directors authorizing the
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execution and performance of this Agreement and authorizing or ratifying the
acts of their officers and employees in carrying out the terms and provisions of
this Agreement.
12.6 FCC Approval. The FCC Approval shall have been obtained and
shall have become a Final Order.
12.7 HSR Clearance. All applicable waiting periods under the HSR
Act shall have expired or been terminated.
SECTION 13
CONDITIONS TO THE OBLIGATION OF CITADEL
The obligation of Citadel to consummate the transactions contemplated
by this Agreement at the Closing is subject to the following conditions
precedent, any or all of which may be waived by Citadel in its sole discretion
(other than those set forth in Sections 13.7 and 13.8):
13.1 Opinion of the Company's and the Stockholders' Counsel.
Citadel shall have received one or more opinions of counsel for the Company and
the Stockholders dated the Closing Date, in form and substance reasonably
satisfactory to Citadel, as to the matters set forth on Exhibit C hereto.
13.2 Representations, Warranties and Covenants. The representations
and warranties of BBH and the Stockholders contained herein shall be true and
correct in all material respects at and as of the Closing with the same effect
as though all such representations and warranties were made at and as of the
Closing (except for representations and warranties expressly and specifically
relating to a time or times other than the Closing, which shall be true and
correct in all material respects at and as of the time or times specified);
provided, however, that to the extent any of such representations or warranties
is modified by a materiality standard or by reference to Material Adverse
Effect, such representation or warranty shall be true and correct as set forth
therein as of the date hereof and as of the Closing Date. BBH and the
Stockholders shall have complied in all material respects with all of their
covenants, undertaking and agreements contained herein to be complied with at or
prior to the Closing; provided, however, that to the extent any of such
covenants, undertakings or agreements is modified by a materiality standard or
by reference to Material Adverse Effect, such covenant, undertaking or agreement
shall have been complied with in all respects . BBH and the Stockholders shall
have delivered to Citadel a certificate confirming the matters set forth in this
Section 13.2, which certificate shall be dated the Closing Date and signed by or
on behalf of each Stockholder and BBH.
13.3 No Litigation. No injunction relating to any action, suit or
proceeding against the Company, the Stockholders or Citadel prohibiting the
consummation of any of the transactions contemplated by this Agreement or any
action by any Governmental Authority shall have been issued and remain in
effect.
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13.4 Other Certificates. Citadel shall have received a certificate
as to the good standing of BBH, BBC and each of the Operating Subsidiaries as a
corporation in each state where organized and qualified, each as of a date not
more than 20 days before the Closing, and such other certificates, instruments
and other documents, in form and substance reasonably satisfactory to Citadel,
as Citadel shall have reasonably requested in connection with the transactions
contemplated by this Agreement.
13.5 Corporate Action. All action necessary to authorize the
execution, delivery and performance by BBH and each Stockholder (other than
individuals) of this Agreement and the transactions contemplated hereby shall
have been duly and validly taken by BBH and such Stockholders, and BBH and such
Stockholders shall have delivered to Citadel certified copies of the resolutions
authorizing the execution and performance of this Agreement and authorizing or
ratifying the acts of their officers and employees in carrying out the terms and
provisions of this Agreement.
13.6 Mandatory Consents. All Mandatory Consents shall have been
obtained (except as otherwise provided in Section 6.12).
13.7 FCC Approval. The FCC Approval shall have been obtained and
shall have become a Final Order.
13.8 HSR Clearance. All applicable waiting periods under the HSR
Act shall have expired or been terminated.
SECTION 14
INDEMNIFICATION
14.1 Indemnification by the Stockholders. Subject to the
limitations and procedures set forth in this Section 14 and in Section 15.3,
each Stockholder, severally to the extent of such Stockholder's percentage
ownership of BBH as of the Closing Date as set forth in the Equity Percentage
Letter (or in accordance with Schedule 1 hereto if the Equity Percentage Letter
is not delivered), and not jointly, shall indemnify and hold harmless Citadel
and its stockholders, officers, directors and employees from and against all
losses, claims, demands, damages, liabilities, obligations, costs and/or
expenses, including without limitation reasonable fees and disbursements of
counsel (hereinafter referred to collectively as "Damages"), which are sustained
or incurred by Citadel, to the extent that such Damages are sustained or
incurred by reason of (a) the breach of any of the obligations or covenants of
BBH or such Stockholder in this Agreement, (b) the breach of any of the
representations or warranties made by BBH or such Stockholder in this Agreement,
(c) any inaccuracy in the Closing Certificate or any other document delivered by
BBH or such Stockholder at the Closing pursuant to this Agreement, (d) the
matters set forth in Section 3.22 of Company's Disclosure Schedule, net of (i)
insurance proceeds actually received by Citadel and (ii) amounts actually
received by Citadel from escrow, with respect to such matters, or (e) item no. 3
set forth in Section 3.25 of Company's Disclosure
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Schedule (provided, however, that the indemnification obligation pursuant to
this clause (e) shall survive for a period of 36 months after the Closing Date).
14.2 Indemnification by Citadel. Subject to the limitations and
procedures set forth in this Section 14, Citadel shall indemnify and hold
harmless the Stockholders and their respective partners, stockholders, officers,
directors and employees from and against any and all Damages sustained or
incurred by them, to the extent that such Damages are sustained or incurred by
reason of (a) the breach of any of the obligations or covenants of Citadel in
this Agreement or (b) the breach of any of the representations or warranties
made by Citadel in this Agreement.
14.3 Procedure for Indemnification. In the event that any party to
this Agreement shall incur any Damages in respect of which indemnity may be
sought by such party pursuant to this Section 14 or any other provision of this
Agreement, the party indemnified hereunder (the "Indemnitee") shall notify the
party providing indemnification (the "Indemnitor") promptly. In the case of
third party claims, such notice shall in any event be given within 10 days of
the filing or assertion of any claim against the Indemnitee stating the nature
and basis of such claim; provided, however, that any delay or failure to notify
any Indemnitor of any claim shall not relieve it from any liability except to
the extent that the Indemnitor demonstrates that the defense of such action has
been materially prejudiced by such delay or failure to notify. In the case of
third party claims, the Indemnitor shall, within 10 days of receipt of notice of
such claim, notify the Indemnitee of its intention to assume the defense of such
claim. If the Indemnitor assumes the defense of the claim, the Indemnitor shall
have the right and obligation (a) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend the Indemnitee, (b)
to take all other required steps or proceedings to settle or defend any such
claims, and (c) to employ counsel to contest any such claim or liability in the
name of the Indemnitee or otherwise. If the Indemnitor shall not assume the
defense of any such claim or litigation resulting therefrom, the Indemnitee may
defend against any such claim or litigation in such manner as it may deem
appropriate and the Indemnitee may settle such claim or litigation on such terms
as it may deem appropriate, and assert against the Indemnitor any rights or
claims to which the Indemnitee is entitled. Payment of Damages shall be made
within 10 days of a final determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
14.4 Survival.
(a) The Stockholders. Each of the representations and
warranties made by BBH and the Stockholders in this Agreement shall survive for
a period of 18 months after the
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Closing Date, notwithstanding any investigation at any time made by or on behalf
of Citadel, and upon the expiration of such 18-month period such representations
and warranties shall expire except as follows: (i) the representations and
warranties contained in Sections 3.1 through 3.9, 3.12, 3.15(a), 3.15(f)(i),
3.18, 3.25, 3.26, 4.1 and 4.2 shall expire upon the earlier to occur of (x) the
date which is 36 months after the Closing Date and (y) the expiration of the
statute of limitations applicable to the pertinent claim; and (ii) the
representations and warranties contained in Section 4.3 shall not expire but
shall continue indefinitely. No claim for the recovery of Damages may be
asserted by Citadel against the Stockholders after such representations and
warranties shall thus expire; provided, however, that claims for Damages first
asserted in writing within the applicable period shall not thereafter be barred.
(b) Citadel. Each of the representations and warranties made
by Citadel in this Agreement shall survive for a period of 18 months after the
Closing Date, notwithstanding any investigation at any time made by or on behalf
of the Stockholders, and upon the expiration of such 18-month period such
representations and warranties shall expire, except that the representations and
warranties of Citadel contained in Sections 5.1 and 5.2 shall expire upon the
earlier to occur of (x) the date which is 36 months after the Closing Date and
(y) the expiration of the statute of limitations applicable to the pertinent
claim. No claim for the recovery of Damages may be asserted by the Stockholders
against Citadel or its successors in interest after such representations and
warranties shall thus expire; provided, however, that claims for Damages first
asserted in writing within the applicable period shall not thereafter be barred.
14.5 Limitation of Stockholders' Liability. Notwithstanding
anything in this Agreement to the contrary (other than Section 15.3), the
obligation of the Stockholders to indemnify Citadel shall be subject to the
following:
(a) Threshold. Citadel shall not be entitled to recover
Damages pursuant to clause (b) or (e) of Section 14.1 (other than Damages
arising by reason of a breach of the representations and warranties made in
Section 4.3) until the aggregate of all such Damages suffered by Citadel
(excluding Pre-Closing Damages of $500,000 or less) exceeds $500,000 (the
"Threshold"); provided, however, that once such aggregate exceeds the Threshold,
Citadel may recover all such Damages (excluding Pre-Closing Damages of $500,000
or less) suffered since the Closing Date without regard to the Threshold.
(b) Ceiling. Citadel shall not be entitled to recover Damages
pursuant to Section 14.1 in excess of $40,000,000; provided, however, that with
respect to Damages arising by reason of a breach of the representations and
warranties made in Section 4.3, Citadel shall not be entitled to recover Damages
in excess of the Purchase Price.
(c) Exclusive Remedy. Except as provided in Section 15 and
except with respect to any claim for Damages relating to any fraudulent breach
of a representation, warranty or covenant of BBH or the Stockholders, subsequent
to the Closing, indemnification under this Section 14 shall be the exclusive
remedy of Citadel with respect to any legal, equitable or other claim for relief
based upon this Agreement.
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(d) Exceptions. The limitations set forth in this Section 14.5
shall not apply with respect to any claim for Damages relating to any fraudulent
breach of a representation, warranty or covenant of BBH or the Stockholders, nor
shall there be any survival limitation for any such claim.
14.6 Limitation of Citadel's Liability. Notwithstanding anything in
this Agreement to the contrary, the obligation of Citadel to indemnify the
Stockholders shall be subject to the following:
(a) Threshold. The Stockholders shall not be entitled to
recover Damages pursuant to clause (b) of Section 14.2 until the aggregate of
all such Damages suffered by the Stockholders exceeds the Threshold; provided,
however, that once such aggregate exceeds the Threshold, the Stockholders may
recover all such Damages suffered since the Closing Date without regard to the
Threshold.
(b) Ceiling. The Stockholders shall not be entitled to recover
Damages pursuant to Section 14.2 in excess of $40,000,000.
(c) Exclusive Remedy. Except as provided in Section 15 and
except with respect to any claim for Damages relating to any fraudulent breach
of a representation, warranty or covenant of Citadel, subsequent to the Closing,
indemnification under this Section 14 shall be the exclusive remedy of the
Stockholders with respect to any legal, equitable or other claim for relief
based upon this Agreement.
(d) Exceptions. The limitations set forth in this Section 14.6
shall not apply with respect to any claim for Damages relating to any fraudulent
breach of a representation, warranty or covenant of Citadel, nor shall there be
any survival limitation for any such claim.
SECTION 15
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
15.1 Manner. This Agreement and the transactions contemplated
hereby may be terminated prior to completion of the Closing:
(a) by mutual written consent of Citadel, BBH and the
Stockholders;
(b) by either Citadel, BBH or the Stockholders upon providing
written notice to the other party at any time after the first anniversary of the
date of this Agreement if the FCC Approval has not been granted by the FCC, but
only if the party providing such notice is not then in material breach of this
Agreement;
(c) by Citadel, upon providing written notice to BBH and the
Stockholders, if as of the Closing Date any of the conditions in Section 13
(except Section 13.7 or 13.8) has not been satisfied or waived by Citadel in
writing, provided (i) Citadel is not then in material breach
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of this Agreement and (ii) BBH and the Stockholders have not cured the breach or
default giving rise to such failed condition within 15 days after delivery of
such written notice;
(d) by BBH and the Stockholders, upon providing written notice
to Citadel, if as of the Closing Date any of the conditions in Section 12
(except Section 12.6 or 12.7) has not been satisfied or waived by BBH and the
Stockholders in writing, provided (i) BBH and the Stockholders are not then in
material breach of this Agreement and (ii) Citadel has not cured the breach or
default giving rise to such failed condition within 15 days after delivery of
such written notice;
(e) by BBH and the Stockholders, upon providing written notice
to Citadel, if Citadel fails to consummate the transactions contemplated hereby
after all conditions in Section 13 have been satisfied, provided BBH and the
Stockholders are not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to BBH and the
Stockholders, if BBH or the Stockholders fail to consummate the transactions
contemplated hereby after all conditions in Section 12 have been satisfied,
provided Citadel is not then in material breach of this Agreement;
(g) by Citadel, BBH or the Stockholders upon denial by the FCC
of the FCC Applications; or
(h) by Citadel, BBH or the Stockholders if any court of
competent jurisdiction in the United States or any other United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other actions
shall have become final and non-appealable.
15.2 Additional Remedies.
(a) In the event of the termination of this Agreement by BBH
and the Stockholders pursuant to Section 15.1(d) or 15.1(e) (any such event
being a "Draw Condition"), BBH shall be entitled to draw upon and receive the
proceeds of the Letter of Credit; provided, however, that such proceeds shall
not constitute liquidated damages and BBH and the Stockholders shall be entitled
to recover only actual damages (including not only the costs incurred by BBH or
any Stockholder but any losses suffered by reason of realizing less than the
Purchase Price upon any subsequent sale of the Company (i.e., the so-called
"benefit of the bargain" or expectancy damages)) they suffer as a result of such
termination and the breach relating to such damages. In the event of any other
termination of this Agreement pursuant to any other provision of Section 15.1,
Citadel shall be entitled to a return of, and BBH shall return to Citadel, the
original Letter of Credit for cancellation.
(b) The parties recognize and agree that Citadel has relied on
this Agreement and expended considerable effort and resources related to the
transactions contemplated hereby, that the rights and benefits conferred upon
Citadel herein are unique, and that damages may not
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be adequate to compensate Citadel in the event BBH or the Stockholders
improperly refuse to consummate the transactions contemplated hereby. The
parties therefore agree that Citadel shall be entitled, at its option and in
lieu of terminating this Agreement pursuant to Section 15.1, to have this
Agreement specifically enforced by a court of competent jurisdiction in addition
all other remedies available at law or in equity; provided, however, that
Citadel may not specifically enforce this Agreement if Citadel has previously
terminated this Agreement and received the original Letter of Credit.
15.3 Pre-Closing Damages. Notwithstanding anything in this
Agreement to the contrary, prior to the Closing, the Company shall deliver to
Citadel in writing a supplement (the "Company's Disclosure Supplement") which
shall set forth (x) inaccuracies in, or other breaches of, the representations
and warranties of the Company and the Stockholders contained herein as of the
date hereof and as of immediately prior to the Closing, (y) the failure of the
Company or the Stockholders to comply with their respective covenants,
undertakings and agreements contained herein and (z) the aggregate amount of
Damages (collectively, "Pre-Closing Damages") which Citadel could reasonably be
expected to incur as a result of the matters described in clauses (x) and (y)
above. The Stockholders shall not have any liability to Citadel or its
stockholders, officers, directors or employees with respect to Pre-Closing
Damages which are equal to or less than $500,000 in the aggregate, and from and
after the Closing, Citadel shall be liable for such Pre-Closing Damages (to the
extent less than or equal to $500,000). The parties hereto acknowledge and agree
that this Section 15.3 shall function independently of the Threshold under
Section 14.5 and Pre-Closing Damages for which Citadel becomes liable hereunder
shall not be included in any calculation of the Threshold pursuant to Section
14.5.
SECTION 16
GENERAL
16.1 Survival of Representations and Warranties. Each
representation and warranty herein contained shall survive the Closing for the
periods described in Section 14.4, notwithstanding any investigation at any time
made by or on behalf of any party to this Agreement.
16.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws, and not the laws of conflicts,
of the State of Nevada.
16.3 Notices. Any notices or other communications required or
permitted under this Agreement shall be delivered personally or sent by
registered or certified mail, postage prepaid, delivered by overnight delivery
or sent by facsimile, addressed as follows:
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To Citadel: Citadel Broadcasting Company
7201 West Lake Mead Boulevard
Suite 400
Las Vegas, Nevada 89128
Attn: Donna L. Heffner
Fax: (702) 804-5936
With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street, 44th Floor
Pittsburgh, Pennsylvania 15219
Attn: Gregory A. Weingart, Esq.
Fax: (412) 566-6099
To the Stockholders: Media/Communications Partners III Limited Partnership
One Liberty Square
13th Floor
Boston, Massachusetts 02109
Attn: Stephen F. Gormley
Fax: (617) 790-9401
With copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: David F. Dietz, P.C.
Fax: (617) 523-1231
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
16.4 Entire Agreement. This instrument supersedes all prior
communications, understandings and agreements of or among the parties with
respect to the subject matter of this Agreement and contains the entire
agreement among the parties with respect to the transactions contemplated by
this Agreement. Except as otherwise set forth in this Agreement, there are no
other representations, warranties or covenants of any party hereto with respect
to the subject matter of this Agreement.
16.5 Headings. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
16.6 Schedules and Exhibits. All schedules and exhibits annexed to
this Agreement are hereby incorporated in this Agreement by this reference.
16.7 Expenses. Each party shall bear its or his own costs and
expenses incurred by it or him in connection with the transactions contemplated
by this Agreement; provided, however,
44
<PAGE> 45
that the Stockholders shall bear all of the costs and expenses incurred by the
Company in connection with the transactions contemplated hereby.
16.8 Amendment. This Agreement may be amended, modified or
superseded, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed on behalf
of all of the parties or, in the case of a waiver, by the party waiving
compliance.
16.9 Waiver. The failure of any party at any time or times to
require performance of any provision of this Agreement shall in no manner affect
the right to enforce that provision or any other provision of this Agreement at
any time thereafter.
16.10 Assignment. Neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by any party without the prior
written consent, in its or his sole discretion, of each other party. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, and no other
Person shall have any right, benefit or obligation under this Agreement.
16.11 Prior Control. Until the Closing, the Company shall maintain
control of each Station.
16.12 Counterparts; Fax Signatures. This Agreement may be executed
in one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
16.13 Company Obligations. Prior to the earlier of the Closing or
the termination of this Agreement in accordance with its terms, BBH shall be
responsible for all representations, warranties, obligations, undertakings and
agreements of the Company herein.
[Remainder of Page Intentionally Left Blank]
45
<PAGE> 46
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
BLOOMINGTON BROADCASTING HOLDINGS, INC.
By: /s/ Ken Maness
----------------------------------------
Title: President
-------------------------------------
MEDIA/COMMUNICATIONS PARTNERS III
LIMITED PARTNERSHIP
By: M/C III L.L.C., General Partner
By: /s/ Stephen F. Gormley
------------------------------------
Title: Manager
---------------------------------
M/C INVESTORS L.L.C.
By: /s/ Stephen F. Gormley
----------------------------------------
Title: Manager
-------------------------------------
FIRST UNION CAPITAL PARTNERS
By: /s/ Scott Perper
----------------------------------------
Title: Senior Vice President
-------------------------------------
BLOOMINGTON BROADCASTING CORP.
EMPLOYEES PROFIT SHARE 401(k)
By: /s/ Chris Ralb, Trustee
---------------
By: IAA Trust Company
------------------------------------
Title: Assistant Trust Officer
---------------------------------
[Signatures continued on next page]
46
<PAGE> 47
[Signatures continued from previous page]
/s/ Kenneth H. Maness
-------------------------------------------
Kenneth H. Maness
/s/ Richard D. Johnson
-------------------------------------------
Richard D. Johnson
/s/ William L. McElveen
-------------------------------------------
William L. McElveen
/s/ Donald G. Munson
-------------------------------------------
Donald G. Munson
/s/ Dan Brown
-------------------------------------------
Dan Brown
/s/ Donald Raines
-------------------------------------------
Donald Raines
/s/ Barclay A. Brandmiller
-------------------------------------------
Barclay A. Brandmiller
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
----------------------------------------
Title: Chief Executive Officer
-------------------------------------
47
<PAGE> 48
Index of Schedules and Exhibits
Schedule 1 - Stockholders
Schedule 2 - Stations
Schedule 3 - Citadel's Disclosure Schedule
Schedule 4 - Company's Disclosure Schedule
Exhibit A - Letter of Credit
Exhibit B - Form of Opinion of Counsel for Citadel
Exhibit C - Form of Opinion of Counsel for the Company and the Stockholders
[Pursuant to Regulation S-K Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules and exhibits to the Securities and
Exchange Commission upon request.]
<PAGE> 1
Exhibit 4.5
GLOBAL ASSIGNMENT AGREEMENT dated as of
February 10, 2000 (this "Agreement"), among CITADEL
BROADCASTING COMPANY, a Nevada corporation (the
"Borrower"), CITADEL COMMUNICATIONS CORPORATION, a
Nevada corporation, the LENDERS listed on the
signature pages hereof under the captions "Existing
Lenders" (the "Existing Lenders") and "Additional
Lenders" (the "Additional Lenders", and, together
with the Existing Lenders, the "Lenders"), CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland and acting through its New York
branch, as administrative agent (in such capacity,
the "Administrative Agent") and collateral agent (in
such capacity, the "Collateral Agent") for the
Lenders and as the issuing bank (in such capacity,
the "Issuing Bank").
A. The Borrower, the Existing Lenders, the Administrative Agent, the
Collateral Agent and the Issuing Bank are parties to a Credit Agreement dated as
of December 17, 1999, as amended by Amendment No. 1 dated as of January 28, 2000
(the "Existing Credit Agreement").
B. The Existing Lenders wish to assign a portion of their interests in
the outstanding letters of credit and loans and the commitments to make such
loans under the Original Credit Agreement to the Additional Lenders, and the
Additional Lenders are willing to accept such assignments.
C. The Borrower has requested, and the other parties hereto have
agreed, upon the terms and subject to the conditions set forth or referred to
herein, that the Original Credit Agreement be amended and restated upon the
effectiveness of the assignments referred to in paragraph B above in the form of
the Amended and Restated Credit Agreement set forth as Exhibit A (the "Restated
Credit Agreement").
D. Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. Capitalized terms used and not defined herein
shall have the meanings assigned to such terms in the Restated Credit Agreement.
SECTION 2. Assignments. (a) On and as of the Restatement Date (as
defined in Section 11 below), subject to the conditions set forth in Section 6
hereof, each of the Existing Lenders and Additional Lenders shall sell, assign
and transfer, or purchase and assume, as the case may be, such interests in (i)
the Commitments (as defined in the Existing Credit Agreement), (ii) the
outstanding Loans (as defined in the Existing Credit Agreement) and
<PAGE> 2
2
(iii) the participations in the Letters of Credit (as defined in the Existing
Credit Agreement), in each case, outstanding immediately prior to the
Restatement Date, as shall be necessary in order that, after giving effect to
all such assignments and purchases, the Commitments, the Loans and the
participations in the Letters of Credit will be held by the Existing Lenders and
Additional Lenders ratably in accordance with their Commitments as set forth on
Schedule 2.01 to the Restated Credit Agreement (or, in the case of
participations in the Letters of Credit, ratably in accordance with the
Revolving Credit Commitments set forth in such Schedule). Each Lender purchasing
interests of any type under this Section 2 shall be deemed to have purchased
such interests from each Existing Lender selling interests of such type ratably
in accordance with the amounts of such interests sold by them. The assignments
and purchases provided for in this Section 2 shall be without recourse, warranty
or representation, except that each assigning Lender shall be deemed to have
represented that it is the legal and beneficial owner of the interests assigned
by it and that such interests are free and clear of any adverse claim, and the
purchase price for each such assignment and purchase shall equal the principal
amount of the Loans purchased less any upfront fees advanced to the assignee.
(b) On the Restatement Date, (i) each Additional Lender shall pay the
purchase price for the interests purchased by it pursuant to paragraph (a) above
by wire transfer of immediately available funds to the Administrative Agent, not
later than 12:00 (noon), New York City time, and (ii) the Administrative Agent
shall pay to each Existing Lender, out of the amounts received by the
Administrative Agent from each Additional Lender pursuant to clause (i) of this
paragraph (b), the purchase price for the interests assigned by it pursuant to
paragraph (a) above by wire transfer of immediately available funds not later
than 3:00 p.m., New York City time.
(c) Each of the parties hereto hereby consents to the assignments and
purchases provided for in paragraphs (a) and (b) above and agrees that (i) each
Additional Lender that is purchasing interests in the Commitments, the
outstanding Loans and the outstanding participations in the Letters of Credit
pursuant to paragraph (a) above are assignees of the Existing Lenders permitted
under Section 9.04 of the Existing Credit Agreement and (ii) each Additional
Lender and each Existing Lender shall have all the rights and obligations of a
Lender under the Restated Credit Agreement with respect to the interests
purchased by it pursuant to such paragraphs.
SECTION 3. Amendment and Restatement of the Credit Agreement. (a)
Subject to the conditions set forth in Section 6 hereof, the Borrower, the
Existing Lenders, the Additional Lenders, the Administrative Agent, the
Collateral Agent and the Issuing Bank agree that the Existing Credit Agreement
(including all Exhibits and Schedules thereto) is hereby amended and restated,
effective as of the Restatement Date, to read in its entirety as set forth in
Exhibit A hereto. As used in the Restated Credit Agreement, the terms
"Agreement", "this Agreement", "herein", "hereinafter", "hereto", "hereof" and
words of similar import shall, unless the context otherwise requires and except
as provided above, mean the Existing Credit Agreement as amended and restated by
this Agreement.
<PAGE> 3
3
(b) On the Restatement Date, upon the effectiveness of this Agreement,
(i) each Loan under the Existing Credit Agreement shall be deemed to be a Loan
of the same type under the Restated Credit Agreement and (ii) each Letter of
Credit under the Existing Credit Agreement shall be deemed to be a Letter of
Credit issued under the Restated Credit Agreement, and the amount of the unused
Commitments shall be adjusted accordingly.
(c) The Borrower shall cause all Borrowings (as defined in the Existing
Credit Agreement) outstanding immediately prior to the Restatement Date to be
ABR Borrowings.
SECTION 4. Representations and Warranties. The Borrower hereby makes to
each of the other parties hereto, as of the Restatement Date, each of the
representations and warranties contained in Article III of the Restated Credit
Agreement, and each of such representations and warranties is hereby
incorporated by reference herein.
SECTION 5. Fees; Interest. (a) On the Restatement Date, simultaneously
with the making of the assignments provided for in Section 2, the Borrower shall
pay to the Administrative Agent, for the accounts of the Lenders (as defined in
the Existing Credit Agreement), the fees payable pursuant to Section 2.05 of the
Existing Credit Agreement which have accrued for the period from the last date
such fees were paid to but excluding the Restatement Date. The fees and expenses
described in this Section 5 shall be payable in immediately available funds.
Once paid, such fees shall not be refundable under any circumstances.
(b) On the Restatement Date, simultaneously with the making of the
assignments provided for in Section 2, the Borrower shall pay to the
Administrative Agent, for the accounts of the Lenders (as defined in the
Existing Credit Agreement), all unpaid interest accrued to but excluding the
Restatement Date on all of the Loans (as defined in the Existing Credit
Agreement) of each such Lender.
SECTION 6. Conditions Precedent. The obligation of each Existing Lender
and each Additional Lender to purchase the assignments provided for in Section 2
hereof and the amendment and restatement of the Existing Credit Agreement
provided for in Section 3 hereof on the Restatement Date shall be subject to the
satisfaction of all of the following conditions:
(a) The Administrative Agent shall have received a
certificate, signed by a Financial Officer of the Borrower, dated the
Restatement Date, giving effect to the transactions contemplated
hereby, and confirming that (i) the representations and warranties set
forth in Section 4 hereof are true and correct in all material
respects, (ii) the Borrower and each other Loan Party is in compliance
with the terms and provisions set forth herein and in each other Loan
Document to be observed or performed by the Borrower or such Loan Party
and (iii) no Default or Event of Default has occurred and is
continuing.
<PAGE> 4
4
(b) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Restatement Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(c) The receiving agent or its counsel shall have received
counterparts of this Agreement which, when taken together, bear the
signatures of the following:
(i) the Borrower;
(ii) each Existing Lender and Additional Lender; and
(iii) the Administrative Agent, the Collateral Agent
and the Issuing Bank.
(d) Each Loan Document other than this Agreement shall be in
full force and effect.
SECTION 7. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. Notices. All notices hereunder shall be given in accordance
with the provisions of Section 9.01 of the Credit Agreement. All notices
hereunder to each Additional Lender shall be given to it at the address listed
on Schedule 1 hereto.
SECTION 9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when taken together shall constitute but one
contract, and shall become effective as provided in Section 11 hereof. Delivery
of an executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart hereof.
SECTION 10. Headings. The headings of this Agreement are for
convenience of reference only, are not part of this Agreement and are not to be
taken into consideration in interpreting this Agreement.
SECTION 11. Effectiveness; Amendment. This Agreement shall become
effective on the date (the "Restatement Date") that each of the conditions
specified in Section 6 have been satisfied. This Agreement may not be amended
nor may any provision hereof be waived except pursuant to a writing signed by
each of the parties hereto; provided that the provisions of Section 9.08 of the
Restated Credit Agreement shall govern any amendment, waiver or modification of
the Restated Credit Agreement or any other Loan Document.
<PAGE> 5
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CITADEL BROADCASTING COMPANY,
by /s/ Donna L. Heffner
----------------------------------------
Name: Donna L. Heffner
Title: Vice President
CITADEL COMMUNICATIONS
CORPORATION,
by /s/ Donna L. Heffner
----------------------------------------
Name: Donna L. Heffner
Title: Vice President
CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent, and Issuing Bank,
by /s/ Jeffrey B. Ulmer
----------------------------------------
Name: Jeffrey B. Ulmer
Title: Vice President
by /s/ Douglas E. Maher
----------------------------------------
Name: Douglas E. Maher
Title: Vice President
Existing Lenders
CREDIT SUISSE FIRST BOSTON,
by /s/ Jeffrey B. Ulmer
----------------------------------------
Name: Jeffrey B. Ulmer
Title: Vice President
<PAGE> 6
6
by /s/ Douglas E. Maher
----------------------------------------
Name: Douglas E. Maher
Title: Vice President
BANK OF AMERICA, N.A.,
by /s/ Roselyn Drake
----------------------------------------
Name: Roselyn Drake
Title: Managing Director
BANK OF MONTREAL,
by /s/ Karen Klapper
----------------------------------------
Name: Karen Klapper
Title: Director
THE BANK OF NEW YORK,
by /s/ Geoffrey C. Brooks
----------------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
BANK OF NOVA SCOTIA,
by /s/ Ian A. Hodgart
----------------------------------------
Name: Ian A. Hodgart
Title: Authorized Signatory
THE CHASE MANHATTAN BANK,
by /s/ John J. Huber III
----------------------------------------
Name: John J. Huber III
Title: Managing Director
<PAGE> 7
7
CREDIT INDUSTRIEL ET
COMMERCIAL,
by /s/ Marcus Edward
----------------------------------------
Name: Marcus Edward
Title: Vice President
by /s/ Sean Mounier
----------------------------------------
Name: Sean Mounier
Title: First Vice President
FINOVA CAPITAL CORPORATION,
by /s/ Jeffrey S. Kilrea
----------------------------------------
Name: Jeffrey S. Kilrea
Title: Senior Vice President
FIRST UNION NATIONAL BANK,
by /s/ Jeffrey M. Graci
----------------------------------------
Name: Jeffrey M. Graci
Title: Director
FLEET NATIONAL BANK,
by /s/ Daniel M. Kortick
----------------------------------------
Name: Daniel M. Kortick
Title: Director
<PAGE> 8
8
Additional Lenders
THE INDUSTRIAL BANK OF JAPAN,
LIMITED,
by /s/ Carl-Eric Benzinger
----------------------------------------
Name: Carl-Eric Benzinger
Title: Senior Vice President & SDGM
WEBSTER BANK,
by /s/ Barbara E. Hillmeyer
----------------------------------------
Name: Barbara E. Hillmeyer
Title: Vice President
MICHIGAN NATIONAL BANK,
by /s/ Eric Haege
----------------------------------------
Name: Eric Haege
Title: Commercial Relationship
Manager
NATEXIS BANQUE POPULAIRES
(Formerly Known As Natexis Banque
BFCE)
by /s/ Evan S. Kraus
----------------------------------------
Name: Evan S. Kraus
Title: Assistant Vice President
by /s/ William C. Maier
----------------------------------------
Name: William C. Maier
Title: Senior Vice President
<PAGE> 9
9
US BANK NATIONAL ASSOCIATION
by /s/ Andrew McDonald
----------------------------------------
Name: Andrew McDonald
Title: Senior Vice President
ING (U.S.) CAPITAL LLC,
by /s/ William James
----------------------------------------
Name: William James
Title: Vice President
THE FUJI BANK, LIMITED,
by /s/ Masahito Fukuda
----------------------------------------
Name: Masahito Fukuda
Title: Senior Vice President
DAI-ICHI KANGYO BANK LTD.,
by /s/ Marvin Mirel Lazar
----------------------------------------
Name: Marvin Mirel Lazar
Title: Assistant Vice President
FIRST HAWAIIAN BANK,
by /s/ Travis Ruetenik
----------------------------------------
Name: Travis Ruetenik
Title: Assistant Vice President
<PAGE> 10
10
GENERAL ELECTRIC CAPITAL
CORPORATION,
by /s/ Karl Kieffer
----------------------------------------
Name: Karl Kieffer
Title: Duly Authorized Signatory
SUNTRUST BANK, INC.,
by /s/ Thomas C. King, Jr.
----------------------------------------
Name: Thomas C. King, Jr.
Title: Assistant Vice President
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH,
by /s/ Douglas W. Zylstra
----------------------------------------
Name: Douglas W. Zylstra
Title: Senior Vice President
by /s/ W. Pieter C. Kodde
----------------------------------------
Name: W. Pieter C. Kodde
Title: Senior Vice President
SUMMIT BANK,
by /s/ Kenneth B. Stoddard
----------------------------------------
Name: Kenneth B. Stoddard
Title: Vice President
<PAGE> 11
11
ROYAL BANK OF CANADA,
by /s/ Barbara Meijer
----------------------------------------
Name: Barbara Meijer
Title: Director
NATIONAL CITY BANK,
by /s/ Elizabeth Brosky
----------------------------------------
Name: Elizabeth Brosky
Title: Corporate Banking Officer
<PAGE> 1
Exhibit 4.6
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of February 10, 2000,
among
CITADEL BROADCASTING COMPANY,
CITADEL COMMUNICATIONS CORPORATION,
THE LENDERS NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger, Administrative Agent and Collateral Agent
---------------------------
FINOVA CAPITAL CORPORATION,
Syndication Agent
FIRST UNION NATIONAL BANK
and
FLEET NATIONAL BANK,
Documentation Agents
================================================================================
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
Definitions
<TABLE>
<S> <C> <C>
SECTION 1.01. Defined Terms..............................................................................6
SECTION 1.02. Terms Generally...........................................................................27
SECTION 1.03. Classification of Loans and Borrowings....................................................28
ARTICLE II
The Credits
SECTION 2.01. Commitments...............................................................................28
SECTION 2.02. Loans ....................................................................................29
SECTION 2.03. Borrowing Procedure.......................................................................30
SECTION 2.04. Evidence of Debt; Repayment of Loans......................................................31
SECTION 2.05. Fees .....................................................................................31
SECTION 2.06. Interest on Loans.........................................................................32
SECTION 2.07. Default Interest..........................................................................33
SECTION 2.08. Alternate Rate of Interest................................................................33
SECTION 2.09. Termination and Reduction of Commitments..................................................33
SECTION 2.10. Conversion and Continuation of Borrowings................................................34
SECTION 2.11. Repayment of Term Borrowings..............................................................35
SECTION 2.12. Prepayment................................................................................36
SECTION 2.13. Mandatory Prepayments.....................................................................37
SECTION 2.14. Reserve Requirements; Change in Circumstances.............................................38
SECTION 2.15. Change in Legality........................................................................39
SECTION 2.16. Indemnity.................................................................................40
SECTION 2.17. Pro Rata Treatment........................................................................40
SECTION 2.18. Sharing of Setoffs........................................................................41
SECTION 2.19. Payments..................................................................................41
SECTION 2.20. Taxes ....................................................................................42
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate...................................................................42
SECTION 2.22. Letters of Credit.........................................................................43
SECTION 2.23. Increase in Revolving Credit Commitments..................................................47
SECTION 2.24. Increase in Term Loan Commitments.........................................................49
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers......................................................................51
SECTION 3.02. Authorization.............................................................................51
SECTION 3.03. Enforceability............................................................................52
</TABLE>
<PAGE> 3
2
<TABLE>
<S> <C> <C>
SECTION 3.04. Governmental Approvals....................................................................52
SECTION 3.05. Financial Statements......................................................................52
SECTION 3.06. No Material Adverse Change................................................................52
SECTION 3.07. Title to Properties; Possession Under Leases..............................................53
SECTION 3.08. Subsidiaries..............................................................................53
SECTION 3.09. Litigation; Compliance with Laws..........................................................53
SECTION 3.10. Agreements and Licenses...................................................................54
SECTION 3.11. Federal Reserve Regulations...............................................................54
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act................................54
SECTION 3.13. Use of Proceeds...........................................................................54
SECTION 3.14. Tax Returns...............................................................................54
SECTION 3.15. No Material Misstatements.................................................................55
SECTION 3.16. Employee Benefit Plans....................................................................55
SECTION 3.17. Environmental Matters.....................................................................55
SECTION 3.18. Insurance.................................................................................56
SECTION 3.19. Security Documents........................................................................56
SECTION 3.20. Location of Real Property and Leased Premises.............................................57
SECTION 3.21. Labor Matters.............................................................................57
SECTION 3.22. Solvency..................................................................................57
SECTION 3.23. Year 2000.................................................................................57
SECTION 3.24. Ranking. ................................................................................58
ARTICLE IV
SECTION 4.01. All Credit Events.........................................................................58
SECTION 4.02. First Credit Event........................................................................58
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties......................................................62
SECTION 5.02. Insurance.................................................................................62
SECTION 5.03. Obligations and Taxes.....................................................................63
SECTION 5.04. Financial Statements, Reports, etc........................................................63
SECTION 5.05. Litigation and Other Notices..............................................................65
SECTION 5.06. Employee Benefits.........................................................................65
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.................................65
SECTION 5.08. Use of Proceeds...........................................................................65
SECTION 5.09. Compliance with Environmental Laws........................................................66
SECTION 5.10. Preparation of Environmental Reports......................................................66
SECTION 5.11. Further Assurances........................................................................66
</TABLE>
<PAGE> 4
3
<TABLE>
<CAPTION>
ARTICLE VI
Negative Covenants
<S> <C> <C>
SECTION 6.01. Indebtedness..............................................................................67
SECTION 6.02. Liens ....................................................................................68
SECTION 6.03. Sale and Lease-Back Transactions..........................................................69
SECTION 6.04. Investments, Loans and Advances...........................................................69
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.................................71
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries to
Pay Dividends......................................................................71
SECTION 6.07. Transactions with Affiliates..............................................................73
SECTION 6.08. Capital Expenditures......................................................................73
SECTION 6.09. Consolidated Interest Coverage Ratio......................................................73
SECTION 6.10. Consolidated Fixed Charge Coverage Ratio..................................................74
SECTION 6.11. Maximum Consolidated Leverage Ratio.......................................................74
SECTION 6.12. Limitation on Modifications of Indebtedness; Modifications of
Certificate of Incorporation, By-laws and Certain Other
Agreements, etc....................................................................74
SECTION 6.13. Limitation on Creation of Subsidiaries....................................................75
SECTION 6.16. Business of Citadel, Borrower and Subsidiaries............................................75
SECTION 6.17. Fiscal Year...............................................................................75
ARTICLE VII
Events of Default ......................................................................................75
ARTICLE VIII
The Administrative Agent and the Collateral Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices...................................................................................80
SECTION 9.02. Survival of Agreement.....................................................................81
SECTION 9.03. Binding Effect............................................................................81
SECTION 9.04. Successors and Assigns....................................................................81
SECTION 9.05. Expenses; Indemnity.......................................................................85
SECTION 9.06. Right of Setoff...........................................................................85
SECTION 9.07. Applicable Law............................................................................86
SECTION 9.08. Waivers; Amendment........................................................................86
SECTION 9.09. Interest Rate Limitation..................................................................87
SECTION 9.10. Entire Agreement..........................................................................87
SECTION 9.11. WAIVER OF JURY TRIAL.....................................................................87
SECTION 9.12. Severability..............................................................................87
SECTION 9.13. Counterparts..............................................................................88
SECTION 9.14. Headings..................................................................................88
SECTION 9.15. Jurisdiction; Consent to Service of Process...............................................88
</TABLE>
<PAGE> 5
4
<TABLE>
<S> <C> <C>
SECTION 9.16. Confidentiality...........................................................................88
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Pending Acquisitions
Schedule 1.01(c) Mortgaged Properties
Schedule 2.01 Lenders and Commitments
Schedule 3.04 Government Approvals
Schedule 3.07(c) Title to Properties
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.10(b) FCC Licenses
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(d) Mortgage Offices
Schedule 3.20(a) Real Property Owned In Fee
Schedule 3.20(b) Leased Property
Schedule 6.01 Existing Indebtedness
Schedule 6.02 Existing Liens
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E Form of Subsidiary Guarantee Agreement
Exhibit F Form of Parent Guarantee Agreement
Exhibit G Form of Pledge Agreement
Exhibit H Form of Security Agreement
Exhibit I-1 Form of Mortgage
Exhibit I-2 Form of Deed of Trust
Exhibit J-1 Form of Opinion of Eckert Seamans Cherin & Mellott, LLC,
Special Counsel for Citadel, the Borrower and CLI
Exhibit J-2 Form of Opinion of Lionel Sawyer & Collins, Nevada Counsel for
Citadel, the Borrower and CLI
Exhibit J-3 Form of Opinion of Local Counsel
</TABLE>
<PAGE> 6
AMENDED AND RESTATED CREDIT
AGREEMENT dated as of February 10, 2000,
among CITADEL BROADCASTING COMPANY, a Nevada
corporation (the "Borrower"), CITADEL
COMMUNICATIONS CORPORATION, a Nevada
corporation ("Citadel"), the Lenders (as
defined in Article I), CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of
Switzerland, acting through its New York
branch, as issuing bank (in such capacity,
an "Issuing Bank") as administrative agent
(in such capacity, the "Administrative
Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders, FINOVA Capital Corporation, as
syndication agent (in such capacity, the
"Syndication Agent") and First Union
National Bank and Fleet National Bank, as
documentation agents (in such capacity, the
"Documentation Agents").
The Borrower, Citadel, the lenders party thereto, the Issuing Bank, the
Collateral Agent and the Administrative Agent are parties to a Credit Agreement
dated as of December 17, 1999, as amended as of January 28, 2000 (the "Original
Credit Agreement"), pursuant to which the Lenders agreed to extend credit in the
form of (a) Term Loans at any time during the Term Loan Availability Period, in
an aggregate principal amount not in excess of $250,000,000, and (b) Revolving
Loans at any time and from time to time prior to the Maturity Date, in an
aggregate principal amount at any time outstanding not in excess of
$150,000,000, in each case subject to increase in accordance with Sections 2.23
and 2.24. The Borrower has requested the Issuing Banks to issue letters of
credit, (a) in an aggregate face amount at any time outstanding not in excess of
$75,000,000 until March 31, 2000 and (b) thereafter in an aggregate face amount
at any time outstanding not in excess of $50,000,000, to support payment
obligations incurred in the ordinary course of business by the Borrower and its
Subsidiaries.
The Borrower has requested that the Original Credit Agreement be
amended and restated in the form hereof to (i) increase the Term Loan Commitment
to $275,000,000 (ii) increase the Revolving Loan Commitment to $225,000,000 and
(iii) make any other changes necessary to effectuate the transactions
contemplated hereby, and the Lenders and the Issuing Bank are willing to so
amend and restate the Original Credit Agreement.
The proceeds of the Term Loans will be used solely (a) to finance a
portion of the Pending Acquisitions, (b) in the case of Incremental Term Loans,
to finance future Permitted Acquisitions and (c) to pay related fees and
expenses. The proceeds of the Revolving Loans will be used solely for general
corporate purposes, including for working capital, Capital Expenditures, to
finance a portion of the Pending Acquisitions and to finance future Permitted
Acquisitions.
<PAGE> 7
2
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquisition Agreements" shall mean any asset purchase agreement,
purchase agreement or exchange agreement entered into in connection with the
Pending Acquisitions.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form as may be supplied
from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified, provided that for purposes of Section 6.07, the term "Affiliate"
shall also include any person that directly or indirectly owns more than 5% of
any class of Equity Interests of the person specified or that is an officer or
director of the person specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall
<PAGE> 8
3
be conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively. The term "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective on the date such
change is publicly announced as being effective. The term "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan or ABR Loan, or with respect to the Commitment Fees, as the case
may be, the applicable percentage set forth below under the caption "Eurodollar
Spread", "ABR Spread" or "Commitment Fee Percentage", as the case may be, based
upon the Consolidated Leverage Ratio as of the relevant date of determination:
<TABLE>
<CAPTION>
============================== ====================== ===================== =======================
CONSOLIDATED EURODOLLAR ABR SPREAD COMMITMENT
LEVERAGE RATIO SPREAD FEE PERCENTAGE
- ------------------------------ ---------------------- --------------------- -----------------------
<S> <C> <C> <C>
Category 1
2.500% 1.500% 0.500%
Greater than 7.00 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
Category 2
2.250% 1.250% 0.500%
Greater than 6.50 to 1.00
but less than or equal to
7.00 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
Category 3
2.000% 1.000% 0.500%
Greater than 6.00 to 1.00
but less than or equal to
6.50 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
</TABLE>
<PAGE> 9
4
<TABLE>
<CAPTION>
============================== ====================== ===================== =======================
CONSOLIDATED EURODOLLAR ABR SPREAD COMMITMENT
LEVERAGE RATIO SPREAD FEE PERCENTAGE
- ------------------------------ ---------------------- --------------------- -----------------------
<S> <C> <C> <C>
Category 4
1.625% 0.625% 0.375%
Greater than 5.50 to 1.00
but less than or equal to
6.00 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
Category 5
1.500% 0.500% 0.375%
Greater than 5.00 to 1.00
but less than or equal to
5.50 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
Category 6
1.250% 0.250% 0.250%
Greater than 4.50 to 1.00
but less than or equal to
5.00 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
Category 7
1.000% 0.000% 0.250%
Greater than 4.00 to 1.00
but less than or equal to
4.50 to 1.00
- ------------------------------ ---------------------- --------------------- -----------------------
Category 8
0.875% 0.000% 0.250%
Greater than 3.50 to 1.00
but less than or equal to
4.00 to 1.00
Category 9
0.750% 0.000% 0.250%
Less than or equal to 3.50
to 1.00
============================== ====================== ===================== =======================
</TABLE>
Each change in the Applicable Percentage resulting from a change in the
Consolidated Leverage Ratio shall be effective with respect to all Loans,
Commitments and Letters of Credit outstanding on and after the date of delivery
to the Administrative Agent of the financial statements and certificates
required by Section 5.04(a) or (b) and Section 5.04(d), respectively, indicating
such change until the date immediately preceding the next date of delivery of
such financial statements and certificates indicating another such change.
<PAGE> 10
5
Notwithstanding the foregoing, until the Borrower shall have delivered the
financial statements and certificates required by Section 5.04(b) and Section
5.04(c), respectively, for the period ended June 30, 2000, the Consolidated
Leverage Ratio shall be deemed to be not lower than the Consolidated Leverage
Ratio corresponding to Category 4 for purposes of determining the Applicable
Percentage; provided, however, that (a) at any time during which the Borrower
has failed to deliver the financial statements and certificates required by
Section 5.04(a) or (b) and Section 5.04(d), respectively, or (b) at any time
after the occurrence and during the continuance of an Event of Default, the
Consolidated Leverage Ratio shall be deemed to be in Category 1 for purposes of
determining the Applicable Percentage.
"Asset Sale" shall mean the sale, transfer or other disposition (by way
of merger, casualty, condemnation or otherwise), other than any Asset Swap, by
Citadel or any of its subsidiaries to any person other than the Borrower or any
Subsidiary Guarantor of (a) any Equity Interests of the Borrower or any of the
Subsidiaries (other than directors qualifying shares) or (b) any other assets of
Citadel or any of its subsidiaries (other than inventory, excess, damaged,
obsolete or worn out assets and Permitted Investments, in each case disposed of
in the ordinary course of business), provided that any asset sale or series of
related asset sales described in clause (b) above having a value not in excess
of $1,000,000 shall be deemed not to be an "Asset Sale" for purposes of this
Agreement.
"Asset Swap" shall mean any transfer of assets of the Borrower or any
Subsidiary to any person other than an Affiliate of Citadel or its subsidiaries
in exchange for assets of such person if such exchange would qualify, whether in
part or in full, as a like-kind exchange pursuant to Section 1031 of the Code.
Nothing in this definition shall require Citadel or its subsidiaries to elect
that Section 1031 of the Code be applicable to any Asset Swap.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrowing" shall mean a group of Loans of a single Type made,
continued or converted on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C, or
such other form as shall be approved by the Administrative Agent.
<PAGE> 11
6
"BPH Acquisition" shall mean the acquisition by the Borrower of
substantially all of the assets, and the assumption of certain of the
liabilities, of Broadcast Partners Holdings, L.P. and its subsidiaries for
approximately $190,000,000.
"Broadcasting Business" shall mean (a) the business of owning and/or
operating a Station, including the operation of a Station pursuant to an LMA
Agreement, (b) the sale of advertising time for a Station pursuant to a JS
Agreement, (c) the business of owning and/or operating a Related Business and
(d) related ancillary activities.
"Broadcast Market" shall mean each of the Stations of the Borrower
serving a specific geographical area or market.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, for any period and with respect to
any person, all expenditures (other than any noncash expenses incurred in
connection with any Trade Out Transactions) during such period by such person
that would be classified as capital expenditures in accordance with GAAP, but
excluding any such expenditure made (a) to restore, replace or rebuild property
to the condition of such property immediately prior to any damage, loss,
destruction or condemnation of such property, to the extent such expenditure is
made with insurance proceeds, condemnation awards or indemnification or damage
recovery proceeds relating to any such damage, loss, destruction or
condemnation, (b) with proceeds from the sale or exchange of property to the
extent utilized to purchase functionally equivalent property or equipment or (c)
as the purchase price of any Permitted Acquisition.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Caribou Acquisition" shall mean the acquisition by the Borrower of all
of the general partnership interests in Caribou Communications Co. for
approximately $60,000,000.
"Caribou Seller Notes" shall mean any promissory notes due January 4,
2000 made by the Borrower in favor of CAT Communications, Inc. or Desert
Communications III, Inc. to finance the Caribou Acquisition.
<PAGE> 12
7
"Certificate of Designation" shall mean the Certificate of Designation
filed on July 1, 1997, as amended on July 2, 1997, by the Borrower with the
Secretary of State of Nevada with respect to the Exchangeable Preferred Stock.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act
of 1934 as in effect on the Restatement Date) shall own directly or indirectly,
beneficially or of record, shares representing more than 35% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests
of Citadel; (b) a majority of the seats (other than vacant seats) on the board
of directors of Citadel shall at any time be occupied by persons who were
neither (i) nominated by the board of directors of Citadel, nor (ii) appointed
by directors so nominated; (c) any change in control (or similar event, however
denominated) with respect to Citadel or the Borrower shall occur under and as
defined in any indenture or agreement in respect of Material Indebtedness to
which Citadel or the Borrower is a party; or (d) Citadel shall cease to own,
directly or indirectly, 100% of the issued and outstanding voting Equity
Interests of the Borrower.
"Change in Law" shall mean (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.14, by any lending office of
such Lender or by such Lender's or Issuing Bank's holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to (a) any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Term Loans or
Revolving Loans, and (b) any Commitment, refers to whether such Commitment is a
Term Loan Commitment or a Revolving Credit Commitment.
"CLI" shall mean Citadel License, Inc., a Nevada corporation and a
wholly owned subsidiary of the Borrower.
"Closing Date" shall mean December 17, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
<PAGE> 13
8
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Communications Act" shall mean the Communications Act of 1934 and the
rules and regulations issued thereunder, as amended from time to time.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated December 1999.
"Consolidated Cash Interest Expense" for any period shall mean the
interest expense, to the extent paid or payable in cash, of the Borrower and its
consolidated Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated EBITDA" for any period shall mean Consolidated Net Income
for such period, to which shall be added back, to the extent deducted in
calculating Consolidated Net Income for such period, (a) the Consolidated
Interest Expense for such period, (b) all charges against income for Federal,
state, local and foreign income taxes and assessments of the Borrower and its
consolidated Subsidiaries for such period, (c) the aggregate depreciation
expense of the Borrower and its consolidated Subsidiaries for such period, (d)
losses from sales, transactions, exchanges and other dispositions of property
not in the ordinary course of business, (e) the aggregate amortization expense
of the Borrower and its consolidated Subsidiaries for such period, (f) noncash
expenses during such period incurred in connection with Trade Out Transactions,
(g) noncash nonrecurring charges for such period and (h) noncash compensation,
minus (i) revenue during such period in connection with Trade Out Transactions,
(ii) gains during such period from sales, transactions, exchanges and other
dispositions of property not in the ordinary course of business and (iii) any
noncash gain to the extent included in determining Consolidated Net Income, all
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" for any period shall mean
the ratio of Consolidated EBITDA to Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" for any period shall mean the sum, without
duplication, of (a) Consolidated Cash Interest Expense for such period, (b) the
amount of all Capital Expenditures made by the Borrower and its Subsidiaries
during such period, (c) all cash payments in respect of income taxes made during
such period (net of any cash refund in respect of income taxes actually received
during such period), (d) the scheduled principal amount of all amortization
payments on all Indebtedness (including the principal component of all Capital
Lease Obligations) of the Borrower and its Subsidiaries for such period and (e)
the amount of cash dividends paid by the Borrower and its Subsidiaries during
such period to persons other than the Borrower or a Subsidiary, all as
determined on a consolidated basis in accordance with GAAP
<PAGE> 14
9
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Cash
Interest Expense for such period.
"Consolidated Interest Expense" for any period shall mean the total
interest expense of the Borrower and its consolidated Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Leverage Ratio" shall mean, at any date of determination,
the ratio of Total Debt on such date to Consolidated EBITDA for the period of
four consecutive fiscal quarters of the Borrower most recently ended on or prior
to such date. Solely for purposes of this definition, if at any time the
Consolidated Leverage Ratio is being determined the Borrower or any Subsidiary
shall have completed a Permitted Acquisition or an Asset Sale since the
beginning of the relevant four fiscal quarter period, the Consolidated Leverage
Ratio shall be determined on a pro forma basis as if such Permitted Acquisition
or Asset Sale, and any related incurrence or repayment of Indebtedness, had
occurred at the beginning of such period and taking into account any
identifiable cost savings documented to the reasonable satisfaction of the
Administrative Agent.
"Consolidated Net Income" shall mean, for any period, net income or
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by the Subsidiary of that income
is prohibited by operation of the terms of its charter or any agreement,
instrument, judgment, decree, statute, rule or governmental regulation
applicable to the Subsidiary, and (b) the income (or loss) of any person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
the Borrower or any of the Subsidiaries or the date that person's assets are
acquired by the Borrower or any of the Subsidiaries.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"Current Assets" shall mean, at any time, the consolidated current
assets (other than cash and Permitted Investments) of the Borrower and its
consolidated Subsidiaries.
"Current Liabilities" shall mean, at any time, the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries at such time, but
excluding, without duplication, (a) the current portion of any long-term
Indebtedness and (b) outstanding Revolving Loans.
<PAGE> 15
10
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"Engagement Letter" shall mean the Engagement Letter dated December 10,
1999, between the Borrower and the Administrative Agent.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface, soils
or subsurface strata, the workplace or any building, structure, facility or
fixture or as otherwise defined in any Environmental Law.
"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, order, directive, cost recovery action or other cause
of action by, or on behalf of, any Governmental Authority or any person for
damages, injunctive or equitable relief, personal injury (including sickness,
disease or death), Remedial Action costs, tangible or intangible property
damage, natural resource damages, nuisance, pollution, any adverse effect on the
environment caused by any Hazardous Material, or for fines, penalties or
restrictions, resulting from or based upon (a) the existence, or the
continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases) or a threatened Release, (b) exposure to
any Hazardous Material, (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material or (d) any
non-compliance or alleged non-compliance with any Environmental Law or
Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes and ordinances, and all orders,
decrees, judgments, injunctions, notices or agreements which are binding on a
Loan Party and issued, promulgated or entered into by any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. " 9601 et
seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. " 6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. " 1251 et
seq., the Clean Air Act of 1970, as amended 42 U.S.C. " 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. " 2601 et seq., the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. " 651 et seq., the
<PAGE> 16
11
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. " 11001 et
seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. " 300(f) et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. " 5101 et seq., and
any similar or implementing state, local or foreign law, and all amendments or
regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Interests" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a person.
"Equity Issuance" shall mean any issuance or sale by Citadel, the
Borrower or any Subsidiary of any Equity Interests of Citadel, the Borrower or
any Subsidiary, as applicable, or any obligations convertible into or
exchangeable for, or giving any person a right, option or warrant to acquire
such Equity Interests or such convertible or exchangeable obligations, except in
each case for (a) any issuance or sale to Citadel, the Borrower or any
Subsidiary, (b) any issuance of directors' qualifying shares and (c) sales or
issuances of common stock of Citadel to management or employees of Citadel, the
Borrower or any Subsidiary under any employee stock option or stock purchase
plan or employee benefit plan in existence from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal from any Plan or
<PAGE> 17
12
Multiemployer Plan; or (g) the receipt by the Borrower or any of its ERISA
Affiliates of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any of its ERISA Affiliates of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year of the Borrower, the
excess of (a) the sum, of (i) Consolidated EBITDA for such fiscal year and (ii)
reductions to noncash working capital of the Borrower and its consolidated
Subsidiaries for such fiscal year (i.e., the decrease, if any, in Current Assets
minus Current Liabilities from the beginning to the end of such fiscal year)
over (b) the sum, without duplication, of (i) the amount of any cash income
taxes payable by the Borrower and its consolidated Subsidiaries with respect to
such fiscal year, (ii) cash interest paid (net of cash interest received) by the
Borrower and its consolidated Subsidiaries during such fiscal year, (iii)
Capital Expenditures made in cash in accordance with Section 6.08 during such
fiscal year, except to the extent financed with the proceeds of Indebtedness,
casualty proceeds or condemnation proceeds, (iv) permanent repayments of
Indebtedness made by the Borrower and its consolidated Subsidiaries during such
fiscal year, but only to the extent that such prepayments by their terms cannot
be reborrowed or redrawn and do not occur in connection with a refinancing of
all or any portion of such Indebtedness, and (v) additions to noncash working
capital for such fiscal year (i.e., the increase, if any, in Current Assets
minus Current Liabilities from the beginning to the end of such fiscal year);
provided that to the extent otherwise included therein, the Net Cash Proceeds of
Asset Sales shall be excluded from the calculation of Excess Cash Flow.
"Exchange Indenture" shall mean the Indenture dated as of July 1, 1997,
among the Borrower, CLI and The Bank of New York, as trustee, relating to the
Exchangeable Debentures.
"Exchangeable Debentures" shall mean any Exchangeable Debentures due
2009 issued in exchange for Exchangeable Preferred Stock.
"Exchangeable Debt Instruments" shall mean the Exchange Indenture and
the Exchangeable Debentures.
"Exchangeable Preferred Stock" shall mean the 13-1/4% Series A
Exchangeable Preferred Stock issued by the Borrower on July 1, 1997, any
exchangeable preferred stock issued in exchange therefor pursuant to the
Preferred Stock Registration Rights Agreement,
<PAGE> 18
13
and any exchangeable preferred stock issued by the Borrower as dividends thereon
in accordance with the Certificate of Designation.
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender, any Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.20(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.20(a).
"Existing Letter of Credit" shall mean each Letter of Credit previously
issued for the account of the Borrower that (a) is outstanding on the Closing
Date and (b) is listed on Schedule 1.01(a).
"FCC" shall mean the Federal Communications Commission or any
Governmental Authority succeeding to its functions.
"FCC Licenses" shall mean the Licenses issued by the FCC.
"Fees" shall mean the Commitment Fee, the Administrative Agent Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any person shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such person.
"Foreign Lender" shall mean any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean United States generally accepted accounting
principles applied on a consistent basis.
<PAGE> 19
14
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Lender" shall have the meaning assigned to such term in
Section 9.04(i).
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; provided, however,
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business.
"Guarantee Agreements" shall mean the Parent Guarantee Agreement and
the Subsidiary Guarantee Agreement.
"Guarantors" shall mean Citadel and the Subsidiary Guarantors.
"Hazardous Material" shall mean all hazardous, toxic, explosive or
radioactive substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment,
radon gas, infectious or medical wastes and all other substances or wastes of
any nature regulated pursuant to any Environmental Law.
"Hedging Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, foreign exchange
contract, currency swap agreement or other similar agreement or arrangement.
"Incremental Facility Cutoff Date" shall mean December 17, 2002.
"Incremental Revolving Facility Amount" shall mean, at any time, the
lesser of (a) $100,000,000 and (b) the excess, if any, of (i) $300,000,000 over
(ii) the sum of (x) the aggregate amount of all Incremental Term Loan
Commitments established at or prior to such time pursuant to Section 2.24 and
(y) the aggregate increase in the Revolving Credit Commitments established prior
to such time pursuant to Section 2.23.
"Incremental Term Lender" shall mean a Lender with an Incremental Term
Loan Commitment or an outstanding Incremental Term Loan.
<PAGE> 20
15
"Incremental Term Loan Amount" shall mean, at any time, the excess, if
any, of (a) $300,000,000 over (b) the sum of (i) the aggregate increase in the
Revolving Credit Commitments established at or prior to such time pursuant to
Section 2.23 and (ii) the aggregate amount of all Incremental Term Loan
Commitments established prior to such time pursuant to Section 2.24.
"Incremental Term Loan Assumption Agreement" shall mean an Incremental
Term Loan Assumption Agreement in form and substance reasonably satisfactory to
the Administrative Agent, among the Borrower, the Administrative Agent and one
or more Incremental Term Lenders.
"Incremental Term Loan Commitment" shall mean the commitment of any
Lender, established pursuant to Section 2.24, to make Incremental Term Loans to
the Borrower.
"Incremental Term Loans" shall mean Term Loans made by one or more
Lenders to the Borrower pursuant to clause (b) of Section 2.01.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets purchased by such person, (d) all obligations of such person issued or
assumed as the deferred purchase price of property or services (excluding trade
accounts payable and accrued obligations incurred in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (f) all Guarantees by such person
of Indebtedness of others, (g) all Capital Lease Obligations of such person, (h)
all obligations, contingent or otherwise, of such person as an account party in
respect of letters of credit and (i) all obligations, contingent or otherwise,
of such person in respect of bankers' acceptances. The Indebtedness of any
person shall include the Indebtedness of any partnership in which such person is
a general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Guarantors and the Collateral
Agent.
"Indentures" shall mean the Exchange Indenture, the 1997 Note Indenture
and the 1998 Note Indenture.
"Interest Payment Date" shall mean, (a) with respect to any ABR Loan,
the last Business Day of each March, June, September and December, and (b) with
respect to any
<PAGE> 21
16
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three months'
duration been applicable to such Borrowing, and, in addition, the date of any
prepayment of a Eurodollar Borrowing or conversion of a Eurodollar Borrowing to
an ABR Borrowing.
"Interest Period" shall mean, as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months (or, with the consent of
all Lenders participating in such Borrowing, 9 or 12 months) thereafter, as the
Borrower may elect; provided, however, that if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"Internet Company" shall mean a business in which the majority of its
revenues arise out of its activities selling goods and/or services over the
internet.
"Internet Trade Out Transaction" shall mean a Trade Out Transaction in
which the Borrower or any Subsidiary exchanges unused and preemptible
advertising time for Equity Interests or any obligations convertible into or
exchangeable for, or giving any person a right, option or warrant to acquire
such Equity Interests or such convertible or exchangeable obligations, of an ISP
or any other Internet Company.
"ISP" shall mean a business in which the majority of its revenues arise
out of its activities as an internet service provider.
"Issuing Bank" shall mean, as the context may require, (a) Credit
Suisse First Boston, with respect to Letters of Credit issued by it, (b) Bank
Boston, N.A., with respect to each Existing Letter of Credit, (c) any other
Lender that may become an Issuing Bank pursuant to Section 2.22(i) or 2.22(k),
with respect to Letters of Credit issued by such Lender or (d) collectively, all
of the foregoing.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"JS Agreement" shall mean an agreement in which (a) two or more
licensees of Stations join to market air time or (b) a licensee of a Station
sells air time to a broker.
<PAGE> 22
17
"L/C Commitment" shall mean, with respect to any Issuing Bank, the
commitment of such Issuing Bank to issue Letters of Credit pursuant to Section
2.22.
"L/C Disbursement" shall mean a payment or disbursement made by an
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any
time shall mean its Pro Rata Percentage of the aggregate L/C Exposure at such
time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22 and any Existing Letter of Credit.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by the Administrative Agent
at approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the beginning of the relevant Interest Period by reference to the
British Bankers Association Interest Settlement Rates for deposits in dollars
(as set forth by the Bloomberg Information Service or any successor thereto or
any other service selected by the Administrative Agent that has been nominated
by the British Bankers Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition, the "LIBO Rate" shall be the
interest rate per annum determined by the Administrative Agent to be the average
of the rates per annum at which deposits in dollars are offered for such
relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. (London
time) on the date that is two Business Days prior to the beginning of such
Interest Period.
"Licenses" shall mean all licenses, permits, consents, approvals and
authorities issued by any Governmental Authority that authorize a person to
operate a Station.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention
<PAGE> 23
18
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.
"Liggett Acquisition" shall mean the acquisition by the Borrower of
substantially all of the assets of Liggett Broadcast, Inc. and certain of its
affiliates for approximately $120,500,000.
"LMA Agreement" shall mean a local marketing arrangement, sale
agreement, time brokerage agreement, management agreement or similar arrangement
pursuant to which a person, subject to customary preemption rights and other
limitations, (a) obtains the right to sell at least a majority of the
advertising inventory of a radio station of which another person is a licensee,
(b) obtains the right to exhibit programming and sell advertising time during a
majority of the air time of a Station or (c) manages the selling operations of a
Station with respect to at least a majority of the advertising inventory of such
Station.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreements, the Security Documents, each Incremental Term Loan
Assumption Agreement and the Indemnity, Subrogation and Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Borrower or any other Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits available to the Lenders
under any Loan Document.
"Material Indebtedness" shall mean Indebtedness (other than the Loans
and Letters of Credit) or obligations in respect of one or more Hedging
Agreements of any one or more of Citadel and its subsidiaries in an aggregate
principal amount exceeding $5,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of Citadel or any
subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that Citadel or such
subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Maturity Date" shall mean March 31, 2007, subject to extension as
provided in Section 2.25.
<PAGE> 24
19
"Mortgaged Properties" shall mean (a) the owned real properties of the
Borrower specified on Schedule 1.01(c) and (b) any other real property of any
Loan Party that is subject to a Mortgage after the Closing Date pursuant to
Section 5.11.
"Mortgages" shall mean the mortgages, deeds of trust, modifications and
other security documents delivered pursuant to clause (i) of Section 4.02(j) or
pursuant to Section 5.11, each substantially in the form of Exhibit I.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds (including cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net of (i)
selling expenses (including reasonable broker's fees or commissions, legal fees,
transfer and similar taxes and the Borrower's good faith estimate of income
taxes paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations or purchase price adjustment associated with such
Asset Sale (provided that, to the extent and at the time any such amounts are
released from such reserve, such amounts shall constitute Net Cash Proceeds) and
(iii) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale and which is repaid with such proceeds (other than any
such Indebtedness assumed by the purchaser of such asset); provided, however,
that, if (x) the Borrower shall deliver a certificate of a Financial Officer to
the Administrative Agent at the time of receipt thereof setting forth the
Borrower's intent to reinvest such proceeds in productive assets of a kind then
used or usable in the business of the Borrower and the Subsidiaries within 330
days of receipt of such proceeds and (y) no Default or Event of Default shall
have occurred and shall be continuing at the time of such certificate or at the
proposed time of the application of such proceeds, such proceeds shall not
constitute Net Cash Proceeds except to the extent that at least $5,000,000 of
such proceeds are not so used or contractually committed to be used at the end
of such 330-day period, at which time all such proceeds shall be deemed to be
Net Cash Proceeds; and (b) with respect to any issuance or disposition of
Indebtedness or any Equity Issuance, the cash proceeds thereof, net of all taxes
and customary fees, commissions, costs and other expenses incurred in connection
therewith. Any "boot" or other nonlike-kind assets received in connection with
an Asset Swap shall be considered proceeds from the sale of an asset.
"1997 Note Indenture" shall mean the indenture dated as of July 1,
1997, among the Borrower, CLI and The Bank of New York, as trustee, as in effect
on the Closing Date and as thereafter amended from time to time in accordance
with the requirements thereof and of this Agreement.
<PAGE> 25
20
"1997 Notes Registration Rights Agreement" shall mean the Registration
Rights Agreement entered into on July 1, 1997 among the Borrower, CLI and the
initial purchasers of the 1997 Senior Subordinated Notes.
"1997 Senior Subordinated Debt Instruments" shall mean the 1997 Senior
Subordinated Notes, the 1997 Note Indenture and the 1997 Notes Registration
Rights Agreement.
"1997 Senior Subordinated Notes" shall mean the Borrower's 10-1/4%
Senior Subordinated Notes due 2007 issued pursuant to the 1997 Note Indenture
and any notes issued by the Borrower in exchange for, and as contemplated by,
the 1997 Notes Registration Rights Agreement.
"1998 Note Indenture" shall mean the indenture dated as of November 19,
1998, among the Borrower, CLI and The Bank of New York, as trustee, as in effect
on the Closing Date and as thereafter amended from time to time in accordance
with the requirements thereof and of this Agreement
"1998 Notes Registration Rights Agreement" shall mean the Registration
Rights Agreement entered into on November 19, 1998, among the Borrower, CLI and
the initial purchasers of the 1998 Senior Subordinated Notes.
"1998 Senior Subordinated Debt Instruments" shall mean the 1998 Senior
Subordinated Notes, the 1998 Note Indenture and the 1998 Notes Registration
Rights Agreement.
"1998 Senior Subordinated Notes" shall mean the Borrower's 9-1/4%
Senior Subordinated Notes due 2008 issued pursuant to the 1998 Note Indenture
and any notes issued by the Borrower in exchange for, and as contemplated by,
the 1998 Notes Registration Rights Agreement.
"Notes Registration Rights Agreements" shall mean, collectively, the
1997 Notes Registration Rights Agreement and the 1998 Notes Registration Rights
Agreement.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
"Operating Agreement" shall mean any tower site lease, tower license,
office lease, studio lease, equipment lease, network affiliation agreement,
programming agreement, time brokerage agreement or other similar agreement
relating to the operation of a Station.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment
<PAGE> 26
21
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.
"Parent Guarantee Agreement" shall mean the Parent Guarantee Agreement,
substantially in the form of Exhibit F, made by Citadel in favor of the
Collateral Agent for the benefit of the Secured Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Pending Acquisitions" shall mean those acquisitions listed on Schedule
1.01(b).
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Acquisition" shall have the meaning assigned to such term in
Section 6.04(c).
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Service or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any Lender or of any commercial bank organized under the laws of the
United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria of
clause (c) above.
<PAGE> 27
22
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit G, between the Borrower, Citadel, the Subsidiaries party
thereto and the Collateral Agent for the benefit of the Secured Parties.
"Preferred Stock Registration Rights Agreement" shall mean the
Preferred Stock Registration Rights Agreement entered into on July 1, 1997 among
the Borrower, CLI and the initial purchasers of the Exchangeable Preferred
Stock.
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"Pro Rata Term Percentage" of any Term Lender at any time shall mean a
fraction (expressed as a percentage) (a) the numerator of which is equal to the
sum of (i) the aggregate principal amount of the Term Loans of such Lender
outstanding at such time and (ii) the unused and available Term Loan Commitment
of such Lender at such time and (b) the denominator of which is the sum of (i)
the aggregate outstanding principal amount of all Term Loans at such time and
(ii) the total unused and available Term Loan Commitments at such time.
"Properties" shall have the meaning assigned to such term in Section
3.17(a).
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
<PAGE> 28
23
"Related Business" shall mean (a) any business ancillary to the
ownership or operation of a Station or (b) any business that is an ISP or
ancillary to the business of an ISP.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto, within or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i)
cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger public health, welfare or the environment; (iii) resolve
any non-compliance with Environmental Law or any Environmental Permit; or (iv)
perform studies and investigations in connection with, or as a precondition to,
(i), (ii) or (iii) above.
"Repayment Date" shall have the meaning given such term in Section
2.11.
"Required Lenders" shall mean, at any time, Lenders having Loans, L/C
Exposure and unused Revolving Credit Commitments and Term Loan Commitments
representing at least a majority of the sum of all Loans outstanding, L/C
Exposure and unused Revolving Credit Commitments and Term Loan Commitments at
such time.
"Responsible Officer" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.
"Restatement Date" shall mean February 10, 2000.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09, (b) reduced or increased
from time to time pursuant to
<PAGE> 29
24
assignments by or to such Lender pursuant to Section 9.04 and (c) increased from
time to time pursuant to Section 2.23.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment or, if the Revolving Credit Commitments have terminated or expired, a
Lender with Revolving Credit Exposure.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit H, among the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
"SPC" shall have the meaning assigned to such term in Section 9.04(i).
"Station" shall mean a radio station operated to transmit over airwaves
radio signals within a geographic area for the purpose of providing commercial
broadcasting radio programming.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which
<PAGE> 30
25
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or more than 50% of the general
partnership interests are, at the time any determination is being made, owned,
controlled or held, or (b) that is, at the time any determination is made,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit E, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each Subsidiary that is or becomes a
party to a Subsidiary Guarantee Agreement.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Lender" shall mean a Lender with a Term Loan Commitment or an
outstanding Term Loan.
"Term Loan Availability Period" shall mean the period from and
including the Closing Date to and including December 15, 2000.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed
its Term Loan Commitment, as applicable, as the same may be (a) reduced from
time to time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial aggregate amount of the Term Loan Commitments is $275,000,000. Unless
the context shall otherwise require, after the effectiveness of any Incremental
Term Loan Commitments the term "Term Loan Commitments" shall include such
Incremental Term Loan Commitment.
"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Term Loan shall be a Eurodollar Term
Loan or an ABR Term Loan. Unless the context shall otherwise require, the term
"Term Loans" shall include any Incremental Term Loans.
"Total Debt" at any time shall mean the total Indebtedness of the
Borrower and its Subsidiaries at such time (excluding Indebtedness of the type
described in clause (h) of the definition of such term, except to the extent of
any unreimbursed drawings thereunder).
<PAGE> 31
26
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
The initial Total Revolving Credit Commitment is $225,000,000.
"Trade Out Transaction" shall mean an exchange by the Borrower or any
Subsidiary of advertising time for non-cash consideration, such as goods,
services or program material.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article
VI or any related definition to eliminate the effect of any change in GAAP
occurring after the date of this Agreement on the operation of such covenant (or
if the Administrative Agent notifies the Borrower that the Required Lenders wish
to amend Article VI or any related definition for such purpose), then the
Borrower's compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP became
<PAGE> 32
27
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Borrower and the Required Lenders.
SECTION 1.03. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings may also be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make Term Loans to the Borrower on no
more than six occasions during the Term Loan Availability Period, in an
aggregate principal amount not to exceed its Term Loan Commitment, (b) if such
Lender has so committed pursuant to Section 2.24, to make Incremental Term Loans
to the Borrower on or prior to the Incremental Facility Cutoff Date, in an
aggregate principal amount not to exceed its Incremental Term Loan Commitment,
and (c) to make Revolving Loans to the Borrower, at any time and from time to
time on or after the Restatement Date, and until the earlier of the Maturity
Date and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in such Lender's Revolving Credit Exposure
exceeding such Lender's Revolving Credit Commitment. Within the limits set forth
in clause (c) of the preceding sentence and subject to the terms, conditions and
limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may
not be reborrowed. The Borrower and the Lenders acknowledge the Revolving Loans
and the Term Loans pursuant to the Original Credit Agreement that are
outstanding on the Restatement Date and listed on Schedule 2.01 and agree that
such Revolving Loans and Term Loans shall continue to be outstanding pursuant to
the terms and conditions of this Agreement and the other Loan Documents.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, however, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Except for Loans deemed made pursuant to Section
2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $1,000,000 and not less than
$5,000,000 (except
<PAGE> 33
28
with respect to any Incremental Term Borrowing, to the extent otherwise provided
in the related Incremental Term Loan Assumption Agreement) or (ii) equal to the
remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08, 2.15 and 2.24(d), each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than ten Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 11:00 a.m.,
New York City time, and the Administrative Agent shall by 12:00 (noon), New York
City time, credit the amounts so received to an account or accounts designated
by the Borrower in the applicable Borrowing Request or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
<PAGE> 34
29
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date.
(f) If the applicable Issuing Bank shall not have received from the
Borrower the payment required to be made by Section 2.22(e) within the time
specified in such Section, such Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Revolving Credit Lender of such L/C Disbursement and its
Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire
transfer of immediately available funds to the Administrative Agent not later
than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit
Lender shall have received such notice later than 12:00 (noon), New York City
time, on any day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day), an amount equal to such Lender's Pro Rata
Percentage of such L/C Disbursement (it being understood that such amount shall
be deemed to constitute an ABR Revolving Loan of such Lender and such payment
shall be deemed to have reduced the L/C Exposure), and the Administrative Agent
will promptly pay to the applicable Issuing Bank amounts so received by it from
the Revolving Credit Lenders. The Administrative Agent will promptly pay to the
applicable Issuing Bank any amounts received by it from the Borrower pursuant to
Section 2.22(e) prior to the time that any Revolving Credit Lender makes any
payment pursuant to this paragraph (f); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the Administrative
Agent to the Revolving Credit Lenders that shall have made such payments and to
the applicable Issuing Bank, as their interests may appear. If any Revolving
Credit Lender shall not have made its Pro Rata Percentage of such L/C
Disbursement available to the Administrative Agent as provided above, such
Lender and the Borrower severally agree to pay interest on such amount, for each
day from and including the date such amount is required to be paid in accordance
with this paragraph to but excluding the date such amount is paid, to the
Administrative Agent for the account of the applicable Issuing Bank at (i) in
the case of the Borrower, a rate per annum equal to the interest rate applicable
to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such
Lender, for the first such day, the Federal Funds Effective Rate, and for each
day thereafter, the Alternate Base Rate.
SECTION 2.03. BORROWING PROCEDURE. In order to request a Borrowing
(other than a deemed Borrowing pursuant to Section 2.02(f), as to which this
Section 2.03 shall not apply), the Borrower shall hand deliver or fax to the
Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 12:00 noon, New York City time, one Business Day
before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall
be signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Term
Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a
Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day), (iii) the number and location of the
<PAGE> 35
30
account to which funds are to be disbursed (which shall be an account that
complies with the requirements of Section 2.02(c)); (iv) the amount of such
Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02. If no election as
to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.03 (and the contents thereof), and of each
Lender's portion of the requested Borrowing.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the principal amount of each Term Loan of such Lender
as provided in Section 2.11 and (ii) the then unpaid principal amount of each
Revolving Loan of such Lender on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by it hereunder be evidenced
by a promissory note. In such event, the Borrower shall execute and deliver to
such Lender a promissory note payable to such Lender and its registered assigns
and in a form and substance reasonably acceptable to the Administrative Agent
and the Borrower. Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive such a promissory note, the interests
represented by such note shall at all times (including after any assignment of
all or part of such interests pursuant to Section 9.04) be
<PAGE> 36
31
represented by one or more promissory notes payable to the payee named therein
or its registered assigns.
SECTION 2.05. FEES. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last Business Day of March, June,
September and December in each year and on each date on which any Commitment of
such Lender shall expire or be terminated as provided herein, a commitment fee
(a "Commitment Fee") equal to the Applicable Percentage per annum in effect from
time to time on the daily unused amount of the Commitments of such Lender during
the preceding quarter (or other period commencing with the Restatement Date or
ending with the date on which the Commitments of such Lender shall expire or be
terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Commitment Fee due to each
Lender shall commence to accrue on the Restatement Date and shall cease to
accrue on the date on which the Commitment of such Lender shall expire or be
terminated as provided herein.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the administrative fees set forth in the Engagement Letter at the times
and in the amounts specified therein (the "Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last Business Day of March, June,
September and December of each year and on the date on which the Revolving
Credit Commitment of such Lender shall be terminated as provided herein, a fee
(an "L/C Participation Fee") calculated on such Lender's Pro Rata Percentage of
the daily aggregate L/C Exposure (excluding the portion thereof attributable to
unreimbursed L/C Disbursements) during the preceding quarter (or shorter period
commencing with the Restatement Date or ending with the Maturity Date or the
date on which all Letters of Credit have been canceled or have expired and the
Revolving Credit Commitments of all Lenders shall have been terminated) at a
rate equal to the Applicable Percentage from time to time used to determine the
interest rate on Revolving Credit Borrowings comprised of Eurodollar Loans
pursuant to Section 2.06, and (ii) to the applicable Issuing Bank with respect
to each Letter of Credit on the last Business Day of March, June, September and
December of each year and on the Maturity Date, a fronting fee equal to 1/8 of
1% per annum on the aggregate outstanding face amount of such Letter of Credit
and the standard issuance and drawing fees specified from time to time by such
Issuing Bank (the "Issuing Bank Fees"). All L/C Participation Fees and Issuing
Bank Fees shall be computed on the basis of the actual number of days elapsed in
a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the applicable Issuing Bank. Once paid, none of the Fees shall be refundable
under any circumstances.
<PAGE> 37
32
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage
in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage in effect from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the rate that would be applicable to an
ABR Revolving Loan plus 2.00%.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or fax notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
<PAGE> 38
33
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Term
Loan Commitments (other than any Incremental Term Loan Commitments) shall
automatically terminate at 5:00 p.m., New York City time, on the last day of the
Term Loan Availability Period. Unless terminated earlier pursuant to the
applicable Incremental Term Loan Assumption Agreement, the Incremental Term Loan
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
the Incremental Facility Cutoff Date. The Revolving Credit Commitments and the
L/C Commitments shall automatically terminate on the Maturity Date.
Notwithstanding the foregoing, all the Commitments shall automatically terminate
at 5:00 p.m., New York City time, on February 29, 2000, if the initial Credit
Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or fax
notice to the Administrative Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the Term
Loan Commitments or the Revolving Credit Commitments; provided, however, that
(i) each partial reduction of the Term Loan Commitments or the Revolving Credit
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $10,000,000 and (ii) the Total Revolving Credit Commitment shall not
be reduced to an amount that is less than the Aggregate Revolving Credit
Exposure at the time.
(c) If any prepayment of Term Loans would be required pursuant to
Section 2.13 but cannot be made because there are no Term Loans outstanding, or
because the amount of the required prepayment exceeds the outstanding amount of
Term Loans, then, on the date that such prepayment is required, the Revolving
Credit Commitments shall be reduced by an aggregate amount equal to the amount
of the required prepayment or the excess of such amount over the outstanding
amount of Term Loans, as the case may be, on the day any such prepayment of Term
Loans is, or would be, required by Section 2.13.
(d) Each reduction in the Term Loan Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective applicable Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, on the date of
each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 10:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period
<PAGE> 39
34
with respect to any Eurodollar Borrowing to another permissible Interest Period,
subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Term Borrowing that would end later than a Repayment Date occurring on
or after the first day of such Interest Period if, after giving effect
to such selection, the aggregate outstanding amount of (A) the
Eurodollar Term Borrowings with Interest Periods ending on or prior to
such Repayment Date and (B) the ABR Term Borrowings would not be at
least equal to the principal amount of Term Borrowings to be paid on
such Repayment Date; and
(viii) upon notice to the Borrower from the Administrative
Agent given at the request of the Required Lenders, after the
occurrence and during the continuance of a Default or Event of Default,
no outstanding Loan may be converted into, or continued as, a
Eurodollar Loan.
<PAGE> 40
35
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender's portion of any converted or
continued Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted into an ABR Borrowing.
SECTION 2.11. REPAYMENT OF TERM BORROWINGS. (a) Subject to paragraph
(c) below, the Borrower shall pay to the Administrative Agent, for the account
of the Lenders, on the dates set forth below, or if any such date is not a
Business Day, on the next preceding day (each a "Repayment Date") a principal
amount of the Term Loans (as adjusted from time to time pursuant to Sections
2.12(b) and 2.13(f)) equal to the percentage set forth below for such date of
the aggregate amount of the Term Loans outstanding on the Incremental Facility
Cutoff Date:
<PAGE> 41
36
<TABLE>
<CAPTION>
Repayment Date Percentage
-------------- ----------
<S> <C>
March 31, 2003 3.750%
June 30, 2003 3.750%
September 30, 2003 3.750%
December 31, 2003 3.750%
March 31, 2004 5.000%
June 30, 2004 5.000%
September 30, 2004 5.000%
December 31, 2004 5.000%
March 31, 2005 5.000%
June 30, 2005 5.000%
September 30, 2005 5.000%
December 31, 2005 5.000%
March 31, 2006 5.000%
June 30, 2006 5.000%
September 30, 2006 5.000%
December 31, 2006 5.000%
March 31, 2007 6.250%
June 30, 2007 6.250%
September 30, 2007 6.250%
December 31, 2007 6.250%
</TABLE>
(b) Each payment of Term Borrowings pursuant to this Section 2.11 shall
be accompanied by accrued interest on the principal amount paid to but excluding
the date of payment.
(c) To the extent not previously paid, all Term Loans shall be due and
payable on the Maturity Date, together with accrued and unpaid interest on the
principal amount to be paid to but excluding the date of payment.
(d) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' prior written or fax notice (or telephone notice
promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or
written or fax notice (or telephone notice promptly confirmed by written or fax
notice) at least one Business Day prior to the date of prepayment in the case of
ABR Loans, to the Administrative Agent before 11:00 a.m., New York City time;
provided, however, that each partial prepayment shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.
<PAGE> 42
37
(b) Optional prepayments of Term Loans shall be applied pro rata
against the remaining scheduled installments of principal due in respect of the
Term Loans.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.16 but otherwise without premium or penalty.
All prepayments under this Section 2.12 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
SECTION 2.13. MANDATORY PREPAYMENTS. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall, on the
date of such termination, repay or prepay all its outstanding Revolving Credit
Borrowings and replace all outstanding Letters of Credit and/or deposit an
amount equal to the L/C Exposure in cash in a cash collateral account
established with the Collateral Agent for the benefit of the Secured Parties. In
the event of any partial reduction of the Revolving Credit Commitments, then (i)
at or prior to the effective date of such reduction, the Administrative Agent
shall notify the Borrower and the Revolving Credit Lenders of the Aggregate
Revolving Credit Exposure after giving effect thereto and (ii) if the Aggregate
Revolving Credit Exposure would exceed the Total Revolving Credit Commitment
after giving effect to such reduction or termination, then the Borrower shall,
on the date of such reduction or termination, repay or prepay Revolving Credit
Borrowings and/or replace or cash collateralize outstanding Letters of Credit in
an amount sufficient to eliminate such excess. Upon the reduction of the L/C
Exposure on April 1, 2000 pursuant to Section 2.22(b), if and to the extent that
the L/C Exposure exceeds $50,000,000 on such date, the Borrower shall cash
collateralize outstanding Letters of Credit in an amount sufficient to eliminate
such excess.
(b) Not later than the third Business Day following the completion of
any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received
with respect thereto to prepay outstanding Term Loans and/or permanently reduce
the Revolving Credit Commitments in accordance with Section 2.13(f).
(c) Following the termination of all Term Loan Commitments (other than
any Incremental Term Loan Commitments) pursuant to Section 2.09, in the event
and on each occasion that an Equity Issuance occurs, if the Consolidated
Leverage Ratio as of the date of such Equity Issuance is greater than 5.00 to
1.00, the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the occurrence of such
Equity Issuance, apply the lesser of (i) 50% of the Net Cash Proceeds therefrom
and (ii) the amount of such Net Cash Proceeds as shall be necessary to reduce
the Consolidated Leverage Ratio as of such date to 5.00 to 1.00, to prepay
outstanding Term Loans and/or permanently reduce the Revolving Credit
Commitments in accordance with Section 2.13(f).
<PAGE> 43
38
(d) No later than the earlier of (i) 90 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on December
31, 2000, and (ii) the date on which the financial statements with respect to
such period are delivered pursuant to Section 5.04(a), the Borrower shall prepay
outstanding Term Loans and/or permanently reduce the Revolving Credit
Commitments in accordance with Section 2.13(f) in an aggregate principal amount
equal to 50% of Excess Cash Flow for the fiscal year then ended; provided,
however, that such prepayment and/or reduction shall only apply if the
Consolidated Leverage Ratio at the end of such year shall have been greater than
5.00 to 1.00.
(e) In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan
Party (other than Indebtedness for money borrowed permitted pursuant to Section
6.01), the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the receipt of such Net
Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal to
100% of such Net Cash Proceeds to prepay outstanding Term Loans and/or
permanently reduce the Revolving Credit Commitments in accordance with Section
2.13(f); provided, however, that such prepayment and/or reduction shall only
apply if the Consolidated Leverage Ratio as of the date of such issuance or
disposition is greater than 5.00 to 1.00.
(f) Amounts required to be used to prepay Term Loans and/or permanently
reduce the Revolving Credit Commitments under this Agreement shall (i) be
applied pro rata against the remaining scheduled installments of principal due
in respect of the Term Loans under Section 2.11(a) until all such principal
shall have been paid in full and (ii) thereafter, be applied to permanently
reduce the Revolving Credit Commitments and, if necessary, prepay Revolving
Loans and/or cash collateralize Letters of Credit to the extent the L/C Exposure
would exceed the Total Revolving Credit Commitment after giving effect to any
such reduction.
(g) The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment and/or reduction required under this Section 2.13, (i) a
certificate signed by a Financial Officer of the Borrower setting forth in
reasonable detail the calculation of the amount of such prepayment and/or
reduction and (ii) to the extent practicable, at least three days prior written
notice of such prepayment and/or reduction. Each notice of prepayment and/or
reduction shall specify the date therefor, the Type of each Loan, if any, being
prepaid and the principal amount of each Loan, if any, (or portion thereof) to
be prepaid. All prepayments of Borrowings under this Section 2.13 shall be
subject to Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.14. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision of this Agreement, if any Change in Law
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement
<PAGE> 44
39
against assets of, deposits with or for the account of or credit extended by any
Lender or such Issuing Bank (except any such reserve requirement which is
reflected in the Adjusted LIBO Rate) or shall impose on such Lender or such
Issuing Bank or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein, and the result of any of the foregoing shall be to
increase the cost to such Lender or such Issuing Bank of making or maintaining
any Eurodollar Loan or increase the cost to any Lender of issuing or maintaining
any Letter of Credit or purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or such Issuing Bank to be material, then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, upon
demand such additional amount or amounts as will compensate such Lender or
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or Issuing Bank shall have determined that any Change
in Law regarding capital adequacy has or would have the effect of reducing the
rate of return on such Lender's or Issuing Bank's capital or on the capital of
such Lender's or Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made or participations in Letters of Credit
purchased by such Lender pursuant hereto or the Letters of Credit issued by such
Issuing Bank pursuant hereto to a level below that which such Lender or Issuing
Bank or such Lender's or Issuing Bank's holding company could have achieved but
for such Change in Law (taking into consideration such Lender's or Issuing
Bank's policies and the policies of such Lender's or Issuing Bank's holding
company with respect to capital adequacy) by an amount deemed by such Lender or
Issuing Bank to be material, then from time to time the Borrower shall pay to
such Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or Issuing Bank or such Lender's or
Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as applicable, as specified in paragraph (a) or (b) above shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or Issuing Bank the amount shown as due on any
such certificate delivered by it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or Issuing Bank's right to demand such compensation; provided that
the Borrower shall not be under any obligation to compensate any Lender or
Issuing Bank under paragraph (a) or (b) above with respect to increased costs or
reductions with respect to any period prior to the date that is 120 days prior
to such request if such Lender or Issuing Bank knew or could reasonably have
been expected to know of the circumstances giving rise to such increased costs
or reductions and of the fact that such circumstances would result in a claim
for increased compensation
<PAGE> 45
40
by reason of such increased costs or reductions; provided further that the
foregoing limitation shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change in Law within such
120-day period. The protection of this Section shall be available to each Lender
and Issuing Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed.
SECTION 2.15. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision of this Agreement, if any Change in Law shall make it unlawful for any
Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such or to convert a Eurodollar Loan into an
ABR Loan, as the case may be), unless such declaration shall be
subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. INDEMNITY. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii)
<PAGE> 46
41
the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the
Interest Period with respect to any Eurodollar Loan, in each case other than on
the last day of the Interest Period in effect therefor, or (iii) any Eurodollar
Loan to be made by such Lender (including any Eurodollar Loan to be made
pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. PRO RATA TREATMENT. Except as required under Section
2.15, each Borrowing of any Class, each payment or prepayment of principal of
any Borrowing of any Class, each payment of interest on the Loans of any Class,
each payment of the Commitment Fees, each reduction of the Commitments and each
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective Commitments of such Class (or, if such Commitments shall have
expired or been terminated, or with respect to payments of principal of and
interest on the Term Loans, in accordance with the respective principal amounts
of their outstanding Loans of such Class). Each Lender agrees that in computing
such Lender's portion of any Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Lender's percentage of such Borrowing
to the next higher or lower whole dollar amount.
SECTION 2.18. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Loans and participations in L/C Disbursements shall be
proportionately less than the unpaid principal portion of the Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Loans and L/C Exposure of such other Lender, so that the aggregate unpaid
principal amount of the Loans and L/C Exposure and participations in Loans and
L/C Exposure held by each Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Loans and
<PAGE> 47
42
L/C Exposure then outstanding as the principal amount of its Loans and L/C
Exposure prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all Loans and L/C Exposure
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower and
Citadel expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Loan or L/C Disbursement deemed to have been
so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower and
Citadel to such Lender by reason thereof as fully as if such Lender had made a
Loan directly to the Borrower in the amount of such participation.
SECTION 2.19. PAYMENTS. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 12:00 (noon), New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than Issuing Bank Fees, which shall be paid directly to the applicable
Issuing Bank,) shall be made to the Administrative Agent at its offices at
Eleven Madison Avenue, New York, New York 10010.
(b) Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder or under any other Loan Document shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.20. TAXES. (a) Any and all payments by or on account of any
obligation of the Borrower or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any Loan
Party shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Administrative Agent or such Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or such Loan Party shall make such
deductions and (iii) the Borrower or such Loan Party shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
<PAGE> 48
43
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower or any Loan Party hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by a Lender,
or by the Administrative Agent on its behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower or any other Loan Party to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.21. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES;
DUTY TO MITIGATE. (a) In the event (i) any Lender or Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower
is required to pay any additional amount to any Lender or Issuing Bank or any
Governmental Authority on account of any Lender or Issuing Bank pursuant to
Section 2.20, the Borrower may, at its sole expense and effort (including with
respect to the processing and recordation fee referred to in Section 9.04(b)),
upon notice to such Lender or Issuing Bank and the Administrative Agent, require
such Lender or Issuing Bank to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
of its interests, rights and obligations under this Agreement to an assignee
that shall assume such assigned obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (x) such assignment
shall not conflict with any law, rule or regulation or order of any court or
other Governmental Authority having jurisdiction, (y) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a
Revolving Credit Commitment is being assigned, of the Issuing Banks), which
consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender or Issuing Bank in
<PAGE> 49
44
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender or Issuing Bank, respectively, plus all Fees and
other amounts accrued for the account of such Lender or Issuing Bank hereunder
(including any amounts under Section 2.14 and Section 2.16); provided further
that, if prior to any such transfer and assignment the circumstances or event
that resulted in such Lender's or Issuing Bank's claim for compensation under
Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to
Section 2.20, as the case may be, cease to cause such Lender or Issuing Bank to
suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.20, as
the case may be (including as a result of any action taken by such Lender or
Issuing Bank pursuant to paragraph (b) below), or if such Lender or Issuing Bank
shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event, as the case may be, then such Lender or
Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder.
(b) If (i) any Lender or Issuing Bank shall request compensation under
Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in
Section 2.15 or (iii) the Borrower is required to pay any additional amount to
any Lender or Issuing Bank or any Governmental Authority on account of any
Lender or Issuing Bank, pursuant to Section 2.20, then such Lender or Issuing
Bank shall use reasonable efforts (which shall not require such Lender or
Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or
otherwise take any action inconsistent with its internal policies or legal or
regulatory restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would
reduce amounts payable pursuant to Section 2.20, as the case may be, in the
future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender or Issuing Bank in connection with any such filing or
assignment, delegation and transfer.
SECTION 2.22. LETTERS OF CREDIT. (a) General. The Borrower may request
the issuance of a Letter of Credit for its own account, in a form reasonably
acceptable to the Administrative Agent and the applicable Issuing Bank, at any
time and from time to time while the Revolving Credit Commitments remain in
effect. This Section shall not be construed to impose an obligation upon any
Issuing Bank to issue any Letter of Credit that is inconsistent with the terms
and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or fax to the applicable Issuing Bank and
<PAGE> 50
45
the Administrative Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of a
Letter of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
below), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare
such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that,
after giving effect to such issuance, amendment, renewal or extension (i) the
L/C Exposure shall not exceed $75,000,000 prior to and including March 31, 2000,
or exceed $50,000,000 thereafter and (ii) the Aggregate Revolving Credit
Exposure shall not exceed the Total Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Maturity Date, unless such Letter of Credit expires by its terms on an earlier
date.
(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the applicable Issuing Bank or the Lenders,
the applicable Issuing Bank hereby grants to each Revolving Credit Lender, and
each Revolving Credit Lender hereby acquires from such Issuing Bank, a
participation in such Letter of Credit equal to such Revolving Credit Lender's
Pro Rata Percentage of the aggregate amount available to be drawn under such
Letter of Credit, effective upon the issuance of such Letter of Credit. In
addition, the applicable Issuing Bank hereby grants to each Revolving Credit
Lender, and each Revolving Credit Lender hereby acquires from such Issuing Bank,
a participation in each Existing Letter of Credit equal to such Revolving Credit
Lender's Pro Rata Percentage of the aggregate amount available to be drawn under
such Existing Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Credit Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the applicable
Issuing Bank, such Lender's Pro Rata Percentage of each L/C Disbursement made by
such Issuing Bank and not reimbursed by the Borrower (or, if applicable, another
party pursuant to its obligations under any other Loan Document) forthwith on
the date due as provided in Section 2.02(f). Each Revolving Credit Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including the
occurrence and continuance of a Default or an Event of Default, and that each
such payment shall be made without any offset, abatement, withholding or
reduction whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay to the Administrative
Agent an amount equal to such L/C Disbursement not later than two hours after
the Borrower shall have received notice from such Issuing Bank that payment of
such draft will be made, or, if the Borrower
<PAGE> 51
46
shall have received such notice later than 10:00 a.m., New York City time, on
any Business Day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other Affiliate thereof
or any other person may at any time have against the beneficiary under
any Letter of Credit, any Issuing Bank, the Administrative Agent or any
Lender or any other person, whether in connection with this Agreement,
any other Loan Document or any other related or unrelated agreement or
transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the applicable Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
any Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or willful misconduct of any Issuing Bank. However, the
foregoing shall not be construed to excuse any Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Issuing Bank's gross negligence or willful misconduct whether in
determining whether drafts and
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47
other documents presented under a Letter of Credit comply with the terms thereof
or otherwise; it is understood that each Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) an Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute willful
misconduct or gross negligence of an Issuing Bank.
(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such Issuing Bank shall
as promptly as possible give telephonic notification, confirmed by fax, to the
Administrative Agent and the Borrower of such demand for payment and whether
such Issuing Bank has made or will make an L/C Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement. The Administrative
Agent shall promptly give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(f), at the rate per annum that would
apply to such amount if such amount were an ABR Revolving Loan.
(i) Resignation or Removal of an Issuing Bank. An Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as an Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any
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48
appointment as an Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Administrative Agent, and, from and after the effective
date of such agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the resignation or removal of an Issuing Bank
hereunder, the retiring Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement and the other Loan Documents with respect to Letters of Credit issued
by it prior to such resignation or removal, but shall not be required to issue
additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) thereof and of the amount
to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C
Exposure as of such date. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Issuing Banks for L/C
Disbursements for which they have not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the L/C
Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit), be applied
to satisfy the Obligations. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
(k) Additional Issuing Banks. The Borrower may, at any time and from
time to time with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and such Lender, designate one or more additional
Lenders to act as an issuing bank under the terms of the Agreement. Any Lender
designated as an issuing bank pursuant to this paragraph (k) shall be deemed to
be an "Issuing Bank" (in addition to being a Lender)
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in respect of Letters of Credit issued or to be issued by such Lender, and, with
respect to such Letters of Credit, such term shall thereafter apply to the other
Issuing Banks and such Lender.
SECTION 2.23. INCREASE IN REVOLVING CREDIT COMMITMENTS. (a) The
Borrower may, by written notice to the Administrative Agent from time to time,
request that the Total Revolving Credit Commitment be increased by an amount not
to exceed the Incremental Revolving Facility Amount at such time. Upon the
approval of such request by the Administrative Agent, the Administrative Agent
shall deliver a copy thereof to each Revolving Credit Lender. Such notice shall
set forth the amount of the requested increase in the Total Revolving Credit
Commitment (which shall be in minimum increments of $5,000,000 and a minimum
amount of $20,000,000 or equal to the remaining Incremental Revolving Facility
Amount) and the date on which such increase is requested to become effective
(which shall be not less than 10 Business Days nor more than 60 days after the
date of such notice and which, in any event, must be on or prior to the
Incremental Facility Cutoff Date), and shall offer each Revolving Credit Lender
the opportunity to increase its Revolving Credit Commitment by its Pro Rata
Percentage of the proposed increased amount. Each Revolving Credit Lender shall,
by notice to the Borrower and the Administrative Agent given not more than 10
days after the date of the Administrative Agent's notice, either agree to
increase its Revolving Credit Commitment by all or a portion of the offered
amount (each Revolving Credit Lender so agreeing being an "Increasing Revolving
Lender") or decline to increase its Revolving Credit Commitment (and any
Revolving Credit Lender that does not deliver such a notice within such period
of 10 days shall be deemed to have declined to increase its Revolving Credit
Commitment) (each Revolving Credit Lender so declining or being deemed to have
declined being a "Non-Increasing Revolving Lender". In the event that, on the
10th day after the Administrative Agent shall have delivered a notice pursuant
to the second sentence of this paragraph, the Revolving Credit Lenders shall
have agreed pursuant to the preceding sentence to increase their Revolving
Credit Commitments by an aggregate amount less than the increase in the Total
Revolving Credit Commitment requested by the Borrower, the Borrower may arrange
for one or more banks or other financial institutions (any such bank or other
financial institution referred to in this clause (a) being called an "Augmenting
Revolving Lender", which may include any Revolving Credit Lender, to extend
Revolving Credit Commitments or increase their existing Revolving Credit
Commitments in an aggregate amount equal to the unsubscribed amount; provided
that each Augmenting Revolving Lender, if not already a Revolving Credit Lender
hereunder, shall be subject to the approval of the Administrative Agent and the
Issuing Banks (which approvals shall not be unreasonably withheld) and the
Borrower and each Augmenting Revolving Lender shall execute all such
documentation as the Administrative Agent shall reasonably specify to evidence
its Revolving Credit Commitment and/or its status as a Revolving Credit Lender
hereunder. Any increase in the Total Revolving Credit Commitment may be made in
an amount which is less than the increase requested by the Borrower if the
Borrower is unable to arrange for, or chooses not to arrange for, Augmenting
Revolving Lenders.
(b) On the effective date (the "Increase Effective Date" of any
increase in the Total Revolving Credit Commitment pursuant to this Section 2.23
(the "Commitment Increase",
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(i) the aggregate principal amount of the Revolving Loans outstanding (the
"Initial Loans" immediately prior to giving effect to the Commitment Increase on
the Increase Effective Date shall be deemed to be paid, (ii) each Increasing
Revolving Lender and each Augmenting Revolving Lender that shall have been a
Revolving Credit Lender prior to the Commitment Increase shall pay to the
Administrative Agent in same day funds an amount equal to the difference between
(A) the product of (1) such Revolving Credit Lender's Pro Rata Percentage
(calculated after giving effect to the Commitment Increase) multiplied by (2)
the amount of the Subsequent Revolving Borrowings (as hereinafter defined) and
(B) the product of (1) such Revolving Credit Lender's Pro Rata Percentage
(calculated without giving effect to the Commitment Increase) multiplied by (2)
the amount of the Initial Loans, (iii) each Augmenting Revolving Lender that
shall not have been a Revolving Credit Lender prior to the Commitment Increase
shall pay to Administrative Agent in same day funds an amount equal to the
product of (1) such Augmenting Revolving Lender's Pro Rata Percentage
(calculated after giving effect to the Commitment Increase) multiplied by (2)
the amount of the Subsequent Revolving Borrowings, (iv) after the Administrative
Agent receives the funds specified in clauses (ii) and (iii) above, the
Administrative Agent shall pay to each Non-Increasing Revolving Lender the
portion of such funds that is equal to the difference between (A) the product of
(1) such Non-Increasing Revolving Lender's Pro Rata Percentage (calculated
without giving effect to the Commitment Increase) multiplied by (2) the amount
of the Initial Loans, and (B) the product of (1) such Non-Increasing Revolving
Lender's Pro Rata Percentage (calculated after giving effect to the Commitment
Increase) multiplied by (2) the amount of the Subsequent Revolving Borrowings,
(v) after the effectiveness of the Commitment Increase, the Borrower shall be
deemed to have made new Revolving Credit Borrowings (the "Subsequent Revolving
Borrowings" in an aggregate principal amount equal to the aggregate principal
amount of the Initial Loans and of the Types and for the Interest Periods
specified in a Borrowing Request delivered to the Administrative Agent in
accordance with Section 2.03, (vi) each Non-Increasing Revolving Lender, each
Increasing Revolving Lender and each Augmenting Revolving Lender shall be deemed
to hold its Pro Rata Percentage of each Subsequent Revolving Borrowing (each
calculated after giving effect to the Commitment Increase) and (vii) the
Borrower shall pay each Increasing Revolving Lender and each Non-Increasing
Revolving Lender any and all accrued but unpaid interest on the Initial Loans.
The deemed payments made pursuant to clause (i) above in respect of each
Eurodollar Loan shall be subject to indemnification by the Borrower pursuant to
the provisions of Section 2.16 if the Increase Effective Date occurs other than
on the last day of the Interest Period relating thereto.
(c) Notwithstanding the foregoing, no increase in the Total Revolving
Credit Commitment (or in the Revolving Credit Commitment of any Revolving Credit
Lender) or addition of a new Revolving Credit Lender shall become effective
under this Section 2.23 unless, (i) on the date of such increase, the conditions
set forth in paragraphs (b) and (c) of Section 4.01 shall be satisfied and the
Administrative Agent shall have received a certificate to that effect dated such
date and executed by a Financial Officer of the Borrower, and (ii) the
Administrative Agent shall have received (with sufficient copies for each of the
Revolving Credit Lenders) documents consistent with those delivered on the
Closing Date
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under clauses (a) and (c) of Section 4.02 as to the corporate power and
authority of the Borrower to borrow hereunder after giving effect to such
increase.
SECTION 2.24. INCREASE IN TERM LOAN COMMITMENTS. (a) The Borrower may,
by written notice to the Administrative Agent, request Incremental Term Loan
Commitments in an amount not to exceed the Incremental Term Loan Amount. Upon
the approval of such request by the Administrative Agent, the Administrative
Agent shall deliver a copy thereof to each Term Lender. Such notice shall set
forth the amount of the Incremental Term Loan Commitments being requested (which
shall be in minimum increments of $5,000,000 and a minimum amount of $20,000,000
or equal to the remaining Incremental Term Loan Amount) and the date on which
such Incremental Term Loan Commitments are requested to become effective (which
shall not be less than 10 Business Days nor more than 60 days after the date of
such notice), and shall offer each Term Lender the opportunity to make an
Incremental Term Loan Commitment in an amount equal to its Pro Rata Term
Percentage (without giving effect to the proposed Incremental Term Loan
Commitments) of the proposed Incremental Term Loan Commitments. Each Term Lender
shall, by notice to the Borrower and the Administrative Agent given not more
than 10 days after the date of the Administrative Agent's notice, either agree
to accept an Incremental Term Loan Commitment in an amount equal to all or a
portion of the offered amount or decline to accept an Incremental Term Loan
Commitment (and any Lender that does not deliver such a notice within such
period of 10 days shall be deemed to have declined to increase its Term Loan
Commitment). In the event that, on the 10th day after the Administrative Agent
shall have delivered a notice pursuant to the second sentence of this paragraph,
the Term Lenders shall have agreed pursuant to the preceding sentence to accept
Incremental Term Loan Commitments by an aggregate amount less than the
Incremental Term Loan Commitment requested by the Borrower, the Borrower may
arrange for one or more banks or other financial institutions (any such bank or
other financial institution referred to in this clause (a) being called an
"Augmenting Term Lender", which may include any Term Lender, to extend
Incremental Term Loan Commitments in an aggregate amount equal to the
unsubscribed amount; provided that each Augmenting Term Lender, if not already a
Term Lender hereunder, shall be subject to the approval of the Administrative
Agent (which approval shall not be unreasonably withheld). Any Incremental Term
Loan Commitment may be made in an amount which is less than the increase
requested by the Borrower if the Borrower is unable to arrange for, or chooses
not to arrange for, Augmenting Term Lenders.
(b) The Borrower and each Incremental Term Lender shall execute and
deliver to the Administrative Agent an Incremental Term Loan Assumption
Agreement and such other documentation as the Administrative Agent shall
reasonably specify to evidence its Incremental Term Loan Commitment and/or its
status as a Term Lender hereunder. The Administrative Agent shall promptly
notify each Lender as to the effectiveness of each Incremental Term Loan
Assumption Agreement. Each of the parties hereto hereby agrees that, upon the
effectiveness of any Incremental Term Loan Assumption Agreement, this Agreement
shall be deemed amended to the extent (but only to the extent) necessary to
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reflect the existence and terms of the Incremental Term Loan Commitment
evidenced thereby.
(c) Notwithstanding the foregoing, no Incremental Term Loan Commitment
shall become effective under this Section 2.24 unless (i) on the date of such
effectiveness, the conditions set forth in paragraphs (b) and (c) of Section
4.01 shall be satisfied and the Administrative Agent shall have received a
certificate to that effect dated such date and executed by a Financial Officer
of the Borrower, and (ii) the Administrative Agent shall have received (with
sufficient copies for each of the Incremental Term Lenders) documents consistent
with those delivered on the Closing Date under clauses (a) and (c) of Section
4.02 as to the corporate power and authority of the Borrower to borrow hereunder
after giving effect to such Incremental Term Loan Commitment.
(d) Each of the parties hereto hereby agrees that the Administrative
Agent may take any and all action as may be reasonably necessary to ensure that
all Incremental Term Loans, when originally made, are included in each Borrowing
of outstanding Term Loans on a pro rata basis. This may be accomplished at the
discretion of the Administrative Agent by requiring each outstanding Eurodollar
Term Borrowing to be converted into an ABR Term Borrowing on the date of each
Incremental Term Loan, or by allocating a portion of each Incremental Term Loan
to each outstanding Eurodollar Term Borrowing on a pro rata basis, even though
as a result thereof such Incremental Term Loan may effectively have a shorter
Interest Period than the Term Loans included in the Borrowing of which they are
a part (and notwithstanding any other provision of this Agreement that would
prohibit such an initial Interest Period). Any conversion of Eurodollar Term
Loans to ABR Term Loans required by the preceding sentence shall be subject to
Section 2.16. If any Incremental Term Loan is to be allocated to an existing
Interest Period for a Eurodollar Term Borrowing then, subject to Section 2.07,
the interest rate applicable to such Incremental Term Loan for the remainder of
such Interest Period shall equal the Adjusted LIBO Rate for a period
approximately equal to the remainder of such Interest Period (as determined by
the Administrative Agent two Business Days before the date such Incremental Term
Loan is made) plus the Applicable Percentage.
SECTION 2.25. EXTENSION OF MATURITY DATE. If on March 31, 2007, (a) the
conditions set forth in paragraphs (b) and (c) of Section 4.01 shall be
satisfied and the Administrative Agent shall have received a certificate to that
effect dated such date and executed by a Financial Officer of the Borrower, and
(b) the 1997 Senior Subordinated Notes shall have been refinanced and shall be
due no earlier than January 1, 2008, then the Maturity Date shall automatically
be extended to December 31, 2007. The Administrative Agent shall promptly notify
each Lender of any such extensions of the Maturity Date and will deliver to each
Lender a copy of the certificate referred to in the preceding sentence.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of Citadel and the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent, the Issuing Banks and each of the
Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of Citadel, the Borrower and
each of the Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect and (d) has the
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance by
each Loan Party of the Acquisition Agreements and each of the Loan Documents and
the consummation of the transactions contemplated by the Acquisition Agreements
and the Loan Documents (including, in the case of the Borrower, the borrowings
hereunder) (collectively, the "transactions" (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Citadel, the Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which Citadel, the Borrower or any Subsidiary is a party or by
which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Citadel, the Borrower or any
Subsidiary (other than any Lien created hereunder or under the Security
Documents).
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by Citadel and the Borrower and constitutes, and each other Loan
Document when executed and delivered by each Loan Party thereto will constitute,
a legal, valid and binding obligation of such Loan Party enforceable against
such Loan Party in accordance with its terms except as such enforceability may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization and
other similar laws relating to or affecting creditors' rights generally and
general equitable principles.
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SECTION 3.04. GOVERNMENTAL APPROVALS. Except as set forth on Schedule
3.04, no action, consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be required in connection
with the Transactions, except for (a) the filing of Uniform Commercial Code
financing statements and filings with the United States Patent and Trademark
Office and the United States Copyright Office, (b) recordation of the Mortgages
and (c) such as have been made or obtained and are in full force and effect.
SECTION 3.05. FINANCIAL STATEMENTS. (a) The Borrower has delivered to
the Lenders its consolidated balance sheets and statements of income,
stockholder's equity and cash flows (i) as of and for the fiscal year ended
December 31, 1998, audited by and accompanied by the opinion of KPMG Peat
Marwick, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended September 30, 1999, certified
by its chief financial officer. Such financial statements present fairly in all
material respects the financial condition and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the dates thereof. Such financial statements were prepared in
accordance with GAAP.
(b) The Borrower has delivered to the Lenders its unaudited pro forma
consolidated balance sheet as of September 30, 1999, prepared giving effect to
the Caribou Acquisition, the BPH Acquisition, the Liggett Acquisition and the
Borrowings contemplated in connection with such acquisitions, as if they had
occurred on such date. Such pro forma balance sheet has been prepared in good
faith by the Borrower based on the assumptions used to prepare the pro forma
financial information contained in the Confidential Information Memorandum
(which assumptions are believed in good faith by the Borrower on the Closing
Date to be reasonable), is based on the best information available to the
Borrower as of the Closing Date, accurately reflects all adjustments required to
be made to give effect to the Caribou Acquisition, the BPH Acquisition, the
Liggett Acquisition and the Borrowings contemplated in connection with such
acquisitions, and presents fairly in all material respects on a pro forma basis
the estimated consolidated financial position of the Borrower and its
consolidated Subsidiaries as of such date, assuming that the Caribou
Acquisition, the BPH Acquisition, the Liggett Acquisition and the Borrowings
contemplated in connection with such acquisitions, had actually occurred at such
date.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, or material agreements of Citadel, the Borrower and the
Subsidiaries, taken as a whole, since December 31, 1998.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each of
Citadel, the Borrower and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
all Mortgaged Properties), except
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for minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties and assets for
their intended purposes. All such material properties and assets are free and
clear of Liens, other than Liens expressly permitted by Section 6.02.
(b) Each of Citadel, the Borrower and the Subsidiaries has complied in
all material respects with all obligations under all material leases to which it
is a party and all such leases are in full force and effect. Each of Citadel,
the Borrower and the Subsidiaries enjoys peaceful and undisturbed possession
under all such material leases.
(c) Except as set forth on Schedule 3.07(c), neither Citadel nor the
Borrower has received any notice of, nor has any knowledge of, any pending or
contemplated condemnation proceeding affecting the Mortgaged Properties or any
sale or disposition thereof in lieu of condemnation.
(d) None of Citadel, the Borrower or any of the Subsidiaries is
obligated under any right of first refusal, option or other contractual right to
sell, assign or otherwise dispose of any Mortgaged Properties or any interest
therein.
SECTION 3.08. SUBSIDIARIES. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of Citadel
or the Borrower therein. The shares of capital stock or other ownership
interests so indicated on Schedule 3.08 are fully paid and non-assessable and
are owned by Citadel or the Borrower, directly or indirectly, free and clear of
all Liens (other than Liens created under the Security Documents).
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of Citadel or the Borrower, threatened against or affecting Citadel or
the Borrower or any Subsidiary or any business, property or rights of any such
person (i) that involve any Loan Document or the Transactions or (ii) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(b) The Borrower has duly and timely filed all reports and other
filings which are required to be filed under the Communications Act or any other
applicable law, rule or regulation of any Governmental Authority, the non-filing
of which could reasonably be expected to have a Material Adverse Effect. All
information provided by or on behalf of the Borrower in any material filing with
the FCC was, at the time of filing, true, complete and correct in all material
respects when made, and the FCC has been notified of any substantial or
significant changes in such information as may be required in accordance with
applicable laws, rules and regulations.
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(c) None of Citadel, the Borrower or any of the Subsidiaries or any of
their respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including the Communications
Act), or is in default with respect to any judgment, writ, injunction, decree or
order of any Governmental Authority, where such violation or default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. AGREEMENTS AND LICENSES. (a) None of Citadel, the
Borrower or any of the Subsidiaries is a party to any agreement or instrument or
subject to any corporate restriction that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(b) Schedule 3.10(b) sets forth as of the Closing Date all FCC Licenses
which have been issued or assigned to CLI and which are being used by the
Borrower, and all such FCC Licenses are in full force and effect, except where
the failure to be so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(c) None of Citadel, the Borrower or any of the Subsidiaries has
breached, or is in default in any manner under, any provision of any indenture
or other agreement or instrument evidencing Indebtedness, or any other material
agreement or instrument or License (including under any LMA Agreement, JS
Agreement, Operating Agreement or FCC License, where such breach or default
could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) None of Citadel, the
Borrower or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation T, U
or X.
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. None of Citadel, the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. USE OF PROCEEDS. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. TAX RETURNS. Each of Citadel, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns or materials
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required to have been filed by it and has paid or caused to be paid all taxes
due and payable by it and all assessments received by it, except taxes that are
being contested in good faith by appropriate proceedings and for which Citadel,
the Borrower or such Subsidiary, as applicable, shall have set aside on its
books adequate reserves.
SECTION 3.15. NO MATERIAL MISSTATEMENTS. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Citadel or the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any of its ERISA Affiliates. As of the Restatement Date, the Borrower and each
of its ERISA Affiliates do not have any Plans or Multiemployer Plans that are
"defined benefit plans" within the meaning of ERISA.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 3.17:
(a) The properties owned, leased or operated by the Borrower and the
Subsidiaries (the "properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last six years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect,
provided that the representations in this paragraph (b) shall be limited to the
Borrower's knowledge with respect to the time periods during the last six years
during which the Borrower did not own the Properties;
(c) There have been no Releases or threatened Releases at, from, under
or, to the Borrower's knowledge, proximate to the Properties or otherwise in
connection with the
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operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect;
(d) None of Citadel, the Borrower or any of the Subsidiaries has
received any notice of an Environmental Claim in connection with the Properties
or the properties formerly owned, leased or operated by the Borrower and the
Subsidiaries (the "Former Properties") or the current or former operations of
the Borrower or the Subsidiaries or with regard to any person whose liabilities
for environmental matters Citadel, the Borrower or the Subsidiaries has retained
or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, nor do Citadel, the Borrower or the Subsidiaries have
reason to believe that any such notice will be received or is being threatened;
and
(e) Hazardous Materials have not been transported from the Properties
or Former Properties, nor have Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of the Properties or Former Properties
in a manner that could give rise to liability under any Environmental Law, nor
have the Borrower or the Subsidiaries retained or assumed any liability,
contractually, by operation of law or otherwise, with respect to the generation,
treatment, storage or disposal of Hazardous Materials, which transportation,
generation, treatment, storage or disposal, or retained or assumed liabilities,
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.18. INSURANCE. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the Restatement Date. As of each such date,
such insurance is in full force and effect and all premiums have been duly paid.
The Borrower and its Subsidiaries have insurance in such amounts and covering
such risks and liabilities as are in accordance with normal industry practice.
SECTION 3.19. SECURITY DOCUMENTS. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement), in
each case prior and superior
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in right to any other person, other than with respect to Liens expressly
permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof).
(d) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Borrower's right, title and interest in and to
the Mortgaged Properties thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Borrower in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other person, other
than with respect to the rights of persons pursuant to Liens expressly permitted
by Section 6.02.
SECTION 3.20. LOCATION OF REAL PROPERTY AND LEASED PREMISES. (a)
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries and the addresses thereof.
The Borrower and the Subsidiaries own in fee all the real property set forth on
Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the Closing
Date all real property material to the business of the Borrower and leased by
the Borrower or the Subsidiaries and the addresses thereof. The Borrower and the
Subsidiaries have valid leases in all the real property set forth on Schedule
3.20(b).
SECTION 3.21. LABOR MATTERS. As of the Restatement Date, there are no
strikes, lockouts or slowdowns against Citadel, the Borrower or any Subsidiary
pending or, to the knowledge of Citadel or the Borrower, threatened. The hours
worked by and payments made to employees of Citadel, the Borrower and the
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Citadel, the Borrower or any Subsidiary, or for which any
claim may be made against Citadel, the Borrower or any Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Citadel, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Citadel, the Borrower or any Subsidiary
is bound.
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SECTION 3.22. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Restatement Date and immediately following the
making of each Loan and after giving effect to the application of the proceeds
of each Loan, (a) the fair value of the assets of each of Citadel and the
Borrower, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each of Citadel and the Borrower will be greater than the amount
that will be required to pay the probable liability of its debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) each of Citadel and the Borrower
will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (d)
each of Citadel and the Borrower will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Restatement Date.
SECTION 3.23. YEAR 2000. There has not occurred, and the Borrower does
not expect there will occur, any material disruption in the operations or
business systems of the Borrower or the Subsidiaries resulting from the
inability of computer systems of the Borrower and the Subsidiaries or equipment
containing embedded microchips to recognize or properly process dates in or
following the year 2000.
SECTION 3.24. RANKING. The Obligations constitute "Specified Senior
Debt" under and as defined in each Indenture.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Banks
to issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. ALL CREDIT EVENTS. On the date of each Borrowing,
including on the date of each issuance, amendment, extension or renewal of a
Letter of Credit (each such event being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance,
amendment, extension or renewal of a Letter of Credit, the applicable Issuing
Bank and the Administrative Agent shall have received a notice requesting the
issuance, amendment, extension or renewal of such Letter of Credit as required
by Section 2.22(b).
(b) The representations and warranties set forth in Article III hereof
and in each other Loan Document shall be true and correct in all material
respects on and as of the date of such
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Credit Event with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an earlier
date.
(c) At the time of and immediately after such Credit Event, no Event of
Default or Default shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower and Citadel on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. FIRST CREDIT EVENT. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Banks, a favorable written opinion
of each of Eckert Seamans Cherin & Mellott, LLC, special counsel for
Citadel, the Borrower and CLI, and Lionel Sawyer & Collins, Nevada
counsel for Citadel, the Borrower and CLI, substantially to the effect
set forth in Exhibit J-1 and Exhibit J-2, respectively, (A) dated the
Closing Date, (B) addressed to the Issuing Banks, the Administrative
Agent, the Collateral Agent and the Lenders, and (C) covering such
other matters relating to the Loan Documents and the Transactions as
the Administrative Agent shall reasonably request, and Citadel, the
Borrower and CLI hereby request such counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be satisfactory to the Lenders, to the Issuing Banks
and to the Administrative Agent, in their commercially reasonable
judgment.
(c) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all
times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by the Board of Directors of such Loan
Party authorizing the execution, delivery and performance of the Loan
Documents to which such person is a party and, in the case of the
Borrower, the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect,
(C) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency
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and specimen signature of each officer executing any Loan Document or
any other document delivered in connection herewith on behalf of such
Loan Party; (iii) a certificate of another officer as to the incumbency
and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders, the Issuing Banks or the Administrative Agent
may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Borrower, confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all of the outstanding capital stock of the
Subsidiaries and all of the outstanding common stock of the Borrower
shall have been duly and validly pledged thereunder to the Collateral
Agent for the ratable benefit of the Secured Parties and certificates
representing such shares, accompanied by instruments of transfer and
stock powers endorsed in blank, shall be in the actual possession of
the Collateral Agent.
(g) The Security Agreement shall have been duly executed by
the Loan Parties party thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest
in and lien on the Collateral (subject to any Lien expressly permitted
by Section 6.02) described in such agreement shall have been delivered
to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code filings (or equivalent filings)
made with respect to the Loan Parties in the states (or other
jurisdictions) in which the chief executive office of each such person
is located, any offices of such persons in which records have been kept
relating to accounts receivable and the other jurisdictions in which
Uniform Commercial Code filings (or equivalent filings) are to be made
pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such search,
and accompanied by evidence satisfactory to
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the Collateral Agent that the Liens indicated in any such financing
statement (or similar document) would be permitted under Section 6.02
or have been released.
(i) The Collateral Agent shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and
duly executed by a Responsible Officer of the Borrower.
(j)(i) Each of the Mortgages and the other Security Documents,
in form and substance satisfactory to the Lenders, relating to each of
the Mortgaged Properties shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full
force and effect, (ii) each of such Mortgaged Properties shall not be
subject to any Lien other than those permitted under Section 6.02,
(iii) each of such Security Documents shall have been filed and
recorded in the recording office as specified on Schedule 3.19(d) (or a
lender's title insurance policy, in form and substance acceptable to
the Collateral Agent, insuring such Security Document as a first lien
on such Mortgaged Property (subject to any Lien permitted by Section
6.02) shall have been received by the Collateral Agent) and, in
connection therewith, the Collateral Agent shall have received evidence
satisfactory to it of each such filing and recordation and (iv) the
Collateral Agent shall have received such other documents, including a
policy or policies of title insurance issued by a nationally recognized
title insurance company, together with such endorsements, coinsurance
and reinsurance as may be requested by the Collateral Agent and the
Lenders, insuring the Mortgages as valid first liens on the Mortgaged
Properties, free of Liens other than those permitted under Section
6.02, together with such surveys, abstracts, appraisals and legal
opinions required to be furnished pursuant to the terms of the
Mortgages or as reasonably requested by the Collateral Agent or the
Lenders.
(k) Each of the Parent Guarantee Agreement and the Subsidiary
Guarantee Agreement shall have been duly executed by the parties
thereto, shall have been delivered to the Collateral Agent and shall be
in full force and effect.
(l) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name
the Collateral Agent as additional insured, in form and substance
satisfactory to the Administrative Agent, provided, however, that with
respect to any flood insurance required by Section 5.02, the Borrower
shall have 30 days following the Closing Date to provide copies of such
insurance policies.
(m) The Lenders shall be satisfied as to the amount and nature
of any environmental and employee health and safety exposures to which
the Borrower and the Subsidiaries may be subject and the plans of the
Borrower with respect thereto.
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(n) All principal, premium, if any, interest, fees and other
amounts due and owing under the Existing Loan Agreement shall have been
paid in full, the commitments thereunder terminated and all guarantees
and security in support thereof released, and the Agent shall have
received reasonably satisfactory evidence thereof, and after giving
effect to the Transactions and the other transactions contemplated
hereby, the Borrower and the Subsidiaries shall have outstanding no
Indebtedness or preferred stock other than (i) the Loans and Letters of
Credit hereunder and (ii) the Indebtedness listed on Schedule 6.01.
(o) All requisite Governmental Authorities and third parties
shall have approved or consented to the Transactions and the other
transactions contemplated hereby to the extent required, in each case
to the extent failure to obtain such consent or approval will or is
reasonably likely to have a Material Adverse Effect and there shall be
no governmental or judicial action, actual or threatened, that has or
would have, singly or in the aggregate, a reasonable likelihood of
restraining, preventing or imposing burdensome conditions on the
Transactions or the other transactions contemplated hereby.
(p) The Administrative Agent shall have received a copy of
each Acquisition Agreement, including all amendments thereto, which
agreements shall be in form and substance reasonably satisfactory to
the Administrative Agent.
(q) The Administrative Agent shall have received the financial
statements required by Section 3.05.
ARTICLE V
AFFIRMATIVE COVENANTS
Each of Citadel and the Borrower covenants and agrees with each Lender
that so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all Fees
and all other expenses or amounts payable under any Loan Document shall have
been paid in full and all Letters of Credit have been canceled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, each of Citadel and the
Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations,
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patents, copyrights, trademarks and trade names material to the conduct of its
business; maintain and operate such business in substantially the manner in
which it is presently conducted and operated; comply in all material respects
with all applicable laws, rules, regulations and decrees and orders of any
Governmental Authority, whether now in effect or hereafter enacted; and at all
times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition
(normal wear and tear excepted) and from time to time make, or cause to be made,
all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.02. INSURANCE. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
(b) Cause all such policies covering any Collateral to be endorsed or
otherwise amended to include a "standard" or "New York" lender's loss payable
endorsement, in form and substance satisfactory to the Administrative Agent and
the Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent or the Collateral Agent of the occurrence of an Event
of Default, the insurance carrier shall pay all proceeds otherwise payable to
the Borrower or the Loan Parties under such policies directly to the Collateral
Agent; cause all such policies to provide that neither the Borrower, the
Administrative Agent, the Collateral Agent nor any other party shall be a
coinsurer thereunder and to contain a "Replacement Cost Endorsement", without
any deduction for depreciation, and such other provisions as the Administrative
Agent or the Collateral Agent may reasonably require from time to time to
protect their interests; deliver original or certified copies of all such
policies to the Collateral Agent; cause each such policy to provide that it
shall not be canceled, modified or not renewed (i) by reason of nonpayment of
premium upon not less than 10 days' prior written notice thereof by the insurer
to the Administrative Agent and the Collateral Agent (giving the Administrative
Agent and the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason upon not less than 30 days' prior written
notice thereof by the insurer to the Administrative Agent and the Collateral
Agent; deliver to the Administrative Agent and the Collateral Agent, prior to
the cancellation, modification or nonrenewal of any such policy of insurance, a
copy of a renewal or replacement policy (or other evidence of renewal of a
policy previously delivered to the Administrative Agent and the Collateral
Agent) together with evidence satisfactory to the Administrative Agent and the
Collateral Agent of payment of the premium therefor.
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(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time require, and otherwise comply with the National Flood Insurance Program
as set forth in the Flood Disaster Protection Act of 1973, as it may be amended
from time to time, or (ii) a "Zone 1" area, obtain earthquake insurance in such
total amount as the Administrative Agent, the Collateral Agent or the Required
Lenders may from time to time require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims that is in each case
customary with companies of similar size in the same or similar businesses,
naming the Collateral Agent as an additional insured, on forms satisfactory to
the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 5.02
is taken out by the Borrower; and promptly deliver to the Administrative Agent
and the Collateral Agent a duplicate original copy of such policy or policies.
SECTION 5.03. OBLIGATIONS AND TAXES. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of income,
stockholders' equity and cash flows showing the financial condition of
the Borrower and its consolidated Subsidiaries as of the close of such
fiscal year and the results of its operations and the operations of
such
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Subsidiaries during such year, all audited by KPMG Peat Marwick or
other independent public accountants of recognized national standing
and accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet and
related statements of income and cash flows showing the financial
condition of the Borrower and its consolidated Subsidiaries as of the
close of such fiscal quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its
Financial Officers as fairly presenting in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of the accounting firm
(in the case of paragraph (a)) or Financial Officer (in the case of
paragraph (b)) opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) (i) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (ii) setting
forth computations in detail reasonably satisfactory to the
Administrative Agent demonstrating compliance with the covenants set
forth in Sections 6.09, 6.10, and 6.11, and (iii) in the case of a
certificate delivered with the financial statements required by
paragraph (a) above, demonstrating compliance with the covenant set
forth in Section 6.08 and setting forth the Borrower's calculation of
Excess Cash Flow;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national
securities exchange, or distributed to its shareholders, as the case
may be;
(e) promptly after the receipt thereof by Citadel or the
Borrower or any of their respective subsidiaries, but in no event later
than June 30 of any year, a copy of any "management letter" received by
any such person from its certified public accountants and the
management's response thereto;
<PAGE> 73
68
(f) not later than January 1 of each year, a business plan for
such year setting forth in reasonable detail the projected operations
budget of each Broadcast Market and ISP of the Borrower for such year;
(g) each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause
(a) above, the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer of the Borrower setting forth the
information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on
the Closing Date or the date of the most recent certificate delivered
pursuant to this Section; and
(i) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
Citadel, the Borrower or any Subsidiary, or compliance with the terms
of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Furnish to the
Administrative Agent, each Issuing Bank and each Lender prompt written notice of
the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
that could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
SECTION 5.06. EMPLOYEE BENEFITS. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent as soon as possible after, and in any event within 10 days
after any Responsible Officer of the Borrower or any ERISA Affiliate knows or
has reason to know that, any ERISA Event has occurred that, alone or together
with any other ERISA Event could reasonably be expected to result in liability
of the Borrower in an aggregate amount exceeding $1,000,000 in any year, a
statement of a Financial Officer of the Borrower setting forth details as to
such ERISA Event and the action, if any, that the Borrower proposes to take with
respect thereto.
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its
<PAGE> 74
69
business and activities. Each Loan Party will, and will cause each of its
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender (in the case of any Lender, at such Lender's own cost) to
visit and inspect the financial records and the properties of Citadel, the
Borrower or any Subsidiary at reasonable times and as often as reasonably
requested and to make extracts from and copies of such financial records, and
permit any representatives designated by the Administrative Agent or any Lender
to discuss the affairs, finances and condition of Citadel, the Borrower or any
Subsidiary with the officers thereof and independent accountants therefor,
provided that reasonable notice shall be given to the applicable Loan Party
prior to any visit and inspection and such visit and inspection shall not result
in a material disruption of such Loan Party's conduct of business.
SECTION 5.08. USE OF PROCEEDS. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause all
lessees and other persons occupying its Properties to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to its
operations and Properties; obtain and renew all material Environmental Permits
necessary for its operations and Properties; and conduct any Remedial Action in
accordance with Environmental Laws; provided, however, that none of Citadel, the
Borrower or any Subsidiaries shall be required to undertake any Remedial Action
to the extent that its obligation to do so is being contested in good faith and
by proper proceedings and appropriate reserves are being maintained with respect
to such circumstances.
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS. If a Default caused
by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, at the expense
of the Borrower, an environmental site assessment report for the Properties
which are the subject of such default prepared by an environmental consulting
firm reasonably acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance or Remedial Action in connection with such Properties.
SECTION 5.11. FURTHER ASSURANCES. (a) Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. The Borrower will cause any
subsequently acquired or organized Domestic Subsidiary to execute a Subsidiary
Guarantee Agreement, Indemnity Subrogation and Contribution Agreement and each
applicable Security Document in favor of the
<PAGE> 75
70
Collateral Agent. In addition, from time to time, the Borrower will, at its cost
and expense, promptly secure the Obligations by pledging or creating, or causing
to be pledged or created, perfected security interests with respect to such of
its assets and properties as the Administrative Agent or the Required Lenders
shall designate (it being understood that it is the intent of the parties that
the Obligations shall be secured by, among other things, substantially all the
assets of the Borrower and its Subsidiaries (including real and other properties
acquired subsequent to the Closing Date)). Such security interests and Liens
will be created under the Security Documents and other security agreements,
mortgages, deeds of trust and other instruments and documents in form and
substance satisfactory to the Collateral Agent, and the Borrower shall deliver
or cause to be delivered to the Lenders all such instruments and documents
(including legal opinions, title insurance policies and lien searches) as the
Collateral Agent shall reasonably request to evidence compliance with this
Section. The Borrower agrees to provide such evidence as the Collateral Agent
shall reasonably request as to the perfection and priority status of each such
security interest and Lien.
(b) With respect to any property which becomes Mortgaged Property after
the Closing Date, cause local counsel to promptly deliver to the Administrative
Agent, on behalf of itself, the Lenders and the Issuing Banks, a favorable
written opinion of local counsel substantially to the effect set forth in
Exhibit J, (A) addressed to the Issuing Banks, the Administrative Agent, the
Collateral Agent and the Lenders and (B) covering such other matters relating to
the Loan Documents and the Transactions as the Administrative Agent shall
reasonably request.
SECTION 5.12. INTEREST RATE PROTECTION. As promptly as practicable, and
in any event within 45 days after the Restatement Date, enter into Hedging
Agreements, with counterparties and on terms and conditions reasonably
satisfactory to the Administrative Agent, pursuant to which the interest rate is
fixed with respect to a notional amount equal to at least 50% of the sum of (a)
the Term Loans and (b) the 1997 Senior Subordinated Notes, the 1998 Senior
Subordinated Notes and any additional long-term Indebtedness of Citadel, the
Borrower or any Subsidiary permitted hereunder that has a fixed interest rate
and is outstanding on such date, provided that at the time of calculation of
such amount, there will be no requirement to enter into Hedging Agreements
pursuant to this Section 5.12 if the amount required to be hedged shall be less
than $25,000,000.
ARTICLE VI
NEGATIVE COVENANTS
Each of Citadel and the Borrower covenants and agrees with each Lender
that, so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all Fees
and all other expenses or amounts payable under any Loan Document have been paid
in full and all Letters of Credit
<PAGE> 76
71
have been canceled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing, neither Citadel nor the Borrower will, nor will they cause or permit
any Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness existing on the Closing Date and set forth in
Schedule 6.01, and any extensions, renewals or replacements of such
Indebtedness to the extent the principal amount of such Indebtedness is
not increased, the weighted average life to maturity of such
Indebtedness is not decreased, such Indebtedness, if subordinated to
the Obligations, remains so subordinated on terms not less favorable to
the Lenders than the terms of the original Indebtedness and the
original obligors in respect of such Indebtedness remain the only
obligors thereon;
(b) Indebtedness created hereunder and under the other Loan
Documents;
(c) Indebtedness of the Borrower constituting Exchange
Debentures issued in exchange for the Exchangeable Preferred Stock
pursuant to the terms of the Exchange Indenture; provided that
Exchangeable Debentures shall not be issued unless no Event of Default
will exist after giving effect to such issuance (giving pro forma
effect to such issuance (i) in the case of the Consolidated Leverage
Ratio, on the last day of the most recent period of four consecutive
fiscal quarters for which there has been delivered to the
Administrative Agent the financial statements required pursuant to
Section 5.04(a) or (b) and (ii) in the case of the Consolidated Fixed
Charge Ratio and Consolidated Interest Coverage Ratio, on the first day
of the most recent period of four consecutive fiscal quarters for which
there has been delivered to the Administrative Agent the financial
statements required pursuant to Section 5.04(a) or (b).
(d) Indebtedness evidenced by Capital Lease Obligations to the
extent permitted pursuant to Section 6.08 or secured by Liens permitted
by Section 6.02(h); provided that in no event shall the aggregate
principal amount of the Indebtedness permitted by this paragraph (d)
exceed $2,000,000 at any time outstanding;
(e) unsecured Indebtedness assumed by the Borrower in
connection with any Permitted Acquisition in an aggregate amount not at
any time in excess of $10,000,000; provided that such Indebtedness
existed at the time of such Permitted Acquisition and was not created
in connection therewith or in contemplation thereof;
(f) prior to January 11, 2000, the Caribou Seller Notes in an
amount not to exceed $60,000,000; and
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72
(g) other unsecured Indebtedness of the Borrower and its
Subsidiaries in an aggregate amount not at any time in excess of
$5,000,000.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the Closing Date and set forth in Schedule
6.02; provided that such Liens shall secure only those obligations
which they secure on the date hereof;
(b) any Lien created under the Loan Documents;
(c) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or which
are being contested in compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(h) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by the Borrower or any Subsidiary;
provided that (i) such security interests secure Indebtedness permitted
by Section 6.01, (ii) such security interests are incurred, and the
Indebtedness secured thereby is created, within 90 days after such
acquisition (or construction), (iii) the Indebtedness secured thereby
does not exceed 85% of the lesser of the cost or the fair market value
of such real property, improvements or equipment at the time of such
acquisition (or construction) and (iv) such security
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73
interests do not apply to any other property or assets of the Borrower
or any Subsidiary;
(i) Liens arising out of judgments or awards (other than any
judgment that is described in clause (i) of Article VII and constitutes
an Event of Default thereunder) in respect of which the Borrower shall
in good faith be prosecuting an appeal of or proceedings for review and
in respect of which it shall have secured a subsisting stay of
execution pending such appeal or proceeding for review, provided that
the Borrower shall have set aside on its books adequate reserves, in
accordance with GAAP, with respect to such judgment or award; and
(j) Liens of any seller which is a party to a proposed
acquisition by the Borrower with respect to any escrow deposits to be
maintained in connection with such proposed Acquisition; and
(k) Liens (other than Liens securing Indebtedness for money
borrowed), provided that such Liens do not secure obligations in excess
of $1,000,000 at any one time.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, unless any Asset Sale,
Indebtedness or Liens resulting therefrom would be permitted under Sections
6.05, 6.01 and 6.02, respectively.
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments by the Borrower existing on the Closing Date
in the capital stock of the Subsidiaries;
(b) Permitted Investments;
(c) the Borrower may acquire all or substantially all the
assets of a person or line of business of such person, or not less than
100% of the Equity Interests of a person (such person being referred to
herein as an "Acquired Entity"); provided that (i) the acquisition is
of a Related Business or of one or more Stations; (ii) simultaneously
with the consummation of any such acquisition, the applicable FCC
Licenses shall be transferred to the Borrower or CLI; (iii) at the time
of such transaction (A) both before and after giving effect thereto, no
Event of Default or
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74
Default shall have occurred and be continuing or shall exist; (B) the
Borrower would be in compliance with the covenants set forth in
Sections 6.09, 6.10 and 6.11 as of the most recently completed period
of four consecutive fiscal quarters ending prior to such transaction
for which the financial statements and certificates required by Section
5.04(a) or 5.04(b) have been delivered or for which comparable
financial statements have been filed with the Securities and Exchange
Commission, after giving pro forma effect to such transaction and to
any other event occurring after such period as to which pro forma
recalculation is appropriate (including any other transaction described
in this Section 6.04(c) occurring after such period) as if such
transaction had occurred as of the first day of such period; (iv) the
Acquired Entity shall not be subject to any material pending litigation
or material contingent liabilities; and (v) if the Acquired Entity is
an ISP, the aggregate consideration for such acquisition (regardless of
the form of payment and including any assumed Indebtedness), together
with the aggregate consideration for all such other acquisitions of
ISPs during the term of this Agreement, shall not exceed $10,000,000
(any acquisition meeting all the criteria of this Section 6.04 being
referred to herein as a "Permitted Acquisition"). All pro forma
calculations required to be made pursuant to this Section 6.04(c) shall
(i) include only those adjustments that (A) would be permitted or
required by Article 11 of Regulation S-X of the Securities Act of 1933,
as amended, and (B) are based on reasonably detailed written
assumptions reasonably acceptable to the Administrative Agent and (ii)
be certified to by a Financial Officer as having been prepared in good
faith based upon reasonable assumptions;
(d) Hedging Agreements required by Section 5.12 and permitted
by Section 6.14;
(e) the Borrower and the Subsidiaries may consummate the
Pending Acquisitions on substantially the terms provided for in the
Acquisition Agreements as in effect on the Closing Date;
(f) loans and advances in an aggregate principal amount
outstanding at any one time not to exceed $2,000,000 to management and
other employees of Citadel, the Borrower or any Subsidiary, provided
that such loans or advances to any one person shall not exceed $50,000
in an aggregate principal amount at any time outstanding;
(g) the Borrower and the Subsidiaries may acquire investments
in ISPs and Internet Companies in connection with Internet Trade Out
Transactions permitted by Section 6.15;
(h) the Borrower may establish Subsidiaries to the extent
permitted by Section 6.13; and
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75
(i) other investments in an aggregate amount not to exceed
$2,000,000 at any time outstanding.
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND
ACQUISITIONS. (a) Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
substantially all the assets of the Borrower (whether now owned or hereafter
acquired) or any capital stock of any Subsidiary, or purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other person, except that (i) the Borrower
and any Subsidiary may purchase and sell inventory in the ordinary course of
business and (ii) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default shall have occurred and be continuing (A)
any wholly owned Subsidiary(including CLI) may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (B) any wholly
owned Subsidiary may merge into or consolidate with any other wholly owned
Subsidiary in a transaction in which the surviving entity is a wholly owned
Subsidiary and no person other than the Borrower or a wholly owned Subsidiary
receives any consideration of the Borrower and (C) the Borrower and its
Subsidiaries may make Permitted Acquisitions.
(b) Engage in any Asset Sale not otherwise prohibited by Section
6.05(a) unless all of the following conditions are met: (i) the consideration
received is at least equal to the fair market value of the assets sold; (ii) at
least 80% of the consideration received is cash or cash equivalents; and (iii)
to the extent applicable, the Net Cash Proceeds of such Asset Sale are applied
as required by Section 2.13(b).
(c) Engage in any Asset Swap not otherwise prohibited by Section
6.05(a) unless all of the following conditions are met: (i) such exchange
complies with the definition of Asset Swap, (ii) if the fair market value of the
assets transferred exceeds $1,000,000 but is less than $25,000,000, the board of
directors of the Borrower approves such exchange, (iii) if the fair market value
of the assets transferred exceeds $25,000,000, the board of directors of the
Borrower approves such exchange and the Borrower secures an appraisal given by
an unaffiliated third party in form and substance reasonably satisfactory to the
Administrative Agent, (iv) the fair market value of any property or assets
received is at least equal to the fair market value of the property or assets so
transferred and (v) to the extent applicable, any "boot" or other assets
received by the Borrower or any Subsidiary complies with the requirements of
paragraph (b) above and the Net Cash Proceeds of such boot or other assets are
applied as required by Section 2.13(b).
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS; RESTRICTIONS ON ABILITY OF
SUBSIDIARIES TO PAY DIVIDENDS. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any of its Equity Interests or directly or indirectly redeem, purchase, retire
or otherwise acquire for value (or permit any Subsidiary to purchase or acquire)
any of its Equity Interests or set aside any amount for any such
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purpose; provided, however, that any Subsidiary may declare and pay dividends or
make other distributions to the Borrower. Notwithstanding the foregoing, the
Borrower and/or Citadel may make any of the following dividends or
distributions:
(i) (A) the Borrower may pay cash dividends on or after July
1, 2002, with respect to the Exchangeable Preferred Stock so long as
(x) no Default shall have occurred and be continuing or would result
therefrom and (y) the Consolidated Leverage Ratio shall be less than
5.00 to 1.00 and (B) the Borrower may exchange Exchangeable Preferred
Stock for Exchangeable Debentures, to the extent permitted in Section
6.01(c);
(ii) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment thereof),
Citadel may repurchase outstanding shares of its common stock (or
options to purchase such common stock) following the death, disability,
retirement or termination of employment of employees, officers or
directors of Citadel or any of its subsidiaries; provided that (A) all
amounts used to effect such repurchases are obtained by Citadel from a
substantially concurrent issuance of its common stock (or options to
purchase such common stock) to other employees, members of management,
executive officers or directors of Citadel or any of its subsidiaries
or (B) to the extent the proceeds used to effect any repurchase
pursuant to this clause (B) are not obtained as described in preceding
clause (A), the aggregate amount of such repurchases made by Citadel
pursuant to this paragraph (ii) (exclusive of amounts paid as described
pursuant to preceding clause (A)) shall not exceed $1,000,000 in any
fiscal year of Citadel;
(iii) the Borrower may pay cash dividends to Citadel (A) for
the purpose of paying, so long as all proceeds thereof are promptly
used by Citadel to pay, its operating expenses incurred in the ordinary
course of business and other corporate overhead costs and expenses
(including, without limitation, legal and accounting expenses and
similar expenses), provided that the aggregate amount of dividends paid
by the Borrower pursuant to this clause (iii)(A) shall not exceed
$500,000 in any fiscal year of Citadel and (B) for the purpose of
repurchasing, so long as all proceeds thereof are promptly used by
Citadel to repurchase, the common stock of Citadel as permitted by
clause (ii) above, provided that the aggregate amount of dividends paid
by the Borrower pursuant to this clause (iii)(B) shall not exceed
$1,000,000 in any fiscal year of Citadel;
(iv) the Borrower may pay cash dividends to Citadel for the
purpose of paying, so long as all proceeds thereof are promptly used by
Citadel to pay, franchise taxes and Federal, state and local income
taxes and interest and penalties with respect thereto, if any, payable
by Citadel; provided, however, that the amount of any such payment
shall not exceed the amount of taxes that the Borrower would have been
liable for on a stand-alone basis; provided further, however, that any
refund shall be promptly returned by Citadel to the Borrower; and
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(v) the Borrower may pay dividends-in-kind to the holders of
its Exchangeable Preferred Stock on the terms, and subject to the
conditions, contained in the Certificate of Designation.
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Borrower or the parent of such
subsidiary. The foregoing limitations will not apply to restrictions (i) in
effect on the Closing Date, (ii) relating to Indebtedness of a Subsidiary and
existing at the time it became a Subsidiary if such restriction was not created
in connection with or in anticipation of the transaction or series of
transactions pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Borrower or any Subsidiary or (iii) which result from the
refinancing of Indebtedness incurred pursuant to an agreement referred to in the
immediately preceding clause (i) or (ii) above, provided that such restriction
is no less favorable to the Lenders than those under the agreement evidencing
the Indebtedness so refinanced.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. Except for transactions by
or among Loan Parties, sell or transfer any property or assets to, or purchase
or acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except that the Borrower or any
Subsidiary may engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties.
SECTION 6.08. CAPITAL EXPENDITURES. Permit the aggregate amount of
Capital Expenditures made by the Borrower and the Subsidiaries, taken as a
whole, (a) in the fiscal year ending December 31, 2000, to exceed $10,000,000
and (b) in any fiscal year thereafter to exceed 7.5% of Consolidated EBITDA;
provided, however, that the amount of Capital Expenditures in any fiscal year
commencing after December 31, 2000, permitted to be incurred shall be increased
by an amount equal to the amount of unused Capital Expenditures permitted to be
incurred pursuant to this covenant for the immediately preceding fiscal year
(without giving effect to this proviso).
SECTION 6.09. CONSOLIDATED INTEREST COVERAGE RATIO. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters, in each case taken as one accounting period, ended during any period
set forth below to be less than the amount set forth opposite such period below:
<PAGE> 83
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
January 1, 2000 through March 31, 2000 1.50x
April 1, 2000 through June 30, 2000 1.50x
July 1, 2000 through September 30, 2000 1.50x
October 1, 2000 through December 31, 2000 1.50x
January 1, 2001 through March 31, 2001 1.75x
April 1, 2001 through June 30, 2001 1.75x
July 1, 2001 through September 30, 2001 1.75x
October 1, 2001 through December 31, 2001 2.00x
January 1, 2002 through March 31, 2002 2.00x
April 1, 2002 through June 30, 2002 2.25x
July 1, 2002 through September 30, 2002 2.25x
Thereafter 2.50x
</TABLE>
SECTION 6.10. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters, in each case taken as one accounting period, to be less than
1.25 to 1.00.
SECTION 6.11. MAXIMUM CONSOLIDATED LEVERAGE RATIO. Permit the
Consolidated Leverage Ratio at any time during a period set forth below to be
greater than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
January 1, 2000 through March 31, 2000 7.25x
April 1, 2000 through June 30, 2000 7.00x
July 1, 2000 through September 30, 2000 6.75x
October 1, 2000 through December 31, 2000 6.50x
January 1, 2001 through March 31, 2001 6.25x
April 1, 2001 through June 30, 2001 6.00x
July 1, 2001 through September 30, 2001 6.00x
October 1, 2001 through December 31, 2001 5.75x
January 1, 2002 through March 31, 2002 5.50x
April 1, 2002 through June 30, 2002 5.25x
July 1, 2002 through September 30, 2002 5.00x
October 1, 2002 through December 31, 2002 4.50x
Thereafter 4.00x
</TABLE>
SECTION 6.12. LIMITATION ON MODIFICATIONS OF INDEBTEDNESS;
MODIFICATIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER
AGREEMENTS, ETC. (a) Amend or modify, or permit the amendment or modification
of, any provision of existing Indebtedness or of any agreement (including any
purchase agreement, indenture, loan agreement or security agreement) relating
thereto other than any amendments or modifications to
<PAGE> 84
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Indebtedness which do not in any way materially adversely affect the interests
of the Lenders, (b) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of, or
any prepayment or redemption as a result of any asset sale, change of control or
similar event of, any 1997 Senior Subordinated Notes, 1998 Senior Subordinated
Notes or Exchangeable Debentures (c) amend or modify, or permit the amendment or
modification of, any 1997 Senior Subordinated Debt Instruments, 1998 Senior
Subordinated Debt Instruments or Exchangeable Debt Instruments other than
amendments or modifications which do not in any way adversely affect the
interests of the Lenders, (d) amend or modify, or permit the amendment or
modification of, any of the Acquisition Agreements or any tax sharing agreement,
in each case except for amendments or modifications which are not in any way
adverse in any material respect to the interests of the Lenders, or (e) amend,
modify or change its Certificate of Incorporation (including by the filing or
modification of any certificate of designation) or By-laws, or any agreement
entered into by it, with respect to its Equity Interests (including the
Certificate of Designation and any shareholders' agreement), or enter into any
new agreement with respect to its Equity Interests, other than any amendments,
modifications or changes pursuant to this clause (e) or any such new agreements
pursuant to this clause (e) which do not in any way materially adversely affect
the interests of the Lenders; provided that (i) nothing in this Section 6.12
shall prohibit the Borrower from refinancing any Indebtedness to the extent
permitted by Section 6.01(a), (ii) nothing in this clause (e) shall prevent the
Borrower or any of its Subsidiaries from amending its Certificate of
Incorporation or By-laws to provide indemnification to any officer or director
of the Borrower or any such Subsidiary to the maximum extent permitted by the
law of its jurisdiction of incorporation and (iii) nothing in this Section 6.12
shall be construed to prohibit the merger of CLI into the Borrower.
SECTION 6.13. LIMITATION ON CREATION OF SUBSIDIARIES. Establish or
create any additional Subsidiaries; provided that a Borrower may establish or
create one or more Subsidiaries so long as (a) 100% of the Equity Interests of
such Subsidiary is owned by the Borrower or a wholly owned Subsidiary, (b) such
Equity Interests are upon the creation or establishment of any such new
Subsidiary pledged and delivered to the Collateral Agent for the benefit of the
Secured Parties under the Pledge Agreement (except that not more than 65% of the
voting Equity Interests of any Foreign Subsidiary owned by a Loan Party shall be
required to be so pledged) and (c) upon the creation or establishment of any
such new Subsidiary such Subsidiary becomes a party to the applicable Security
Documents in accordance with Section 5.11 and the other Loan Documents.
SECTION 6.14. HEDGING AGREEMENTS. Enter into any Hedging Agreement,
other than (a) Hedging Agreements required by Section 5.12 and (b) Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities.
SECTION 6.15. INTERNET TRADE OUT TRANSACTIONS. Engage in any Internet
Trade Out Transaction to the extent the value of all advertising time exchanged
by the Borrower
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80
and the Subsidiaries in connection therewith would exceed $50,000,000 during the
term of this Agreement.
SECTION 6.16. BUSINESS OF CITADEL, BORROWER AND SUBSIDIARIES. (a) In
the case of the Borrower and its Subsidiaries, engage at any time in any
business or business activity other than the Broadcasting Business and Related
Businesses.
(b) In the case of Citadel, engage in any business or business activity
other than its ownership of the common Equity Interests of the Borrower and
activities incidental thereto.
SECTION 6.17. FISCAL YEAR. With respect to the Borrower or Citadel,
change its fiscal year end to a date other than December 31.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in any Loan
Document or in connection with the borrowings or issuances of Letters of Credit
hereunder, or any representation, warranty, statement or information contained
in any report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document, shall prove to have been false
or misleading in any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan or
any Fee or L/C Disbursement or any other amount (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same shall become
due and payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by
Citadel, the Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by
Citadel, the Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan
<PAGE> 86
81
Document (other than those specified in (b), (c) or (d) above) and such default
shall continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent or any Lender to the Borrower;
(f) Citadel, the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any Material
Indebtedness, when and as the same shall become due and payable, or (ii) fail to
observe or perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any Material Indebtedness if
the effect of any failure referred to in this clause (ii) is to cause, or to
permit the holder or holders of such Material Indebtedness or a trustee on its
or their behalf (with or without the giving of notice, the lapse of time or
both) to cause, such Material Indebtedness to become due prior to its stated
maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Citadel, the Borrower or any Subsidiary, or of a substantial part
of the property or assets of Citadel, the Borrower or a Subsidiary, under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Citadel, the Borrower or any Subsidiary or
for a substantial part of the property or assets of Citadel, the Borrower or a
Subsidiary or (iii) the winding-up or liquidation of Citadel, the Borrower or
any Subsidiary; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
(h) Citadel, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Citadel, the
Borrower or any Subsidiary or for a substantial part of the property or assets
of Citadel, the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the foregoing;
(i) (i) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 (to the extent not adequately covered by
insurance as to which the insurance company has acknowledged coverage pursuant
to a writing reasonably satisfactory to the Administrative Agent) shall be
rendered against Citadel, the Borrower, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed, or any action
<PAGE> 87
82
shall be legally taken by a judgment creditor to levy upon assets or properties
of Citadel, the Borrower or any Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events, could
reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $5,000,000;
(k) any Guarantee under any Guarantee Agreement for any reason shall
cease to be in full force and effect (other than in accordance with its terms),
or any Guarantor shall deny in writing that it has any further liability under
its Guarantee Agreement (other than as a result of the discharge of such
Guarantor in accordance with the terms of the Loan Documents);
(l) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any other
Loan Party not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in the securities, assets or properties covered thereby, except to the
extent that any such loss of perfection or priority results from the failure of
the Collateral Agent to maintain possession of certificates representing
securities pledged under the Pledge Agreement and except to the extent that such
loss is covered by a lender's title insurance policy and the related insurer
promptly after such loss shall have acknowledged in writing that such loss is
covered by such title insurance policy; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to Citadel or
the Borrower described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to Citadel or the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
<PAGE> 88
83
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this Agreement,
Credit Suisse First Boston is hereby appointed to act as Administrative Agent
and Collateral Agent on behalf of the Lenders and the Issuing Banks (for
purposes of this Article VIII, the Administrative Agent and the Collateral Agent
are referred to collectively as the "agents"). Each of the Lenders and each
assignee of any such Lender, hereby irrevocably authorizes the Agents to take
such actions on behalf of such Lender or assignee or Issuing Bank and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Issuing Banks,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders and the Issuing Banks all payments of principal of and interest on the
Loans, all payments in respect of L/C Disbursements and all other amounts due to
the Lenders hereunder, and promptly to distribute to each Lender or Issuing Bank
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrower of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Borrower or any other Loan Party pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or willful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
<PAGE> 89
84
the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility to the Borrower or any other
Loan Party on account of the failure of or delay in performance or breach by any
Lender or Issuing Bank of any of its obligations hereunder or to any Lender or
Issuing Bank on account of the failure of or delay in performance or breach by
any other Lender or Issuing Bank or the Borrower or any other Loan Party of any
of their respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Citadel, the Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents and the Issuing Banks,
on demand, in the amount of its pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of any
expenses incurred for the benefit of the Lenders by the Agents or the Issuing
Bank, as the case may be, including counsel fees and compensation of agents and
employees paid for services rendered on behalf
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of the Lenders, that shall not have been reimbursed by the Borrower and (b) to
indemnify and hold harmless each Agent and each Issuing Bank and each of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against it in its capacity as Agent or Issuing Bank or any of
them in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower or any other Loan Party, provided that no Lender
shall be liable to an Agent, an Issuing Bank or any such other indemnified
person for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements which are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent or Issuing Bank or any of its directors, officers, employees or
agents. For purposes of this Section, a Lender's "pro rata share" shall be
determined based upon its share of the sum (without duplication) of the total
Revolving Credit Exposures, outstanding Term Loans and unused Commitments at the
time.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
The Documentation Agents shall have no rights, powers,
obligations, liabilities, responsibilities or duties under this Agreement other
than those applicable to each as a Lender. Without limiting the foregoing
sentence, the Documentation Agents shall not have, or be deemed to have, any
fiduciary relationship with any other Lender. Each Lender acknowledges that it
has not relied, and will not rely, on the Documentation Agents in deciding to
enter into this Agreement or in taking or not taking any action hereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by fax, as follows:
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(a) if to the Borrower or Citadel, to it at City Center West,
7201 West Lake Mead Boulevard, Suite 400, Las Vegas, Nevada 89128,
Attention of Donna L. Heffner (Fax No. (702) 804-5936);
(b) if to the Administrative Agent, to Credit Suisse First
Boston, Eleven Madison Avenue, New York, New York 10010, Attention of
Jessica Totarum (Fax No. (212) 325-8304), with a copy to Credit Suisse
First Boston, at Eleven Madison Avenue, New York, New York 10010,
Attention of Rupal Hirwe (Fax No. (212) 325-8304); and
(c) if to a Lender, to it at its address (or fax number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower or Citadel herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Banks and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Banks, regardless of any investigation made by the Lenders or the
Issuing Banks or on their behalf, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any Fee or any
other amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not been terminated. The provisions of Sections 2.14, 2.16,
2.20 and 9.05 shall remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank.
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower, Citadel and the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be
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binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, Citadel, the
Administrative Agent, the Issuing Banks or the Lenders that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate or Related Fund of such Lender, (x) the Borrower and the
Administrative Agent (and, in the case of any assignment of a Revolving Credit
Commitment, the Issuing Banks) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld); provided,
however, that the consent of the Borrower shall not be required to any such
assignment during the continuance of any Event of Default described in
paragraphs (b), (c), (f), (g) or (h) of Article VII, and (y) the amount of the
Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 (or, if
less, the entire remaining amount of such Lender's Commitment), (ii) the parties
to each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
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effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Banks, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Banks, the Collateral
Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Issuing
Banks and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the
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information contained therein in the Register and (iii) give prompt notice
thereof to the Lenders and the Issuing Banks. No assignment shall be effective
unless it has been recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the Issuing
Banks or the Administrative Agent sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same
extent as if they were Lenders and (iv) the Borrower, the Administrative Agent,
the Issuing Banks and the Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans or L/C Disbursements and to
approve any amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers decreasing any fees payable
hereunder or the amount of principal of or the rate at which interest is payable
on the Loans, extending any scheduled principal payment date or date fixed for
the payment of interest on the Loans, increasing or extending the Commitments or
releasing any Guarantor or all or any substantial part of the Collateral).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information that has not previously been disclosed in a document that is
available to the public, each such assignee or participant or proposed assignee
or participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
such confidential information on terms no less restrictive than those applicable
to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement, including to any Federal Reserve Bank, to secure
extensions of credit to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrower pursuant to this
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90
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender
to the same extent, and as if, such Loan were made by such Granting Lender. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section 9.04, any SPC may (i) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by
the Borrower and Administrative Agent) providing liquidity and/or credit support
to or for the account of such SPC to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC.
(j) Neither Citadel nor the Borrower shall assign or delegate any of
its rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Banks and each Lender, and any attempted
assignment without such consent shall be null and void.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower and Citadel agree,
jointly and severally, to pay all reasonable out-of-pocket expenses incurred by
the Administrative Agent, the Collateral Agent and the Issuing Banks in
connection with the syndication of the credit facilities provided for herein and
the preparation and administration of this Agreement and the other Loan
Documents or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent, the
Collateral Agent or any Lender in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent and the Collateral Agent, and, in
connection with any such enforcement or protection, the reasonable fees, charges
and disbursements of any other counsel (including the allocated cost of internal
counsel) for the Administrative Agent, the Collateral Agent or any Lender.
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(b) The Borrower and Citadel agree, jointly and severally, to indemnify
the Administrative Agent, the Collateral Agent, each Lender and each Issuing
Bank, each Affiliate of any of the foregoing persons and each of their
respective directors, officers, employees and agents (each such person being
called an "indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees (including the allocated cost of internal counsel),
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the proceeds of the
Loans or issuance of Letters of Credit, (iii) any actual or alleged presence or
Release of Hazardous Materials on, at or under any Properties or Former
Properties, or any Environmental Claim related in any way to the Borrower or the
Subsidiaries, or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or any Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower or Citadel against any of and all
the obligations of the Borrower or Citadel now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN
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92
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER
OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES
ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993
REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM
CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower or Citadel in
any case shall entitle the Borrower or Citadel to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, Citadel and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan or any date for reimbursement of an L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the prior
written consent of each Lender affected thereby, (ii) increase or extend the
Commitment or decrease or extend the date for payment of the Commitment Fees of
any Lender without the prior written consent of such Lender, (iii) amend or
modify the pro rata requirements of Section 2.17, the provisions of Section
9.04(j), the provisions of this Section, the definition of the term "Required
Lenders" or release any Guarantor or all or any substantial part of the
Collateral, without the prior written consent of each Lender or modify the
protections afforded to an SPC pursuant to the provisions of Section 9.04(i)
without the written consent of such SPC; provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Collateral Agent or any Issuing Bank hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent, the Collateral Agent or such Issuing Bank.
<PAGE> 98
93
SECTION 9.09. INTEREST RATE LIMITATION. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, the Engagement Letter
and the other Loan Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any party
other than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The
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94
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by fax
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of
Citadel and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Collateral Agent, any Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Borrower, Citadel or their
respective properties in the courts of any jurisdiction.
(b) Each of Citadel and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
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95
SECTION 9.16. CONFIDENTIALITY. The Administrative Agent, the Collateral
Agent, each Issuing Bank and each of the Lenders agrees to keep confidential
(and to use its best efforts to cause its respective agents and representatives
to keep confidential) in accordance with its customary practices the Information
(as defined below) and all copies thereof, extracts therefrom and analyses or
other materials based thereon, except that the Administrative Agent, the
Collateral Agent, any Issuing Bank or any Lender shall be permitted to disclose
Information (a) to such of its respective officers, directors, employees,
agents, affiliates and representatives as need to know such Information, (b) to
a potential assignee or participant of such Lender or any direct or indirect
contractual counterparty in any swap agreement relating to the Loans or such
potential assignee's or participant's or counterparty's advisors who need to
know such Information (provided that any such potential assignee or participant
or counterparty shall, and shall use commercially reasonable efforts to cause
its advisors to, keep confidential all such Information on the terms set forth
in this Section 9.16), (c) to the extent requested by any regulatory authority,
(d) to the extent otherwise required by applicable laws and regulations or by
any subpoena or similar legal process, (e) in connection with any suit, action
or proceeding relating to the enforcement of its rights hereunder or under the
other Loan Documents or (f) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 9.16 or (ii)
becomes available to the Administrative Agent, any Issuing Bank, any Lender or
the Collateral Agent on a nonconfidential basis from a source other than the
Borrower or Citadel. For the purposes of this Section, "information" shall mean
all financial statements, certificates, reports, agreements and information
(including all analyses, compilations and studies prepared by the Administrative
Agent, the Collateral Agent, any Issuing Bank or any Lender based on any of the
foregoing) and that are received from the Borrower or Citadel and related to the
Borrower or Citadel, any shareholder of the Borrower or Citadel or any employee,
customer or supplier of the Borrower or Citadel, other than any of the foregoing
that have been previously disclosed in a document that is available to the
public. The provisions of this Section 9.16 shall remain operative and in full
force and effect for three years after the expiration of this Agreement.
<PAGE> 1
Exhibit 10.11
FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Fourth Amendment to Third Amended and Restated
Registration Rights Agreement (this "Amendment") is made as of December 2, 1999
among Citadel Communications Corporation ("Citadel") and the undersigned
stockholders of Citadel.
R E C I T A L S
A. This Amendment amends that certain Third Amended and
Restated Registration Rights Agreement dated June 28, 1996, as amended, among
Citadel, the undersigned stockholders of Citadel and certain other stockholders
of Citadel (the "Registration Rights Agreement"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to them in the
Registration Rights Agreement.
B. A Qualified Public Offering occurred in each of July 1998
and June 1999.
C. All outstanding shares of Restricted Stock are shares of
Citadel's common stock, par value $.001 per share (the "Common Stock"), and the
Common Stock is publicly traded on The Nasdaq Stock Market's National Market.
D. All then parties to the Registration Rights Agreement were
given notice of their right to seek to participate and sell all or a portion of
their shares of Restricted Stock in a registered public offering of shares of
Citadel's Common Stock, which offering closed on June 25, 1999.
E. The undersigned stockholders of Citadel own in excess of
66-2/3% of the outstanding shares of Restricted Stock.
F. This amendment will benefit Citadel and stockholders of
Citadel.
Accordingly, in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Citadel and the undersigned, in their capacities as parties to the Registration
Rights Agreement and pursuant to Section 12(c) of the Registration Rights
Agreement, hereby amend the Registration Rights Agreement as follows:
1. Amendment to Definition. The definition of "Transfer
Restricted Security" contained in Section 1 of the Registration Rights Agreement
is amended to provide as follows:
"Transfer Restricted Security" shall mean a security that (i)
has not been sold through a broker, dealer or underwriter in a public
distribution or other public securities transaction, (ii) has not been sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Rule 144 promulgated thereunder (or any
<PAGE> 2
successor rule) and (iii) may not be sold pursuant to Rule 144(k) under the
Securities Act (or any successor rule).
2. Application of Amendment. For purposes of construing the
foregoing definition of Transfer Restricted Security, in addition to any Holder
who may otherwise be an affiliate of Citadel as defined in Rule 144 (or any
successor rule), any Holder who is a director or executive officer of Citadel or
who possesses voting and/or dispositive power with respect to five percent or
more of the outstanding Common Stock (an "Affiliate Holder"), or any Holder who
is a spouse of an Affiliate Holder or an entity controlled by an Affiliate
Holder shall be deemed to be an affiliate of Citadel under Rule 144 (or any
successor rule). Once a security ceases to be a Transfer Restricted Security,
such security shall never again become a Transfer Restricted Security.
3. Choice of Law. This Amendment shall be governed by and
construed in accordance with the internal laws of the State of Arizona, without
regard to any provision or rule of the laws of the State of Arizona which would
otherwise cause the laws of a jurisdiction other than the State of Arizona to be
applied.
4. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
5. No Other Amendment of Waiver. Except as expressly set forth
herein, the undersigned are not hereby amending or waiving any other term or
provision of the Registration Rights Agreement and all other surviving terms and
provisions of the Registration Rights Agreement shall remain in full force and
effect in accordance with their terms.
(SIGNATURES APPEAR ON NEXT PAGE)
-2-
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed and delivered on the day and year first above written.
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
------------------------------------------
Its: Chief Executive Officer and President
------------------------------------------
ABRY BROADCAST PARTNERS II, L.P.
By: ABRY CAPITAL, L.P., its General Partner
By: ABRY HOLDINGS, INC., its
General partner
By: /s/ Andrew Banks
-----------------------------------
Its: Chairman
-----------------------------------
THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP
By: DVS Management, Inc., its General Partner
By: /s/ John von Schlegell
-----------------------------------
Its: Managing Partner
-----------------------------------
DVS MANAGEMENT, INC.
By: /s/ John von Schlegell
------------------------------------------
Its: President
------------------------------------------
/s/ Ted L. Snider, Sr.
------------------------
Ted L. Snider, Sr.
-3-
<PAGE> 1
Exhibit 10.15
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made as of the 31st
day of August, 1999 by and between ROBERT F. FULLER ("Consultant") and CITADEL
BROADCASTING COMPANY, a Nevada corporation ("Citadel").
RECITALS:
A. Consultant and Citadel are parties to a Stock Purchase
Agreement dated as of April 30, 1999 (the "Stock Purchase Agreement"), pursuant
to which Citadel has, concurrently with the execution of this Agreement,
purchased all of the capital stock of Fuller-Jeffrey Broadcasting Companies,
Inc., a Maine corporation ("FJB"), owned by Consultant. As of the date of this
Agreement, FJB and its subsidiaries own and operate ten radio stations in the
States of Maine and New Hampshire.
B. To induce Citadel to enter into the Stock Purchase
Agreement, Consultant, who is the majority stockholder of FJB, has agreed to
provide certain consulting services to Citadel and to forego his right to
compete with Citadel, on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. Engagement. Citadel will engage Consultant as a consultant
to Citadel to provide the services described in Section 2 hereof, and Consultant
accepts such engagement, for the Consulting Period (as hereinafter defined),
upon the terms and conditions set forth in this Agreement.
2. Services. During the Consulting Period, Consultant agrees
to provide consulting services to Citadel primarily in connection with the
operation of Citadel's radio stations in the States of Maine and New Hampshire
(the "Territory"), as well as in such other areas as may from time to time be
reasonably determined by Citadel. Consultant shall devote such time as is
reasonably necessary (but not more than five hours per month) to satisfactorily
perform such services for Citadel.
3. Term of Consulting. The engagement under this Agreement
shall be for a period (the "Consulting Period") commencing on the date hereof
and ending on the seventh anniversary of the date hereof.
4. Compensation. For the services rendered by Consultant
hereunder, Citadel shall pay Consultant a fee of $250,000 per year (the
"Consulting Fee") during the Consulting Period. The Consulting Fee shall be paid
in monthly installments of $20,833.33.
<PAGE> 2
Citadel shall reimburse Consultant for reasonable expenses incurred by
Consultant in performing his services hereunder only if such expenses were
approved in advance by Citadel.
5. Disclosure of Information. Consultant recognizes and
acknowledges that Citadel and its affiliates' trade secrets and advertiser lists
as they exist from time to time and non-public information concerning its
services, methods of operation, technical information and processes, inventions,
ideas, products, specifications, trade secrets, formulae, pricing and bids,
customers and sales activities and procedures (collectively, the "Proprietary
Information") are valuable, special and unique assets of Citadel and its
affiliates, access to and knowledge of which are essential to the performance of
Consultant's duties hereunder. In light of the highly competitive nature of the
industry in which Citadel and its affiliates conduct their businesses,
Consultant further agrees that all Proprietary Information heretofore or in the
future obtained by Consultant as a result of Consultant's association with
Citadel shall be considered confidential. In recognition of this fact,
Consultant agrees that, so long as the Proprietary Information does not
otherwise become publicly available, neither Consultant nor any of his
affiliates will, during and after the Consulting Period, disclose any of such
Proprietary Information to any person, firm, corporation, partnership,
association or other entity (collectively, "Person") for any reason or purpose
whatsoever, directly or indirectly, except in connection with the furtherance of
the business of Citadel or its affiliates, and neither Consultant nor any of his
affiliates will make use of any Proprietary Information for his own purposes or
for the benefit of any other Person (except Citadel and its affiliates) under
any circumstances. Consultant further agrees that upon termination of his
engagement he shall turn over to Citadel all documents, papers, records, files,
computer discs, drawings, sketches, plans, specifications, manuals, models,
equipment, machines, devices, computer data, or other written or graphic
material which contain or are derived from Proprietary Information. Consultant
agrees that he shall have no proprietary interest in any work product used or
developed by Consultant and arising out of his engagement with Citadel. The
provisions contained in this Section 5 apply to information of Citadel and of
any affiliate of Citadel, which information is analogous to the Proprietary
Information. Consultant further agrees to comply fully with all confidentiality
or secrecy provisions or agreements binding on Citadel or any of its affiliates.
6. Preservation of Corporate Opportunity. To protect further
the confidentiality of the Proprietary Information and in recognition of the
highly competitive nature of Citadel and its affiliates' businesses, Consultant
further agrees as follows:
(a) During and for the period commencing with the date hereof
and ending on the seventh anniversary of the date hereof, neither Consultant nor
any of his affiliates will directly or indirectly engage, advise, manage,
operate, participate, invest in or assist, as owner, part owner, lender,
investor, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity, any AM or FM radio station or any Person
that owns or operates a radio station, licensed to the Territory or whose signal
is broadcast into the Territory; provided that neither Consultant's ownership
and operation of WNBP-AM licensed to Newburyport, Massachusetts nor Consultant's
assistance during the period of one year following the date hereof in the
operation of the radio stations identified as part of the Excluded Assets under
the Stock Purchase Agreement will constitute a violation of this Section 6(a).
2
<PAGE> 3
(b) During and for the period commencing with the date hereof
and ending on the seventh anniversary of the date hereof, neither Consultant nor
any of his affiliates will induce or attempt to induce employees of Citadel or
any affiliate of Citadel to engage in any activity hereby prohibited to
Consultant or to terminate their employment with Citadel or such affiliate.
7. Interpretation. It is expressly understood and agreed that
although Consultant and Citadel consider the restrictions contained in Sections
5 and 6 hereof reasonable for the purpose of preserving for Citadel its
proprietary rights, business value as a going concern and goodwill, if a final
judicial determination is made by a court having jurisdiction that the time or
any other restriction contained in Section 5 or 6 hereof is an unenforceable
restriction against Consultant, the provision containing such restriction shall
not be rendered void but shall be deemed amended to apply as to such maximum
time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable. Alternatively, if the court referred to
above finds that any restriction contained in Section 5 or 6 hereof is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained therein.
8. Remedies. Consultant acknowledges and agrees that Citadel's
remedy at law for a breach or threatened breach of any of the provisions of
Section 5 or 6 hereof would be inadequate and, in recognition of this fact, in
the event of a breach or threatened breach by Consultant of any of the
provisions of Section 5 or 6 hereof it is agreed that, in addition to its remedy
at law, Citadel shall be entitled to equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available. In the event of any such
breach, at the election of Citadel, all rights of Consultant under Section 4
hereof shall thereupon terminate. Consultant acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach, and consequently agrees, upon any such breach
or threatened breach, to the granting of injunctive relief prohibiting
Consultant from engaging in business activities similar to those engaged in by
Citadel other than on behalf of Citadel or any of its affiliates to the extent
that Consultant is then consulting for Citadel or any of its affiliates. Nothing
herein contained shall be construed as prohibiting Citadel from pursuing any
other remedies available to it for such breach or threatened breach. In any
action by either Consultant or Citadel to enforce such party's rights under this
Agreement, the prevailing party shall be entitled to recover his or its
reasonable attorney's fees and costs incurred in prosecuting such action.
9. Independent Contractor. In connection with his performance
hereunder, Consultant shall act solely as an independent contractor and nothing
herein contained shall at any time be so construed as to create a relationship
of employer and employee, partnership, principal and agent, or joint venturer as
between Citadel and Consultant. Consultant shall not be entitled to receive or
accrue or participate in, as a result of his performance under this Agreement,
paid vacation, sick leave, retirement, insurance, health or sick benefits or any
other employee benefit programs of Citadel.
3
<PAGE> 4
10. Notices. Any notice required or permitted to be given
under this Agreement shall be deemed properly given if in writing and personally
delivered or mailed by certified U.S. mail, postage prepaid with return receipt
requested, addressed as follows:
To Consultant:
Robert F. Fuller
P.O. Box 820
Newburyport, MA 01950
To Citadel:
Citadel Broadcasting Company
7201 W. Lake Mead Blvd.
Suite 400
Las Vegas, NV 89128
Attn: Lawrence R. Wilson
11. Assignment. This Agreement shall not be assignable by
either party except by Citadel to any affiliate of Citadel or any successor in
interest to Citadel's business.
12. Entire Agreement. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and may not be
waived, changed, modified, extended or discharged orally but only by an
agreement in writing, signed by the party against whom enforcement of any such
waiver, change, modification, extension or discharge is sought. The waiver by
any party of a breach of any provision of this Agreement by any other will not
operate or be construed as a waiver of any subsequent breach by such other
party.
13. Survival. Any termination of this Agreement shall not
affect the provisions of Section 5, 6, 7 or 8 hereof, which shall survive such
termination in accordance with their terms.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada without regard to
its conflict of laws provisions.
15. Headings. The headings of the sections are for convenience
of reference only and shall not control or affect the meaning or construction or
limit the scope or intent of any of the provisions of this Agreement.
16. Counterparts. This Agreement may be executed in several
counterparts or with counterpart signature pages, each of which shall be deemed
an original, but such counterparts shall together constitute but one and the
same Agreement.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
/s/ Robert F Fuller
---------------------------------------
Robert F. Fuller
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
---------------------------------
Title: Chief Executive Officer
5
<PAGE> 1
Exhibit 21
Subsidiaries of Citadel Communications Corporation
<TABLE>
<CAPTION>
Name State of Incorporation
- ---- ----------------------
<S> <C>
Citadel Broadcasting Company Nevada
</TABLE>
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Citadel Communications Corporation:
We consent to incorporation by reference in the registration statements (No.
333-65279, No. 333-85701 and No. 333-85703) filed on Form S-8 and No. 333-92593
on Form S-3 of Citadel Communications Corporation of our report dated February
29, 2000, relating to the consolidated balance sheets of Citadel Communications
Corporation and subsidiary as of December 31, 1998 and 1999, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1999, which report
appears in Form 10-K of Citadel Communications Corporation dated March 30, 2000.
Phoenix, Arizona
March 30, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS IN CITADEL COMMUNICATIONS CORPORATION'S FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 17,981
<SECURITIES> 0
<RECEIVABLES> 55,171
<ALLOWANCES> (2,443)
<INVENTORY> 0
<CURRENT-ASSETS> 76,154
<PP&E> 86,650
<DEPRECIATION> (18,615)
<TOTAL-ASSETS> 716,613
<CURRENT-LIABILITIES> 21,377
<BONDS> 342,509
85,362
0
<COMMON> 32
<OTHER-SE> 219,177
<TOTAL-LIABILITY-AND-EQUITY> 716,613
<SALES> 0
<TOTAL-REVENUES> 178,495<F1>
<CGS> 0
<TOTAL-COSTS> 118,262
<OTHER-EXPENSES> 35,749
<LOSS-PROVISION> 5,787
<INTEREST-EXPENSE> 25,385
<INCOME-PRETAX> (6,300)
<INCOME-TAX> (1,647)
<INCOME-CONTINUING> (4,653)
<DISCONTINUED> (4,275)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,031)
<EPS-BASIC> (.80)
<EPS-DILUTED> (.80)
<FN>
<F1>Comprised of net revenues (gross revenues net of agency commissions).
</FN>
</TABLE>
