[LOGO] EXHIBIT (a)(1)(A)
CITADEL BROADCASTING COMPANY
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF 13 1/4% SERIES B EXCHANGEABLE PREFERRED STOCK
AND
CONSENT SOLICITATION STATEMENT
TO ADOPT PROPOSED AMENDMENTS TO THE
PREFERRED STOCK CERTIFICATE OF DESIGNATIONS
OUR OFFER AND CONSENT SOLICITATION AND YOUR RIGHT TO WITHDRAW YOUR SHARES WILL
EXPIRE AT 12:00 NOON, NEW YORK CITY TIME, ON TUESDAY, JUNE 26, 2001, UNLESS OUR
OFFER AND CONSENT SOLICITATION ARE EXTENDED. WE MAY EXTEND OUR OFFER AND CONSENT
SOLICITATION PERIOD AT ANY TIME.
CITADEL BROADCASTING COMPANY IS:
- offering to purchase for cash all outstanding shares of its 13 1/4%
series B exchangeable preferred stock, which is referred to as the
"preferred stock," in a tender offer for a total purchase price, or the
"offer consideration," per share, calculated in accordance with
Schedule I, equal to:
- the present value, as of the payment date, of the dividends accruing
from and including the payment date up to but not including January 1,
2002, the first date on which it is assumed that dividends will be paid
in cash, determined on the basis of the fixed spread yield, which is
explained in greater detail below; PLUS
- the present value, as of the payment date, of the dividends accruing
from and including January 1, 2002 up to but not including July 1,
2002, the second date on which it is assumed that dividends will be
paid in cash, determined on the basis of the fixed spread yield; PLUS
- the present value, as of the payment date, of the redemption payment on
the earliest redemption date, which is 107.729% of the then effective
liquidation preference per share of preferred stock on July 1, 2002,
which amount does not include accrued dividends payable on July 1,
2002, determined on the basis of the fixed spread yield; DIVIDED BY
- the aggregate number of shares of preferred stock then outstanding;
MINUS
- the consent payment of $2.00 per share of preferred stock; and
- soliciting your consent to amend substantially all of the restrictive
covenants contained in the certificate of designations for the preferred
stock.
For purposes of calculating the offer consideration, the "fixed spread yield"
shall equal the sum of:
- the yield on the 6 3/8% U.S. Treasury note due June 30, 2002, as
calculated by the dealer manager in accordance with standard market
practice, based on the offer price for such reference security as of
2:00 p.m., New York City time, on June 11, 2001, or the "price
determination date," which will be the eleventh business day immediately
preceding the scheduled expiration date, as displayed on the applicable
page of the Bloomberg Government Pricing Monitor (or, if any relevant
price is not available on a timely basis on the Bloomberg Page or is
manifestly erroneous, such other recognized quotation source as the dealer
manager shall select in its sole discretion); and
- a fixed spread of 100 basis points.
If you tender a fractional share, we will pay you the offer consideration and,
if you tender your shares prior to the consent date, the consent payment per
share multiplied by that fraction of a share.
IF YOU WANT TO TENDER YOUR SHARES OF PREFERRED STOCK, YOU SHOULD:
- specify the number of shares, or fraction of a share, you want to tender;
and
- follow the instructions in this document and the related documents,
including the accompanying consent and letter of transmittal, to submit
your shares.
Our shares of preferred stock are quoted on the Over The Counter Bulletin Board
under the symbol "CTDB.O." You are urged to obtain current market quotations for
the preferred stock.
Our offer is conditioned on a majority of the outstanding shares of preferred
stock being tendered and is subject to the other conditions discussed in
Section 6.
Our board of directors and the board of directors of Citadel Communications
Corporation, our parent company, have approved this offer and consent
solicitation. Our board of directors and the board of directors of Citadel
Communications each recommends that our preferred stockholders tender their
shares of preferred stock in response to this offer and consent to the proposed
amendments. IF YOU DECIDE TO TENDER YOUR SHARES OF PREFERRED STOCK, YOU MUST
CONSENT TO THE PROPOSED AMENDMENTS WITH RESPECT TO THOSE SHARES.
This document contains important information about our offer. We urge you to
read it in its entirety.
THE DEALER MANAGER FOR THE OFFER AND
THE SOLICITATION AGENT FOR THE CONSENT SOLICITATION IS:
JP MORGAN
May 18, 2001
IMPORTANT PROCEDURES
If you want to tender all or part of your shares, you must do one of the
following before our offer expires:
- if your shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee, contact the nominee and have the
nominee tender your shares for you, or
- if you hold certificates in your own name, complete, sign and date a
consent and letter of transmittal according to its instructions, and
deliver it, together with any required signature guarantees, the
certificates for your shares and any other documents required by the
consent and letter of transmittal, to The Bank of New York, the depositary
for our offer, or
- if you are an institution participating in The Depository Trust Company,
which we call the "book-entry transfer facility" in this document, tender
your shares according to the procedure for book-entry transfer described
in Section 4.
If you want to tender your shares but
- your certificates for the shares are not immediately available or cannot
be delivered to the depositary, or
- you cannot comply with the procedure for book-entry transfer, or
- your other required documents cannot be delivered to the depositary by the
expiration of our offer,
you can still tender your shares if you comply with the guaranteed delivery
procedure described in Section 4.
TO TENDER YOUR SHARES YOU MUST FOLLOW THE PROCEDURES DESCRIBED IN THIS
DOCUMENT, THE CONSENT AND LETTER OF TRANSMITTAL AND THE OTHER DOCUMENTS RELATED
TO OUR OFFER AND CONSENT SOLICITATION.
If you have questions or need assistance, you should contact Innisfree M&A
Incorporated, the information agent for our offer, or J.P. Morgan
Securities Inc., the dealer manager for our offer, at their respective addresses
and telephone numbers on the back page of this document. You may request
additional copies of this document, the consent and letter of transmittal or the
notice of guaranteed delivery from the information agent.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR NOT TENDER SHARES IN OUR OFFER AND AS TO
WHETHER YOU SHOULD CONSENT TO THE PROPOSED AMENDMENTS. WE HAVE NOT AUTHORIZED
ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF US
IN CONNECTION WITH OUR OFFER AND CONSENT SOLICITATION OTHER THAN THOSE CONTAINED
IN THIS DOCUMENT OR IN THE RELATED CONSENT AND LETTER OF TRANSMITTAL. IF GIVEN
OR MADE, ANY RECOMMENDATION, INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY US, THE DEALER MANAGER OR THE INFORMATION
AGENT.
TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET................................................... 1
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS......................... 7
OUR OFFER............................................................ 8
Introduction.................................................... 8
1. Terms of the Offer and Consent Solicitation................. 8
2. Background and Purpose of Our Offer and Consent 11
Solicitation; Certain Effects of Our Offer and Consent
Solicitation................................................
3. Proposed Amendments to Our Preferred Stock Certificate of 15
Designations................................................
4. Procedures for Tendering Shares and Consenting to the 17
Proposed Amendments.........................................
5. Withdrawal Rights and Revocation of Consents................ 21
6. Conditions of Our Offer and Consent Solicitation............ 22
7. Sources and Amount of Funds................................. 23
8. Material United States Federal Income Tax Consequences...... 24
9. Price Range of Shares....................................... 26
10. Information About Us........................................ 26
11. Fees and Expenses........................................... 27
12. Miscellaneous............................................... 27
Schedule I Formula to Determine the Total Consideration and the Offer
Consideration............................................... SI-1
Schedule II Hypothetical Pricing Examples............................... SII-1
Annex A Form of Second Certificate of 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..................................................... A-1
Annex B 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........................................ B-1
i
SUMMARY TERM SHEET
WE ARE PROVIDING THIS SUMMARY FOR YOUR CONVENIENCE. IT HIGHLIGHTS MATERIAL
INFORMATION IN THIS DOCUMENT, BUT YOU SHOULD REALIZE THAT IT DOES NOT DESCRIBE
ALL OF THE DETAILS OF OUR OFFER AND CONSENT SOLICITATION TO THE SAME EXTENT THAT
THEY ARE DESCRIBED IN THE BODY OF THIS DOCUMENT. WE URGE YOU TO READ THE ENTIRE
DOCUMENT AND THE RELATED CONSENT AND LETTER OF TRANSMITTAL BECAUSE THEY CONTAIN
THE FULL DETAILS OF OUR OFFER AND CONSENT SOLICITATION. WHERE HELPFUL, WE HAVE
INCLUDED REFERENCES TO THE SECTIONS OF THIS DOCUMENT WHERE YOU WILL FIND A MORE
COMPLETE DISCUSSION.
WHO IS OFFERING TO PURCHASE MY SECURITIES? WHO IS SEEKING MY CONSENT TO THE
PROPOSED AMENDMENTS?
Citadel Broadcasting Company, a Nevada corporation.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding shares of our 13 1/4%
series B exchangeable preferred stock, which we refer to throughout this
document as our "preferred stock." This offer includes an offer to purchase
any and all shares of preferred stock outstanding at any time during this
offer as well as any and all shares that you have the right to receive or
will receive as payment-in-kind dividends declared on your shares of
preferred stock by our board of directors on April 26, 2001. See the
"Introduction" to this document and Section 1.
WHY IS CITADEL BROADCASTING OFFERING TO PURCHASE MY SECURITIES?
We are seeking to purchase all of the outstanding shares of our preferred
stock in connection with the proposed merger between FLCC Acquisition Corp.
and Citadel Communications Corporation, our parent company. Under the terms
of the agreement and plan of merger between FLCC Acquisition Corp., Citadel
Communications and FLCC Holdings, Inc., an entity formed by Forstmann
Little & Co. to complete the merger and the parent company of FLCC
Acquisition Corp., Citadel Communications agreed to cause us to make an
offer to purchase, at the direction of FLCC Holdings, all of our outstanding
shares of preferred stock and to solicit consents to eliminate and/or amend
certain covenants in our preferred stock certificate of designations. The
completion of the merger is a condition to our completion of this offer.
However, the merger is not conditioned on any minimum number of shares being
tendered or on our obtaining the consent of the holders of a majority of the
outstanding shares of preferred stock to amend the preferred stock
certificate of designations. Following the merger, we will remain a
subsidiary of Citadel Communications, which will become a wholly owned
subsidiary of FLCC Holdings. See Section 2.
WHAT IS SOUGHT IN THE CONSENT SOLICITATION?
We are seeking your consent to the proposed amendments to the preferred
stock certificate of designations. These amendments will substantially
eliminate all of the restrictive covenants in our existing preferred stock
certificate of designations. In addition, we are seeking your consent to
amend the requirement under the preferred stock certificate of designations
to effect a change of control offer upon the completion of the merger;
instead, this offer will qualify as a "change of control offer" under the
amended preferred stock certificate of designations. Only holders of record
as of May 2, 2001, the record date, may effectively deliver a consent and
receive the consent payment. See the "Introduction" to this document and
Section 1.
1
HOW MUCH IS CITADEL BROADCASTING OFFERING TO PAY AND WHAT IS THE FORM OF
PAYMENT? WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to purchase for cash all outstanding shares of our preferred
stock in a tender offer for a total purchase price, or the "offer
consideration," per share, calculated in accordance with Schedule I, equal
to:
- the present value, as of the payment date, of the dividends accruing
from and including the payment date up to but not including January 1,
2002, the first date on which it is assumed that dividends will be paid
in cash, determined on the basis of the fixed spread yield, which is
explained in greater detail below; PLUS
- the present value, as of the payment date, of the dividends accruing
from and including January 1, 2002 up to but not including July 1,
2002, the second date on which it is assumed that dividends will be
paid in cash, determined on the basis of the fixed spread yield; PLUS
- the present value, as of the payment date, of the redemption payment on
the earliest redemption date, which is 107.729% of the then effective
liquidation preference per share of preferred stock on July 1, 2002,
which amount does not include accrued dividends payable on July 1,
2002, determined on the basis of the fixed spread yield; DIVIDED BY
- the aggregate number of shares of preferred stock then outstanding;
MINUS
- the consent payment of $2.00 per share of preferred stock.
For purposes of calculating the offer consideration, the "fixed spread
yield" shall equal the sum of:
- the yield on the 6 3/8% U.S. Treasury note due June 30, 2002, as
calculated by the dealer manager in accordance with standard market
practice, based on the offer price for such reference security as of
2:00 p.m., New York City time, on June 11, 2001, or the "price
determination date," which will be the eleventh business day
immediately preceding the scheduled expiration date, as displayed on
the applicable page of the Bloomberg Government Pricing Monitor (or, if
any relevant price is not available on a timely basis on the Bloomberg
Page or is manifestly erroneous, such other recognized quotation source
as the dealer manager shall select in its sole discretion); and
- a fixed spread of 100 basis points.
If you tender a fractional share, we will pay you the offer consideration
and, if you tender your shares prior to the consent date, the consent
payment per share multiplied by that fraction of a share.
This offer includes an offer to purchase any and all shares of preferred
stock outstanding at any time during this offer as well as any and all
shares of preferred stock that you have the right to receive or will receive
as payment-in-kind dividends declared on your shares of preferred stock by
our board of directors on April 26, 2001.
As a result, if you tender your shares of preferred stock prior to July 1,
2001, you will be deemed to have also tendered your right to those
payment-in-kind shares. If we complete this offer prior to July 1, 2001, the
offer consideration per share of preferred stock as currently calculated in
accordance with Schedule I provides the benefit of the value of the
dividends that have accrued and been declared but not yet paid as
payment-in-kind shares. Therefore, you will not receive any separate offer
consideration for your right to receive those payment-in-kind shares.
Alternatively, if this offer is extended to or beyond July 1, 2001 and you
tender your shares prior to July 1, 2001, then you will be deemed to have
also tendered, and we will purchase, the shares that will be issued on
July 1, 2001 as payment-in-kind dividends on the shares that you have
tendered. In these circumstances, the formula for calculating the offer
consideration, as set forth on Schedule I, will be adjusted, and the offer
consideration for each share of preferred stock validly tendered, or deemed
to have been tendered,
2
and not withdrawn will be proportionately reduced to reflect the greater
number of shares of preferred stock that will be outstanding after June 30,
2001. In this event, we will publish and circulate a supplement to this
document and describe in greater detail the adjustments that will be made to
the formula and the offer consideration. In this situation, we will also
ensure that the offer remains open for at least ten business days after the
announcement of any such change to the formula and the offer consideration,
if necessary, by extending the expiration date, during which time any shares
previously tendered may be withdrawn.
If you are the record owner of your shares and you tender your shares to us
in the offer, you will not have to pay brokerage fees or similar expenses.
If you own your shares through a broker or other nominee, and your broker
tenders your shares on your behalf, your broker or nominee may charge you a
fee for doing so. You should consult your broker or nominee to determine
whether any charges will apply. See Section 4.
DOES CITADEL BROADCASTING HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. Concurrently with the completion of the merger of FLCC Acquisition
Corp. with Citadel Communications, we will become a party to the credit
agreement, dated as of April 3, 2001, between FLCC Acquisition Corp., FLCC
Holdings, certain lenders and The Chase Manhattan Bank, as administrative
agent. The funds to make payment for the preferred stock and the consent
payments will come from borrowings under this credit agreement.
IS CITADEL BROADCASTING'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER
TO TENDER IN THE OFFER?
We do not believe that our financial condition is important to your
decision. We base this conclusion on several factors:
- we are paying you cash for your shares;
- our offer is not subject to any financing condition;
- our funding will come from borrowings under a new credit facility; and
- if you tender all of your shares of preferred stock, you will end your
ownership interest in us.
You should note that the credit agreement that we will enter into in
connection with the completion of the merger and this offer and consent
solicitation requires that any shares of preferred stock that remain
outstanding on the closing date of the merger be EITHER:
- as soon as possible following the closing, exchanged for our 13 1/4%
exchange debentures due 2009, which we refer to in this document as our
"exchange debentures," and as soon as possible thereafter the exchange
debentures must be covenant defeased; OR
- redeemed on the first optional redemption date.
WHAT IS THE PURPOSE OF THE OFFER AND CONSENT SOLICITATION?
The purpose of the offer and consent solicitation is to enable us to
eliminate or reduce the number of outstanding shares of our preferred stock
and to eliminate and/or amend the application of substantially all of the
restrictive covenants under our preferred stock certificate of designations,
which we believe will improve our capital structure and increase our
financial flexibility.
Citadel Communications also agreed to cause us, at the direction of FLCC
Holdings, simultaneously with this offer and consent solicitation, to make
an offer to purchase all of our outstanding 10 1/4% senior subordinated
notes due 2007 and 9 1/4% senior subordinated notes due 2008 and to solicit
consents to amend or eliminate the principal restrictive covenants in the
indentures governing these notes.
3
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER? CAN CITADEL
BROADCASTING EXTEND THE OFFER AND CONSENT SOLICITATION PAST THE INITIAL
EXPIRATION DATE?
You may tender your shares until our offer expires. Currently, our offer is
scheduled to expire at 12:00 noon, New York City time, on Tuesday, June 26,
2001.
Yes, we can extend our offer past this scheduled expiration date in our sole
discretion. If we choose to do so, you will be able to tender your shares
until the end of the day selected as the new expiration date. We can also
extend the date on which consents may be delivered and for which a consent
payment may be made.
If you cannot deliver everything that is required in order to make a valid
tender by that time, you may be able to use a guaranteed delivery procedure,
which is described later in this document. See Section 4.
HOW WILL I BE NOTIFIED IF CITADEL BROADCASTING EXTENDS THE OFFER AND CONSENT
SOLICITATION?
If we extend the offer and consent solicitation, we will make a public
announcement no later than 9:00 a.m., New York City time, on the next
business day after the last previously scheduled or announced expiration
date. If we terminate or postpone the offer and consent solicitation, we
will also give written or oral notice to the depositary. See Section 6.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER AND CONSENT SOLICITATION?
Our offer is conditioned on the stockholders tendering a majority of the
outstanding shares of preferred stock and consenting to the proposed
amendments, and the completion of the merger of FLCC Acquisition Corp. with
Citadel Communications. Our offer is subject to a number of other
conditions. We can waive some of the conditions to the offer. See
Section 6.
HOW DO I TENDER MY SHARES AND CONSENT TO THE PROPOSED AMENDMENTS?
To tender shares and consent to the proposed amendments, you must complete
one of the actions described under "Important Procedures" on the inside
front cover of this document before our offer expires. If you tender your
shares, you must consent to the proposed amendments. For a more detailed
explanation of the tendering process, see Section 4.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES OR REVOKE MY CONSENT?
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES OR REVOKE MY CONSENT?
You can withdraw tendered shares and revoke your consent at any time on or
prior to the expiration of our offer, subject to applicable law. You can
withdraw shares that you have already tendered by sending a notice of
withdrawal or revocation, or a facsimile of one, with the required
information to the depositary while you still have the right to withdraw the
shares.
A valid withdrawal of tendered shares on or prior to the expiration of the
offer, however, will not be deemed a revocation of the related consents. If
you decide to withdraw your tendered shares and also decide to revoke your
consent related to those shares, you must expressly request the revocation
of that consent in the notice withdrawing your tendered shares. See
Section 5.
WHAT DOES CITADEL BROADCASTING'S BOARD OF DIRECTORS RECOMMEND REGARDING THE
OFFER?
Our board of directors and the board of directors of Citadel Communications,
our parent company, have approved this offer and consent solicitation. Our
board of directors and the board of directors of Citadel Communications each
recommends that our preferred stockholders tender their shares of preferred
stock in response to this offer and consent to the proposed amendments. See
the "Introduction" to this document for more information on the factors
considered by our board of directors and the board of directors of Citadel
Communications.
4
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AND CONSENT SOLICITATION AFFECT MY
SHARES?
If the merger between FLCC Acquisition Corp. and Citadel Communications
takes place, stockholders not tendering in the offer will continue to hold
shares of our preferred stock.
If you did not tender your shares, you can expect the following:
- if we obtain the consent of the holders of a majority of the
outstanding shares of our preferred stock to adopt the proposed
amendments, substantially all of the restrictive covenants contained in
the certificate of designations will be eliminated or amended. The
rights of non-tendering preferred stockholders will be governed by the
amended certificate of designations and your right to receive a change
of control offer upon the completion of the merger between FLCC
Acquisition Corp. and Citadel Communications will have been eliminated.
We intend to redeem any shares of preferred stock not tendered pursuant
to our offer on the earliest redemption date, which will be July 1,
2002; OR
- if we do not obtain the consent of the holders of a majority of the
outstanding shares of preferred stock to adopt the proposed amendments,
then, in accordance with the terms of the existing preferred stock
certificate of designations, we intend to exercise our right to
exchange the outstanding shares of preferred stock for exchange
debentures on the earliest dividend payment date, which will be
July 1, 2001 or January 1, 2002, depending upon when the merger between
FLCC Acquisition Corp. and Citadel Communications is completed.
Immediately after the exchange, the covenants in the indenture
governing the exchange debentures will be covenant defeased.
The credit agreement that we will enter into in connection with the
completion of the merger between FLCC Acquisition Corp. and Citadel
Communications and our offer and consent solicitation requires that any
shares of preferred stock that remain outstanding on the closing date of the
merger be EITHER:
- as soon as possible following the closing, exchanged for exchange
debentures and as soon as possible thereafter the exchange debentures
must be covenant defeased; OR
- redeemed on the first optional redemption date.
If the merger does not take place, however, we will not purchase any shares
and the proposed amendments will not be adopted. See Section 2.
WHAT WILL HAPPEN IF LESS THAN A MAJORITY OF THE OUTSTANDING SHARES OF PREFERRED
STOCK ARE VALIDLY TENDERED?
If the merger between FLCC Acquisition Corp. and Citadel Communications
takes place and less than a majority of the outstanding shares of preferred
stock are validly tendered and consents given, we intend to exercise our
right under the existing preferred stock certificate of designations to
exchange the outstanding shares of preferred stock for exchange debentures
on the earliest dividend payment date, which will be July 1, 2001 or
January 1, 2002, depending upon when the merger between FLCC Acquisition
Corp. and Citadel Communications is completed. Immediately after the
exchange, the covenants in the indenture governing the exchange debentures
will be covenant defeased.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
Although the preferred stock is quoted on the Over The Counter Bulletin
Board, or "OTC," trading of the preferred stock is limited and sporadic. To
the best of our knowledge, in the past two years, there have been no trades
of shares of the preferred stock.
5
WILL CITADEL BROADCASTING CONTINUE AS A PUBLIC REPORTING COMPANY?
If the merger between FLCC Acquisition Corp. and Citadel Communications is
completed, we intend, as promptly as practicable after the completion of
this offer and consent solicitation, to suspend our reporting obligations
under the Securities Exchange Act of 1934 and will thereby discontinue
making periodic filings of financial statements and other information with
the Securities and Exchange Commission.
WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING SHARES?
The receipt of cash for shares pursuant to the offer will be a taxable
transaction for United States federal income tax purposes and possibly for
state, local and foreign income tax purposes as well. In general, a
stockholder who sells shares pursuant to the offer will recognize gain or
loss for United States federal income tax purposes equal to the difference,
if any, between the amount of cash received and the stockholder's adjusted
tax basis in the shares sold pursuant to the tender offer. See Section 8.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
If you have more questions about the offer, you should contact Innisfree M&A
Incorporated, the information agent, or J.P. Morgan Securities Inc., the
dealer manager. See the back cover of this document for their contact
information.
6
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
This document includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
are based largely on current expectations and projections about future events
affecting Citadel Broadcasting Company's business. The words "will," "intend,"
"anticipate" and "expect" and similar words are intended to identify
forward-looking statements. In addition, any statements that refer to
expectations or other characterizations of future events or circumstances are
forward-looking statements.
The forward-looking statements in this document are subject to risks,
uncertainties and assumptions including, among other things:
- the satisfaction of various conditions to closing of the merger
transaction described in this document, and
- the impact of current or pending legislation and regulation.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this document might not transpire. Citadel
Broadcasting undertakes no obligation to publicly update or revise any
forward-looking statements because of new information, future events or
otherwise.
Please note that the "safe harbor" provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, do not apply to statements made in connection with
tender offers.
7
OUR OFFER
TO THE HOLDERS OF 13 1/4% SERIES B EXCHANGEABLE PREFERRED STOCK OF
CITADEL BROADCASTING COMPANY:
INTRODUCTION
We are Citadel Broadcasting Company, a Nevada corporation, and we invite our
preferred stockholders to tender all of the outstanding shares of our 13 1/4%
series B exchangeable preferred stock, without par value, to us for a total
purchase price per share in cash, without interest, upon the terms and subject
to the conditions set forth in this document and the related consent and letter
of transmittal, which together, as amended, supplemented or otherwise modified
from time to time, constitute our "offer." Throughout this document we refer to
our 13 1/4% series B exchangeable preferred stock as our "preferred stock." We
also invite our preferred stockholders to consent to the proposed amendments to
our preferred stock certificate of designations, upon the terms and subject to
the conditions set forth in this document and the related consent and letter of
transmittal, which together, as amended, supplemented or otherwise modified from
time to time, constitute our "consent solicitation."
Our board of directors and the board of directors of Citadel Communications
Corporation, our parent company, have approved this offer and consent
solicitation. Our board of directors and the board of directors of Citadel
Communications each recommends that our preferred stockholders tender their
shares of preferred stock in response to this offer and consent to the proposed
amendments. In reaching this conclusion, the boards considered a variety of
factors, including the following:
- preferred stockholders who tender their shares will receive a higher
payment for their shares, and will receive this payment at an earlier
date, than if their shares were repurchased by us pursuant to a change of
control offer as provided by the existing preferred stock certificate of
designations;
- if we obtain the consents necessary to adopt the proposed amendments to
the certificate of designations, any shares of preferred stock not
tendered pursuant to this offer will be redeemed by us on the earliest
redemption date, which is July 1, 2002, and preferred stockholders who
tender their shares pursuant to this offer will receive a higher payment
for their shares, and will receive this payment at an earlier date, than
if their shares are redeemed on the earliest redemption date; and
- following the merger between FLCC Acquisition Corp. and Citadel
Communications,
- if we obtain the consents necessary to adopt the proposed amendments to
the certificate of designations, preferred stockholders who fail to
tender their shares will own shares that are governed by the amended
preferred stock certificate of designations which will lack many of the
restrictive covenants currently in place; or
- if we fail to obtain the consents necessary to adopt the proposed
amendments to the certificate of designations, then, in accordance with
the terms of the preferred stock certificate of designations, we intend
to exercise our right to exchange the outstanding shares of preferred
stock for exchange debentures on the earliest dividend payment date,
I.E. July 1, 2001 or January 1, 2002, depending upon when the merger
between FLCC Acquisition Corp. and Citadel Communications is completed,
and immediately thereafter effectuate a defeasance of our obligations
under the indenture governing these debentures.
1. TERMS OF THE OFFER AND CONSENT SOLICITATION.
On the terms and subject to the conditions of our offer, we will purchase
for cash all outstanding shares of preferred stock that are validly tendered
before the expiration date and not withdrawn in accordance with Section 5 for a
total purchase price, or the "offer consideration," per share, calculated in
accordance with Schedule I, equal to:
- the present value, as of the payment date, of the dividends accruing from
and including the payment date up to but not including January 1, 2002,
the first date on which it is assumed that dividends will
8
be paid in cash, determined on the basis of the fixed spread yield, which
is explained in greater detail below; PLUS
- the present value, as of the payment date, of the dividends accruing from
and including January 1, 2002, up to but not including July 1, 2002, the
second date on which it is assumed that dividends will be paid in cash,
determined on the basis of the fixed spread yield; PLUS
- the present value, as of the payment date, of the redemption payment on
the earliest redemption date, which is 107.729% of the then effective
liquidation preference per share of preferred stock on July 1, 2002, which
amount does not include accrued dividends payable on July 1, 2002,
determined on the basis of the fixed spread yield; DIVIDED BY
- the aggregate numbers of shares of preferred stock then outstanding; MINUS
- the consent payment of $2.00 per share of preferred stock.
For purposes of calculating the offer consideration, the "fixed spread
yield" shall equal the sum of:
- the yield on the 6 3/8% U.S. Treasury Note due June 30, 2002, as
calculated by the dealer manager in accordance with standard market
practice, based on the offer price for such reference security as of
2:00 p.m., New York City time, on June 11, 2001, or the "price
determination date," which will be the eleventh business day immediately
preceding the scheduled expiration date, as displayed on the applicable
page of the Bloomberg Government Pricing Monitor (or, if any relevant
price is not available on a timely basis on the Bloomberg Page or is
manifestly erroneous, such other recognized quotation source as the dealer
manager shall select in its sole discretion); and
- a fixed spread of 100 basis points.
If you tender a fractional share, we will pay you the offer consideration
and, if you tender your shares prior to the consent date, the consent payment
per share multiplied by that fraction of a share.
Prior to the price determination date, holders of our preferred stock may
obtain hypothetical quotes of the yield on the 6 3/8% U.S. Treasury note due
June 30, 2002, calculated as of a then recent time, and the resulting
hypothetical offer consideration by contacting the dealer manager at its
toll-free telephone number set forth on the back cover of this document. After
the price determination date, holders of preferred stock may ascertain the
actual yield on the 6 3/8% U.S. Treasury note due June 30, 2002 as of the price
determination date and the resulting actual offer consideration for each share
of preferred stock by contacting the dealer manager at its toll-free telephone
number set forth on the back cover of this document.
Because the offer consideration prior to the price determination date is
based on a fixed spread pricing formula that is linked to the yield on the
6 3/8% U.S. Treasury note due June 30, 2002, the actual amount of cash that will
be received by a tendering holder pursuant to this offer will be affected by
changes in the yield during the term of the offer prior to the price
determination date. After the price determination date, when the offer
consideration is no longer linked to the 6 3/8% U.S. Treasury note due June 30,
2002, the actual amount of cash that will be received by a tendering holder
pursuant to this offer will be known, and holders will be able to ascertain the
offer consideration in the manner described above.
This offer includes an offer to purchase any and all shares of preferred
stock outstanding at any time during this offer as well as any and all shares of
preferred stock that you have the right to receive or will receive as
payment-in-kind dividends declared on your shares of preferred stock by our
board of directors on April 26, 2001.
As a result, if you tender your shares of preferred stock prior to July 1,
2001, you will be deemed to have also tendered your right to those
payment-in-kind shares. If we complete this offer prior to July 1, 2001, the
offer consideration per share of preferred stock as currently calculated in
accordance with Schedule I provides the benefit of the value of the dividends
that have accrued and been declared but not yet paid as payment-in-kind shares.
Therefore, you will not receive any separate offer consideration for your right
to receive those payment-in-kind shares. Alternatively, if this offer is
extended to or beyond
9
July 1, 2001 and you tender your shares prior to July 1, 2001, then you will be
deemed to have also tendered, and we will purchase, the shares that will be
issued on July 1, 2001 as payment-in-kind dividends on the shares that you have
tendered. In these circumstances, the formula for calculating the offer
consideration, as set forth on Schedule I, will be adjusted, and the offer
consideration for each share of preferred stock validly tendered, or deemed to
have been tendered, and not withdrawn will be proportionately reduced to reflect
the greater number of shares of preferred stock that will be outstanding after
June 30, 2001. In this event, we will publish and circulate a supplement to this
document and describe in greater detail the adjustments that will be made to the
formula and the offer consideration. In this situation, we will also ensure that
the offer remains open for at least ten business days after the announcement of
any such change to the formula and the offer consideration if necessary, by
extending, the expiration date, during which time any shares previously tendered
may be withdrawn.
At the same time, on the terms and subject to the conditions of the consent
solicitation, we are also soliciting consents to the proposed amendments to the
preferred stock certificate of designations. If you tender your shares and
consent to the proposed amendments prior to 12:00 noon, New York City time, on
May 18, 2001, which we refer to as the "consent date," you will be entitled to
receive a "consent payment" of $2.00 for each share that is validly tendered and
not withdrawn. If you tender your shares after the consent date, you will not
receive the consent payment. Only a holder of record as of May 2, 2001, the
record date, may effectively deliver a consent and receive the consent payment.
Concurrently with this offer, the proposed amendments are being submitted to
the holders of the outstanding preferred stock for their approval. We believe
that the benefits of the proposed amendments, which will eliminate and/or amend
the application of substantially all of the restrictive covenants in the
preferred stock certificate of designations, will improve our capital structure
and increase our flexibility in financing our future business. The proposed
amendments require the approval of the holders of a majority of the outstanding
shares of preferred stock, voting together as a class. OUR OFFER TO PURCHASE THE
OUTSTANDING SHARES OF PREFERRED STOCK IS CONDITIONED UPON OUR OBTAINING THE
APPROVAL OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF THE PREFERRED
STOCK TO THE PROPOSED AMENDMENTS.
For purposes of our offer and consent solicitation, the term "expiration
date" means 12:00 noon, New York City time, on Tuesday, June 26, 2001, unless
and until we in our sole discretion extend the period of time during which our
offer and consent solicitation will remain open. If extended by us, the term
"expiration date" shall refer to the latest time and date at which our offer and
consent solicitation, as extended, shall expire. See Section 6 for a description
of our right to extend delay, terminate or amend our offer and consent
solicitation. Promptly after the expiration date, we will accept for payment any
and all shares of preferred stock that are validly tendered and not withdrawn,
or if the offer has been terminated, we will return all shares of preferred
stock that are validly tendered and not withdrawn.
As of May 3, 2001, 1,000,791.79 shares of preferred stock were outstanding
with an aggregate liquidation value of $100,079,179. If the merger of FLCC
Acquisition Corp. with Citadel Communications is not completed by July 1, 2001,
we expect to pay approximately $6,630,245.61 in dividends in the form of
payment-in-kind shares of preferred stock on that date, or 66,302.46 shares.
This offer includes an offer to purchase any and all shares outstanding during
the period of this offer. Therefore, if you have tendered your shares of
preferred stock prior to July 1, 2001 and in the event that the merger of FLCC
Acquisition Corp. with Citadel Communications is not completed by July 1, 2001
and this offer has been extended to or beyond that date, you will be deemed to
have tendered those shares that will be issued as payment-in-kind dividends on
July 1, 2001. If this offer has been extended to or beyond July 1, 2001 and you
have not yet tendered any shares, you may tender any shares, including the
payment-in-kind shares, that you hold until the expiration date.
HOLDERS OF OUR PREFERRED STOCK WHO DESIRE TO TENDER THEIR SHARES PURSUANT TO
THIS OFFER ARE REQUIRED TO CONSENT TO THE PROPOSED AMENDMENTS. Pursuant to the
terms of the consent and letter of transmittal, a holder cannot tender shares
without consenting to the proposed amendments with respect to the certificate of
designations. In addition, pursuant to the terms of the consent and letter of
transmittal, a holder cannot
10
complete, execute and deliver a consent and letter of transmittal prior to
July 1, 2001 without also delivering a written consent with respect to any and
all shares of preferred stock that the holder may receive as payment-in-kind
dividends issued, during the period of this offer, on the holder's shares of
preferred stock that are being tendered. Holders may not deliver consents
without tendering the shares in the offer, and may not revoke consents without
withdrawing the previously tendered shares to which such consents relate from
the offer. Tenders of shares may be validly withdrawn at any time on or prior to
the expiration date, or thereafter if required by applicable law. However, a
valid withdrawal of tendered shares on or prior to the expiration date shall not
be deemed a revocation of the related consents. IF, ON OR PRIOR TO THE
EXPIRATION DATE, OR THEREAFTER IF REQUIRED BY APPLICABLE LAW, A HOLDER
WITHDRAWING SHARES ALSO DETERMINES TO REVOKE THE CONSENT RELATED THERETO, THE
HOLDER MUST EXPRESSLY REQUEST THE REVOCATION OF SUCH CONSENT IN THE
COMMUNICATION WITHDRAWING SUCH SHARES. CONSENTS MAY NOT BE REVOKED AND TENDERS
OF SHARES MAY NOT BE VALIDLY WITHDRAWN AFTER THE EXPIRATION DATE UNLESS REQUIRED
BY APPLICABLE LAW.
OUR OFFER IS CONDITIONED ON A MAJORITY OF SHARES BEING TENDERED, THE
COMPLETION OF THE MERGER BETWEEN FLCC ACQUISITION CORP. AND CITADEL
COMMUNICATIONS, OUR PARENT COMPANY, AND THE OTHER CONDITIONS DISCUSSED IN
SECTION 6. We expect the merger to be completed during the second or third
quarter of 2001.
2. BACKGROUND AND PURPOSE OF OUR OFFER AND CONSENT SOLICITATION; CERTAIN
EFFECTS OF OUR OFFER AND CONSENT SOLICITATION.
BACKGROUND. On April 26, 2001, the stockholders of our parent company,
Citadel Communications Corporation, approved the agreement and plan of merger,
dated as of January 15, 2001, as amended, between FLCC Acquisition Corp.,
Citadel Communications and FLCC Holdings that provides for FLCC Acquisition
Corp. to be merged into Citadel Communications. FLCC Acquisition Corp. is a
newly formed Nevada corporation and is a wholly owned subsidiary of FLCC
Holdings. Citadel Communications will be the surviving corporation of the merger
and will become a wholly owned subsidiary of FLCC Holdings.
FLCC Holdings is a corporation newly formed by Forstmann Little & Co. to
complete the merger. FLC XXXI Partnership, L.P. is a New York limited
partnership doing business as Forstmann Little & Co. ("Forstmann Little").
Forstmann Little is a private investment partnership that through affiliates has
acquired or made significant equity investments in 28 companies. Forstmann
Little will acquire Citadel Communications through its affiliates, FLCC Holdings
and FLCC Acquisition Corp., each of which are described below. The general
partners of Forstmann Little are FLC XXIX Partnership, L.P. and FLC XXXIII
Partnership, L.P., both New York limited partnerships. The general partners of
FLC XXIX are Theodore J. Forstmann, Sandra J. Horbach, Tywana LLC (a North
Carolina limited liability company), Erskine B. Bowles, Thomas H. Lister,
Winston W. Hutchins and Jamie C. Nicholls. The general partners of FLC XXXIII
are Theodore J. Forstmann, Sandra J. Horbach, Tywana LLC, Erskine B. Bowles,
Thomas H. Lister, Winston W. Hutchins and Jamie C. Nicholls. The general manager
of Tywana LLC is Erskine B. Bowles.
FLC Equity Partnership-VI, L.P. and Forstmann Little & Co. Equity
Partnership-VII, L.P. (collectively, the "FL Equity Partnerships") are both
Delaware limited partnerships. The general partner of each is FLC XXXII
Partnership, L.P., a New York limited partnership. The general partners of FLC
XXXII are Theodore J. Forstmann, Sandra J. Horbach, Tywana LLC, Erskine B.
Bowles, Thomas H. Lister, Winston W. Hutchins and Jamie C. Nicholls.
FLC XXXIII is the general partner of both Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-VII, L.P. and
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VIII, L.P. (collectively, the "FL MBO Partnerships") which are both
Delaware limited partnerships formed to provide the subordinated debt financing
and a portion of the equity financing required in some transactions in which the
FL Equity Partnerships participate. All of the entities and individuals listed
above are collectively referred to herein as the "FL Parties." The mailing
address, principal office and telephone number for each FL Party, other than
Tywana LLC, are c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New York
10153, (212) 355-5656. The mailing
11
address, principal office and telephone number for Tywana LLC are 201 North
Tryon Street, Suite 2450, Charlotte, North Carolina 28202, (704) 372-2040.
FLCC Holdings is a Delaware corporation, and FLCC Acquisition Corp. is a
Nevada corporation, each newly formed by Forstmann Little for the purpose of
effecting the merger. The mailing address and telephone number for FLCC Holdings
and FLCC Acquisition Corp. are c/o Forstmann Little & Co., 767 Fifth Avenue, New
York, New York 10153, (212) 355-5656. Upon completion of the merger, all of the
equity interests in FLCC Holdings will be held by the FL Equity Partnerships and
the FL MBO Partnerships. FLCC Holdings owns all the outstanding capital stock of
FLCC Acquisition Corp. It is not anticipated that, prior to the completion of
the merger, FLCC Holdings or FLCC Acquisition Corp. will have any significant
assets or liabilities or will engage in any activities other than those incident
to the merger and the financing of the merger.
This offer and the consent solicitation are being solicited in connection
with the merger of FLCC Acquisition Corp. with Citadel Communications, with
Citadel Communications as the surviving corporation, pursuant to the agreement
and plan of merger. In the merger, all outstanding shares of common stock, par
value $.001 per share, of Citadel Communications (other than shares owned by
FLCC Holdings, Citadel Communications or any of their respective subsidiaries,
all of which will be cancelled) will be converted into the right to receive in
cash, without interest, an amount equal to $26.00 per share, and Citadel
Communications will become a wholly owned subsidiary of FLCC Holdings. The
merger is described in greater detail in Citadel Communications' Proxy Statement
for its Annual Meeting of Stockholders held on April 26, 2001, a copy of which
will be furnished to you by the dealer manager, the information agent or us,
upon request.
Pursuant to the agreement and plan of merger, Citadel Communications agreed
that, upon the request and at the expense of FLCC Holdings, Citadel
Communications would cause us to make an offer to purchase or redeem all of our
outstanding shares of preferred stock and to solicit consents from the holders
of not less than a majority of the outstanding shares of our preferred stock to
amend our certificate of designations. Citadel Communications also agreed, that
upon the request and at the expense of FLCC Holdings, Citadel Communications
would cause us to make an offer to purchase or redeem all of our 10 1/4% senior
subordinated notes due 2007, which we refer to as our "10 1/4% notes," and our
9 1/4% senior subordinated notes due 2008, which we refer to as our "9 1/4%
notes," and to solicit consents from the holders of at least a majority in
aggregate principal amount of each series of notes to amend each of the
indentures governing the 10 1/4% notes and the 9 1/4% notes. The offer to
purchase the 10 1/4% notes and the 9 1/4% notes and the related solicitation of
consents is being made concurrently with this offer. We will not be required to
complete any of these transactions until the merger has been completed or is
being completed simultaneously. The merger is not conditioned on the acceptance
of these offers and solicitations. However, the merger cannot be completed until
certain other conditions provided in the agreement and plan of merger are
satisfied, including the approval of the Federal Communications Commission, or
FCC, to the transfer of control of Citadel Communications' broadcast licenses to
FLCC Holdings. On April 26, 2001, the FCC granted its consent to such transfer
of control. On May 1, 2001, the FCC issued a public notice stating that the
grant was effective on April 26, 2001. This notice triggered a 30-day period
during which third parties can ask the FCC to reconsider its decision. For an
additional 10 days beyond the 30-day period, the FCC can also review and
reconsider the grant on its own motion. We anticipate that the merger will be
completed on the expiration date, which will be after the conclusion of such
40-day period.
In January and February 2001, five lawsuits were filed against Citadel
Communications in the District Court of Clark County, Nevada relating to the
proposed merger. On January 17 and 19, 2001, two purported class actions were
filed naming Citadel Communications, certain members of its board of directors,
and unidentified individuals and corporations as defendants. Plaintiffs allege,
among other things, that the defendant directors have breached their fiduciary
duties to the stockholders of Citadel Communications and seek certification as
class actions. The complaints demand various forms of relief, including
injunctive relief to prevent the closing of the merger. On January 18, 2001,
another complaint
12
was filed. This purported class action names Citadel Communications and certain
of its directors as defendants and alleges defendants' breach of fiduciary duty
to Citadel Communications' stockholders. The various forms of relief demanded in
this complaint are comparable to the forms of relief sought in the other two
complaints described above. Two other purported class actions were filed on
January 17, 2001 and February 13, 2001 naming as defendants Citadel
Communications, certain directors of Citadel Communications, FLCC Holdings, FLCC
Acquisition Corp. and Forstmann Little & Co. These complaints allege, among
other things, that the defendant directors breached their fiduciary duties to
Citadel Communications' stockholders and that the closing of the merger would
irreparably harm the plaintiffs and members of the purported classes. The relief
sought is similar to that requested in the three complaints described above.
The parties to the litigation described above have reached an agreement in
principle to settle all claims arising out of the proposed merger, pursuant to
which certain changes were made to the terms of the merger agreement and Citadel
Communications' Proxy Statement for its Annual Meeting of Stockholders based on
the suggestions and comments of plaintiffs' counsel. Citadel Communications
expects that the agreement will be memorialized in a formal settlement agreement
and presented to the court for its approval.
PURPOSE. The purpose of the offer and consent solicitation is to enable us
to eliminate or reduce the number of outstanding shares of our preferred stock
and to eliminate and amend the application of substantially all of the
restrictive covenants under our preferred stock certificate of designations,
which we believe will improve our capital structure and increase our operating
and financial flexibility.
EFFECTS AND SIGNIFICANT CONSIDERATIONS. Our purchase of the shares of our
preferred stock will reduce the number of outstanding shares and the number of
holders. Depending upon the number of shares purchased, the liquidity and market
value of the remaining outstanding shares could be adversely affected. The
proposed amendments will not become effective until they are approved by the
holders of a majority of the outstanding shares of preferred stock and the
amended certificate of designations has been filed with the Nevada Secretary of
State.
EFFECTS OF THE PROPOSED AMENDMENTS. Shares not purchased pursuant to the
offer will remain outstanding. If the proposed amendments become effective,
certain of the principal restrictive covenants contained in the certificate of
designations will be eliminated or amended, increasing our operating and
financial flexibility following the completion of the merger. The certificate of
designations, as so revised, will continue to govern the terms of all shares
that remain outstanding after the completion of the offer. The elimination or
amendment of these restrictive covenants and other provisions would permit us
to, among other things, incur indebtedness, pay dividends or make other
restricted payments, incur liens or make investments which would otherwise not
have been permitted pursuant to the existing certificate of designations. It is
possible that any such actions that we would be permitted to take will increase
the credit risk with respect to us faced by the non-tendering holders or
otherwise adversely affect the interests of the non-tendering holders. See
Section 3.
REDEMPTION. If the merger between FLCC Acquisition Corp. and Citadel
Communications is completed and we obtain the requisite consents to adopt the
proposed amendments to the preferred stock certificate of designations, then any
untendered shares of preferred stock that remain outstanding will be governed by
the amended preferred stock certificate of designations. In accordance with the
terms of the preferred stock certificate of designations we intend to redeem any
outstanding preferred stock on July 1, 2002 at the redemption price of 107.729%
of the then effective liquidation preference.
EXCHANGE FOR EXCHANGE DEBENTURES AND SUBSEQUENT COVENANT DEFEASANCE. If the
merger between FLCC Acquisition Corp. and Citadel Communications is completed
and we do not obtain the requisite consents to adopt the proposed amendments to
the preferred stock certificate of designations and shares of preferred stock
remain outstanding, then in accordance with the preferred stock certificate of
designations we intend to exercise our right to exchange outstanding shares of
preferred stock for the
13
exchange debentures on the next dividend payment date, I.E. July 1, 2001 or
January 1, 2002, depending upon the date of completion of the merger.
Simultaneously with the exchange of the preferred stock for the exchange
debentures, we intend to effect a covenant defeasance under the indenture
governing the newly issued exchange debentures. A covenant defeasance means that
we may elect to terminate some of the covenants in the indenture governing the
exchange debentures if we take specified actions, including irrevocably
depositing funds in trust, in accordance with the indenture, in an amount
sufficient to pay and discharge the principal of and interest on the exchange
debentures to maturity or redemption, as the case may be. For a description of
the indenture governing the terms of our exchange debentures, we refer you to
our prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) of the Securities Act of 1933 on December 30, 1997.
OTHER INDEBTEDNESS. In connection with the merger, this offer and this
consent solicitation, on April 3, 2001, FLCC Holdings, FLCC Acquisition Corp.,
The Chase Manhattan Bank and certain other lenders entered into a credit
agreement which provides that, concurrent with the merger, we will become a
party to the credit agreement. Under the credit agreement, the lenders have
agreed to provide an aggregate principal amount of $700 million in revolving
loans and term loans to us, and we may, at our option and subject to certain
conditions specified in the credit agreement, borrow an additional $400 million
in revolving loans and term loans to fund future acquisitions and to use for
general corporate purposes. The loans under the credit agreement will be
conditioned on certain customary conditions and will contain customary
representations and warranties, covenants and events of default. The credit
agreement requires that any shares of preferred stock that remain outstanding on
the closing date of the merger between FLCC Acquisition Corp. and Citadel
Communications be EITHER: (1) as soon as possible following the closing,
exchanged for exchange debentures and as soon as possible thereafter the
exchange debentures must be covenant defeased OR (2) redeemed on the first
optional redemption date. A covenant defeasance means that we may elect to
terminate some of the covenants in the indenture governing the exchange
debentures if we take specified actions, including irrevocably depositing funds
in trust, in accordance with the indenture, in an amount sufficient to pay and
discharge the principal of and interest on the exchange debentures to maturity
or redemption, as the case may be. The credit agreement also requires that we
redeem, on the earliest optional redemption date, any 10 1/4% notes and 9 1/4%
notes not tendered pursuant to our offers to purchase these notes. The credit
agreement also provides that the obligation of the lenders to make loans to us
is conditioned upon the repayment or covenant defeasance of at least 90% in
aggregate principal amount of our outstanding 10 1/4% notes and 9 1/4% notes.
Accordingly, if less than 90% in aggregate principal amount of our outstanding
10 1/4% notes and 9 1/4% notes is tendered pursuant to the offers to purchase
these notes, we will effect a covenant defeasance of our obligations under the
applicable indentures on the closing date of the merger. If more than 90% in
aggregate principal amount of our outstanding 10 1/4% notes and 9 1/4% notes is
tendered pursuant to the offers, we may or may not implement such a covenant
defeasance.
We expect to obtain $525 million under the credit agreement following or
concurrently with the closing of the merger in connection with the purchase of
the notes pursuant to the offers to purchase the notes, the consent
solicitations for the notes, the purchase of the preferred stock pursuant to
this offer and consent solicitation and refinancing of other of our
indebtedness.
SUSPENSION OF REPORTING. We intend, as promptly as practicable after the
completion of the offer and the consent solicitation, to suspend our reporting
obligations under the Securities Exchange Act of 1934 and will thereby
discontinue making periodic filings of financial statements and other
information with the Securities and Exchange Commission. By suspending our
reporting obligations, our preferred stock will no longer be eligible for
quotation on the Over The Counter Bulletin Board, or "OTC." Under the
certificate of designations as currently in effect, if we were to cease to be
subject to the reporting obligations under the Securities Exchange Act of 1934,
we would still be obligated to make filings under Sections 13 and 15(d) of the
Securities Exchange Act of 1934 and to provide the same to holders. Such
obligation, however, would be eliminated upon the adoption of the proposed
amendments contained in the amended certificate
14
of designations. This would adversely affect the amount of publicly available
information about us and might affect the liquidity of the shares.
LIMITED TRADING MARKET. Shares of preferred stock were first issued in
1997. The shares are not listed on any national or regional securities exchange
and are not approved for quotation through any automated inter-dealer quotation
system. However, the shares are quoted on the OTC. To the extent that the shares
are tendered and accepted in the offer, any existing trading market for the
remaining shares will become more limited. Consequently, the liquidity, market
value and price volatility of the shares that remain outstanding may be
adversely affected. Holders of unpurchased shares may attempt to obtain
quotations for the shares from their brokers; however, we cannot assure you that
any trading market will exist for the shares following the completion of this
offer. The extent of the public market for the shares following completion of
this offer would depend upon the number of holders remaining at such time, the
interest in maintaining a market in shares on the part of securities firms and
other factors. Although the preferred stock is quoted on the OTC, trading of the
preferred stock is limited and sporadic. To the best of our knowledge, in the
past two years, there have been no trades of shares of the preferred stock.
CHANGE OF CONTROL. The completion of the merger would constitute a "change
of control" under our existing preferred stock certificate of designations as
FLCC Holdings will become the "beneficial owner," as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, indirectly, of more than a
majority of the voting power of all classes of our voting stock. If we do not
obtain the necessary consents to amend the change of control offer covenant and
if a change of control occurs, we are required to advise all holders of
preferred stock of their right to require us to repurchase any and all shares of
preferred stock at a cash price equal to 101% of the then effective liquidation
preference, plus accrued and unpaid dividends, if any, to the date of
repurchase. Based upon this offer, holders who tender their shares pursuant to
this offer will receive a higher payment for their shares, and will receive this
payment at an earlier date, than if their shares were repurchased pursuant to a
change of control offer. However, the change of control offer, unlike this
offer, would not require the delivery of consents to the proposed amendments.
Any shares remaining outstanding following the merger and a change of control
offer would remain equity securities of Citadel Broadcasting.
If we obtain the necessary consents to amend the certificate of designations
covenant providing for a change of control offer, then we will not be obligated
to effect a change of control offer upon the completion of the merger.
3. PROPOSED AMENDMENTS TO OUR PREFERRED STOCK CERTIFICATE OF DESIGNATIONS.
The proposed amendments are included in the form of amended certificate of
designations, a copy of which is attached as Annex A. The amended certificate of
designations, if adopted, will be binding on all our preferred stockholders who
do not tender their preferred stock in the offer. The proposed amendments will
not become effective, however, until the completion of the merger and the filing
of the amended certificate of designations. The proposed amendments, if adopted
and effective, will eliminate and/or amend substantially all of the covenants in
our preferred stock certificate of designations other than the covenants to pay
dividends accrued on our preferred stock when due. The following are summaries
of the proposed amendments. For more complete information regarding our
preferred stock certificate of designations, you should consult our existing
preferred stock certificate of designations, a copy of the operative provisions
of which are attached as Annex B, and the form of amended certificate of
designations, a copy of which is attached as Annex A.
The proposed amendments to our preferred stock certificate of designations
would eliminate and/or amend the application of covenants that currently
prohibit or restrict our ability and the ability of some or all of our
subsidiaries, subject to specified exceptions, to:
- incur any indebtedness unless our debt to consolidated cash flow ratio
would be 7.0 to 1 or less;
15
- declare or pay any dividend or make any distribution to holders of any of
our securities ranking junior to our preferred stock or to holders of any
of the stock of our restricted subsidiaries, other than dividends or
distributions payable solely in the form of our capital stock that ranks
junior to the preferred stock or distributions by a restricted subsidiary
to us or to another restricted subsidiary;
- acquire or retire for value any of our securities ranking junior to our
preferred stock other than such securities held by our restricted
subsidiaries;
- acquire or retire for value any capital stock of any of our unrestricted
subsidiaries or the capital stock of any of our restricted subsidiaries
held by any of our affiliates other than capital stock owned by us or any
of our restricted subsidiaries;
- make so-called restricted payments;
- offer to purchase our preferred stock in the event of a change of control;
- sell, or allow our restricted subsidiaries to sell, any shares of capital
stock of a restricted subsidiary except to us or to a wholly owned
restricted subsidiary;
- permit any of our restricted subsidiaries to sell, transfer or dispose of
any of their properties or assets to an unrestricted subsidiary except in
the ordinary course of business;
- designate a subsidiary as an unrestricted subsidiary unless (a) neither we
nor any of our restricted subsidiaries is liable for any debt of such
subsidiary; and (b) no default on account of such debt would cause us or
any of our restricted subsidiaries to default on any of our existing debt
or have such debt accelerated and declared payable by a holder of the
debt; and (c) any investment in any such subsidiary made as a result of
designating such subsidiary as an unrestricted subsidiary complies with
the restricted payment covenant in our certificate of designations;
- designate an unrestricted subsidiary as a restricted subsidiary unless
such designation complies with our restricted payment covenant under the
certificate of designations and would not constitute a voting rights
triggering event under our certificate of designations;
- permit any of our subsidiaries to issue preferred stock except to us or to
one of our wholly owned restricted subsidiaries or permit any person to
own preferred stock in any of our subsidiaries except in compliance with
the terms of our preferred stock certificate of designations; or
- consolidate or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of our properties
or assets in one or more related transactions, to another entity without
the consent of holders of a majority of the outstanding shares of our
preferred stock.
The existing certificate of designations, a copy of the operative provisions
of which is attached as Annex B hereto, currently requires us, whether or not
required by the Securities and Exchange Commission's rules and regulations and
for so long as any preferred stock is outstanding, to:
- file a copy of all information and reports with the Securities and
Exchange Commission required to be filed by Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
- furnish to the holders of preferred stock all information reports.
The revised certificate of designations, a copy of which is attached as
Annex A hereto, would eliminate or modify these requirements.
The proposed amendments to the preferred stock certificate of designations
would also amend the change of control offer covenant which currently requires
us to effect a change of control offer upon the completion of the merger of FLCC
Acquisition Corp. and Citadel Communications. Instead, as provided by the
proposed amendments, this offer would qualify as a change of control offer under
the amended preferred stock certificate of designations.
We propose to amend the definition of a change of control offer to allow us
to satisfy the change of control offer requirement by completing this offer upon
the completion of the merger of FLCC
16
Acquisition Corp. with Citadel Communications. As a result, this offer would be
deemed to constitute a "change of control offer" under our amended preferred
stock certificate of designations and the completion of the merger would not
require us to effect a separate and additional change of control offer.
The definitions relating solely to the eliminated covenants will be
eliminated. Some other sections of our preferred stock certificate of
designations will be amended to reflect the elimination of the foregoing
covenants. All of the covenants that will be eliminated are contained in
Section VIII of the existing preferred stock certificate of designations, and we
refer you to Section VIII of the operative provisions of the existing preferred
stock certificate of designations, a copy of which is attached as Annex B
hereto, for the text of the restrictive covenants that will be eliminated. The
proposed amendment to the change of control offer covenant is contained in
Section VIII of the form of amended certificate of designations, and we refer
you to Section VIII of the form of amended and restated certificate of
designations, attached as Annex A, for the text of the proposed amendments
including the amended change of control offer covenant.
The proposed amendments would not eliminate covenants that currently:
- require us to pay accrued dividends on our preferred stock in the manner
provided in the certificate of designations; and
- allow us to exchange preferred stock for the exchange debentures.
The proposed amendments to our preferred stock certificate of designations
require the consent of holders of a majority of the outstanding shares of our
preferred stock. In addition, for any of the proposed amendments to the
certificate of designations to become effective, we must execute and file an
amended certificate of designations.
THE PROPER TENDER BY A HOLDER OF SHARES PURSUANT TO THIS OFFER WILL REQUIRE
THE GIVING OF A CONSENT BY SUCH HOLDER TO THE PROPOSED AMENDMENTS WITH RESPECT
TO SUCH SHARES. WE ARE NOT SOLICITING AND WILL NOT ACCEPT CONSENTS FROM HOLDERS
WHO ARE NOT TENDERING THEIR SHARES PURSUANT TO THIS OFFER.
THE PROPOSED AMENDMENTS CONSTITUTE A SINGLE PROPOSAL WITH RESPECT TO THE
CERTIFICATE OF DESIGNATIONS AND A TENDERING AND CONSENTING HOLDER MUST CONSENT
TO THE PROPOSED AMENDMENTS WITH RESPECT TO THE CERTIFICATE OF DESIGNATIONS AS AN
ENTIRETY AND MAY NOT CONSENT SELECTIVELY WITH RESPECT TO CERTAIN OF THE PROPOSED
AMENDMENTS.
The elimination and modification effected by the amended certificate of
designations of the covenants and other provisions set forth in the proposed
amendments will not become effective until the completion of the merger of FLCC
Acquisition Corp. and Citadel Communications and the expiration of our offer.
Promptly thereafter we will file the amended certificate of designations and
then accept for payment the shares of preferred stock properly tendered in this
offer.
IF THE PROPOSED AMENDMENTS WITH RESPECT TO THE CERTIFICATE OF DESIGNATIONS
BECOME EFFECTIVE, THEY WILL APPLY TO ALL SHARES THAT ARE NOT PROPERLY TENDERED
AND ACCEPTED FOR PAYMENT HEREUNDER AND EACH HOLDER OF SHARES WILL BE BOUND BY
THE PROPOSED AMENDMENTS REGARDLESS OF WHETHER THE HOLDER CONSENTED TO THE
PROPOSED AMENDMENTS. THE SHARES OF PREFERRED STOCK THAT ARE NOT TENDERED AND
ACCEPTED FOR PAYMENT PURSUANT TO THIS OFFER WILL REMAIN EQUITY SECURITIES OF
CITADEL BROADCASTING.
Consents given by holders of our preferred stock tendered but rejected by us
will not be counted for the purpose of determining whether the requisite
consents have been obtained. Only a registered holder as of May 2, 2001, the
record date, can effectively deliver a consent to the proposed amendments and
receive a consent payment.
4. PROCEDURES FOR TENDERING SHARES AND CONSENTING TO THE PROPOSED AMENDMENTS.
PROPER TENDER OF SHARES. For shares to be properly tendered, EITHER (1) OR
(2) below must happen:
17
(1) The depositary must receive all of the following before or on the
expiration date at one of the depositary's addresses on the back page of
this document:
- one of (a) the certificates for the shares or (b) a confirmation of
receipt of the shares pursuant to the procedure for book-entry transfer
we describe below,
- a properly completed and executed consent and letter of transmittal or
a manually executed facsimile of it, including any required signature
guarantees, and
- any other documents required by the consent and letter of transmittal;
or
(2) You must comply with the guaranteed delivery procedure set forth below.
If you tender your shares directly to the depositary, you will not have to
pay any brokerage commissions. If you hold shares through a broker or bank,
however, you should ask your broker or bank to see if you will be charged a fee
to tender your shares through the broker or bank.
ENDORSEMENTS AND SIGNATURE GUARANTEES. Depending on how your shares are
registered and to whom you want payments or deliveries made, you may need to
have your certificates endorsed and the signatures on the consent and letter of
transmittal and endorsement guaranteed by an "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934. No endorsement or signature guarantee is required if:
- the consent and letter of transmittal is signed by the registered holder
of the shares tendered (which, for purposes of this Section 4, includes
any participant in The Depository Trust Company, referred to as the
"book-entry transfer facility," whose name appears on a security position
listing as the owner of the shares) exactly as the name of the registered
holder appears on the certificate(s) for the shares and payment and
delivery are to be made directly to the holder, unless the holder has
completed either the box captioned "Special Delivery Instructions" or the
box captioned "Special Payment Instructions" on the consent and letter of
transmittal; or
- shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity that is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity that is
an eligible guarantor institution.
See instruction 6 of the consent and letter of transmittal.
On the other hand, if a certificate for shares is registered in the name of
a person other than the person executing a consent and letter of transmittal or
you are completing either the box captioned "Special Delivery Instructions" or
the box captioned "Special Payment Instructions" on the consent and letter of
transmittal, then:
- your certificates must be endorsed or accompanied by an appropriate stock
power, in either case signed exactly as the name of the registered holder
appears on the certificates, and
- the signature on (a) the consent and letter of transmittal and (b) your
certificates or stock power must be guaranteed by an eligible guarantor
institution.
METHOD OF DELIVERY. Payment for shares tendered and accepted for payment
under our offer will be made only after timely receipt by the depositary of all
of the following:
- certificates for those shares or a timely confirmation of the book-entry
transfer of those shares into the depositary's account at the book-entry
transfer facility as described below,
- a properly completed and duly executed consent and letter of transmittal
or a manually signed facsimile of it, including any required signature
guarantees, and
- any other documents required by the consent and letter of transmittal.
18
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
CONSENT AND LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT YOUR
ELECTION AND RISK. IF YOU DECIDE TO MAKE DELIVERY BY MAIL, WE RECOMMEND YOU USE
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
ALL DELIVERIES IN CONNECTION WITH OUR OFFER, INCLUDING A CONSENT AND LETTER
OF TRANSMITTAL AND CERTIFICATES FOR SHARES, MUST BE MADE TO THE DEPOSITARY AND
NOT TO US, THE DEALER MANAGER, THE INFORMATION AGENT OR THE BOOK-ENTRY TRANSFER
FACILITY. ANY DOCUMENTS DELIVERED TO US, THE DEALER MANAGER, THE INFORMATION
AGENT OR THE BOOK-ENTRY TRANSFER FACILITY WILL NOT BE FORWARDED TO THE
DEPOSITARY AND THEREFORE WILL NOT BE DEEMED TO BE PROPERLY TENDERED.
BOOK-ENTRY DELIVERY. The depositary will establish an account with respect
to the shares at a book-entry transfer facility for purposes of our offer within
two business days after the date of this document. Any institution that is a
participant in the book-entry transfer facility's system may make book-entry
delivery of the shares by causing that facility to transfer those shares into
the depositary's account in accordance with that facility's procedure for the
transfer. Even if delivery of shares is made through book-entry transfer into
the depositary's account at the book-entry transfer facility, EITHER (1) OR
(2) below must occur:
(1) the depositary must receive all of the following before or on the
expiration date at one of the depositary's addresses on the back page of
this document:
- a properly completed and executed consent and letter of transmittal or
a manually executed facsimile of it, including any required signature
guarantees, and
- any other documents required by the consent and letter of transmittal;
or
(2) the guaranteed delivery procedure described below must be followed.
Delivery of the consent and letter of transmittal or any other required
documents to the book-entry transfer facility does not constitute delivery to
the depositary.
Participants in the book-entry transfer facility also may tender their
shares in accordance with the "automated tender offer program" to the extent it
is available to them for the shares they wish to tender. A stockholder tendering
through the automated tender offer program must properly complete and execute a
consent and letter of transmittal, delivered to the depositary by the expiration
date to effect the delivery of the related consent.
GUARANTEED DELIVERY. If you want to tender your shares after the consent
date but your share certificates are not immediately available or cannot be
delivered to the depositary on or before the expiration date, the procedure for
book-entry transfer cannot be completed on or before the expiration date, or if
time will not permit all required documents to reach the depositary on or before
the expiration date, you can still tender your shares, if all of the following
conditions are satisfied:
- the tender is made by or through an eligible guarantor institution;
- the depositary receives by hand, mail, overnight courier or facsimile
transmission, before the expiration date, a properly completed and duly
executed notice of guaranteed delivery in the form we have provided with
this document; and
- all of the following are received by the depositary within two business
days after the date of execution of the notice of guaranteed delivery:
- one of (a) the certificates for the shares or (b) a confirmation of
receipt of the shares pursuant to the procedure for book-entry transfer
described above,
- a properly completed and executed consent and letter of transmittal or
a manually executed facsimile of it, including any required signature
guarantees, and
19
- any other documents required by the consent and letter of transmittal.
HOLDERS OF SHARES OF PREFERRED STOCK SHOULD BE AWARE THAT, PRIOR TO THE
CONSENT DATE, TENDERS OF SHARES CANNOT BE MADE AND CONSENTS CANNOT BE DELIVERED
USING THE GUARANTEED DELIVERY PROCESS AND USE OF THE GUARANTEED DELIVERY PROCESS
WILL RESULT IN A HOLDER BEING INELIGIBLE TO RECEIVE THE CONSENT PAYMENT WITH
RESPECT TO THE SHARES SO TENDERED.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. We will determine, in our sole discretion,
all questions as to the validity, form, eligibility, including time of receipt,
and acceptance for payment of any tender of shares. Our determination will be
final and binding on all parties. We reserve the absolute right to reject any or
all tenders we determine not to be in proper form or the acceptance of or
payment for which we determine may be unlawful. We also reserve the absolute
right to waive any of the conditions of our offer and any defect or irregularity
in the tender of any particular shares or any particular stockholder. No tender
of shares will be deemed to be properly made until all defects or irregularities
have been cured by the tendering stockholder or waived by us. None of we, the
depositary, the information agent, the dealer manager and any other person will
be under any duty to give notice of any defects or irregularities in any tender,
or incur any liability for failure to give any such notice.
RETURN OF UNPURCHASED SHARES. If any tendered shares are not purchased or
are properly withdrawn, or if less than all shares evidenced by a stockholder's
certificates are tendered, certificates for unpurchased shares will be returned
as soon as practicable after the expiration or termination of our offer or the
proper withdrawal of the shares, as applicable. In the case of shares tendered
by book-entry transfer at the book-entry transfer facility, the shares will be
credited to the appropriate account maintained by the tendering stockholder at
the book-entry transfer facility. In each case, shares will be returned or
credited without expense to the stockholder.
LOST OR DESTROYED CERTIFICATES. If your certificate for part or all of your
shares has been lost, stolen, misplaced or destroyed, you should contact The
Bank of New York, the transfer agent for our shares, at (212) 815-5592, for
instructions as to obtaining an affidavit of loss. The affidavit of loss will
then be required to be submitted together with the consent and letter of
transmittal in order for you to receive payment for shares that are tendered and
accepted for payment. A bond may be required to be posted by you to secure
against the risk that the certificates may be subsequently recirculated. You are
urged to contact The Bank of New York immediately in order to receive further
instructions, to permit timely processing of this documentation and for a
determination as to whether you will need to post a bond.
FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income tax
withholding equal to 31% of the gross payments payable pursuant to our offer,
each stockholder who is not a foreign stockholder who does not otherwise
establish an exemption from backup withholding must notify the depositary of the
stockholder's correct taxpayer identification number (or certify that the
taxpayer is awaiting a taxpayer identification number) and provide certain other
information by completing, under penalties of perjury, the Substitute Form W-9
included in the consent and letter of transmittal. Foreign stockholders should
generally complete and sign an appropriate Form W-8 in order to avoid backup
withholding; provided, however, that if the foreign stockholder is neither an
individual nor a corporation, in order to prevent backup federal income tax
withholding, the foreign stockholder may also be required to provide an
appropriate Form W-8 or a Form W-9 with respect to its partners, members,
beneficiaries or owners and their beneficial owners.
For a discussion of material United States federal income tax consequences
generally applicable to tendering stockholders, see Section 8.
20
5. WITHDRAWAL RIGHTS AND REVOCATION OF CONSENTS.
Shares tendered in our offer may be withdrawn, and the related consents may
be revoked, at any time on or before the expiration date, subject to applicable
law. Except as otherwise provided in this Section 5, tenders of shares pursuant
to our offer are irrevocable.
A valid withdrawal of tendered shares on or prior to the expiration date
shall not be deemed a revocation of the related consent. If, prior to the
expiration date, a holder withdrawing shares also determines to revoke the
consent related thereto, the holder must expressly request the revocation of the
consent in the communication withdrawing the shares. Consents may be revoked at
any time on or prior to the expiration date, but a valid revocation of a consent
will render a tender of related shares defective. Consents may not be revoked
after the expiration date and tendered shares cannot be withdrawn after the
expiration date, unless required by applicable law. If, after the price
determination date, we change the offer consideration to be received in this
offer, then previously tendered shares may be validly withdrawn until the
expiration of ten business days after the date that notice of any such reduction
is first published, given or sent to holders by us. In addition, tendered shares
will be promptly returned to the tendering holder if the offer is terminated
without any shares being purchased hereunder.
For a withdrawal to be effective, the depositary must receive (at one of its
addresses set forth on the back cover of this document) a notice of withdrawal
in written or facsimile transmission form on a timely basis. The notice of
withdrawal must specify the name of the person who tendered the shares to be
withdrawn, the number of shares tendered, the number of shares to be withdrawn
and the name of the registered holder. If the certificates have been delivered
or otherwise identified to the depositary, then, prior to the release of those
certificates, the tendering stockholder must also submit the serial numbers
shown on the particular certificates evidencing the shares and the signature on
the notice of withdrawal must be guaranteed by an eligible guarantor institution
(except in the case of shares tendered by an eligible guarantor institution). If
consents previously delivered are also to be revoked, the notice of withdrawal
described above must be received by the depositary on or prior to the expiration
date and must contain the description of the shares (including certificate
number, if applicable) as to which consents are to be revoked. A purported
notice of withdrawal that lacks any of the required information will not be an
effective withdrawal of a tender previously made.
If shares have been tendered pursuant to the procedure for book-entry
transfer set forth in Section 4, the notice of withdrawal must specify the name
and the number of the account at the book-entry transfer facility to be credited
with the withdrawn shares and otherwise comply with the procedures of the book-
entry transfer facility.
We will determine, in our sole discretion, all questions as to the form and
validity, including time of receipt, of notices of withdrawal. Our determination
shall be final and binding on all parties. None of we, the depositary, the
information agent, the dealer manager and any other person will be under any
duty to give any notice of any defects or irregularities in any notice of
withdrawal, or incur any liability for failure to give any such notice.
Withdrawals may not be rescinded, and any shares properly withdrawn will
thereafter be deemed not tendered for purposes of our offer unless the withdrawn
shares are properly retendered before the expiration date by following any of
the procedures described in Section 4.
If we extend our offer, or if we are delayed in our purchase of shares or
are unable to purchase shares under our offer for any reason, then, without
prejudice to our rights under our offer, the depositary may, subject to
applicable law, retain on our behalf all tendered shares, and those shares may
not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in this Section 5.
21
6. CONDITIONS OF OUR OFFER AND CONSENT SOLICITATION.
Our offer is conditioned on the following:
- obtaining the consent of the holders of at least a majority of the
outstanding shares of our preferred stock to adopt the proposed
amendments;
- the completion of the merger between FLCC Acquisition Corp. and our parent
company, Citadel Communications;
- the absence of governmental or court action prohibiting the offer;
- the absence of any event, that, in our reasonable judgment, would or might
prohibit, prevent, restrict or delay this offer and consent solicitation
or that will or is reasonably likely to impair materially the contemplated
benefits of this offer and consent solicitation; and
- the absence of any of the following:
- a declaration of a banking moratorium or any suspension of payments in
respect of banks by federal or state authorities in the United States
(whether or not mandatory);
- a commencement or escalation of a war, armed hostilities or other
national or international crisis directly or indirectly relating to the
United States;
- any limitation (whether or not mandatory) by any governmental authority
on, or other event having a reasonable likelihood of affecting, the
extension of credit by banks or other lending institutions in the
United States; or
- in the case of any of the foregoing existing as of the date hereof, a
material acceleration or worsening thereof.
In accordance with the terms of the agreement and plan of merger between
FLCC Holdings, FLCC Acquisition Corp. and Citadel Communications, we will act
only in connection with this offer and consent solicitation at the direction of,
and in the manner directed by, FLCC Holdings. Notwithstanding any other
provision of our offer, we will not be required to accept for payment, purchase
or pay for any shares tendered, and may terminate or amend our offer or may
postpone the acceptance for payment of, or the purchase of and the payment for
shares tendered, subject to Rule 13e-4(f) under the Securities Exchange Act of
1934, if at any time prior to the expiration date (whether any shares have
theretofore been accepted for payment, purchased or paid for under our offer)
any of the foregoing events occur or are determined by us to have occurred,
that, in our reasonable judgment and regardless of the cause of the event,
including any action or omission to act by us, makes it inadvisable to proceed
with the offer or with acceptance for payment or payment for the shares in our
offer.
We also expressly reserve the right, in our sole discretion, subject to
applicable law, at any time or from time to time prior to the expiration date,
to:
- terminate the offer or the consent solicitation;
- waive any condition to the offer or the consent solicitation;
- extend the offer or the consent solicitation; or
- amend the offer or the consent solicitation in any respect.
All conditions to the offer and the consent solicitation must be satisfied
or waived on or prior to the expiration date.
If we amend the offer and consent solicitation, we will make a public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the last previously scheduled or announced
22
expiration date. If we terminate or postpone the offer and consent solicitation,
we will also give written or oral notice to the depositary.
The conditions listed above are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any of these conditions,
including any action or inaction by us, or may be waived by us in whole or in
part. Our failure at any time to exercise any of the foregoing rights shall not
be deemed to be a waiver of any of these rights, and each of these rights shall
be deemed an ongoing right that may be asserted by us at any time and from time
to time prior to the expiration of our offer. Our determination concerning the
events described above and any related judgment or decision by us regarding the
inadvisability of proceeding with the purchase of or payment for any shares
tendered will be final and binding on all parties.
Any amendment applicable to the offer and consent solicitation will apply to
all shares tendered pursuant to the offer and consent solicitation. See
Section 1.
7. SOURCES AND AMOUNT OF FUNDS.
The total amount of funds required to solicit consents from the holders of
our preferred stock and to repurchase all of the outstanding shares of preferred
stock is estimated to be approximately $123.0 million. The total amount of funds
required to solicit consents from the holders of our 10 1/4% notes and 9 1/4%
notes and to repurchase all of our 10 1/4% notes and 9 1/4% notes pursuant to
the offers to purchase these notes, before accrued and unpaid interest, is
estimated to be approximately $241.5 million. Accordingly, the total amount of
funds required to complete the foregoing transactions is estimated to be
approximately $364.5 million. These calculations assume that (1) all 10 1/4%
notes and 9 1/4% notes and all shares of preferred stock are tendered and
accepted for payment, (2) consents are received from holders of all 10 1/4%
notes and 9 1/4% notes and all shares of preferred stock and (3) the tender
offer yields on the price determination dates are equivalent to those used in
Schedule II hereto and Schedule II in the offer to purchase for cash and consent
solicitation statement, as amended, supplemented or otherwise modified from time
to time, with respect to the 10 1/4% notes and the 9 1/4% notes.
The lenders under the credit agreement, which is described more fully below,
have agreed to provide an aggregate principal amount of $700 million in loans to
us. Of this amount, we expect to obtain $525 million following or concurrently
with the closing of the merger in connection with the financing of the purchase
of the 10 1/4% notes and 9 1/4% notes pursuant to the offers to purchase these
notes, the consent solicitations for these notes, this offer and consent
solicitation and the refinancing of our other indebtedness.
The table below identifies the approximate expected sources and uses of
funds necessary to complete the merger.
SOURCES AND USES OF FUNDS
SOURCES (IN MILLIONS) USES (IN MILLIONS)
- ----------------------------------- -----------------------------------
Revolving Credit Facility.......... $ 25.0 Purchase of Equity................. $ 994.8
Term Loan A........................ 250.0 Refinance Existing Debt and 976.2
Preferred Stock....................
Term Loan B........................ 250.0 Other Fees and Expenses(a)......... 89.0
Subordinated Debt.................. 500.0
Equity............................. 1,035.0
-------- --------
Total Sources...................... $2,060.0 Total Uses......................... $2,060.0
======== ========
- ------------------------
(a) Includes approximately $48 million of premiums paid to holders of the
preferred stock, the 10 1/4% notes and the 9 1/4% notes.
23
On April 3 2001, FLCC Holdings, FLCC Acquisition Corp., The Chase Manhattan
Bank and certain other lenders entered into a credit agreement which provides
that, when the merger is completed, we will become a party to the credit
agreement. The following is a summary of the material terms of our new credit
facility. The summary is qualified in its entirety by reference to the credit
facility, a copy of which is filed as an exhibit to our Issuer Tender Offer
Statement on Schedule TO, filed with the Securities and Exchange Commission.
Under the credit agreement, the lenders have agreed to provide to us an
aggregate principal amount of $700 million in revolving loans and term loans,
and we may, at our option and subject to certain conditions specified in the
credit agreement (including obtaining commitments for the incremental facility),
borrow an additional $400 million in revolving loans and term loans to fund
future acquisitions and to use for general corporate purposes.
Under the credit agreement, we may elect that all or a portion of the loans
bear an annual interest rate equal to (a) the highest of (1) the prime rate,
(2) the secondary market rate for three-month certificates of deposit plus 1%
and (3) the federal funds rate plus 0.5%, or (b) the eurodollar rate (grossed-up
for reserve requirements), in each case plus a margin which will vary between
0.5% and 3.25% per year depending on our interest rate election and our ratio of
total senior debt to consolidated earnings before interest, taxes, depreciation
and amortization, or EBITDA.
Subject to certain conditions, we can prepay all or a portion of the
outstanding loans at any time and terminate the unused portion of the revolving
credit facility in whole or in part at our option. Prepayments of term loans may
not be reborrowed. The loans must be prepaid (and letters of credit cash
collateralized or replaced) with the net proceeds (in excess of $30 million) of
certain asset sales and issuances of debt obligations (other than permitted
indebtedness) of Citadel Communications or any of its subsidiaries following the
merger. The net proceeds will be applied, except to the extent the lenders agree
otherwise, first to prepay term loans and then to prepay revolving credit loans
(and cash collateralize or replace outstanding letters of credit) and
simultaneously reduce the revolving credit facility.
The loans will be unconditionally guaranteed by FLCC Holdings and Citadel
Communications. The loans and all guarantees will be secured by a perfected
first priority security interest in all of the capital stock of Citadel
Communications and substantially all capital stock owned by Citadel
Communications and us. In addition, the credit agreement contains a negative
pledge on our assets and the assets of Citadel Communications and prohibits us
from paying dividends on our preferred stock in the form of cash.
The loans under the credit agreement are conditioned on certain customary
conditions and will contain certain customary representations and warranties,
covenants and events of default. Other than in the ordinary course of business,
there are no plans or arrangements to refinance or repay the credit agreement.
There are no alternative financing arrangements or alternative financing plans
in the event that our primary financing plans under the credit agreement fall
through.
8. MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following discussion describes the material United States federal income
tax consequences of participating in our offer. The discussion is for general
information only, and does not purport to consider all aspects of federal income
taxation that may be relevant to stockholders. The consequences to any
particular stockholder may differ depending upon that stockholder's own
circumstances and tax position. The discussion deals only with preferred stock
held as capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, or the Code, and does not address matters that may be
relevant to stockholders in light of their particular circumstances or to
certain stockholders subject to special treatment under the Code, such as
financial institutions, insurance companies, stockholders liable for the
alternative minimum tax, dealers in securities or currencies, traders who elect
to apply a mark-to-market method of accounting, tax-exempt organizations,
foreign persons, directors, employees, former employees or other persons who
acquired their preferred stock as compensation, including upon the exercise of
employee stock options, and persons who are holding preferred stock as part of a
straddle, conversion,
24
constructive sale, hedge or hedging or other integrated transaction, who may be
subject to special rules. In addition, this discussion does not address persons
who constructively own or acquire our preferred stock immediately after the
offer. The discussion does not consider the effect of any applicable state,
local or foreign tax laws. In addition, this discussion is based upon tax laws
in effect on the date of this document, which are subject to change. EACH
STOCKHOLDER IS URGED TO CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH STOCKHOLDER OF PARTICIPATING OR NOT PARTICIPATING IN OUR
OFFER, INCLUDING THE APPLICATIONS OF STATE, LOCAL AND FOREIGN TAX LAWS AND
POSSIBLE TAX LAW CHANGES.
TENDER OF PREFERRED STOCK PURSUANT TO THE OFFER. The sale of preferred
stock pursuant to our offer will be a taxable transaction for United States
federal income tax purposes. In general, the tendering stockholder will
recognize gain or loss equal to the difference between the amount of cash
received by the stockholder pursuant to our offer and the stockholder's tax
basis in the preferred stock sold pursuant to our offer. Gain or loss will be
separately computed for each block of shares tendered by the stockholder. Any
gain or loss will be capital gain or loss, except to the extent that the
redemption price includes dividends which have been declared by our board of
directors prior to the redemption. In addition, if the consent payment received
by a stockholder in connection with such stockholder's sale of a stock pursuant
to our offer is treated as a separate fee for consenting to the proposed
amendments, such amount may be taxable as ordinary income to a stockholder
(rather than as sale proceeds in the manner discussed above). See "--Taxation of
Consent Payments" below. Any capital gain or loss will be long-term capital gain
or loss if the preferred stock has been held for more than one year.
For a discussion of certain withholding tax consequences to tendering
stockholders, see Section 4.
TAXATION OF CONSENT PAYMENTS. The law is unclear with respect to the United
States federal income tax treatment of a stockholder's receipt of a consent
payment. The receipt of a consent payment by a stockholder may be treated EITHER
as (1) additional consideration received in exchange for tendered preferred
stock, in which case such payments would be taken into account in the manner
described above (see "--Tender of Preferred Stock Pursuant to the Offer" above),
OR (2) as separate consideration for consenting to the proposed amendments, in
which case such payments would constitute ordinary income to the stockholder. We
intend to treat and report the consent payments for United States federal income
tax purposes as additional consideration paid to the stockholders in exchange
for their tendered preferred stock. The Internal Revenue Service could assert,
however, that a consent payment is separate consideration for consenting to the
proposed amendments, in which case, if such assertion were successful, such
payment would constitute ordinary income to the stockholders.
TAX CONSEQUENCES TO NON-TENDERING STOCKHOLDERS. Although there is no
authority which directly addresses the type of modifications of the terms of the
preferred stock that would occur upon adoption of the proposed amendments to the
terms of the preferred stock, a stockholder who retains its preferred stock
should not be treated as having exchanged its non-tendered preferred stock for
new preferred stock and, therefore, should not recognize any gain or loss as
result of such proposed amendments. Even if the adoption of the proposed
amendments did result in a deemed exchange, however, such deemed exchange should
be treated as a tax-free recapitalization for United States federal income tax
purposes. In such a recapitalization, the stockholder generally would not
recognize any gain or loss, except to the extent of any accrued but unpaid
dividends which will generally constitute ordinary income to the non-tendering
stockholder.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER (INCLUDING
THE APPLICABILITY AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND FOREIGN,
STATE AND LOCAL TAX LAWS AND POSSIBLE TAX LAW CHANGES) OF THE SALE OF PREFERRED
STOCK PURSUANT TO OUR OFFER.
25
9. PRICE RANGE OF SHARES.
The shares are quoted on the OTC under the symbol "CTDB.O." Although the
preferred stock is quoted on the OTC, trading of the preferred stock is limited
and sporadic. To the best of our knowledge, in the past two years, there have
been no trades of shares of the preferred stock.
10. INFORMATION ABOUT US.
GENERAL. We are a Nevada corporation. Citadel Communications owns all of
our issued and outstanding common stock. We are a radio broadcaster in the
United States that focuses primarily on acquiring, developing and operating
radio stations in mid-sized markets. Upon completion of currently pending
transactions, we will own or operate 140 FM and 65 AM radio stations in 42
markets, including clusters of four or more stations in 32 markets. Our primary
strategy is to secure and maintain a leadership position in the markets we serve
and to expand into additional markets where management believes we can obtain a
leadership position. Upon entering a market, we seek to acquire stations that,
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, management
believes we are not unduly reliant upon the performance of any single station.
Management also believes that the diversity of our portfolio of radio stations
helps insulate us from downturns in specific markets and changes in format
preferences.
Our principal executive offices are located at City Center West, Suite 400,
7201 West Lake Mead Boulevard, Las Vegas, Nevada 89128. Our telephone number is
(702) 804-5200.
WHERE YOU CAN FIND MORE INFORMATION. We are subject to the informational
filing requirements of the Securities Exchange Act of 1934 and, in accordance
with these requirements, are obligated to file reports and other information
with the Securities and Exchange Commission relating to our business, financial
condition and other matters. Information, as of particular dates, concerning our
directors and officers, their compensation, options granted to them, the
principal holders of our securities and any material interest of such persons in
transactions with us is required to be disclosed in certain reports we file with
the Securities and Exchange Commission. We have also filed an Issuer Tender
Offer Statement on Schedule TO, which includes additional information with
respect to our offer.
The reports, and other information we file can be inspected and copied at
the public reference facilities maintained by the Securities and Exchange
Commission at 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; and at
its regional offices located at Citicorp Center 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, New York, New York
10048. Copies of this material may also be obtained by mail, upon payment of the
Securities and Exchange Commission's customary charges, from the Public
Reference Section at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The Securities and Exchange Commission also maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Securities and Exchange Commission.
INCORPORATION BY REFERENCE. The rules of the Securities and Exchange
Commission allow us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to another document filed separately with the Securities and
Exchange Commission. These documents contain important information about us.
OUR SECURITIES AND EXCHANGE COMMISSION FILINGS
(FILE NO. 333-36771) PERIOD OR DATE FILED
- ---------------------------------------------- -----------------------------------------------------------
Annual Report on Form 10-K Year ended December 31, 2000
Reports on Form 8-K Reports filed on January 16, 2001 and January 24, 2001
26
We incorporate by reference these documents and any additional documents
that we may file with the Securities and Exchange Commission (other than any
portion of a current report on Form 8-K that provides information under Item 9
of Form 8-K and other than any financial statements contained in such documents)
between the date of this document and the date of expiration of withdrawal
rights. Those documents include periodic reports, such as annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
11. FEES AND EXPENSES.
We have retained J.P. Morgan Securities Inc. as the dealer manager and
solicitation agent in connection with our offer. In such capacity, the dealer
manager may contact brokers, dealers and similar entities and may provide
information regarding our offer to those that they contact or persons that
contact them. We have agreed to pay, subject to certain conditions, the dealer
manager for its financial advisory services; to reimburse the dealer manager for
reasonable out-of-pocket expenses; and to indemnify the dealer manager against
certain liabilities, including certain liabilities under the federal securities
laws. The dealer manager is an affiliate of The Chase Manhattan Bank, which is
the administrative agent and a lender to us under the credit agreement. The
dealer manager has provided in the past, and/or is currently providing, other
investment banking and financial advisory services to us and certain affiliates
of FLCC Holdings, Inc. The dealer manager may continue to provide various
investment banking and other services to us in the future, for which it would
receive customary compensation from us. The dealer manager is also acting as
dealer manager in our concurrent tender offer for the 10 1/4% notes and the
9 1/4% notes.
We have retained Innisfree M&A Incorporated to act as information agent and
The Bank of New York to act as depositary in connection with our offer. The
information agent may contact holders of shares by mail, telephone, telegraph
and in person and may request brokers, dealers, commercial banks, trust
companies and other nominee stockholders to forward materials relating to our
offer to beneficial owners. The information agent and the depositary will each
receive reasonable and customary compensation for their services, which will be
reimbursed by us for specified reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection with our offer, including
certain liabilities under the federal securities laws.
We will not pay fees or commissions to any broker, dealer, commercial bank,
trust company or other person for soliciting any shares under our offer, other
than as described above. We will, however, on request, reimburse brokers,
dealers, commercial banks, trust companies and other persons for customary
handling and mailing expenses incurred in forwarding our offer and related
materials to the beneficial owners for which they act as nominees. No broker,
dealer, commercial bank or trust company has been authorized to act as our agent
or as an agent of our dealer manager, information agent or depositary for
purposes of our offer. We will not pay, or cause to be paid, any stock transfer
taxes on our purchase of shares, except as otherwise provided in instruction 11
of the consent and letter of transmittal.
12. MISCELLANEOUS.
We are not aware of any jurisdiction where the making of our offer is not in
compliance with applicable law. If we become aware of any jurisdiction where the
making of our offer is not in compliance with any applicable law, we will make a
good faith effort to comply with the applicable law. If, after good faith
effort, we cannot comply with the applicable law, we will not make our offer to,
nor will we accept tenders from or on behalf of, the holders of shares residing
in that jurisdiction. In any jurisdiction where the securities or blue sky laws
require our offer to be made by a licensed broker or dealer, our offer shall be
deemed to be made on our behalf by the dealer manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
In accordance with Rule 13e-4 under the Securities Exchange Act of 1934, we
have filed with the Securities and Exchange Commission an Issuer Tender Offer
Statement on Schedule TO that contains additional information with respect to
our offer. The Schedule TO, including the exhibits and any amendments thereto,
may be examined, and copies may be obtained, at the same places and in the same
manner as is set forth in Section 10 with respect to information concerning us.
27
SCHEDULE I
FORMULA TO DETERMINE THE TOTAL CONSIDERATION
AND THE OFFER CONSIDERATION*
O/S = Aggregate liquidation value of the preferred stock
based upon the total number of shares outstanding
and the current effective liquidation preference
per share of preferred stock.
YLD = Fixed spread yield plus reference security yield
for the preferred stock expressed as a decimal
number.
CPN = The nominal rate of dividends payable on the
preferred stock expressed as a decimal number.
S1 = The number of days from (and including) the
expected payment date up to (but not including)
the first assumed date on which dividends will be
payable in cash.
S2 = The number of days from (and including) the
expected payment date up to (but not including)
the earliest redemption date.
exp = Exponentiate. The term to the left of "exp" is
raised to the power indicated by the term to the
right of "exp."
CP = The Consent Payment of $2.00 per share of
preferred stock.
RV = The assumed redemption value, as a percentage of
the then effective liquidation preference, based
on the earliest redemption date, for each share of
preferred stock (as rounded to the nearest one
hundredth of one percent).
Total Consideration = The Offer Consideration plus the Consent Payment
per share of preferred stock. The Total
Consideration is rounded to the nearest cent.
Offer Consideration = The applicable purchase price per share of
preferred stock. The Offer Consideration is
rounded to the nearest cent.
- ------------------------
* The formula assumes that dividends due and payable on the preferred stock on
July 1, 2001 will be paid in the form of payment-in-kind shares and that
dividends due and payable on January 1, 2002 and July 1, 2002 will be paid
in the form of cash. The existing credit facility as well as the credit
agreement that we will enter into upon the completion of the merger of FLCC
Acquisition Corp. and Citadel Communications Corporation each prohibit us
from paying dividends on our preferred stock in the form of cash.
SI-1
Total Consideration:
(O/S*(1+(CPN/2)))*CPN/2 (O/S*(1+(CPN/2)))*CPN/2 (O/S*(1+(CPN/2)))*RV
[ ----------------------- + ----------------------- + ----------------------- ] DIVIDED BY (O/S/$100)
((1+(YLD/2))exp(S1/180)) ((1+(YLD/2))exp(S2/180)) ((1+(YLD/2))exp(S2/180))
Offer Consideration:
(O/S*(1+(CPN/2)))*CPN/2 (O/S*(1+(CPN/2)))*CPN/2 (O/S*(1+(CPN/2)))*RV
[ ----------------------- + ----------------------- + ----------------------- ] DIVIDED BY (O/S/$100) - CP
((1+(YLD/2))exp(S1/180)) ((1+(YLD/2))exp(S2/180)) ((1+(YLD/2))exp(S2/180))
SI-2
AMENDED SCHEDULE II
HYPOTHETICAL PRICING EXAMPLES
This Schedule provides a hypothetical illustration of the Offer
Consideration and the Total Consideration payment pursuant to the offer for the
shares of preferred stock based on hypothetical data, and should, therefore, be
used solely for the purpose of obtaining an understanding of the calculation of
the Offer Consideration and the Total Consideration, as quoted at hypothetical
rates and times, and should not be used or relied upon for any other purpose.
Number of shares outstanding as of May 3, 2001 = 1,000,791.79
O/S = $100,079,179
Reference Security = 6 3/8% U.S. Treasury Note due June 30, 2002
Fixed Spread = 100 basis points
EXAMPLE:
Assumed Price Determination Date and Time = 12:00 noon, New York City time, May 16, 2001
Assumed Payment Date = June 26, 2001
Assumed Reference Security Yield (as at Assumed Price
Determination Date and Time) = 3.93%
YLD = .0493
CPN = .1325
Date of first assumed payment of dividends in cash = January 1, 2002
Date of second assumed payment of dividends in cash = July 1, 2002
S1 = 185
S2 = 365
RV = 107.729%
CP = $2.00
Total Consideration = $122.945
--------
($100,079,179)*(1+(.1325/2))*.1325/2 ($100,079,179)*(1+(.1325/2))*.1325/2 ($100,079,179)*(1+(.1325/2))*1.07729
[ ((1+(.0493/2))exp(185/180)) + ((1+(.0493/2))exp(365/180)) + ((1+(.0493/2))exp(365/180))
[ ] DIVIDED BY ($100,079,179/$100)
Offer Consideration = $120.945
--------
($100,079,179)*(1+(.1325/2))*.1325/2 ($100,079,179)*(1+(.1325/2))*.1325/2 ($100,079,179)*(1+(.1325/2))*1.07729
[ ((1+(.0493/2))exp(185/180)) + ((1+(.0493/2))exp(365/180)) + ((1+(.0493/2))exp(365/180))
DIVIDED BY
[ ] ($100,079,179/$100) - $2.00
ANNEX A
FORM OF
SECOND CERTIFICATE OF 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
The undersigned, the duly elected and acting president and
secretary of Citadel Broadcasting Company, a Nevada corporation,
pursuant to NRS 78.1955 do hereby certify as follows:
WHEREAS, pursuant to authority conferred upon the Board of Directors by
ARTICLE 4 of the Amended and Restated Articles of Incorporation of the Company
(the "Articles"), the Board of Directors of the Company by unanimous written
consent dated June 30, 1997 adopted a resolution creating two series of
Preferred Stock designated as 13 1/4% Series A Exchangeable Preferred Stock of
Citadel Broadcasting Company and 13 1/4% Series B Exchangeable Preferred Stock
of Citadel Broadcasting Company:
WHEREAS, a certificate of designation creating two series of Preferred Stock
of the Company designated as 13 1/4% Series A Exchangeable Preferred Stock and
13 1/4% Series B Exchangeable Preferred Stock, was filed with the Nevada
Secretary of State on July 2, 1997 (the "Original Designation").
WHEREAS, pursuant to the authority conferred upon the Board of Directors of
the Company by ARTICLE 4 of the Articles, and Section V of the Original
Designation, the Board of Directors of the Company by unanimous written consent,
dated July 21, 1997, adopted a resolution amending the Original Designation (the
"New Designation").
WHEREAS, a certificate of amendment effecting the New Designation was filed
with the Nevada Secretary of State on July 31, 1997.
WHEREAS, pursuant to the authority conferred upon the Board of Directors of
the Company by ARTICLE 4 of the Articles, Section V of the New Designation and
NRS 78.1955, the Board of Directors of the Company at a meeting held on
April 26, 2001, adopted a resolution adopting an amendment to the New
Designation.
WHEREAS, pursuant to Section V of the New Designation, a majority of the
holders of the outstanding shares of the Company's 13 1/4% Series B Exchangeable
Preferred Stock (the only outstanding preferred stock of the Company) have
granted their consent to an amendment to the New Designation.
WHEREAS, the foregoing approval constitutes the approval required by NRS
78.1955(3) and therefore the approval of the stockholders required by NRS
78.1955(3) has been obtained.
RESOLVED, that pursuant to the authority granted by the New Designation and
NRS 78.1955 to the Board of Directors and the holders of the Company's
Exchangeable Preferred Stock, the New Designation is hereby amended and restated
in its entirety as follows:
I. DESIGNATION AND AMOUNT. The designations for the two series of
Preferred Stock authorized by this resolution shall be the 13 1/4% Series A
Exchangeable Preferred Stock without par value (the "Series A Preferred
Stock") and the 13 1/4% Series B Exchangeable Preferred Stock without par
value (the "Series B Preferred Stock" and together with the Series A
Preferred Stock, the "Exchangeable Preferred Stock"). The initial
liquidation preference of the Exchangeable Preferred Stock is $100.00 per
share and the original issue price for each such share is $100.00. The issue
price per share or
A-1
liquidation preference of the Exchangeable Preferred Stock shall not for any
purpose be considered to be a determination by the Board of Directors with
respect to the capital and surplus of the Company. The maximum number of
shares of Series A Preferred Stock shall be 2,000,000 and the maximum number
of shares of Series B Preferred Stock shall be 2,000,000.
II. DIVIDENDS. (a) Holders of the outstanding shares of Exchangeable
Preferred Stock (the "Holders") will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Exchangeable Preferred Stock at an annual rate of 13 1/4%
(the "Dividend Rate"). All dividends will be cumulative, whether or not
earned or declared, from the Closing Date and will be payable semi-annually
in arrears on each Dividend Payment Date, commencing on January 1, 1998, to
Holders of record on the June 15 or December 15 immediately preceding the
relevant Dividend Payment Date. On or before July 1, 2002, the Company may,
at its option, pay dividends in cash or in additional fully paid and
non-assessable shares of Exchangeable Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends, PROVIDED,
HOWEVER, that if the Company pays dividends in additional shares of
Exchangeable Preferred Stock, Holders of Series A Preferred Stock shall be
paid in additional shares of Series A Preferred Stock and Holders of
Series B Preferred Stock shall be paid in additional shares of Series B
Preferred Stock. After July 1, 2002, dividends shall be paid only in cash.
If any dividend (or portion thereof) payable on any Dividend Payment Date on
or before July 1, 2002 is not declared or paid in full in cash or in shares
of Exchangeable Preferred Stock as described above on such Dividend Payment
Date, the amount of the accumulated and unpaid dividend will bear interest
at the Dividend Rate, compounding semi-annually from such Dividend Payment
Date until paid in full. If any dividend (or portion thereof) payable on any
Dividend Payment Date after July 1, 2002 is not declared or paid in full in
cash on such Dividend Payment Date, the amount of the accumulated and unpaid
dividend that is payable and that is not paid in cash on such date will bear
interest at the Dividend Rate, compounding semi-annually from such Dividend
Payment Date until paid in full. Dividends shall cease to accumulate in
respect of the shares of Exchangeable Preferred Stock on the Exchange Date
or on the Redemption Date unless the Company shall have failed to issue the
appropriate aggregate principal amount of Exchange Debentures in respect of
the Exchangeable Preferred Stock on the Exchange Date or shall have failed
to pay the relevant redemption price on the Redemption Date.
(b) All dividends paid with respect to shares of the Exchangeable
Preferred Stock pursuant to Section II(a) of this Certificate of Designation
shall be paid PRO RATA to the Holders entitled thereto.
(c) Nothing contained in this Certificate of Designation shall in any
way or under any circumstances be construed or deemed to require the Board
of Directors to declare, or the Company to pay or set apart for payment, any
dividends on shares of the Exchangeable Preferred Stock at any time.
(d) Holders shall be entitled to receive the dividends provided for in
Section II(a) of this Certificate of Designation (including any accumulated
and unpaid cash dividends on the Exchangeable Preferred Stock) in preference
to and in priority over any cash dividends (including accumulated and unpaid
dividends) upon any of the Junior Stock.
(e) No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Stock for any period unless full
cumulative dividends shall have been or contemporaneously are declared and
paid (or are deemed declared and paid) in full or declared and, if payable
in cash, a sum in cash sufficient for such payment set apart for such
payment on the Exchangeable Preferred Stock. If full dividends are not so
paid, the Exchangeable Preferred Stock will share dividends PRO RATA with
the Parity Stock. No dividends may be paid or set apart for such payment on
Junior Stock (except dividends on Junior Stock payable in additional shares
of Junior Stock) and no Junior Stock or Parity Stock may be repurchased,
redeemed or otherwise retired nor may funds be set apart for payment with
respect thereto, if full cumulative dividends have not been paid in full (or
deemed paid) on any issued and outstanding Exchangeable Preferred Stock.
A-2
(f) Dividends on account of arrears for any past dividend period and
dividends in connection with any optional redemption may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
Holders of record of the Exchangeable Preferred Stock on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(g) Each fractional share of Exchangeable Preferred Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends
accruing with respect to each outstanding share of Exchangeable Preferred
Stock pursuant to Section II(a), and all such dividends with respect to such
outstanding fractional shares shall accumulate at the Dividend Rate and
shall be payable in the same manner and at such times as provided for in
Section II(a) with respect to dividends on each outstanding share of
Exchangeable Preferred Stock.
(h) Dividends payable on the Exchangeable Preferred Stock for any period
less than a year shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which
dividends are payable.
III. LIQUIDATION PREFERENCE. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, Holders will be
entitled to be paid, out of the assets of the Company available for
distribution to stockholders, the then effective liquidation preference per
share of Exchangeable Preferred Stock, plus, without duplication, an amount
in cash equal to all accumulated and unpaid dividends thereon to the date
fixed for liquidation, dissolution or winding-up (including an amount equal
to a prorated dividend for the period from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up), before any
distribution is made on any Junior Stock, including, without limitation,
common stock of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable
with respect to the Exchangeable Preferred Stock and all other Parity Stock
are not paid in full, the Holders of the Exchangeable Preferred Stock and
the holders of the Parity Stock will share equally and ratably in any
distribution of assets of the Company in proportion to the liquidation
preference, together with all accumulated and unpaid dividends, to which
each is entitled. After payment of the full amount of the liquidation
preference and accumulated and unpaid dividends to which they are entitled,
Holders will not be entitled to any further participation in any
distribution of assets of the Company. For the purposes of this
Section III, neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all of the property or assets of the Company nor the consolidation or merger
of the Company with one or more entities shall be deemed to be a
liquidation, dissolution or winding-up of the Company.
The liquidation preference with respect to each outstanding fractional
share of Exchangeable Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payments with respect to each
outstanding full share of Exchangeable Preferred Stock.
IV. EXCHANGE. (a) The Company may, at its option, subject to the
conditions described below, on any scheduled Dividend Payment Date, exchange
the Exchangeable Preferred Stock, in whole but not in part, for the Exchange
Debentures. At least 30 and not more than 60 days prior to the date fixed
for exchange, the Company shall send a written notice (the "Exchange
Notice") of exchange by mail to each Holder, which notice shall state:
(i) that the Company has elected to exchange the Exchangeable
Preferred Stock into Exchange Debentures pursuant to this Certificate of
Designation;
(ii) the date of such exchange (the "Exchange Date");
(iii) that the Holder is to surrender to the Company, at the place or
places and in the manner designated in the Exchange Notice, its
certificate or certificates representing the shares of Exchangeable
Preferred Stock;
(iv) that dividends on the shares of Exchangeable Preferred Stock to
be exchanged shall cease to accumulate at the close of business on the
day prior to the Exchange Date, whether or
A-3
not certificates for shares of Exchangeable Preferred Stock are
surrendered for exchange on the Exchange Date, unless the Company shall
default in the delivery of Exchange Debentures; and
(v) that interest on the Exchange Debentures shall accrue from the
Exchange Date whether or not certificates for shares of Exchangeable
Preferred Stock are surrendered for exchange on the Exchange Date.
On the Exchange Date, if the conditions set forth in clauses
(A) through (E) below are satisfied and if the exchange is then permitted
under the Exchange Indenture, the Company shall issue Exchange Debentures in
exchange for the Exchangeable Preferred Stock as provided in the next
paragraph, provided that on the Exchange Date: (A) there shall be legally
available funds sufficient for the exchange to occur (including, without
limitation, legally available funds sufficient therefor under
Section 78.288 (or any successor provisions), to the extent applicable, of
the General Corporation Law of the State of Nevada); (B) the Company shall
have obtained a written opinion of counsel acceptable to the Company that an
exemption from the registration requirements of the Securities Act is
available for such exchange, and such exemption is relied upon by the
Company for such exchange or, alternatively, that the Exchange Debentures
have been registered thereunder; (C) the Exchange Indenture and the
Debentures Trustee shall have been qualified under the Trust Indenture Act
or the Company shall have obtained a written opinion of counsel that such
qualification is not required; (D) immediately after giving effect to such
exchange, no default or event of default would exist under the Exchange
Indenture, and no material breach or default would exist under the Credit
Facility, the Notes Indenture or the Securities Purchase and Exchange
Agreement; and (E) on the Exchange Date there are no accumulated and unpaid
dividends on the Exchangeable Preferred Stock (including the dividend
payable on such date). In the event that any of the conditions set forth in
clauses (A) through (E) of the preceding sentence are not satisfied on the
Exchange Date, then no shares of Exchangeable Preferred Stock shall be
exchanged, and in order to effect an exchange as provided for in this
Section IV, the Company shall be required to fix another date for the
exchange and issue a new Exchange Notice.
(b) Upon any exchange pursuant to this Section IV, Holders shall be
entitled to receive, subject to the provisions hereof, $1.00 principal
amount of Exchange Debentures for each $1.00 of the aggregate of the
liquidation preference of the Exchangeable Preferred Stock and all
accumulated and unpaid dividends thereon, plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends thereon for the
period from the immediately preceding Dividend Payment Date to the day prior
to the Exchange Date; PROVIDED that the Company shall pay cash in lieu of
issuing an Exchange Debenture in a principal amount of less than $1,000 and
provided further that the Exchange Debentures will be issuable only in
denominations of $1,000 and integral multiples thereof.
(c) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of the Exchangeable
Preferred Stock, in the manner and at the place designated in the Exchange
Notice. The Company shall cause the Exchange Debentures to be executed on
the Exchange Date and, upon surrender in accordance with the Exchange Notice
of the certificates for any shares of the Exchangeable Preferred Stock so
exchanged (properly endorsed or assigned for transfer, if the Exchange
Notice shall so state), such shares shall be exchanged by the Company into
Exchange Debentures as aforesaid. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(d) If the Exchange Notice has been mailed as aforesaid, and if before
the Exchange Date all Exchange Debentures necessary for such exchange shall
have been duly executed by the Company and delivered to the Debentures
Trustee with irrevocable instructions to authenticate the Exchange
Debentures necessary for such exchange, then the rights of the Holders as
stockholders of the Company shall cease (except the right to receive the
Exchange Debentures, an amount in cash, to the extent applicable, equal to
the accumulated and unpaid dividends to the Exchange Date and cash in lieu
of any Exchange Debenture that is in a principal amount less than $1,000),
and the person or
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persons entitled to receive the Exchange Debentures issuable upon exchange
shall be treated for all purposes as a registered holder or holders of such
Exchange Debentures as of the Exchange Date.
V. VOTING RIGHTS. (a) Holders, except as otherwise required under
Nevada law or as set forth below, shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by the stockholders of
the Company.
(b) If (i) after July 1, 2002, cash dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for two or more semi-annual
dividend periods (whether or not consecutive) (a "Dividend Default");
(ii) the Company fails to redeem the Exchangeable Preferred Stock on
July 1, 2009 or fails to otherwise discharge any redemption obligation set
forth in this Certificate of Designation with respect to the Exchangeable
Preferred Stock; (iii) the Company fails to make a Non-FL Change of Control
Offer if such offer is required by the provisions set forth under the
"Purchase of Exchangeable Preferred Stock upon a Change of Control" covenant
set forth in Section VIII(b) below or fails to purchase shares of
Exchangeable Preferred Stock from Holders who elect to have such shares
purchased pursuant to the Non-FL Change of Control Offer; (iv) a breach or
violation of any other provisions contained in Section VIII hereof occurs
and the breach or violation continues for a period of 30 days or more after
the Company receives notice thereof specifying the default from the Holders
of at least 25% of the shares of Exchangeable Preferred Stock then
outstanding; or (v) the Company fails to pay at the final stated maturity
(giving effect to any extensions thereof) the principal amount of any Debt
of the Company, or the final stated maturity of any such Debt is
accelerated, if the aggregate principal amount of such Debt, together with
the aggregate principal amount of any other such Debt in default for failure
to pay principal at the final stated maturity (giving effect to any
extensions thereof) or which has been accelerated, aggregates $5,000,000 or
more at any time (each such event described in clauses (i) through
(v) above being referred to herein as a "Voting Rights Triggering Event")
then the number of directors constituting the Board of Directors will be
adjusted to permit the Holders of a majority of the then outstanding shares
of Exchangeable Preferred Stock, voting separately and as a class (together
with the holders of any Parity Stock having similar voting rights), to elect
two directors to the Board of Directors. The voting rights provided herein
shall be the Holders' exclusive remedy at law or in equity. Such voting
rights will continue until such time as, in the case of a Dividend Default,
all dividends in arrears on the Exchangeable Preferred Stock are paid in
full in cash and, in all other cases, any failure, breach or default giving
rise to such voting rights is remedied or waived by the Holders of at least
a majority of the shares of Exchangeable Preferred Stock then outstanding,
at which time the term of any directors elected pursuant to the provisions
of this paragraph shall terminate.
(c) The Company shall not authorize any new class of Senior Stock or
modify, change, affect or amend the Articles or this Certificate of
Designation to affect materially and adversely the specified rights,
preferences, privileges or voting rights of the Exchangeable Preferred Stock
without the affirmative vote or consent of Holders of at least a majority of
the shares of Exchangeable Preferred Stock then outstanding, voting or
consenting, as the case may be, as one class.
(d) Immediately after voting power to elect directors shall have become
vested and be continuing in the Holders pursuant to Section V(b) or if
vacancies shall exist in the offices of directors elected by the Holders, a
proper officer of the Company shall call a special meeting of the Holders
for the purpose of electing the directors which such Holders are entitled to
elect. Any such meeting shall be held at the earliest practicable date, and
the Company shall provide Holders with access to the lists of Holders
pursuant to the provisions of this Section V(d). At any meeting held for the
purpose of electing directors at which the Holders shall have the right,
voting separately as a class, to elect directors, the presence in person or
by proxy of the Holders of at least a majority of the outstanding shares of
Exchangeable Preferred Stock shall be required to constitute a quorum of
such Holders.
(e) Any vacancy occurring in the office of a director elected by the
Holders may be filled by the remaining director elected by the Holders
unless and until such vacancy shall be filled by the Holders.
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(f) In any case in which the Holders shall be entitled to vote pursuant
to this Section V or pursuant to the General Corporation Law of the State of
Nevada, each Holder shall be entitled to one vote for each share of
Exchangeable Preferred Stock held.
(g) Holders of at least 66 2/3% of the then outstanding shares of
Exchangeable Preferred Stock, voting or consenting, as the case may be,
separately as a class, may waive compliance with any provision of this
Certificate of Designation.
Further, Holders are entitled to vote as a class upon a proposed
amendment to the Articles if the amendment would increase or decrease the
par value of the shares of, or alter or change the powers, preferences or
special rights of the shares of such class so as to affect them adversely.
Except as set forth above, (i) the creation, authorization or issuance of
any shares of Junior Stock, Parity Stock or Senior Stock, including the
designation of series thereof within the existing class of Preferred Stock
of the Company, or (ii) the increase or decrease in the amount of authorized
Capital Stock of any class, including any Preferred Stock of the Company,
shall not require the consent of the Holders and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of
Holders.
VI. REDEMPTION. (a) OPTIONAL REDEMPTION. (i) The Exchangeable
Preferred Stock will be redeemable (subject to contractual and other
restrictions with respect thereto and to the legal availability of funds
therefor) at the election of the Company, as a whole or from time to time in
part, at any time on or after July 1, 2002 on not less than 30 nor more than
60 days' prior notice, at the redemption prices (expressed as percentages of
the then effective liquidation preference thereof) set forth below, plus,
without duplication, all accumulated and unpaid dividends, if any, to the
date of redemption (the "Redemption Date") (including an amount in cash
equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date), if
redeemed during the 12-month period beginning on July 1 of the years
indicated below:
YEAR REDEMPTION PRICE
- ---- ----------------
2002 ........................................ 107.729%
2003 ........................................ 106.625%
2004 ........................................ 105.521%
2005 ........................................ 104.417%
2006 ........................................ 103.313%
2007 ........................................ 102.208%
2008 ........................................ 101.104%
(ii) In addition, at any time and from time to time prior to July 1,
2000, the Company may at its option redeem shares of Exchangeable
Preferred Stock having an aggregate liquidation preference of up to 35%
of the aggregate liquidation preference of all shares of Exchangeable
Preferred Stock issued as of the Closing Date or issued as dividends on
the Exchangeable Preferred Stock, with the net proceeds of one or more
Public Equity Offerings at a redemption price equal to 113.250% of the
liquidation preference thereof, plus without duplication, accumulated and
unpaid dividends, if any, to the Redemption Date (including an amount in
cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption
Date), subject to the right of Holders of record on the relevant record
date to receive dividends due on a Dividend Payment Date; PROVIDED that,
immediately after giving effect to any such redemption, at least
$75,000,000 in aggregate liquidation preference of the Exchangeable
Preferred Stock remains outstanding. Any such redemption must be made
within 90 days of the related Public Equity Offering.
(iii) No optional redemption may be authorized or made unless on or
prior to such redemption full unpaid cumulative dividends shall have been
paid or a sum set apart for such payment on the Exchangeable Preferred
Stock. If less than all the Exchangeable Preferred Stock
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is to be redeemed, the particular shares to be redeemed will be
determined PRO RATA, except that the Company may redeem such shares held
by any holder of fewer than 100 shares without regard to such PRO RATA
redemption requirement. If any Exchangeable Preferred Stock is to be
redeemed in part, the Redemption Notice that relates to such Exchangeable
Preferred Stock shall state the portion of the liquidation preference to
be redeemed. New shares of the same Series of Exchangeable Preferred
Stock having an aggregate liquidation preference equal to the unredeemed
portion will be issued in the name of the holder thereof upon
cancellation of the original shares of Exchangeable Preferred Stock and,
unless the Company fails to pay the redemption price on the Redemption
Date, after the Redemption Date dividends will cease to accumulate on the
Exchangeable Preferred Stock called for redemption.
(b) MANDATORY REDEMPTION. The Company shall redeem all outstanding
Exchangeable Preferred Stock (subject to the legal availability of funds
therefor) in whole on the redemption date of July 1, 2009 (the "Mandatory
Redemption Date"), at a redemption price equal to 100% of the liquidation
preference thereof, plus, without duplication, all accumulated and unpaid
dividends, if any, to the date of redemption.
(c) PROCEDURE FOR REDEMPTION. (i) Not more than 60 and not less than
30 days prior to any Redemption Date, written notice (the "Redemption
Notice") shall be given by first-class mail, postage prepaid, to each Holder
of record of shares to be redeemed on the record date fixed for such
redemption of the Exchangeable Preferred Stock at such Holder's address as
the same appears on the stock ledger of the Company, provided, however, that
no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of Exchangeable
Preferred Stock to be redeemed except as to the Holder or Holders to whom
the Company has failed to give such notice or except as to the Holder or
Holders whose notice was defective. The Redemption Notice shall state:
(A) the Redemption Price;
(B) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of such Exchangeable Preferred Stock being redeemed;
(C) the number of shares of Exchangeable Preferred Stock held by the
Holder that the Company intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Company, at the place or
places, which shall be designated in such Redemption Notice, its
certificates representing the shares of Exchangeable Preferred Stock to
be redeemed;
(F) that dividends on the shares of the Exchangeable Preferred Stock
to be redeemed shall cease to accumulate on the day prior to such
Redemption Date unless the Company defaults in the payment of the
redemption price; and
(G) the name of any bank or trust company performing the duties
referred to in subsection (c)(v) below.
(ii) On or before the Redemption Date, each Holder of Exchangeable
Preferred Stock to be redeemed shall surrender the certificate or
certificates representing such shares of Exchangeable Preferred Stock to the
Company, in the manner and at the place designated in the Redemption Notice,
and on the Redemption Date the full redemption price for such shares shall
be payable in cash to the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
returned to authorized but unissued shares. In the event that less than all
of the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
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(iii) Unless the Company defaults in the payment in full of the
redemption price, dividends on the Exchangeable Preferred Stock called for
redemption shall cease to accumulate on the day prior to the Redemption
Date, and the Holders of such shares shall cease to have any further rights
with respect thereto on the Redemption Date, other than the right to receive
the redemption price, without interest.
(iv) If a Redemption Notice shall have been duly given, and if, on or
before the Redemption Date specified therein, all funds necessary for such
redemption shall have been set aside by the Company, separate and apart from
its other funds, in trust for the pro rata benefit of the Holders of the
Exchangeable Preferred Stock called for redemption so as to be and continue
to be available therefor, then, notwithstanding that any certificate for
shares so called for redemption shall not have been surrendered for
cancellation, all shares so called for redemption shall no longer be deemed
outstanding, and all rights with respect to such shares shall forthwith on
such Redemption Date cease and terminate, except only the right of the
Holders thereof to receive the amount payable on redemption thereof, without
interest.
(v) If a Redemption Notice shall have been duly given or if the Company
shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before
the Redemption Date specified therein the funds necessary for such
redemption shall have been deposited by the Company with such bank or trust
company in trust for the pro rata benefit of the Holders of the Exchangeable
Preferred Stock called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, from and after the time of such deposit, all
shares so called, or to be so called pursuant to such irrevocable
authorization, for redemption shall no longer be deemed to be outstanding
and all rights with respect of such shares shall forthwith cease and
terminate, except only the right of the Holders thereof to receive from such
bank or trust company at any time after the time of such deposit the funds
so deposited, without interest. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United States of
America or of the State of New York, shall be doing business in the Borough
of Manhattan, The City of New York, shall have capital, surplus and
undivided profits aggregating at least $100,000,000 according to its last
published statement of condition, and shall be identified in the Redemption
Notice. Any interest accrued on such funds shall be paid to the Company from
time to time. Any funds so set aside or deposited, as the case may be, and
unclaimed at the end of three years from such Redemption Date shall, to the
extent permitted by law, be released or repaid to the Company, after which
repayment the Holders of the shares so called for redemption shall look only
to the Company for payment thereof.
VII. RANKING. The Exchangeable Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company, rank (a) senior to all classes of common stock and to each other
class of Capital Stock or series of preferred stock established after the
Closing Date by the Board of Directors the terms of which expressly provide
that it ranks junior to the Exchangeable Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the Company
(collectively referred to, together with all classes of common stock of the
Company, as "Junior Stock"); (b) on a parity with each other class of
Capital Stock or series of preferred stock established after the Closing
Date by the Board of Directors the terms of which expressly provide that
such class or series will rank on a parity with the Exchangeable Preferred
Stock as to dividend rights on liquidation, winding-up and dissolution of
the Company (collectively referred to as "Parity Stock"); and (c) subject to
the approval of the Holders in accordance with Section V(c) hereof, junior
to each class of Capital Stock or series of preferred stock established
after the Closing Date by the Board of Directors the terms of which do not
expressly provide that such class or series will rank junior to, or on a
parity with, the Exchangeable Preferred Stock as to dividend rights and
rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Stock").
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VIII. CERTAIN COVENANTS. PURCHASE OF EXCHANGEABLE PREFERRED STOCK UPON
A CHANGE OF CONTROL. Upon a Change of Control, the Company shall consummate
either an FL Change of Control Offer or a Non-FL Change of Control Offer. An
"FL Change of Control Offer" shall mean an offer to purchase described in
Section VIII(a) and the other procedures set forth in Section VIII(a). A
"Non-FL Change of Control Offer" shall mean an offer to purchase described
in Section VIII(b) and the other procedures set forth in Section VIII(b).
(a) FL CHANGE OF CONTROL OFFER. If the Company elects to consummate an
FL Change of Control Offer the Company, or any of its Affiliates (including,
without limitation, Citadel Communications), shall make an offer to purchase
from the Holders shares of Exchangeable Preferred Stock, in whole or in
part, at a purchase price in cash equal to or greater than 101% of the
liquidation preference of such Exchangeable Preferred Stock, plus
accumulated and unpaid dividends, if any, to the date of purchase.
An FL Change of Control Offer may be commenced at any time, including
prior to the occurrence of a Change of Control, and shall comply with the
following requirements:
(i) the offer to purchase the Holders' Exchangeable Preferred Stock
shall comply with the requirements of the Exchange Act;
(ii) the Company shall be obligated to consummate the FL Change of
Control Offer upon a Change of Control;
(iii) the Company shall be obligated to accept for payment and
purchase within 60 days of a Change of Control the Exchangeable Preferred
Stock that is tendered pursuant to an FL Change of Control Offer;
(iv) any Exchangeable Preferred Stock not tendered will continue to
accumulate dividends;
(v) unless the Company defaults in the payment of the purchase price,
any Exchangeable Preferred Stock accepted for payment pursuant to the FL
Change of Control Offer will cease to accumulate dividends after the
Change of Control purchase date; and
(vi) the offer to purchase shall state certain other procedures that
a Holder of Exchangeable Preferred Stock must follow to accept an FL
Change of Control Offer or to withdraw such acceptance.
(b) NON-FL CHANGE OF CONTROL OFFER. Unless the Company consummates an FL
Change of Control Offer, if a Change of Control occurs at any time, then
each Holder of Exchangeable Preferred Stock will have the right to require
that the Company purchase such Holder's Exchangeable Preferred Stock, in
whole or in part, at a purchase price in cash equal to 101% of the
liquidation preference of such Exchangeable Preferred Stock, plus
accumulated and unpaid dividends, if any, to the date of purchase.
A Non-FL Change of Control Offer shall comply with the following
requirements:
(i) Within 30 days following any Change of Control, the Company will
notify the Transfer Agent thereof and give written notice of such Change
of Control to each Holder of Exchangeable Preferred Stock by first-class
mail, postage prepaid, at its address appearing in the security register
of the Exchangeable Preferred Stock, stating, among other things,
(A) the purchase price and the purchase date, which will be a Business
Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed or such later date as is necessary to comply with
requirements under the Exchange Act; (B) that any Exchangeable Preferred
Stock not tendered will continue to accumulate dividends; (C) that,
unless the Company defaults in the payment of the purchase price, any
Exchangeable Preferred Stock accepted for payment pursuant to the Non-FL
Change of Control Offer will cease to accumulate dividends after the
Change of Control purchase date;
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and (D) certain other procedures that a Holder of Exchangeable Preferred
Stock must follow to accept a Non-FL Change of Control Offer or to
withdraw such acceptance.
(ii) On the date of purchase, the Company shall: (A) accept for
payment the Exchangeable Preferred Stock tendered pursuant to the Non-FL
Change of Control Offer; (B) deposit with the Transfer Agent money
sufficient to pay the purchase price of all Exchangeable Preferred Stock
so accepted; and (C) deliver, or cause to be delivered, to the Transfer
Agent, all Exchangeable Preferred Stock so accepted together with an
officers' certificate specifying the Exchangeable Preferred Stock
accepted for payment by the Company. The Company shall promptly mail to
the Holders a new certificate representing any shares not so purchased.
The Company shall publicly announce the results of the Non-FL Change of
Control Offer on or as soon as practicable after the date of purchase.
(iii) The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing
under Debt as in effect on the Closing Date or in refinancings or
replacements of such Debt) that would materially impair the ability of
the Company to make a Non-FL Change of Control Offer to purchase the
Exchangeable Preferred Stock or, if such Non-FL Change of Control Offer
is made, to pay for the Exchangeable Preferred Stock tendered for
purchase.
IX. NO REISSUANCE OF EXCHANGEABLE PREFERRED STOCK. None of the shares
of Exchangeable Preferred Stock acquired by the Company by reason of
redemption, purchase, or otherwise shall be reissued.
X. BUSINESS DAY. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
XI. TRANSFER RESTRICTIONS. (a) The Series A Preferred Stock will bear
a legend to the following effect (as applicable) unless otherwise agreed by
the Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
CITADEL BROADCASTING COMPANY (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE
"RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY,
(B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR,"
WITHIN THE MEANING OF SUBPARAGRAPH (A) (1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY
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DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
(b) The Transfer Agent shall refuse to register any transfer of
Series A Preferred Stock in violation of the restrictions contained in the
legend provided for in Section XI(a).
(c) The legend provided for in Section XI(a) may be removed if the
Series A Preferred Stock has been registered pursuant to a Preferred Stock
Shelf Registration Statement under the Securities Act. Unlegended Series B
Preferred Stock may be issued in exchange for Series A Preferred Stock
pursuant to a Preferred Stock Exchange Offer.
(d) At any time after one year following the Closing Date, upon receipt
by the Transfer Agent and the Company of a certificate substantially in the
form of Exhibit A hereto, the Transfer Agent shall authenticate and deliver
one or more shares of unlegended Series A Preferred Stock in the place of
shares of legended Series A Preferred Stock.
(e) In connection with proposed transfers of Series A Preferred Stock
described in Exhibit B or Exhibit C, the Transfer Agent or the Company may
require the transferor or transferee, as the case may be, to deliver the
appropriate letter attached hereto as Exhibits B or C. Each Holder of
Series A Preferred Stock shall notify the Company or the Transfer Agent in
the event of any transfer by such Holder of any shares of Series A Preferred
Stock to a foreign transferee.
XII. DEFINITIONS. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of
this definition, "control," when used with respect to any specified person,
means the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Banks" means the banks and other financial institutions that from time
to time are lenders under the Credit Facility.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York
City are authorized or required by law to close.
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents
(however designated) of such person's equity (however designated).
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"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease
of real or personal property that, in accordance with GAAP, has been
recorded as a capitalized lease on the balance sheet of such person.
"Change of Control" means the occurrence of any of the following events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E.
Smith, John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour
Capital Fund Limited Partnership and any trustee, in its capacity as
trustee under the Voting Trust Agreement or Citadel Communications is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than a majority of the voting
power of all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together
with any new directors whose election to such Board of Directors or whose
nomination for election by the stockholders of the Company, was approved
by a vote of at least 66 2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in office;
or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Citadel Communications" means Citadel Communications Corporation, a
Nevada corporation, and any successors thereof.
"Closing Date" means July 3, 1997.
"Credit Facility" means the loan agreement dated October 9, 1996 among
the Company and the financial institutions and banks named therein, as
amended, and as such agreement may be amended, restated, supplemented,
replaced or refinanced or otherwise modified from time to time.
"Debentures Trustee" means The Bank of New York, as Trustee under the
Exchange Indenture, or any successor Debentures Trustee appointed in
accordance with the terms of the Exchange Indenture.
"Debt" means (without duplication), with respect to any person, whether
recourse is to all or a portion of the assets of such person and whether or
not contingent, (a) every obligation of such person for money borrowed,
(b) every obligation of such person evidenced by bonds, debentures, notes or
other similar instruments, (c) every reimbursement obligation of such person
with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person, (d) every obligation of
such person issued or assumed as the deferred purchase price of property or
services, (e) every Capitalized Lease Obligation of such person, (f) all
Disqualified Stock of such person valued at its maximum fixed repurchase
price, plus accumulated and unpaid dividends, (g) all Hedging Obligations of
such person, and (h) every obligation of the type referred to in clauses
(a) through (g) of another person and all dividends of another person
(i) the payment of which, in either case, such person has guaranteed or
(ii) which is secured by any Lien on any property or asset of such person,
the amount of such Debt being deemed to be the lesser of the actual amount
of the guarantee or the value of such property or asset subject to such
Lien, as the case may be, and the amount of the Debt so guaranteed or
secured, as the case may be. For purposes of this definition, the "maximum
fixed repurchase price" of any Disqualified Stock that does not have a fixed
repurchase price will be
A-12
calculated in accordance with the terms of such Disqualified Stock as if
such Disqualified Stock were repurchased on any date on which Debt is
required to be determined pursuant to this Certificate of Designation, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock, such fair market value will be determined reasonably and
in good faith by the board of directors of the issuer of such Disqualified
Stock. Notwithstanding the foregoing, trade accounts payable and accrued
liabilities arising in the ordinary course of business and any liability,
for federal, state or local taxes or other taxes owed by such person will
not be considered Debt for purposes of this definition. The amount
outstanding at any time of any Debt issued with original issue discount is
the aggregate principal amount at maturity of such Debt, less the remaining
unamortized portion of the original issue discount of such Debt at such
time, as determined in accordance with GAAP.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms (or by the terms of any security into which it is
convertible or exchangeable by contract or otherwise), or upon the happening
of any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to
a sinking fund obligation or otherwise, or is redeemable at the sole option
of the holder thereof, in whole or in part, prior to one year after the
Mandatory Redemption Date, provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to cause the issuer thereof to repurchase or redeem such
Capital Stock upon occurrence of a "change of control" occurring prior to
the Mandatory Redemption Date will not constitute Disqualified Stock if the
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained
in Section VIII, "Purchase of Exchangeable Preferred Stock upon a Change of
Control," of this Certificate of Designation and such Capital Stock
specifically provides that the issuer will not repurchase or redeem any such
stock pursuant to such provision prior to the Company's repurchase of such
Exchangeable Preferred Stock as are required to be repurchased pursuant to
Section VIII, "Purchase of Exchangeable Preferred Stock upon a Change of
Control," of this Certificate of Designation; provided, however, that
"Disqualified Stock" shall not include the Exchangeable Preferred Stock.
"Dividend Default" has the meaning specified in Section V(b) hereof.
"Dividend Payment Date" means each January 1 and July 1 of each year on
which dividends shall be paid or are payable, any Redemption Date and any
other date on which dividends in arrears may be paid.
"Dividend Rate" has the meaning specified in Section II(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" has the meaning specified in Section IV(a) hereof.
"Exchange Debentures" means the 13 1/4% Exchange Debentures due 2009 of
the Company, issuable pursuant to the Exchange Indenture in exchange for the
Exchangeable Preferred Stock at the option of the Company.
"Exchange Indenture" means the Indenture dated as of July 1, 1997 among
the Company, Citadel License, Inc. as guarantor, and The Bank of New York,
as trustee, relating to the Exchange Debentures.
"Exchange Notice" has the meaning specified in Section IV(a) hereof.
"Exchangeable Preferred Stock" has the meaning set forth in Section I
hereof.
"FL Change of Control Offer" has the meaning specified in
Section VIII(a) hereof.
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"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied,
that are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all
of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way, the
payment or performance (or payment of damages in the event of
nonperformance) of all or any part of such obligation, including without
limitation, the payment of amounts drawn down under letters of credit.
"Hedging Obligations" means the obligations of any person under
(a) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (b) other agreements or arrangements destined to
protect such person against fluctuations in interest rates or the value of
foreign currencies.
"Holder" has the meaning specified in Section II(a) hereof.
"Junior Stock" has the meaning specified in Section VII hereof.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, assignment for
security, claim, preference, priority or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable,
now owned or hereafter acquired. A person will be deemed to own subject to a
Lien any property that such person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Mandatory Redemption Date" has the meaning specified in Section VI(b)
hereof.
"Non-FL Change of Control Offer" has the meaning specified in
Section VIII(b) hereof.
"Notes" means the 10 1/4% Senior Subordinated Notes due 2007 of the
Company, issuable pursuant to the Notes Indenture.
"Notes Indenture" means the Indenture dated as of July 1, 1997 among the
Company, Citadel License, Inc., as guarantor, and The Bank of New York, as
trustee, relating to the 10 1/4% Senior Subordinated Notes due 2007 of the
Company.
"Original Issue Date" means July 3, 1997.
"Parity Stock" has the meaning specified in Section VII hereof.
"Preferred Stock" of any person means any Capital Stock of such person
that has preferential rights to any other Capital Stock of such person with
respect to dividends or redemptions or upon liquidation.
"Preferred Stock Exchange Offer" means an offer by the Company to
exchange the Series A Preferred Stock for the Series B Preferred Stock
pursuant to an effective registration statement.
"Preferred Stock Shelf Registration Statement" means a shelf
registration statement which becomes effective and covers resales of the
Series A Preferred Stock.
"Public Equity Offering" means an underwritten public offering of
Qualified Equity Interests of either (a) the Company or (b) Citadel
Communications, the net proceeds from which (after deducting any
underwriting discounts and commissions) are used by Citadel Communications
to purchase Qualified Equity Interests of the Company; provided that, in
either case, such net proceeds exceed $10,000,000.
A-14
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any person means any and all Capital Stock of such
person, other than Disqualified Stock.
"Redemption Date" has the meaning specified in
Section VI(a)(i) hereof.
"Redemption Notice" has the meaning specified in
Section VI(c)(i) hereof.
"Redemption Price" means the price at which the Exchangeable Preferred
Stock may be redeemed.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase and Exchange Agreement" means that certain
Securities Purchase and Exchange Agreement, dated June 28, 1996, as amended
by the First Amendment thereto dated December 31, 1996, and by the Second
Amendment thereto dated March 17, 1997 among Citadel Communications, the
Company and certain other parties.
"Senior Stock" has the meaning specified in Section VII hereof.
"Series A Preferred Stock" has the meaning set forth in Section I
hereof.
"Series B Preferred Stock" has the meaning set forth in Section I
hereof.
"Subsidiary" means any person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by the
Company and/or one or more other Subsidiaries of the Company.
"Transfer Agent" means The Bank of New York or any successor transfer
agent.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
on the date on which this Certificate of Designation was filed.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary in accordance with the
Exchange Indenture and (b) any Subsidiary of an Unrestricted Subsidiary.
"Voting Rights Triggering Event" has the meaning set forth above in
Section V(b) hereof.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of any person (irrespective of whether or not, at the
time, stock of any other class or classes has, or might have, voting power
by reason of the happening of any contingency).
"Voting Trust Agreement" means that certain Voting Trust Agreement dated
as of March 17, 1997 by and among Citadel Communications, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Christopher Hall,
as the initial Trustee thereunder and J. Walter Corcoran and Harlan Levy,
each as an initial Back-Up Trustee thereunder.
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EXHIBIT A
FORM OF CERTIFICATE AS TO
COMPLETION OF DISTRIBUTION AND
TERMINATION OF RESTRICTED PERIOD
_______, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the "Company") 13 1/4%
Series A Exchangeable Preferred Stock (the "Series A
Preferred Stock") and 13 1/4% Series B Exchangeable
Preferred Stock (the "Series B Preferred Stock")
Dear Ladies and Gentlemen:
This letter relates to shares of Series A Preferred Stock represented by
the attached Certificate (the "Legended Certificate") which bears a legend
outlining restrictions upon transfer of such Legended Certificate. Pursuant to
Section XI(d) of the Certificate of Designation (the "Certificate of
Designation") filed with the Secretary of State of the State of Nevada on
, 2001 relating to the Series A Preferred Stock and the Series B
Preferred Stock, we hereby certify that we are a person outside the United
States to whom the Series A Preferred Stock could be transferred in accordance
with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933,
as amended. Accordingly, you are hereby requested to exchange the shares of
Series A Preferred Stock represented by the Legended Certificate for a like
number of shares of Series A Preferred Stock, which shall be represented by the
attached Certificate (the "Unlegended Certificate"), which does not bear a
legend outlining restrictions upon the transfer of such Unlegended Certificate,
all in the manner provided for in the Certificate of Designation.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
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EXHIBIT B
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
_______, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13 1/4% Series A Exchangeable
Preferred Stock (the "Securities")
Dear Sirs:
In connection with our proposed purchase of shares of the Securities, we
confirm that:
1. The undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities, except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities, we will do so
only (A) to the Company or any subsidiary thereof, (B) in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if requested by the Company,
an opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act,
(E) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act, or (F) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Securities from us a notice advising such purchaser
that resales of the Securities are restricted as stated herein.
3. We understand that, on any proposed resale of any Securities or
Conversion Shares, we will be required to furnish to you and the Company
such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the effect set out in paragraph 2.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Securities and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
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5. We are acquiring the Securities purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
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EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13 1/4% Series A Exchangeable
Preferred Stock (the "Securities")
Dear Sirs:
In connection with our proposed sale of shares of the Securities, we
confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended, and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting
on our behalf knows that the transaction has been pre-arranged with a buyer
in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the
case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
A-19
IN WITNESS WHEREOF, the Company has caused this Second Certificate of Amendment
to Certificate of Designations to be duly executed in its corporate name on this
day of , 2001.
CITADEL BROADCASTING COMPANY
By:
-----------------------------------------
Name:
Its:
By:
-----------------------------------------
Name:
Its:
STATE OF ________________________
COUNTY OF _____________________
This instrument was acknowledged before me on , 2001 by
, as President of Citadel Broadcasting Company.
------------------------------------------
(Seal, if any) Notary Public
My Commission Expires
STATE OF ________________________
COUNTY OF _____________________
This instrument was acknowledged before me on , 2001 by , as
Secretary of Citadel Broadcasting Company.
------------------------------------------
Notary Public
(Seal, if any) My Commission Expires
A-20
ANNEX B
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
WHEREAS, pursuant to authority conferred upon the Board of Directors by
ARTICLE 4 of the Amended and Restated Articles of Incorporation of the Company
(the "Articles"), the Board of Directors of the Company by unanimous written
consent dated June 30, 1997 adopted the following resolution creating two series
of Preferred Stock designated as 13 1/4% Series A Exchangeable Preferred Stock
of Citadel Broadcasting Company and 13 1/4% Series B Exchangeable Preferred
Stock of Citadel Broadcasting Company:
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors in accordance with the provisions of the Articles, two series of
Preferred Stock of the Company, without par value, be and they hereby are,
created and that the designation and amount thereof and the voting powers,
preferences, and relative rights of the shares of each such series, and the
limitations and restrictions thereof, are as follows:
I. DESIGNATION AND AMOUNT. The designations for the two series of
Preferred Stock authorized by this resolution shall be the 13 1/4% Series A
Exchangeable Preferred Stock without par value (the "Series A Preferred
Stock") and the 13 1/4% Series B Exchangeable Preferred Stock without par
value (the "Series B Preferred Stock" and together with the Series A
Preferred Stock, the "Exchangeable Preferred Stock"). The initial
liquidation preference of the Exchangeable Preferred Stock is $100.00 per
share and the original issue price for each such share is $100.00. The issue
price per share or liquidation preference of the Exchangeable Preferred
Stock shall not for any purpose be considered to be a determination by the
Board of Directors with respect to the capital and surplus of the Company.
The maximum number of shares of Series A Preferred Stock shall be 2,000,000
and the maximum number of shares of Series B Preferred Stock shall be
2,000,000.
II. DIVIDENDS. (a) Holders of the outstanding shares of Exchangeable
Preferred Stock (the "Holders") will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Exchangeable Preferred Stock at an annual rate of 13 1/4%
(the "Dividend Rate"). All dividends will be cumulative, whether or not
earned or declared, from the Closing Date and will be payable semi-annually
in arrears on each Dividend Payment Date, commencing on January 1, 1998, to
Holders of record on the June 15 or December 15 immediately preceding the
relevant Dividend Payment Date. On or before July 1, 2002, the Company may,
at its option, pay dividends in cash or in additional fully paid and
non-assessable shares of Exchangeable Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends, provided,
however, that if the Company pays dividends in additional shares of
Exchangeable Preferred Stock, Holders of Series A Preferred Stock shall be
paid in additional shares of Series A Preferred Stock and Holders of
Series B Preferred Stock shall be paid in additional shares of Series B
Preferred Stock. After July 1, 2002, dividends shall be paid only in cash.
If any dividend (or portion thereof) payable on any Dividend Payment Date on
or before July 1, 2002 is not declared or paid in full in cash or in shares
of Exchangeable Preferred Stock as described above on such Dividend Payment
Date, the amount of the accumulated and unpaid dividend will bear interest
at the Dividend Rate, compounding semi-annually from such Dividend Payment
Date until paid in full. If any dividend (or portion thereof) payable on any
Dividend Payment Date after July 1, 2002 is not declared or paid in full in
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cash on such Dividend Payment Date, the amount of the accumulated and unpaid
dividend that is payable and that is not paid in cash on such date will bear
interest at the Dividend Rate, compounding semi-annually from such Dividend
Payment Date until paid in full. Dividends shall cease to accumulate in
respect of the shares of Exchangeable Preferred Stock on the Exchange Date
or on the Redemption Date unless the Company shall have failed to issue the
appropriate aggregate principal amount of Exchange Debentures in respect of
the Exchangeable Preferred Stock on the Exchange Date or shall have failed
to pay the relevant redemption price on the Redemption Date.
(b) All dividends paid with respect to shares of the Exchangeable
Preferred Stock pursuant to Section II(a) of this Certificate of Designation
shall be paid pro rata to the Holders entitled thereto.
(c) Nothing contained in this Certificate of Designation shall in any
way or under any circumstances be construed or deemed to require the Board
of Directors to declare, or the Company to pay or set apart for payment, any
dividends on shares of the Exchangeable Preferred Stock at any time.
(d) Holders shall be entitled to receive the dividends provided for in
Section II(a) of this Certificate of Designation (including any accumulated
and unpaid cash dividends on the Exchangeable Preferred Stock) in preference
to and in priority over any cash dividends (including accumulated and unpaid
dividends) upon any of the Junior Stock.
(e) No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Stock for any period unless full
cumulative dividends shall have been or contemporaneously are declared and
paid (or are deemed declared and paid) in full or declared and, if payable
in cash, a sum in cash sufficient for such payment set apart for such
payment on the Exchangeable Preferred Stock. If full dividends are not so
paid, the Exchangeable Preferred Stock will share dividends pro rata with
the Parity Stock. No dividends may be paid or set apart for such payment on
Junior Stock (except dividends on Junior Stock payable in additional shares
of Junior Stock) and no Junior Stock or Parity Stock may be repurchased,
redeemed or otherwise retired nor may funds be set apart for payment with
respect thereto, if full cumulative dividends have not been paid in full (or
deemed paid) on any issued and outstanding Exchangeable Preferred Stock.
(f) Dividends on account of arrears for any past dividend period and
dividends in connection with any optional redemption may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
Holders of record of the Exchangeable Preferred Stock on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(g) Each fractional share of Exchangeable Preferred Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends
accruing with respect to each outstanding share of Exchangeable Preferred
Stock pursuant to Section II(a), and all such dividends with respect to such
outstanding fractional shares shall accumulate at the Dividend Rate and
shall be payable in the same manner and at such times as provided for in
Section II(a) with respect to dividends on each outstanding share of
Exchangeable Preferred Stock.
(h) Dividends payable on the Exchangeable Preferred Stock for any period
less than a year shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which
dividends are payable.
III. LIQUIDATION PREFERENCE. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, Holders will be
entitled to be paid, out of the assets of the Company available for
distribution to stockholders, the then effective liquidation preference per
share of Exchangeable Preferred Stock, plus, without duplication, an amount
in cash equal to all accumulated and unpaid dividends thereon to the date
fixed for liquidation, dissolution or winding-up (including an amount equal
to a prorated dividend for the period from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up), before any
distribution is made on any Junior Stock,
B-2
including, without limitation, common stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the
Company, the amounts payable with respect to the Exchangeable Preferred
Stock and all other Parity Stock are not paid in full, the Holders of the
Exchangeable Preferred Stock and the holders of the Parity Stock will share
equally and ratably in any distribution of assets of the Company in
proportion to the liquidation preference, together with all accumulated and
unpaid dividends, to which each is entitled. After payment of the full
amount of the liquidation preference and accumulated and unpaid dividends to
which they are entitled, Holders will not be entitled to any further
participation in any distribution of assets of the Company. For the purposes
of this Section III, neither the sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with one or more entities shall be
deemed to be a liquidation, dissolution or winding-up of the Company.
The liquidation preference with respect to each outstanding fractional
share of Exchangeable Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payments with respect to each
outstanding full share of Exchangeable Preferred Stock.
IV. EXCHANGE. (a) The Company may, at its option, subject to the
conditions described below, on any scheduled Dividend Payment Date, exchange
the Exchangeable Preferred Stock, in whole but not in part, for the Exchange
Debentures. At least 30 and not more than 60 days prior to the date fixed
for exchange, the Company shall send a written notice (the "Exchange
Notice") of exchange by mail to each Holder, which notice shall state:
(i) that the Company has elected to exchange the Exchangeable
Preferred Stock into Exchange Debentures pursuant to this Certificate of
Designation;
(ii) the date of such exchange (the "Exchange Date");
(iii) that the Holder is to surrender to the Company, at the place or
places and in the manner designated in the Exchange Notice, its
certificate or certificates representing the shares of Exchangeable
Preferred Stock;
(iv) that dividends on the shares of Exchangeable Preferred Stock to
be exchanged shall cease to accumulate at the close of business on the
day prior to the Exchange Date, whether or not certificates for shares of
Exchangeable Preferred Stock are surrendered for exchange on the Exchange
Date, unless the Company shall default in the delivery of Exchange
Debentures; and
(v) that interest on the Exchange Debentures shall accrue from the
Exchange Date whether or not certificates for shares of Exchangeable
Preferred Stock are surrendered for exchange on the Exchange Date.
On the Exchange Date, if the conditions set forth in clauses
(A) through (E) below are satisfied and if the exchange is then permitted
under the Exchange Indenture, the Company shall issue Exchange Debentures in
exchange for the Exchangeable Preferred Stock as provided in the next
paragraph, provided that on the Exchange Date: (A) there shall be legally
available funds sufficient for the exchange to occur (including, without
limitation, legally available funds sufficient therefor under
Section 78.288 (or any successor provisions), to the extent applicable, of
the General Corporation Law of the State of Nevada); (B) the Company shall
have obtained a written opinion of counsel acceptable to the Company that an
exemption from the registration requirements of the Securities Act is
available for such exchange, and such exemption is relied upon by the
Company for such exchange or, alternatively, that the Exchange Debentures
have been registered thereunder; (C) the Exchange Indenture and the
Debentures Trustee shall have been qualified under the Trust Indenture Act
or the Company shall have obtained a written opinion of counsel that such
qualification is not required; (D) immediately after giving effect to such
exchange, no default or event of default would exist under the Exchange
Indenture, and no material breach or default would exist under the
B-3
Credit Facility, the Notes Indenture or the Securities Purchase and Exchange
Agreement; and (E) on the date of such exchange (the "Exchange Date") there
are no accumulated and unpaid dividends on the Exchangeable Preferred Stock
(including the dividend payable on such date). In the event that any of the
conditions set forth in clauses (A) through (E) of the preceding sentence
are not satisfied on the Exchange Date, then no shares of Exchangeable
Preferred Stock shall be exchanged, and in order to effect an exchange as
provided for in this Section IV, the Company shall be required to fix
another date for the exchange and issue a new Exchange Notice.
(b) Upon any exchange pursuant to this Section IV, Holders shall be
entitled to receive, subject to the provisions hereof, $1.00 principal
amount of Exchange Debentures for each $1.00 of the aggregate of the
liquidation preference of the Exchangeable Preferred Stock and all
accumulated and unpaid dividends thereon, plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends thereon for the
period from the immediately preceding Dividend Payment Date to the day prior
to the Exchange Date; provided that the Company shall pay cash in lieu of
issuing an Exchange Debenture in a principal amount of less than $1,000 and
provided further that the Exchange Debentures will be issuable only in
denominations of $1,000 and integral multiples thereof.
(c) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of the Exchangeable
Preferred Stock, in the manner and at the place designated in the Exchange
Notice. The Company shall cause the Exchange Debentures to be executed on
the Exchange Date and, upon surrender in accordance with the Exchange Notice
of the certificates for any shares of the Exchangeable Preferred Stock so
exchanged (properly endorsed or assigned for transfer, if the Exchange
Notice shall so state), such shares shall be exchanged by the Company into
Exchange Debentures as aforesaid. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(d) If the Exchange Notice has been mailed as aforesaid, and if before
the Exchange Date all Exchange Debentures necessary for such exchange shall
have been duly executed by the Company and delivered to the Debentures
Trustee with irrevocable instructions to authenticate the Exchange
Debentures necessary for such exchange, then the rights of the Holders as
stockholders of the Company shall cease (except the right to receive the
Exchange Debentures, an amount in cash, to the extent applicable, equal to
the accumulated and unpaid dividends to the Exchange Date and cash in lieu
of any Exchange Debenture that is in a principal amount less than $1,000),
and the person or persons entitled to receive the Exchange Debentures
issuable upon exchange shall be treated for all purposes as a registered
holder or holders of such Exchange Debentures as of the Exchange Date.
V. VOTING RIGHTS. (a) Holders, except as otherwise required under
Nevada law or as set forth below, shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by the stockholders of
the Company.
(b) If (i) after July 1, 2002, cash dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for two or more semi-annual
dividend periods (whether or not consecutive) (a "Dividend Default");
(ii) the Company fails to redeem the Exchangeable Preferred Stock on
July 1, 2009 or fails to otherwise discharge any redemption obligation set
forth in this Certificate of Designation with respect to the Exchangeable
Preferred Stock; (iii) the Company fails to make a Change of Control Offer
if such offer is required by the provisions set forth under the "Purchase of
Exchangeable Preferred Stock upon a Change of Control" covenant set forth in
Section VIII below or fails to purchase shares of Exchangeable Preferred
Stock from Holders who elect to have such shares purchased pursuant to the
Change of Control Offer; (iv) a breach or violation of any other provisions
contained in Section VIII hereof occurs and the breach or violation
continues for a period of 30 days or more after the Company receives notice
thereof specifying the default from the Holders of at least 25% of the
shares of Exchangeable Preferred Stock then outstanding; or (v) the Company
fails to pay at the final stated maturity (giving effect to any extensions
thereof) the principal amount of any Debt
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of the Company or any Restricted Subsidiary of the Company, or the final
stated maturity of any such Debt is accelerated, if the aggregate principal
amount of such Debt, together with the aggregate principal amount of any
other such Debt in default for failure to pay principal at the final stated
maturity (giving effect to any extensions thereof) or which has been
accelerated, aggregates $5,000,000 or more at any time (each such event
described in clauses (i) through (v) above being referred to herein as a
"Voting Rights Triggering Event") then the number of directors constituting
the Board of Directors will be adjusted to permit the Holders of a majority
of the then outstanding shares of Exchangeable Preferred Stock, voting
separately and as a class (together with the holders of any Parity Stock
having similar voting rights), to elect two directors to the Board of
Directors. The voting rights provided herein shall be the Holders' exclusive
remedy at law or in equity. Such voting rights will continue until such time
as, in the case of a Dividend Default, all dividends in arrears on the
Exchangeable Preferred Stock are paid in full in cash and, in all other
cases, any failure, breach or default giving rise to such voting rights is
remedied or waived by the Holders of at least a majority of the shares of
Exchangeable Preferred Stock then outstanding, at which time the term of any
directors elected pursuant to the provisions of this paragraph shall
terminate.
(c) The Company shall not authorize any new class of Senior Stock or
modify, change, affect or amend the Articles or this Certificate of
Designation to affect materially and adversely the specified rights,
preferences, privileges or voting rights of the Exchangeable Preferred Stock
without the affirmative vote or consent of Holders of at least a majority of
the shares of Exchangeable Preferred Stock then outstanding, voting or
consenting, as the case may be, as one class.
(d) Immediately after voting power to elect directors shall have become
vested and be continuing in the Holders pursuant to Section V(b) or if
vacancies shall exist in the offices of directors elected by the Holders, a
proper officer of the Company shall call a special meeting of the Holders
for the purpose of electing the directors which such Holders are entitled to
elect. Any such meeting shall be held at the earliest practicable date, and
the Company shall provide Holders with access to the lists of Holders
pursuant to the provisions of this Section V(d). At any meeting held for the
purpose of electing directors at which the Holders shall have the right,
voting separately as a class, to elect directors, the presence in person or
by proxy of the Holders of at least a majority of the outstanding shares of
Exchangeable Preferred Stock shall be required to constitute a quorum of
such Holders.
(e) Any vacancy occurring in the office of a director elected by the
Holders may be filled by the remaining director elected by the Holders
unless and until such vacancy shall be filled by the Holders.
(f) In any case in which the Holders shall be entitled to vote pursuant
to this Section V or pursuant to the General Corporation Law of the State of
Nevada, each Holder shall be entitled to one vote for each share of
Exchangeable Preferred Stock held.
(g) Holders of at least 66 2/3% of the then outstanding shares of
Exchangeable Preferred Stock, voting or consenting, as the case may be,
separately as a class, may waive compliance with any provision of this
Certificate of Designation.
Further, Holders are entitled to vote as a class upon a proposed
amendment to the Articles if the amendment would increase or decrease the
par value of the shares of, or alter or change the powers, preferences or
special rights of the shares of such class so as to affect them adversely.
Except as set forth above, (i) the creation, authorization or issuance of
any shares of Junior Stock, Parity Stock or Senior Stock, including the
designation of series thereof within the existing class of Preferred Stock
of the Company, or (ii) the increase or decrease in the amount of authorized
Capital Stock of any class, including any Preferred Stock of the Company,
shall not require the consent of the Holders and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of
Holders.
VI. REDEMPTION. (a) OPTIONAL REDEMPTION. (i) The Exchangeable
Preferred Stock will be redeemable (subject to contractual and other
restrictions with respect thereto and to the legal
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availability of funds therefor) at the election of the Company, as a whole
or from time to time in part, at any time on or after July 1, 2002 on not
less than 30 nor more than 60 days' prior notice, at the redemption prices
(expressed as percentages of the then effective liquidation preference
thereof) set forth below, plus, without duplication, all accumulated and
unpaid dividends, if any, to the date of redemption (the "Redemption Date")
(including an amount in cash equal to a prorated dividend for the period
from the Dividend Payment Date immediately prior to the Redemption Date to
the Redemption Date), if redeemed during the 12-month period beginning on
July 1 of the years indicated below:
YEAR REDEMPTION PRICE
- ---- ----------------
2002................................................. 107.729%
2003................................................. 106.625%
2004................................................. 105.521%
2005................................................. 104.417%
2006................................................. 103.313%
2007................................................. 102.208%
2008................................................. 101.104%
(ii) In addition, at any time and from time to time prior to July 1,
2000, the Company may at its option redeem shares of Exchangeable Preferred
Stock having an aggregate liquidation preference of up to 35% of the
aggregate liquidation preference of all shares of Exchangeable Preferred
Stock issued as of the Closing Date or issued as dividends on the
Exchangeable Preferred Stock, with the net proceeds of one or more Public
Equity Offerings at a redemption price equal to 113.250% of the liquidation
preference thereof, plus without duplication, accumulated and unpaid
dividends, if any, to the Redemption Date (including an amount in cash equal
to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date), subject to
the right of Holders of record on the relevant record date to receive
dividends due on a Dividend Payment Date; provided that, immediately after
giving effect to any such redemption, at least $75,000,000 in aggregate
liquidation preference of the Exchangeable Preferred Stock remains
outstanding. Any such redemption must be made within 90 days of the related
Public Equity Offering.
(iii) No optional redemption may be authorized or made unless on or
prior to such redemption full unpaid cumulative dividends shall have been
paid or a sum set apart for such payment on the Exchangeable Preferred
Stock. If less than all the Exchangeable Preferred Stock is to be redeemed,
the particular shares to be redeemed will be determined pro rata, except
that the Company may redeem such shares held by any holder of fewer than 100
shares without regard to such pro rata redemption requirement. If any
Exchangeable Preferred Stock is to be redeemed in part, the Redemption
Notice that relates to such Exchangeable Preferred Stock shall state the
portion of the liquidation preference to be redeemed. New shares of the same
Series of Exchangeable Preferred Stock having an aggregate liquidation
preference equal to the unredeemed portion will be issued in the name of the
holder thereof upon cancellation of the original shares of Exchangeable
Preferred Stock and, unless the Company fails to pay the redemption price on
the Redemption Date, after the Redemption Date dividends will cease to
accumulate on the Exchangeable Preferred Stock called for redemption.
(b) MANDATORY REDEMPTION. The Company shall redeem all outstanding
Exchangeable Preferred Stock (subject to the legal availability of funds
therefor) in whole on the redemption date of July 1, 2009 (the "Mandatory
Redemption Date"), at a redemption price equal to 100% of the liquidation
preference thereof, plus, without duplication, all accumulated and unpaid
dividends, if any, to the date of redemption.
(c) PROCEDURE FOR REDEMPTION. (i) Not more than 60 and not less than
30 days prior to any Redemption Date, written notice (the "Redemption
Notice") shall be given by first-class mail, postage
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prepaid, to each Holder of record of shares to be redeemed on the record
date fixed for such redemption of the Exchangeable Preferred Stock at such
Holder's address as the same appears on the stock ledger of the Company,
provided, however, that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the redemption of any
shares of Exchangeable Preferred Stock to be redeemed except as to the
Holder or Holders to whom the Company has failed to give such notice or
except as to the Holder or Holders whose notice was defective. The
Redemption Notice shall state:
(A) the Redemption Price;
(B) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of such Exchangeable Preferred Stock being redeemed;
(C) the number of shares of Exchangeable Preferred Stock held by the
Holder that the Company intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Company, at the place or
places, which shall be designated in such Redemption Notice, its
certificates representing the shares of Exchangeable Preferred Stock to
be redeemed;
(F) that dividends on the shares of the Exchangeable Preferred Stock
to be redeemed shall cease to accumulate on the day prior to such
Redemption Date unless the Company defaults in the payment of the
redemption price; and
(G) the name of any bank or trust company performing the duties
referred to in subsection (c)(v) below.
(ii) On or before the Redemption Date, each Holder of Exchangeable
Preferred Stock to be redeemed shall surrender the certificate or
certificates representing such shares of Exchangeable Preferred Stock to the
Company, in the manner and at the place designated in the Redemption Notice,
and on the Redemption Date the full redemption price for such shares shall
be payable in cash to the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
returned to authorized but unissued shares. In the event that less than all
of the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(iii) Unless the Company defaults in the payment in full of the
redemption price, dividends on the Exchangeable Preferred Stock called for
redemption shall cease to accumulate on the day prior to the Redemption
Date, and the Holders of such shares shall cease to have any further rights
with respect thereto on the Redemption Date, other than the right to receive
the redemption price, without interest.
(iv) If a Redemption Notice shall have been duly given, and if, on or
before the Redemption Date specified therein, all funds necessary for such
redemption shall have been set aside by the Company, separate and apart from
its other funds, in trust for the pro rata benefit of the Holders of the
Exchangeable Preferred Stock called for redemption so as to be and continue
to be available therefor, then, notwithstanding that any certificate for
shares so called for redemption shall not have been surrendered for
cancellation, all shares so called for redemption shall no longer be deemed
outstanding, and all rights with respect to such shares shall forthwith on
such Redemption Date cease and terminate, except only the right of the
Holders thereof to receive the amount payable on redemption thereof, without
interest.
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(v) If a Redemption Notice shall have been duly given or if the Company
shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before
the Redemption Date specified therein the funds necessary for such
redemption shall have been deposited by the Company with such bank or trust
company in trust for the pro rata benefit of the Holders of the Exchangeable
Preferred Stock called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, from and after the time of such deposit, all
shares so called, or to be so called pursuant to such irrevocable
authorization, for redemption shall no longer be deemed to be outstanding
and all rights with respect of such shares shall forthwith cease and
terminate, except only the right of the Holders thereof to receive from such
bank or trust company at any time after the time of such deposit the funds
so deposited, without interest. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United States of
America or of the State of New York, shall be doing business in the Borough
of Manhattan, The City of New York, shall have capital, surplus and
undivided profits aggregating at least $100,000,000 according to its last
published statement of condition, and shall be identified in the Redemption
Notice. Any interest accrued on such funds shall be paid to the Company from
time to time. Any funds so set aside or deposited, as the case may be, and
unclaimed at the end of three years from such Redemption Date shall, to the
extent permitted by law, be released or repaid to the Company, after which
repayment the Holders of the shares so called for redemption shall look only
to the Company for payment thereof.
VII. RANKING. The Exchangeable Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company, rank (a) senior to all classes of common stock and to each other
class of Capital Stock or series of preferred stock established after the
Closing Date by the Board of Directors the terms of which expressly provide
that it ranks junior to the Exchangeable Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the Company
(collectively referred to, together with all classes of common stock of the
Company, as "Junior Stock"); (b) on a parity with each other class of
Capital Stock or series of preferred stock established after the Closing
Date by the Board of Directors the terms of which expressly provide that
such class or series will rank on a parity with the Exchangeable Preferred
Stock as to dividend rights on liquidation, winding-up and dissolution of
the Company (collectively referred to as "Parity Stock"); and (c) subject to
the approval of the Holders in accordance with Section V(c) hereof, junior
to each class of Capital Stock or series of preferred stock established
after the Closing Date by the Board of Directors the terms of which do not
expressly provide that such class or series will rank junior to, or on a
parity with, the Exchangeable Preferred Stock as to dividend rights and
rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Stock").
VIII. CERTAIN COVENANTS.
(1) LIMITATION ON DEBT. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, create, issue, assume, guarantee or
in any manner become directly or indirectly liable for the payment of, or
otherwise incur (collectively, "incur"), any Debt (including Acquired Debt
and the issuance of Disqualified Stock), except that the Company or a
Restricted Subsidiary may incur Debt or issue Disqualified Stock if, at the
time of such event, the Consolidated Cash Flow Ratio would have been less
than 7.0 to 1.0. In making the foregoing calculation, pro forma effect will
be given to: (i) the incurrence of such Debt and (if applicable) the
application of the net proceeds therefrom, including to refinance other Debt
as if the additional Debt had been incurred and the application of proceeds
therefrom occurred on the first day of the four-fiscal quarter period used
to calculate the Consolidated Cash Flow Ratio, (ii) the incurrence,
repayment or retirement of any other Debt by the Company or any of its
Restricted Subsidiaries since the first day of such four-quarter period as
if such Debt was incurred, repaid or retired at the beginning of such
four-quarter period and (iii) the acquisition (whether by purchase, merger
or otherwise) or disposition (whether by sale,
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merger or otherwise) of any company, entity or business acquired or disposed
of by the Company or any of its Restricted Subsidiaries, as the case may be,
since the first day of such four-quarter period, as if such acquisition or
disposition occurred at the beginning of such four-quarter period. In making
a computation under the foregoing clause (i) or (ii), the amount of Debt
under a revolving credit facility will be computed based upon the average
daily balance of such Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may, to the
extent expressly permitted below, permit any of its Restricted Subsidiaries
to, incur any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Restricted Subsidiary under the Credit
Facility (including guarantees thereof by Subsidiaries) in an aggregate
principal amount at any one time outstanding not to exceed $110,000,000.
(ii) Debt of the Company or any of its Restricted Subsidiaries
outstanding on the Closing Date, other than Debt described in clause (i)
above.
(iii) Debt owed by the Company to any of its Restricted Subsidiaries
or owed by any Subsidiary to the Company or a Restricted Subsidiary or
owed to the Company or a Restricted Subsidiary by a Restricted
Subsidiary, provided the incurrence of such Debt did not violate
Section VIII(2), "Limitation on Restricted Payments," of this Certificate
of Designation.
(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Hedging Obligations of the Company or any of its Restricted
Subsidiaries incurred in the ordinary course of business.
(vi) Capitalized Lease Obligations of the Company or any of its
Restricted Subsidiaries in an aggregate amount not exceeding $3,000,000
at any one time outstanding.
(vii) Debt under purchase money mortgages or secured by purchase
money security interests so long as (x) such Debt is not secured by any
property or assets of the Company or any of its Restricted Subsidiaries
other than the property or assets so acquired and (y) such Debt is
created within 60 days of the acquisition of the related property;
provided that the aggregate principal amount of Debt under this
clause (vii) does not exceed $2,000,000 at any one time outstanding.
(viii) Debt of the Company or any Restricted Subsidiary, not
permitted by any other clause of this definition, in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding.
(ix) Debt of the Company or any of its Restricted Subsidiaries
consisting of guarantees, indemnities or obligations in respect of
purchase price adjustments in connection with the acquisition or
disposition of assets, including, without limitation, shares of Capital
Stock.
(x) Acquired Debt of a person, other than Debt incurred in connection
with, or in contemplation of, such person becoming a Restricted
Subsidiary or the acquisition of assets from such person, as the case may
be, provided that the Company on a pro forma basis could incur $1.00 of
additional Debt (other than Permitted Debt) pursuant to the first
paragraph of this covenant.
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(xi) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or any Restricted Subsidiary of any outstanding Debt of the
Company or such Restricted Subsidiary, other than Debt incurred pursuant
to clause (i), (v), (vi), (vii), (viii) or (ix) of this definition,
including any successive refinancings thereof, so long as (A) any such
new Debt is in a principal amount that does not exceed the principal
amount so refinanced, plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the Debt
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing plus the amount of
expenses of the Company incurred in connection with such refinancing and
(B) such refinancing Debt does not have a Weighted Average Life less than
the Weighted Average Life of the Debt being refinanced and does not have
a final scheduled maturity earlier than the final scheduled maturity, or
permit redemption at the option of the holder earlier than the earliest
date of redemption at the option of the holder, of the Debt being
refinanced.
(2) LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
take any of the following actions:
(a) declare or pay any dividend on, or make any distribution to holders
of, any shares of the Junior Stock of the Company or any of its Restricted
Subsidiaries, other than (i) dividends or distributions payable solely in
Qualified Equity Interests of the issuer of such shares of Junior Stock,
(ii) dividends or distributions by a Restricted Subsidiary payable to the
Company or another Restricted Subsidiary or (iii) pro rata dividends or
distributions on common stock of a Restricted Subsidiary held by minority
stockholders, provided that such dividends do not in the aggregate exceed
the minority stockholders' pro rata share of such Restricted Subsidiary's
net income from the first day of the Company's fiscal quarter during which
the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any shares of (i) Junior Stock of the Company (or any
options, warrants or other rights to acquire shares of Junior Stock of the
Company (other than any such Junior Stock owned by Restricted Subsidiaries))
or (ii) Capital Stock (or any options, warrants or other rights to acquire
shares of Capital Stock) of (A) any Unrestricted Subsidiary or (B) any
Restricted Subsidiary that are held by any Affiliate of the Company (other
than, in either case, any such Capital Stock owned by the Company or any of
its Restricted Subsidiaries);
(c) make any Investment (other than a Permitted Investment) in any
person (such payments or other actions described in (but not excluded from)
clauses (a) through (c) being referred to as "Restricted Payments"), unless
at the time of, and immediately after giving effect to, the proposed
Restricted Payment:
(i) no Voting Rights Triggering Event has occurred and is continuing,
(ii) the Company could incur at least $1.00 of additional Debt (other
than Permitted Debt) pursuant to Section VIII(1)(a), "Limitation on
Debt," of this Certificate of Designation, and
(iii) the aggregate amount of all Restricted Payments declared or
made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate Consolidated Cash
Flow for the period beginning on the first day of the Company's
fiscal quarter during which the Closing Date occurs and ending on the
last day of the Company's most recent fiscal quarter for which
internal financial statements are available ending prior to the date
of such proposed Restricted Payment (the "Computation Period") minus
(y) the product of 1.4 times the sum of (i) Consolidated Fixed
Charges for the Computation Period and (ii) all dividends or other
distributions paid in cash by the Company or any of its Restricted
Subsidiaries on any
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Disqualified Stock of the Company or any of its Restricted
Subsidiaries for the Computation Period; plus
(B) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other than
cash as determined by the Board of Directors, whose good faith
determination will be conclusive) from the issuance or sale (other
than to a Subsidiary) of Qualified Equity Interests of the Company
(excluding from this computation any net proceeds of a Public Equity
Offering received by the Company that are used by it to redeem the
Exchangeable Preferred Stock, as discussed in Section VI(a)(ii),
"Redemption" above); plus
(C) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other than
cash as determined by the Board of Directors, whose good faith
determination will be conclusive) from the issuance or sale (other
than to a Subsidiary) of debt securities or Disqualified Stock that
have been converted into or exchanged for Qualified Stock of the
Company, together with the aggregate net cash proceeds received by
the Company at the time of such conversion or exchange; plus
(D) without duplication, the Net Cash Proceeds received by the
Company or a Wholly Owned Restricted Subsidiary upon the sale of any
of its Unrestricted Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its Restricted
Subsidiaries may take any of the following actions, so long as (with respect
to clauses (c) and (d) below) no Voting Rights Triggering Event has occurred
and is continuing or would occur:
(a) The payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or retirement for
value of any shares of Junior Stock of the Company, in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Subsidiary) of, Qualified Equity Interests of the Company.
(c) The payment by the Company to Citadel Communications for the purpose
of the purchase, redemption, acquisition, cancellation or other retirement
for value of shares of Capital Stock of Citadel Communications, options on
any such shares or related stock appreciation rights or similar securities
held by officers or employees or former officers or employees (or their
estates or beneficiaries under their estates) or by any employee benefit
plan, upon death, disability, retirement or termination of employment or
pursuant to the terms of any employee benefit plan or any other agreement
under which such shares of stock or related rights were issued; provided
that the aggregate cash consideration paid for such purchase, redemption,
acquisition, cancellation or other retirement of such shares of Capital
Stock after the Closing Date does not exceed $1,000,000 in any fiscal year.
(d) Loans or advances to officers, directors and employees of Citadel
Communications, the Company or any of its Restricted Subsidiaries made in
the ordinary course of business after the Closing Date in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
(e) Payments to or on behalf of Citadel Communications to pay its
operating and administrative expenses attributable to the Company,
including, without limitation, legal and audit expenses, directors' fees,
fees payable in respect of the trustee and the back-up trustees under the
Voting Trust Agreement, and Commission compliance expenses, in an amount not
to exceed the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
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(f) Repayment of the note payable of the Company to Citadel
Communications outstanding as of the Closing Date in an amount not to exceed
$12,817,000 plus accrued and unpaid interest thereon to the Closing Date.
The payments described in clauses (b), (c) and (d) of this paragraph
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph but will reduce the amount that would otherwise be
available for Restricted Payments under the foregoing clause (iii), and the
payments described in clauses (a), (e) and (f) of this paragraph will be
Restricted Payments that will be permitted to be taken in accordance with
this paragraph and will not reduce the amount that would otherwise be
available for Restricted Payments under the foregoing clause (iii).
For the purpose of making calculations under this Certificate of
Designation (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company will be deemed to have made an Investment in an
amount equal to the fair market value of the net assets of such Restricted
Subsidiary at the time of such designation as determined by the Board of
Directors, whose good faith determination will be conclusive, (ii) any
property transferred to or from an Unrestricted Subsidiary will be valued at
fair market value at the time of such transfer, as determined by the Board
of Directors, whose good faith determination will be conclusive and
(iii) subject to the foregoing, the amount of any Restricted Payment, if
other than cash, will be determined by the Board of Directors, whose good
faith determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other person that thereafter becomes a Restricted Subsidiary, such
Investment will no longer be counted as a Restricted Payment for purposes of
calculating the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such
Investment (resulting from the payment of interest or dividends, loan
repayment, transfer of assets or otherwise), to the extent such net
reduction is not included in Consolidated Adjusted Net Income; provided that
the total amount by which the aggregate amount of all Restricted Payments
may be reduced may not exceed the lesser of (x) the cash proceeds received
by the Company and any of its Restricted Subsidiaries in connection with
such net reduction and (y) the initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of the
foregoing clause (iii) (A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited
financial statements are available on the date of determination and
unaudited financial statements and other current financial data based on the
books and records of the Company for the remaining portion of such period
and (ii) the Company will be permitted to rely in good faith on the
financial statements and other financial data derived from the books and
records of the Company that are available on the date of determination. If
the Company makes a Restricted Payment that, at the time of the making of
such Restricted Payment, would in the good faith determination of the
Company be permitted under the requirements of this Certificate of
Designation, such Restricted Payment will be deemed to have been made in
compliance with this Certificate of Designation notwithstanding any
subsequent adjustments made in good faith to the Company's financial
statements affecting Consolidated Adjusted Net Income of the Company for any
period.
(3) PURCHASE OF EXCHANGEABLE PREFERRED STOCK UPON A CHANGE OF
CONTROL. If a Change of Control occurs at any time, then each Holder of
Exchangeable Preferred Stock will have the right to require that the Company
purchase such Holder's Exchangeable Preferred Stock, in whole or in part, at
a purchase price in cash equal to 101% of the liquidation preference of such
Exchangeable Preferred Stock, plus accumulated and unpaid dividends, if any,
to the date of purchase, pursuant to the offer described herein (the "Change
of Control Offer") and the other procedures set forth herein.
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Within 30 days following any Change of Control, the Company will notify
the Transfer Agent thereof and give written notice of such Change of Control
to each Holder of Exchangeable Preferred Stock by first-class mail, postage
prepaid, at its address appearing in the security register of the
Exchangeable Preferred Stock, stating, among other things, (i) the purchase
price and the purchase date, which will be a Business Day no earlier than
30 days nor later than 60 days from the date such notice is mailed or such
later date as is necessary to comply with requirements under the Exchange
Act; (ii) that any Exchangeable Preferred Stock not tendered will continue
to accumulate dividends; (iii) that, unless the Company defaults in the
payment of the purchase price, any Exchangeable Preferred Stock accepted for
payment pursuant to the Change of Control Offer will cease to accumulate
dividends after the Change of Control purchase date; and (iv) certain other
procedures that a Holder of Exchangeable Preferred Stock must follow to
accept a Change of Control Offer or to withdraw such acceptance.
On the date of purchase, the Company shall: (i) accept for payment the
Exchangeable Preferred Stock tendered pursuant to the Change of Control
Offer; (ii) deposit with the Transfer Agent money sufficient to pay the
purchase price of all Exchangeable Preferred Stock so accepted; and
(iii) deliver, or cause to be delivered, to the Transfer Agent, all
Exchangeable Preferred Stock so accepted together with an officers'
certificate specifying the Exchangeable Preferred Stock accepted for payment
by the Company. The Company shall promptly mail to the Holders a new
certificate representing any shares not so purchased. The Company shall
publicly announce the results of the Change of Control Offer on or as soon
as practicable after the date of purchase.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing
under Debt as in effect on the Closing Date or in refinancings or
replacements of such Debt) that would materially impair the ability of the
Company to make a Change of Control Offer to purchase the Exchangeable
Preferred Stock or, if such Change of Control Offer is made, to pay for the
Exchangeable Preferred Stock tendered for purchase.
(4) LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not sell, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any
shares of Capital Stock of a Restricted Subsidiary (including options,
warrants, or other rights to purchase shares of such Capital Stock) except
(i) to the Company or a Wholly Owned Restricted Subsidiary, (ii) issuances
or sales to foreign nationals of shares of Capital Stock of foreign
Restricted Subsidiaries, to the extent required by applicable law, or
issuances or sales to directors of directors' qualifying shares, (iii) if,
immediately after giving effect to such issuance or sale, neither the
Company nor any Subsidiary owns any shares of Capital Stock of such
Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) or (iv) if, immediately either giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such person
remaining after giving effect to such issuance or sale would have been
permitted to be made under Section VIII(2), "Limitation on Restricted
Payments," of this Certificate of Designation if made on the date of such
issuance or sale.
In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, transfer or otherwise dispose of any of
its properties or assets to an Unrestricted Subsidiary other than in the
ordinary course of business.
(5) UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the
Company may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither
the Company nor any of its Restricted Subsidiaries is directly or indirectly
liable for any Debt of such Subsidiary, (ii) no default with respect to any
Debt of such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Debt of the Company or any of its
Restricted Subsidiaries to declare a default on such other Debt or cause the
payment thereof to be accelerated or made payable prior to its stated
maturity, (iii) any Investment in
B-13
such Subsidiary made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of Section VIII(2),
"Limitation on Restricted Payments," of this Certificate of Designation,
(iv) neither the Company nor any of its Restricted Subsidiaries has a
contract, agreement, arrangement, understanding or obligation of any kind,
whether written or oral, with such Subsidiary other than those that might be
obtained at the time from persons who are not Affiliates of the Company and
(v) neither the Company nor any of its Restricted Subsidiaries has any
obligation to subscribe for additional shares of Capital Stock or other
equity interest in such Subsidiary, or to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Notwithstanding the foregoing, the
Company may not designate the License Subsidiary, or any Subsidiary to which
any properties or assets (other than current assets) owned by the Company or
the License Subsidiary on the Closing Date have been transferred, as an
Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any of its
Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Debt is permitted under
Section VIII(1), "Limitation on Debt," of this Certificate of Designation
and (ii) no Voting Rights Triggering Event will have occurred and be
continuing following such designation.
(6) LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company will
not permit any of its Subsidiaries to issue any Preferred Stock (other than
to the Company or to a Wholly Owned Restricted Subsidiary of the Company) or
permit any person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company) to own any Preferred Stock of a Subsidiary of the
Company (other than Acquired Preferred Stock; provided that at the time the
issuer of such Acquired Preferred Stock becomes a Subsidiary of the Company
or merges with the Company or any of its Subsidiaries, and after giving
effect to such transaction, the Company shall be able to incur $1.00 of
additional Debt (other than Permitted Debt) in compliance with
Section VIII(1), "Limitation on Debt," of this Certificate of Designation).
(7) REPORTS. At all times from and after the earlier of (i) the date
of the commencement of the Preferred Stock Exchange Offer or the
effectiveness of the Preferred Stock Shelf Registration Statement (the
"Preferred Stock Registration") and (ii) the date 180 days after the Closing
Date, in either case, whether or not the Company is then required to file
reports with the Commission, the Company will file with the Commission all
such reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Exchange Act if it were
subject thereto. The Company will supply the Transfer Agent and each Holder,
or will supply to the Transfer Agent for forwarding to each such Holder,
without cost to such Holder, copies of such reports and other information.
In addition, at all times prior to the earlier of the date of the Preferred
Stock Shelf Registration Statement and the date 180 days after the Closing
Date, the Company will, at its cost, deliver to each Holder of the
Exchangeable Preferred Stock quarterly and annual reports substantially
equivalent to those that would be required by the Exchange Act. In addition,
at all times prior to the Preferred Stock Registration, upon the request by
any Holder or any prospective purchaser of the Exchangeable Preferred Stock
designated by a Holder, the Company will supply to such Holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
(8) CONSOLIDATION, MERGER AND SALE OF ASSETS. Without the affirmative
vote of the Holders of a majority of the issued and outstanding shares of
Exchangeable Preferred Stock and the holders of any Parity Stock, voting or
consenting, as the case may be, as a separate class, the Company may not, in
a single transaction or a series of related transactions, consolidate with
or merge with or into, or sell,
B-14
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its assets to, another person or adopt a plan of liquidation unless:
(a) Either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition the properties and
assets of the Company substantially as an entirety (the "Surviving
Entity") (A) is a corporation, partnership or trust organized and validly
existing under the laws of the United States or any state thereof or the
District of Columbia and (B) the Exchangeable Preferred Stock shall be
converted into or exchanged for and shall become shares of such Surviving
Entity, having in respect of such Surviving Entity the same powers,
preferences and relative participating, optional or other special rights
and the qualifications, limitations or restrictions thereon, that the
Exchangeable Preferred Stock had immediately prior to such transaction.
(b) Immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection
with or as a result of such transaction as having been incurred at the
time of such transaction, no Voting Rights Triggering Event shall have
occurred or be continuing.
(c) Immediately after giving effect to such transaction on a pro
forma basis (on the assumption that the transaction occurred at the
beginning of the most recently ended four full fiscal quarter period for
which internal financial statements are available), the Company (in the
case of clause (i) of paragraph (a) or such person (in the case of
clause (ii) of paragraph (a)) could incur at least $1.00 of additional
Debt (other than Permitted Debt) pursuant to Section VIII(1)(a),
"Limitation on Debt," of this Certificate of Designation.
(d) The Company delivers, or causes to be delivered, to the Transfer
Agent an officers' certificate and an opinion of counsel, each stating
that such consolidation, merger or transfer complies with this
Certificate of Designation and that all conditions precedent in this
Certificate of Designation relating to such transaction have been
satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of related transactions) of
all or substantially all of the properties or assets of one or more
Subsidiaries, the Capital Stock of which constitutes all or substantially
all of the properties or assets of the Company, will be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
IX. NO REISSUANCE OF EXCHANGEABLE PREFERRED STOCK. None of the shares
of Exchangeable Preferred Stock acquired by the Company by reason of
redemption, purchase, or otherwise shall be reissued.
X. BUSINESS DAY. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
XI. TRANSFER RESTRICTIONS. (a) The Series A Preferred Stock will bear
a legend to the following effect (as applicable) unless otherwise agreed by
the Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS
B-15
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH CITADEL BROADCASTING COMPANY (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION
DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR," WITHIN THE MEANING OF SUBPARAGRAPH (A) (1), (2),
(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
(b) The Transfer Agent shall refuse to register any transfer of
Series A Preferred Stock in violation of the restrictions contained in the
legend provided for in Section XI(a).
(c) The legend provided for in Section XI(a) may be removed if the
Series A Preferred Stock has been registered pursuant to a Preferred Stock
Shelf Registration Statement under the Securities Act. Unlegended Series B
Preferred Stock may be issued in exchange for Series A Preferred Stock
pursuant to a Preferred Stock Exchange Offer.
(d) At any time after one year following the Closing Date, upon receipt
by the Transfer Agent and the Company of a certificate substantially in the
form of Exhibit A hereto, the Transfer Agent shall authenticate and deliver
one or more shares of unlegended Series A Preferred Stock in the place of
shares of legended Series A Preferred Stock.
(e) In connection with proposed transfers of Series A Preferred Stock
described in Exhibit B or Exhibit C, the Transfer Agent or the Company may
require the transferor or transferee, as the case may be, to deliver the
appropriate letter attached hereto as Exhibits B or C. Each Holder of
Series A Preferred Stock shall notify the Company or the Transfer Agent in
the event of any transfer by such Holder of any shares of Series A Preferred
Stock to a foreign transferee.
XII. DEFINITIONS. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Debt" means Debt of a person (a) existing at the time such
person is merged with or into the Company or becomes a Subsidiary,
(b) assumed in connection with the acquisition of assets from such person or
(c) secured by a Lien encumbering assets acquired from such person.
B-16
"Acquired Preferred Stock" means preferred stock of a person
(a) existing at the time such person is merged with or into the Company or
becomes a Subsidiary or (b) assumed in connection with the acquisition of
assets from such person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of
this definition, "control," when used with respect to any specified person,
means the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a
"transfer") by the Company or a Restricted Subsidiary, directly or
indirectly, in one or a series of related transactions, to any person other
than the Company or a Restricted Subsidiary of (a) any Capital Stock of any
of its Restricted Subsidiaries, (b) all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries
representing a division or line of business or (c) any other properties or
assets of the Company or any of its Restricted Subsidiaries, other than in
the ordinary course of business. For the purposes of this definition, the
term "Asset Sale" does not include any transfer of properties or assets
(a) that is governed by the provisions of Section VIII(8), "Consolidation,
Merger and Sale of Assets," of this Certificate of Designation, (b) to an
Unrestricted Subsidiary, if permitted under Section VIII(2), "Limitation on
Restricted Payments," of this Certificate of Designation, (c) representing
obsolete or permanently retired equipment, (d) the gross proceeds of which
(exclusive of indemnities) do not exceed $100,000 for any particular item or
$500,000 in the aggregate for any fiscal year, or (e) the transfer of up to
$500,000 of properties and assets, including cash, to a joint venture in
which the Company or a Restricted Subsidiary has an equity interest, which
joint venture is engaged in the internet service provider business.
"Banks" means the banks and other financial institutions that from time
to time are lenders under the Credit Facility.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York
City are authorized or required by law to close.
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents
(however designated) of such person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease
of real or personal property that, in accordance with GAAP, has been
recorded as a capitalized lease on the balance sheet of such person.
"Change of Control" means the occurrence of any of the following events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E.
Smith, John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour
Capital Fund Limited Partnership and any trustee, in its capacity as
trustee under the Voting Trust Agreement or Citadel Communications is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage
of time), directly
B-17
or indirectly, of more than a majority of the voting power of all classes
of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together
with any new directors whose election to such Board of Directors or whose
nomination for election by the stockholders of the Company, was approved
by a vote of at least 66 2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in office;
or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Change of Control Offer" has the meaning specified in Section VIII(3)
hereof.
"Citadel Communications" means Citadel Communications Corporation, a
Nevada corporation, and any successors thereof.
"Closing Date" means July 3, 1997.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act.
"Computation Period" has the meaning specified in Section VIII(2)
hereof.
"Consolidated Adjusted Net Income" means, for any period, the net income
(or net loss) of the Company and its Restricted Subsidiaries for such period
as determined on a consolidated basis in accordance with GAAP, adjusted to
the extent included in calculating such net income or loss by excluding
(a) any net after-tax extraordinary gains or losses (less all fees and
expenses relating thereto), (b) any net after-tax gains or losses (less all
fees and expenses relating thereto) attributable to Asset Sales, (c) the
portion of net income (or loss) of any person (other than the Company or a
Restricted Subsidiary), including Unrestricted Subsidiaries, in which the
Company or any of its Restricted Subsidiaries has an ownership interest,
except to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Restricted Subsidiaries in cash
during such period, (d) the net income (or loss) of any person combined with
the Company or any of its Restricted Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of
combination, and (e) the net income (but not the net loss) of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary is at the date of
determination restricted, directly or indirectly, except to the extent that
such net income could be paid to the Company or a Restricted Subsidiary
thereof; provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated Adjusted Net Income will be reduced (to
the extent not otherwise reduced in accordance with GAAP) by an amount equal
to (A) the amount of the Consolidated Adjusted Net Income otherwise
attributable to such Restricted Subsidiary multiplied by (B) the quotient of
(1) the number of shares of outstanding common stock of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of
its Restricted Subsidiaries divided by (2) the total number of shares of
outstanding common stock of such Restricted Subsidiary on the last day of
such period.
B-18
"Consolidated Cash Flow" means, for any period, the sum of, without
duplication, Consolidated Adjusted Net Income for such period, plus (or, in
the case of clause (d) below, plus or minus) the following items to the
extent included in computing Consolidated Adjusted Net Income for such
period: (a) the aggregate interest expense and preferred stock dividends of
the Company and its Restricted Subsidiaries for such period, plus (b) the
provision for federal, state, local and foreign income taxes of the Company
and its Restricted Subsidiaries for such period, plus (c) the aggregate
depreciation and amortization expense of the Company and any of its
Restricted Subsidiaries for such period, plus (d) any other non-cash charges
for such period, and minus non-cash credits for such period, other than
non-cash charges or credits resulting from changes in prepaid assets or
accrued liabilities in the ordinary course of business; provided that income
tax expense, interest expense and preferred stock dividends, depreciation
and amortization expense, and non-cash charges and credits of a Restricted
Subsidiary will be included in Consolidated Cash Flow only to the extent
(and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Adjusted Net Income for
such period. Solely for purposes of determining whether the Company could
incur Debt pursuant to Section VIII(1)(a), "Limitation on Debt," of this
Certificate of Designation, if the Company is permitted to give pro forma
effect to an In-Market Acquisition of a radio station pursuant to
clause (iii) of the second paragraph of such covenant, such calculation may
also give pro forma effect to projected quantifiable improvements in
operating results of such radio station due to cost reductions calculated in
good faith by the Company and certified by an officers' certificate filed
with the Transfer Agent. As used in the preceding sentence, the term
"In-Market Acquisition" means the acquisition of a radio station or group of
radio stations serving a metropolitan statistical area in which the Company
or its Subsidiaries has owned, or has operated under a local marketing
agreement, one or more radio stations for at least the preceding six months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio of (i) the
aggregate amount of Debt of the Company and its Restricted Subsidiaries on a
consolidated basis as of the end of the immediately preceding four fiscal
quarters for which internal financial statements of the Company are
available (the "Reference Period") to (ii) the aggregate amount of
Consolidated Cash Flow for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without duplication,
the sum of (a) the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a
consolidated statement of operations of the Company and its Restricted
Subsidiaries for such period, including, without limitation,
(i) amortization of debt discount, (ii) the net cost of interest rate
contracts (including amortization of discounts), (iii) the interest portion
of any deferred payment obligation, (iv) amortization of debt issuance
costs, (v) the interest component of Capitalized Lease Obligations of the
Company and any of its Restricted Subsidiaries, and (vi) the portion of any
rental obligation of the Company and any of its Restricted Subsidiaries in
respect of any sale and leaseback transaction allocable during such period
to interest expense (determined as if it were treated as a Capitalized Lease
Obligation) plus (b) all interest on any Debt of any other person guaranteed
by the Company or any of its Restricted Subsidiaries: provided, however,
that Consolidated Fixed Charges will not include any gain or loss from
extinguishment of debt, including any write-off of debt issuance costs.
"Credit Facility" means the loan agreement dated October 9, 1996 among
the Company and the financial institutions and banks named therein, as
amended, and as such agreement may be amended, restated, supplemented,
replaced or refinanced or otherwise modified from time to time.
"Debentures Trustee" means The Bank of New York, as Trustee under the
Exchange Indenture, or any successor Debentures Trustee appointed in
accordance with the terms of the Exchange Indenture.
B-19
"Debt" means (without duplication), with respect to any person, whether
recourse is to all or a portion of the assets of such person and whether or
not contingent, (a) every obligation of such person for money borrowed,
(b) every obligation of such person evidenced by bonds, debentures, notes or
other similar instruments, (c) every reimbursement obligation of such person
with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person, (d) every obligation of
such person issued or assumed as the deferred purchase price of property or
services, (e) every Capitalized Lease Obligation of such person, (f) all
Disqualified Stock of such person valued at its maximum fixed repurchase
price, plus accumulated and unpaid dividends, (g) all Hedging Obligations of
such person, and (h) every obligation of the type referred to in clauses
(a) through (g) of another person and all dividends of another person
(i) the payment of which, in either case, such person has guaranteed or
(ii) which is secured by any Lien on any property or asset of such person,
the amount of such Debt being deemed to be the lesser of the actual amount
of the guarantee or the value of such property or asset subject to such
Lien, as the case may be, and the amount of the Debt so guaranteed or
secured, as the case may be. For purposes of this definition, the "maximum
fixed repurchase price" of any Disqualified Stock that does not have a fixed
repurchase price will be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any
date on which Debt is required to be determined pursuant to this Certificate
of Designation, and if such price is based upon, or measured by, the fair
market value of such Disqualified Stock, such fair market value will be
determined reasonably and in good faith by the board of directors of the
issuer of such Disqualified Stock. Notwithstanding the foregoing, trade
accounts payable and accrued liabilities arising in the ordinary course of
business and any liability, for federal, state or local taxes or other taxes
owed by such person will not be considered Debt for purposes of this
definition. The amount outstanding at any time of any Debt issued with
original issue discount is the aggregate principal amount at maturity of
such Debt, less the remaining unamortized portion of the original issue
discount of such Debt at such time, as determined in accordance with GAAP.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms (or by the terms of any security into which it is
convertible or exchangeable by contract or otherwise), or upon the happening
of any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to
a sinking fund obligation or otherwise, or is redeemable at the sole option
of the holder thereof, in whole or in part, prior to one year after the
Mandatory Redemption Date, provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to cause the issuer thereof to repurchase or redeem such
Capital Stock upon occurrence of a "change of control" occurring prior to
the Mandatory Redemption Date will not constitute Disqualified Stock if the
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained
in Section VIII(3), "Purchase of Exchangeable Preferred Stock upon a Change
of Control," of this Certificate of Designation and such Capital Stock
specifically provides that the issuer will not repurchase or redeem any such
stock pursuant to such provision prior to the Company's repurchase of such
Exchangeable Preferred Stock as are required to be repurchased pursuant to
Section VIII(3), "Purchase of Exchangeable Preferred Stock upon a Change of
Control," of this Certificate of Designation; provided, however, that
"Disqualified Stock" shall not include the Exchangeable Preferred Stock.
"Dividend Default" has the meaning specified in Section V(b) hereof.
"Dividend Payment Date" means each January 1 and July 1 of each year on
which dividends shall be paid or are payable, any Redemption Date and any
other date on which dividends in arrears may be paid.
"Dividend Rate" has the meaning specified in Section II(a) hereof.
B-20
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" has the meaning specified in Section IV(a) hereof.
"Exchange Debentures" means the 13 1/4% Exchange Debentures due 2009 of
the Company, issuable pursuant to the Exchange Indenture in exchange for the
Exchangeable Preferred Stock at the option of the Company.
"Exchange Indenture" means the Indenture dated as of July 1, 1997 among
the Company, Citadel License, Inc. as guarantor, and The Bank of New York,
as trustee, relating to the Exchange Debentures.
"Exchange Notice" has the meaning specified in Section IV(a) hereof.
"Exchangeable Preferred Stock" has the meaning set forth in Section I
hereof.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied,
that are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all
of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way, the
payment or performance (or payment of damages in the event of
nonperformance) of all or any part of such obligation, including without
limitation, the payment of amounts drawn down under letters of credit.
"Hedging Obligations" means the obligations of any person under
(a) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (b) other agreements or arrangements destined to
protect such person against fluctuations in interest rates or the value of
foreign currencies.
"Holder" has the meaning specified in Section II(a) hereof.
"Investment" (in any person) means (a) directly or indirectly, any
advance, loan or other extension of credit (including, without limitation,
by way of guarantee or similar arrangement) or capital contribution to any
person, the purchase or other acquisition of any stock, bonds, notes,
debentures or other securities issued by such person or the acquisition (by
purchase or otherwise) of all or substantially all of the business or assets
of such person or the making of any investment in such person, (b) the
designation of any Restricted Subsidiary as an Unrestricted Subsidiary and
(c) the transfer of any assets or properties from the Company or a
Restricted Subsidiary to any Unrestricted Subsidiary, other than the
transfer of assets or properties made in the ordinary course of business.
Investments will exclude extension of trade credit on commercially
reasonable terms in accordance with normal trade practices.
"Junior Stock" has the meaning specified in Section VII hereof.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, assignment for
security, claim, preference, priority or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable,
now owned or hereafter acquired. A person will be deemed to own subject to a
Lien any property that such person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Mandatory Redemption Date" has the meaning specified in Section VI(b)
hereof.
B-21
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations when received in the form of, or
stock or other assets when disposed of for, cash or cash equivalents (except
to the extent that such obligations are financed or sold with recourse to
the Company or any of its Restricted Subsidiaries), net of (a) brokerage
commissions and other fees and expenses (including fees and expenses of
legal counsel and investment banks) related to such Asset Sale,
(b) provisions for all taxes payable as a result of such Asset Sale,
(c) payments made to retire Debt where payment of such Debt is secured by
the assets that are the subject of such Asset Sale, (d) amounts required to
be paid to any person (other than the Company or any of its Restricted
Subsidiaries) owning a beneficial interest in the assets that are subject to
the Asset Sale and (e) appropriate amounts to be provided by the Company or
any of its Restricted Subsidiaries, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with
such Asset Sale and retained by the seller after such Asset Sale, including
pension and other post-employment benefit liabilities, liabilities related
to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Notes" means the 10 1/4% Senior Subordinated Notes due 2007 of the
Company, issuable pursuant to the Notes Indenture.
"Notes Indenture" means the Indenture dated as of July 1, 1997 among the
Company, Citadel License, Inc., as guarantor, and The Bank of New York, as
trustee, relating to the 10 1/4% Senior Subordinated Notes due 2007 of the
Company.
"Original Issue Date" means July 3, 1997.
"Parity Stock" has the meaning specified in Section VII hereof.
"Permitted Debt" has the meaning specified in Section VIII(1)(b) hereof.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year or less
issued or directly and fully guaranteed or insured by the United States
or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof);
(ii) certificates of deposit, time deposits, overnight bank deposits or
bankers' acceptances with a maturity of 270 days or less of any financial
institution that is a member of the Federal Reserve System having
combined capital and surplus of not less than $500,000,000; and
(iii) commercial paper with a maturity of 270 days or less issued by a
corporation that is not an Affiliate of the Company and is organized
under the laws of any state of the United States or the District of
Columbia and having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Ratings Services.
(b) Investments by the Company or any of its Restricted Subsidiaries
in another person, if as a result of such Investment (i) such other
person becomes a Restricted Subsidiary that would be a Subsidiary
Debentures Guarantor under the Exchange Indenture or (ii) such other
person is merged or consolidated with or into, or transfers or conveys
all or substantially all of its assets to, the Company or a Restricted
Subsidiary that would be such a Subsidiary Debentures Guarantor.
(c) Investments by the Company or any of its Restricted Subsidiaries
in a Subsidiary Debentures Guarantor and Investments by any Restricted
Subsidiary in the Company.
(d) Investments in assets owned or used in the ordinary course of
business.
(e) Investments in existence on the Closing Date.
(f) Promissory notes received as a result of Asset Sales provided
that (i) the consideration received by the Company or the relevant
Restricted Subsidiary for such Asset Sale is not less than
B-22
the fair market value of the assets sold (as determined by the Board of
Directors, whose good faith determination will be conclusive) and
(ii) the consideration received by the Company or the relevant Restricted
Subsidiary in respect of such Asset Sale consists of at least 80%
(A) cash or cash equivalents and/or (B) the assumption by the transferee
of Debt of the Company or a Restricted Subsidiary which would be ranked
senior to or PARI PASSU with the Exchange Debentures and release of the
Company or such Restricted Subsidiary from all liability on such Debt.
(g) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding, at any time not
exceeding $1,000,000.
(h) Investments by the Company or any of its Restricted Subsidiaries
in a joint venture that is engaged in the internet service provider
business in an aggregate amount outstanding at any time not exceeding
$500,000.
(i) Other Investments that do not exceed $2,000,000 at any one time
outstanding.
"Preferred Stock" of any person means any Capital Stock of such person
that has preferential rights to any other Capital Stock of such person with
respect to dividends or redemptions or upon liquidation.
"Preferred Stock Exchange Offer" means an offer by the Company to
exchange the Series A Preferred Stock for the Series B Preferred Stock
pursuant to an effective registration statement.
"Preferred Stock Registration" has the meaning set forth in
Section VIII(7) hereof.
"Preferred Stock Shelf Registration Statement" means a shelf
registration statement which becomes effective and covers resales of the
Series A Preferred Stock.
"Public Equity Offering" means an underwritten public offering of
Qualified Equity Interests of either (a) the Company or (b) Citadel
Communications, the net proceeds from which (after deducting any
underwriting discounts and commissions) are used by Citadel Communications
to purchase Qualified Equity Interests of the Company; provided that, in
either case, such net proceeds exceed $10,000,000.
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any person means any and all Capital Stock of such
person, other than Disqualified Stock.
"Redemption Date" has the meaning specified in
Section VI(a)(i) hereof.
"Redemption Notice" has the meaning specified in
Section VI(c)(i) hereof.
"Redemption Price" means the price at which the Exchangeable Preferred
Stock may be redeemed.
"Restricted Payment" has the meaning specified in Section VIII(2)
hereof.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase and Exchange Agreement" means that certain
Securities Purchase and Exchange Agreement, dated June 28, 1996, as amended
by the First Amendment thereto dated
B-23
December 31, 1996, and by the Second Amendment thereto dated March 17, 1997
among Citadel Communications, the Company and certain other parties.
"Senior Stock" has the meaning specified in Section VII hereof.
"Series A Preferred Stock" has the meaning set forth in Section I
hereof.
"Series B Preferred Stock" has the meaning set forth in Section I
hereof.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that together with its Subsidiaries, (a) for the most recent fiscal year of
the Company accounted for more than 10% of the consolidated net sales of the
Company and its Restricted Subsidiaries, (b) as of the end of such fiscal
year was the owner of more than 10% of the consolidated assets of the
Company and its Restricted Subsidiaries, in the case of either (a) or (b),
as set forth on the most recently available consolidated financial
statements of the Company for such fiscal year, (c) was organized or
acquired after the beginning of such fiscal year and would have been a
Significant Subsidiary if it had been owned during the entire fiscal year or
(d) that holds one or more licenses material to the Company's business.
"Subsidiary" means any person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by the
Company and/or one or more other Subsidiaries of the Company.
"Subsidiary Debentures Guarantee" means a guarantee of the Exchange
Debentures by a Restricted Subsidiary under the Exchange Indenture.
"Subsidiary Debentures Guarantor" means the License Subsidiary and each
other Restricted Subsidiary that issues a Subsidiary Debentures Guarantee
under the Exchange Indenture.
"Subsidiary Notes Guarantee" means a guarantee of the Notes by a
Restricted Subsidiary under the Notes Indenture.
"Transfer Agent" means The Bank of New York or any successor transfer
agent.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
on the date on which this Certificate of Designation was filed.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary in accordance with
Section VIII(5), "Unrestricted Subsidiaries," of this Certificate of
Designation and (b) any Subsidiary of an Unrestricted Subsidiary.
"Voting Rights Triggering Event" has the meaning set forth above in
Section V(b) hereof.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of any person (irrespective of whether or not, at the
time, stock of any other class or classes has, or might have, voting power
by reason of the happening of any contingency).
"Voting Trust Agreement" means that certain Voting Trust Agreement dated
as of March 17, 1997 by and among Citadel Communications, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Christopher Hall,
as the initial Trustee thereunder and J. Walter Corcoran and Harlan Levy,
each as an initial Back-Up Trustee thereunder.
"Weighted Average Life" means, as of the date of determination with
respect to any Debt or Disqualified Stock, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal or
liquidation value payment of such Debt or Disqualified Stock, respectively,
multiplied by (ii) the amount of each such principal or liquidation value
payment by (b) the sum of all such principal or liquidation value payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary,
all of the outstanding voting securities (other than directors' qualifying
shares or an immaterial number of shares required to be owned by other
persons pursuant to applicable law) of which are owned, directly or
indirectly, by the Company.
B-24
EXHIBIT A
FORM OF CERTIFICATE AS TO
COMPLETION OF DISTRIBUTION AND
TERMINATION OF RESTRICTED PERIOD
_____________, ________
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the "Company") 13 1/4%
Series A Exchangeable Preferred Stock (the "Series A
Preferred Stock") and 13 1/4% Series B Exchangeable
Preferred Stock (the "Series B Preferred Stock")
Dear Ladies and Gentlemen:
This letter relates to shares of Series A Preferred Stock represented by
the attached Certificate (the "Legended Certificate") which bears a legend
outlining restrictions upon transfer of such Legended Certificate. Pursuant to
Section XI(d) of the Certificate of Designation (the "Certificate of
Designation") filed with the Secretary of State of the State of Nevada on July
, 1997 relating to the Series A Preferred Stock and the Series B Preferred
Stock, we hereby certify that we are a person outside the United States to whom
the Series A Preferred Stock could be transferred in accordance with Rule 904 of
Regulation S promulgated under the U.S. Securities Act of 1933, as amended.
Accordingly, you are hereby requested to exchange the shares of Series A
Preferred Stock represented by the Legended Certificate for a like number of
shares of Series A Preferred Stock, which shall be represented by the attached
Certificate (the "Unlegended Certificate"), which does not bear a legend
outlining restrictions upon the transfer of such Unlegended Certificate, all in
the manner provided for in the Certificate of Designation.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
B-25
EXHIBIT B
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
_______, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13 1/4% Series A Exchangeable
Preferred Stock (the "Securities")
Dear Sirs:
In connection with our proposed purchase of shares of the Securities, we
confirm that:
1. The undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities, except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities, we will do so
only (A) to the Company or any subsidiary thereof, (B) in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if requested by the Company,
an opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act,
(E) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act, or (F) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Securities from us a notice advising such purchaser
that resales of the Securities are restricted as stated herein.
3. We understand that, on any proposed resale of any Securities or
Conversion Shares, we will be required to furnish to you and the Company
such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the effect set out in paragraph 2.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Securities and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
B-26
5. We are acquiring the Securities purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
B-27
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13 1/4% Series A Exchangeable
Preferred Stock (the "Securities")
Dear Sirs:
In connection with our proposed sale of shares of the Securities, we
confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended, and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting
on our behalf knows that the transaction has been pre-arranged with a buyer
in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the
case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
Authorized Signature
B-28
III. That, the shareholder approval requirement contained in Nev. Rev. Stat.
Section 1955, subsection 3, does not apply to this Amended Certificate of
Designation, because Section V of the Original Designation provides otherwise,
and the changes to the Original Designation contained in this Amended
Certificate of Designation do not materially or adversely affect the specified
rights, preferences, privileges or voting rights of the Exchangeable Preferred
Stock.
[The remainder of this page left intentionally blank]
B-29
IN WITNESS WHEREOF, the Company has caused this Amended Certificate of
Designation to be duly executed in its corporate name on this 23rd day of July,
1997.
CITADEL BROADCASTING COMPANY
By: /s/ LAWRENCE R. WILSON
-----------------------------------------
Name: Lawrence R. Wilson
Its: President
By: /s/ DONNA L. HEFFNER
-----------------------------------------
Name: Donna L. Heffner
Its: Secretary
STATE OF ARKANSAS
COUNTY OF PULASKI
This instrument was acknowledged before me on July 30, 1997 by Lawrence R.
Wilson, as President of Citadel Broadcasting Company.
[SEAL:
Sheila A. Hornecker /s/ SHEILA A. HORNECKER
Notary Public ---------------------------------------------
Pulaski County, AR] Notary Public
(Seal, if any) My Commission Expires 8-1-99
STATE OF ARIZONA
COUNTY OF MARICOPA
This instrument was acknowledged before me on July 23, 1997 by Donna L.
Heffner, as Secretary of Citadel Broadcasting Company.
/s/ SUSAN M. KAISER
---------------------------------------------
Notary Public
(Seal, if any) My Commission Expires April 24, 2000
B-30
THE DEPOSITARY FOR THE OFFER AND THE CONSENT SOLICITATION IS:
THE BANK OF NEW YORK
BY REGISTERED OR CERTIFIED BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT DELIVERY:
MAIL:
The Bank of New York (212) 815-6339 The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, NY 10286 CONFIRM BY TELEPHONE OR Corporate Trust Services
FOR INFORMATION CALL: Window
Attention: William Buckley William Buckley New York, NY 10286
Reorganization Department (212) 815-5788 Attention: William Buckley
Reorganization Department
Any questions or requests for assistance or additional copies of this
document, the consent and letter of transmittal or the notice of guaranteed
delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A stockholder may also contact the Dealer Manager at its
telephone numbers set forth below or such stockholder's broker, dealer,
commercial bank or trust company or nominee for assistance concerning the offer
and consent solicitation.
------------------------
THE INFORMATION AGENT FOR THE OFFER AND THE CONSENT SOLICITATION IS:
INNISFREE
501 Madison Avenue, 20th Floor
New York, New York 10022
Bankers and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
------------------------
THE DEALER MANAGER FOR THE OFFER AND
THE SOLICITATION AGENT FOR THE CONSENT SOLICITATION IS:
JP MORGAN
270 Park Avenue
New York, New York 10017
Attention: Robert Berk
Call: (212) 270-1100 (collect)
or
(800) 245-8812 (toll-free)