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EXHIBIT 3
FORM OF
RECAPITALIZATION AGREEMENT
This RECAPITALIZATION AGREEMENT (this "Agreement") is entered into as
of June ___, 1998 by and among Citadel Communications Corporation, a Nevada
corporation (the "Company"), and the stockholders of the Company and the holders
of options and warrants to acquire shares of capital stock of the Company
(collectively, the "Stockholders").
RECITALS:
WHEREAS, subject to the terms and conditions of this Agreement and
formal approval of certain matters by the stockholders of the Company, the Board
of Directors of the Company has approved a recapitalization of the Company (the
"Recapitalization"), on the terms set forth in this Agreement; and
WHEREAS, the Company has filed a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") for the purpose of registering shares of its common stock for sale in an
underwritten public offering (the "Offering"); and
WHEREAS, in furtherance of the Offering and the transactions
contemplated herein, the parties hereto desire to enter into this Agreement.
NOW, THEREFORE, in consideration of and premised upon the various
agreements of the parties contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Stockholders, intending to be legally bound
hereby, agree as follows:
ARTICLE I - THE RECAPITALIZATION
SECTION 1.1. - THE RECAPITALIZATION. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Nevada's laws on
private corporations, Chapter 78 of the Nevada Revised Statutes (the "NGCL"), at
the Effective Time (as defined below), the following events constituting the
Recapitalization shall occur:
SECTION 1.1.1. - CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company shall be amended and restated as set forth
in Exhibit A hereto and shall be the Certificate of Incorporation of
the Company (the "New Certificate"), unless and until amended as
provided in the New Certificate or by law. When used herein, the
"Effective Time" shall mean the date and time at which the New
Certificate becomes effective under the NGCL. It is the intent of the
parties that the New
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Certificate will be filed and become effective under the NGCL at or
about the time the Company seeks to have the Registration Statement
declared effective by the SEC.
SECTION 1.1.2. - BYLAWS. The Bylaws of the Company shall be amended and
restated as set forth in Exhibit B hereto and shall be the Bylaws of
the Company (the "New Bylaws"), unless and until amended or repealed as
provided in the New Certificate, the New Bylaws or by law.
SECTION 1.1.3. - OFFICERS AND DIRECTORS. The officers of the Company
immediately prior to the Effective Time shall continue as the officers
of the Company until their successors shall have been duly elected and
qualified, or as otherwise provided in the New Bylaws. Following the
Effective Time, the Class A Directors of the Company contemplated by
the New Certificate shall be Lawrence R. Wilson, Scott E. Smith, Ted L.
Snider, Sr. and John E. von Schlegell, and the Class B Director
contemplated by the New Certificate shall be Patricia Diaz Dennis,
until their successors shall have been duly elected and qualified, or
as otherwise provided in the New Certificate, the New Bylaws or as
otherwise provided by applicable law.
SECTION 1.1.4. - STOCK RECLASSIFICATION.
(a) Without any action on the part of the holder thereof, each
share of Class A Common Stock, Class B Common Stock, Class C Common
Stock, Series A Convertible Redeemable Preferred Stock, Series B
Convertible Redeemable Preferred Stock, Series E Convertible Redeemable
Preferred Stock, Series F Convertible Redeemable Preferred Stock and
Series G Convertible Redeemable Preferred Stock of the Company issued
and outstanding immediately prior to the Effective Time (collectively,
the "Common Conversion Stock") shall be converted into the right to
receive three shares of common stock, par value $0.001 per share, of
the Company (the "Common Stock") rounded to the nearest whole share, in
accordance with the provisions of this Agreement and the New
Certificate. From and after the Effective Time, all certificates or
other instruments representing shares of Common Conversion Stock issued
and outstanding immediately prior to the Effective Time shall
thereafter evidence, without further action, Common Stock. Each holder
of Common Conversion Stock shall be entitled to receive, upon surrender
of his, her or its certificates representing shares of Common
Conversion Stock to the Company, share certificates representing that
number of shares of Common Stock into which his, her or its shares of
Common Conversion Stock is converted in accordance with this Section
1.1.4(a) and the New Certificate. Nevada law may require the Company to
issue a full share of Common Stock in lieu of a fractional share of
Common Stock resulting from the Recapitalization. To the extent that a
holder of Common Conversion Stock would be due a whole share of Common
Stock and, under this Agreement, such holder will not receive either a
fractional share of Common Stock or a full share of Common Stock in
lieu thereof, such holder hereby waives any right to receive such
fractional or full share of Common Stock.
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(b) Without any action on the part of the holder thereof, each
share of Series C Convertible Redeemable Preferred Stock and Series D
Convertible Redeemable Preferred Stock of the Company issued and
outstanding immediately prior to the Effective Time (collectively, the
"Preferred Conversion Stock") shall be converted into the right to
receive three shares of Series AA Convertible Preferred Stock, par
value $0.001 per share, of the Company (the "Convertible Preferred
Stock") rounded to the nearest whole share, in accordance with the
provisions of this Agreement and the New Certificate. From and after
the Effective Time, all certificates or other instruments representing
shares of Preferred Conversion Stock of the Company issued and
outstanding immediately prior to the Effective Time shall thereafter
evidence, without further action, Convertible Preferred Stock. Each
holder of Preferred Conversion Stock shall be entitled to receive, upon
surrender of his, her or its certificate or certificates representing
shares of Preferred Conversion Stock to the Company, share certificates
representing that number of shares of Convertible Preferred Stock into
which his, her or its shares of Preferred Conversion Stock is converted
in accordance with this Section 1.1.4(b) and the New Certificate.
Nevada law may require the Company to issue a full share of Convertible
Preferred Stock in lieu of a fractional share of Convertible Preferred
Stock resulting from the Recapitalization. To the extent that a holder
of Preferred Conversion Stock would be due a whole share of Convertible
Preferred Stock and, under this Agreement, such holder will not receive
either a fractional share of Convertible Preferred Stock or a full
share of Convertible Preferred Stock in lieu thereof, such holder
hereby waives any right to receive such fractional or full share of
Convertible Preferred Stock.
SECTION 1.1.5. - STOCK OPTIONS AND WARRANTS. Without any action on the
part of the holder thereof, each option or warrant to acquire shares of
capital stock of the Company outstanding immediately prior to the
Effective Time shall be converted into an option or warrant, as
applicable, to acquire three times the same number of shares of Common
Stock, and the per share exercise price of each such option or warrant
shall be divided by three.
ARTICLE II - WAIVERS AND TERMINATIONS
SECTION 2.1. - REGISTRATION RIGHTS AGREEMENT. Each Stockholder (other
than the holders of Class B Common Stock and the outstanding warrant to acquire
shares of Class B Common Stock) who is a party to that certain Third Amended and
Restated Registration Rights Agreement dated June 28, 1996 among the Company and
certain of its stockholders, as amended (the "Registration Rights Agreement"),
hereby waives any and all rights which such Stockholder may have under the
Registration Rights Agreement, insofar as such rights relate to "piggy-back"
rights to have shares of capital stock of the Company beneficially owned by such
Stockholder registered on the Registration Statement or otherwise in connection
with the Offering.
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SECTION 2.2. - STOCKHOLDERS AGREEMENT. Each Stockholder who is a party
to that certain Second Amended and Restated Stockholders Agreement dated June
28, 1996 among the Company and certain of its stockholders, as amended (the
"Stockholders Agreement"), hereby waives any and all rights which such
Stockholder may have under the Stockholders Agreement, insofar as such rights
arise from or relate to the Recapitalization.
SECTION 2.3. - WAIVER OF VOTING RIGHTS. The Stockholders who will
receive shares of Convertible Preferred Stock in the Recapitalization hereby
agree that, from the Effective Time until consummation of the Offering, such
Stockholders will not vote shares representing more than 49% of the combined
voting power of the outstanding capital stock of the Company with respect to any
matter submitted to a vote of the stockholders of the Company from the Effective
Time until consummation of the Offering.
ARTICLE III - ADDITIONAL WAIVERS AND
TERMINATIONS; LOCKUP AGREEMENT
SECTION 3.1 - EXCEPTIONS TO ARTICLE. This Article III shall not apply
to the holders of Preferred Conversion Stock prior to the Effective Time and
holders of the Convertible Preferred Stock or Common Stock into which the
Convertible Preferred Stock may be converted at and following the Effective
Time.
SECTION 3.2. - OPTION VESTING. Each Stockholder who holds an option
granted under the Company's 1996 Equity Incentive Plan to purchase shares of
capital stock of the Company hereby waives any and all rights to have the
vesting and exercisability of such option accelerated, insofar as the
Recapitalization would otherwise cause such an acceleration of vesting and
exercisability of such option under the agreement between the Company and the
Stockholder governing the option.
SECTION 3.3. - OTHER AGREEMENTS. The Company and the Stockholders
acknowledge that each of the following agreements shall terminate and be of no
further force or effect upon consummation of the Offering: (i) any Stock
Transfer Restriction Agreement entered into with a Stockholder upon the exercise
by such Stockholder of an option or options to purchase shares of capital stock
of the Company granted in 1994 (collectively, the "Stock Transfer Restriction
Agreements"); (ii) that certain Second Amended and Restated Security Holder
Agreement dated June 28, 1996 among the Company, Citadel Broadcasting Company,
Bank of America National Trust and Savings Association and certain other
Stockholders (the "BofA Agreement"); (iii) that certain Security Holder
Agreement dated December 31, 1996 among the Company, Endeavour Capital Fund
Limited Partnership and certain other Stockholders (the "Endeavour Agreement");
(iv) that certain Security Holder Agreement dated September 26, 1997 among the
Company, Philip J. Urso and certain other Stockholders (the "Urso Agreement");
and (v) Section 7 of any Management Team Stock Subscription entered into with a
stockholder in connection with the reorganization of the
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Company into a holding company or otherwise (collectively, the "Management Team
Agreements").
SECTION 3.4. - THE OFFERING. Each Stockholder understands that
Prudential Securities Incorporated; Donaldson, Lufkin & Jenrette Securities
Corporation; Goldman, Sachs & Co.; and NationsBanc Montgomery Securities LLC, as
Representatives (the "Representatives") of the several underwriters (the
"Underwriters"), propose to enter into an Underwriting Agreement with the
Company (the "Underwriting Agreement"), providing for the Offering by the
Underwriters, including the Representatives, of Common Stock.
SECTION 3.5 - LOCK-UP AGREEMENT. In consideration of the Underwriters'
agreement to purchase, and undertake the Offering of, the Common Stock, each
Stockholder agrees not to, directly or indirectly, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale, pledge,
grant of an option to purchase or other sale or disposition) of any Common Stock
(including, without limitation, shares of Common Stock which may be deemed to be
beneficially owned by a Stockholder in accordance with the rules and regulations
of the SEC and shares of Common Stock which may be issued upon exercise of a
stock option or warrant) or any securities convertible into or exercisable or
exchangeable for such Common Stock in any manner, transfer all or a portion of
the economic consequences associated with the ownership of the Common Stock, for
a period of 180 days after the effective date of the Registration Statement,
other than (i) as a gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this Article III, (ii) transfers to a transferor's
affiliate, as such term is defined in Rule 405 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), provided the transferee or
transferees thereof agree in writing to be bound by this Article III, or (iii)
with the prior written consent of Prudential Securities Incorporated. Each
Stockholder agrees that for a period of 180 days after the effective date of the
Registration Statement, such Stockholder will not exercise any rights that such
Stockholder may have to cause the Company to register (under the Securities Act
or otherwise) any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Common Stock, without the prior
written consent of Prudential Securities Incorporated.
SECTION 3.6. - TRANSFER OF SHARES. Each Stockholder agrees that the
Company may, with respect to any shares of Common Stock for which such
Stockholder is the record holder, cause the transfer agent for the Company to
note stop transfer instructions with respect to such shares of Common Stock on
the transfer books and records of the Company. Each Stockholder further agrees
that such Stockholder will, if requested by the Company with respect to any
shares of Common Stock for which such Stockholder is the beneficial holder but
not the record holder, cause the record holder of such shares of Common Stock to
cause the transfer agent for the Company to note stop transfer instructions with
respect to such shares of Common Stock on the transfer books and records of the
Company.
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ARTICLE IV - TERMINATION AND AMENDMENT
SECTION 4.1. - TERMINATION BY THE COMPANY OR THE STOCKHOLDERS. This
Agreement may be terminated at any time prior to the Effective Time by the
Company or by Stockholders holding at least 66% of the voting power of the
capital stock of the Company.
SECTION 4.2. - TERMINATION FOR NONCONSUMMATION OF OFFERING.
(a) If the Effective Time has not yet occurred, this Agreement
will terminate automatically if the Offering is not consummated on or
before August 31, 1998.
(b) If the Effective Time has occurred but the Offering is not
consummated within ten (10) business days after the Effective Time, the
New Certificate will be rescinded and be of no force or effect. Such
recision shall be effected by a subsequent amendment adopting the
entirety of the Certificate of Seventh Amended and Restated Certificate
of Incorporation of the Company as filed with the Nevada Secretary of
State on October 16, 1997, with such amendments thereto as may be
necessary to reinstate each Stockholder to the position such
Stockholder was in vis-a-vis ownership of capital stock (including
options and warrants to acquire capital stock) of the Company
immediately prior to the Effective Time.
SECTION 4.3. - AMENDMENTS. This Agreement may not be amended, altered
or modified except by a written instrument executed by the Company and the
Stockholders.
ARTICLE V - MISCELLANEOUS
SECTION 5.1. - ENTIRE AGREEMENT. This Agreement, the New Certificate
and the New Bylaws constitute the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related to the subject matter
hereof; provided, however, that, subject to Article III, each of the Stock
Transfer Restriction Agreements, the BofA Agreement, the Endeavour Agreement,
the Urso Agreement and the Management Team Agreements shall continue in effect
until consummation of the Offering.
SECTION 5.2. - POWER AND AUTHORITY. Each Stockholder hereby represents
and warrants that such Stockholder has full power and authority to enter into
this Agreement. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of any Stockholder and any obligations of any
Stockholder shall be binding upon the heirs, personal representatives,
successors and assigns of such Stockholder.
SECTION 5.3. - BINDING EFFECT; PERSONS BENEFITTING. This Agreement
shall inure to the benefit of and be binding on the parties hereto, and the
respective successors and assigns of the parties and such persons. Except as set
forth in Section 5.4, nothing in this Agreement is intended or shall be
construed to confer upon any entity or person other than
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the parties hereto and their respective successors and assigns any right, remedy
or claim under or by reason of this Agreement or any part hereof.
SECTION 5.4. - THIRD PARTY BENEFICIARY. The Representatives shall be
intended third party beneficiaries of Article III and shall have the right to
enforce Article III directly in a court of law or equity or both to protect
their rights under Article III. Without limiting the generality of the
foregoing, it is the intention of the parties hereto that the provisions of
Article III are made for the benefit of the Representatives and to induce the
Representatives to purchase, and undertake the Offering of, the Common Stock
pursuant to the Underwriting Agreement.
SECTION 5.5. - GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Nevada, without regard to the application of conflicts of
law principles.
SECTION 5.6. - COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
SECTION 5.7 - EFFECTIVE AGREEMENT. If the New Certificate is approved
by the stockholders of the Company in accordance with Nevada law and the Board
of Directors of the Company determines to proceed with the Offering, this
Agreement shall be effective and binding on the Company and the Stockholders
whose signatures appear on the signature pages hereto notwithstanding the fact
that less than all of the stockholders of the Company and holders of options and
warrants to acquire shares of capital stock of the Company have executed this
Agreement.
SECTION 5.8. - INTERPRETATION. When reference is made in this Agreement
to an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
(Signatures on following page)
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CITADEL COMMUNICATIONS
CORPORATION
By:_____________________________
Lawrence R. Wilson, President
CLASS A COMMON STOCK HOLDERS:
SECURITY INVESTMENT MANAGEMENT &
TRUST FUND, as custodian
By:_____________________________
Its:____________________________
________________________________
Michael Ahearn
________________________________
Gayle Ahearn
________________________________
Mike Atterbury
________________________________
Don Becker
________________________________
Fritz Beesemyer
________________________________
Pete Benedetti
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________________________________
Ann M. Berg
________________________________
Douglas E. Berg
________________________________
Steve Bertholf
________________________________
Debra Bertholf
________________________________
William C. Betts, Jr.
________________________________
Pamela Moore
________________________________
Joseph M. Biondi
________________________________
Carolyn Bower
________________________________
Ross Stephen Campbell
________________________________
Linda J. Capser
________________________________
Tom Caulkins
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________________________________
Charles V. Chackel
________________________________
Dennis Coffman
________________________________
Cynthia A. Dye
________________________________
John L. Dye
________________________________
Donald Edkins
________________________________
Constance Edkins
________________________________
Paul V. Ehlis
________________________________
John R. Forsythe
________________________________
Faith F. Forsythe
________________________________
Bret Fox
________________________________
Edward T. Hardy
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________________________________
Donna L. Heffner
________________________________
Tim L. Heffner
________________________________
L. Scott Keller, II
________________________________
LeRoy Scott Keller, Sr.
________________________________
Marlene C. Keller
________________________________
Dennis R. Logsdon
________________________________
Robert B. Lund
________________________________
Michelle M. Lund
________________________________
Scott G. Mahalick
________________________________
Victoria Mann
________________________________
Terry Mathis
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________________________________
Joseph D. Norwood
________________________________
Debra Parigian
________________________________
D. Robert Proffitt
________________________________
Lynette Proffitt
________________________________
Debbie Raborn
________________________________
Gerard J. Schlegel
________________________________
Phillip F. Sisneros
________________________________
Leonard Smart
________________________________
Stuart Stanek
RUSTY WALKER, PROGRAMMING
CONSULTANTS, INC.
By:_____________________________
Its:____________________________
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\
RIO BRAVO ENTERPRISE ASSOCIATES
By: RIO BRAVO, INC., its General
Partner
By: _____________________________
Lawrence R. Wilson, President
HOLDERS OF OPTIONS TO ACQUIRE CLASS A
COMMON STOCK (WHO ARE NOT ALSO CLASS
A COMMON STOCK HOLDERS):
_____________________________________
Patricia Diaz Dennis
_____________________________________
Thomas Ehrman
_____________________________________
Randy Elison
_____________________________________
Brenda Goodrich
_____________________________________
Ed Hill
_____________________________________
Susan M. Kaiser
_____________________________________
Jack Kryer
_____________________________________
Ralph W. McKee
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_________________________________
Fay Mills
_________________________________
Mark Moorehead
_________________________________
Scott K. Smith
_________________________________
Martin Stabbert
_________________________________
Lawrence R. Wilson
CLASS B COMMON STOCK HOLDERS:
_________________________________
Christopher J. Perry
_________________________________
Robert F. Perille
_________________________________
M. Anne O'Brien
_________________________________
Ford S. Bartholow
_________________________________
Jeffrey M. Mann
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_________________________________
Andrea P. Joselit
_________________________________
Sheryl E. Bartol
_________________________________
Matthew W. Clary
HOLDER OF WARRANT TO ACQUIRE
CLASS B COMMON STOCK:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:______________________________
Its:_____________________________
CLASS C COMMON STOCK HOLDER:
FINOVA CAPITAL CORPORATION
By:______________________________
Its:_____________________________
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SERIES A PREFERRED STOCK HOLDER:
BAKER, FENTRESS & COMPANY
By:______________________________
Its:_____________________________
SERIES B PREFERRED STOCK HOLDER:
OPPENHEIMER & CO., INC.
By:______________________________
Its:_____________________________
SERIES C PREFERRED STOCK HOLDERS:
_________________________________
HARLAN LEVY, as trustee pursuant
to that certain Fourth Amended and
Restated Voting Agreement dated as
of October 15, 1997
ABRY BROADCAST PARTNERS II, L.P.
By: ABRY CAPITAL, L.P., its General
Partner
By: ABRY HOLDINGS, INC., its
General Partner
By:_____________________________
Its:____________________________
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ABRY/CITADEL INVESTMENT PARTNERS,
L.P.
By: ABRY CAPITAL, L.P., its General
Partner
By: ABRY HOLDINGS, INC., its
General Partner
By:______________________
Its:_____________________
SERIES D PREFERRED STOCK HOLDERS:
_________________________________
HARLAN LEVY, as trustee pursuant
to that certain Fourth Amended and
Restated Voting Agreement dated as
of October 15, 1997
ABRY BROADCAST PARTNERS II, L.P.
By: ABRY CAPITAL, L.P., its General
Partner
By: ABRY HOLDINGS, INC., its
General Partner
By:_______________________
Its:______________________
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ABRY/CITADEL INVESTMENT PARTNERS,
L.P.
By: ABRY CAPITAL, L.P., its General
Partner
By: ABRY HOLDINGS, INC., its
General Partner
By:_______________________
Its:______________________
SERIES E PREFERRED STOCK HOLDERS:
THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP
By: DVS Management, Inc., its General
Partner
By:_______________________
Its:______________________
_________________________________
Joseph P. Tenant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-
15-94
By:_______________________________
Richard M. Schafbuch, Trustee
By:_______________________________
Susan P. Schafbuch, Trustee
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BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP
By:______________________________
Its:_____________________________
_________________________________
Tal Johnson
_________________________________
Edward T. Hardy
_________________________________
Ralph W. McKee
SERIES F PREFERRED STOCK HOLDERS:
_________________________________
Philip J. Urso
_________________________________
Phillip Norton
_________________________________
Richard Poholek
_________________________________
Karen Kutniewski
_________________________________
M. Linda Urso
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PHILIP J. URSO AND ELISABET URSO
NOMINEE TRUST DATED NOVEMBER 17,
1997
By:______________________________
M. Linda Urso, Trustee
_________________________________
Mark Urso
_________________________________
Juliet Rice
_________________________________
Jeffrey M. Thompson
_________________________________
Thomas Jenkins
_________________________________
Patrick S. Bowen
SERIES G PREFERRED STOCK HOLDERS:
_________________________________
Ted L. Snider, Sr.
_________________________________
Ted L. Snider, Jr.
_________________________________
Calvin G. Arnold
_________________________________
Jane J. Snider
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_____________________________________________
Cathron Snider Brewton
_____________________________________________
Cathron Snider Brewton, as custodian for Rory
Julaine Brewton under the UTMA
_____________________________________________
Cathron Snider Brewton, as custodian for
Cassandra Leigh Brewton under the UTMA
_____________________________________________
Robert L. Brewton
_____________________________________________
Jan Green Snider
_____________________________________________
George Morgan
_____________________________________________
Lee R. Arnold
_____________________________________________
Cynthia D. Arnold
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