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EXHIBIT 10.3
CITADEL COMMUNICATIONS CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
This Option Agreement is made and entered into by and between CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company") and Xxxxxxxx
X. Xxxxxx ("Xxxxxx") as of June 28, 1996.
WHEREAS, in October of 1993, the Company's Board of Directors (the
"Board") granted Xxxxxx annual performance stock options for the years 1993 to
1997 for the annual purchase 17,187 shares of the Company's Class A Common
Stock (the "Stock") per year at the Purchase Price (as that term is defined in
Section 2 below) for each year in which he receives a Performance Bonus (as that
term is defined in that certain Employment Agreement of even date herewith
between Citadel Broadcasting Company, a Nevada corporation, and Xxxxxx);
WHEREAS, because Xxxxxx received a Performance Bonus during the calendar
years 1993 and 1994 he is entitled to options to purchase 17,187 shares of the
Stock for each year, for a total of 34,374 shares (the "Vested Options");
WHEREAS, during the calendar year 1995 Xxxxxx did not receive a
Performance Bonus; and
WHEREAS, the Company and Xxxxxx now wish to document the terms and
conditions of the Company's grant of all performance stock options to Xxxxxx,
including the Vested Options and any options Xxxxxx might earn during the
calendar years 1996 and 1997;
THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and for good and valuable consideration, the Company and
Xxxxxx agree as follows:
1. Grant of Option.
a. Vested Options. The Company acknowledges that Xxxxxx has a
vested right to purchase a total of 34,374 shares of the Stock at the Purchase
Price based on his Performance Bonuses during 1993 and 1994.
b. Future Options. For the calendar years 1996 and 1997, the
Company grants to Xxxxxx the right and option to purchase 17,187 shares of Stock
per year at the Purchase Price for each year in which he receives a Performance
Bonus (the "Future Options," and together with the Vested Options, the "Options"
or "Option").
2. Purchase Price. The price at which Xxxxxx shall be entitled to
purchase the Stock covered by the Options shall be $2.9091 per share (the
"Purchase Price").
3. Exercise of Option. The Vested Options may be exercised by Xxxxxx
as of the date hereof. The Future Options vest, if earned, as of January 1,
1997 for the Options based on the
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Company's performance during 1996 and January 1, 1998 for the Options based on
the Company's performance during 1997 (the "Vesting Dates"), but such options
shall not be exercisable until the Company has determined, based on its
internal accounting records, that a Performance Bonus was earned for each
preceding calendar year. Such determination shall be made by the Company as
soon as practical after the end of each calendar year. The Options may be
exercised from time to time, as to all or any part of the shares covered
hereby, by delivery to the Company of written notice of exercise and payment of
the Purchase Price.
4. Method of Exercising Option. Subject to the terms and conditions
of this Agreement, the Options may be exercised by timely delivery to the
Company of a written notice, which notice shall be effective on the date
received by the Company. The written notice shall state Xxxxxx'x election to
exercise the Options, the number of shares in respect of which an election to
exercise has been made, the method of payment elected, the exact name or names
in which the shares will be registered and Xxxxxx'x Social Security number.
Such notice shall be signed by Xxxxxx and shall be accompanied by payment of the
purchase price of such shares. In the event the Options shall be exercised by a
person or persons other than Xxxxxx pursuant to Section 6 hereof, such notice
shall be signed by such other person or persons and shall be accompanied by
proof acceptable to the Company of the legal right of such person or persons to
exercise the Options. All shares delivered by the Company upon exercise of the
Options as provided herein shall be fully paid and nonassessable upon delivery.
5. Method of Payment for Options. Upon the exercise of all or any
part of an Option, the Purchase Price shall be payable in full by check, or, in
the event the Company is at the time of exercise a reporting Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in shares of
Stock owned by Xxxxxx to the extent permitted by law, or in any combination
thereof at the election of Xxxxxx. Payment of the Purchase Price with shares of
Stock owned by Xxxxxx, to the extent permitted under this Agreement, shall be
made by assigning and delivering such shares to the Company. The shares shall
be valued at Fair Market Value on the exercise date of the Option. For purposes
of this Agreement, the "Fair Market Value" of the Stock as of any date shall be
the average of the closing bid and asked prices for the Stock as reported on the
Nasdaq National Market System (or on any national securities exchange on which
the Stock is then listed) for the date or, if no prices are so reported for that
date, such prices on the next preceding date for which closing bid and asked
prices were reported. If at any time the Stock is not listed on any national
securities exchange, the Fair Market Value shall be the fair market value
determined by the Board in good faith and in its reasonable discretion using
such methods or procedures as may be established from time to time by the Board
in its reasonable discretion.
To the extent permitted under this Agreement, if Xxxxxx elects to pay
for all or part of the shares purchased upon the exercise of the Option in
Stock, a share certificate or certificates, together with a duly executed stock
power authorizing the transfer of such shares to the Company, shall be delivered
to the Company with the notice of exercise. Should the number of such shares
delivered for credit against the purchase price have a Fair Market Value less
than the full purchase price, Xxxxxx shall pay the difference between the Fair
Market Value of the Stock to be conveyed to the
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Company and the full purchase price by check. Should the share certificate
delivered be for a number of shares in excess of that number to be conveyed to
the Company for credit against the full purchase price, the Company will issue
to Xxxxxx a new share certificate representing the number of shares in excess
of the nearest whole number of shares having a Fair Market Value not in excess
of the amount required to pay the full purchase price. No fractional shares
shall be accepted in payment or be reissued by the Company under this
provision.
6. Death of Xxxxxx. In the event of the death of Xxxxxx, the Option
shall lapse unless it is exercised within one hundred eighty days (180) days
after the date of Xxxxxx'x death by Xxxxxx'x legal representative or
representatives or by the person or persons entitled to do so under Xxxxxx'x
last will and testament or if Xxxxxx fails to make a testamentary disposition of
such Option or shall die intestate, by the person or persons entitled to receive
such Option under the applicable laws of descent and distribution. The Company
shall have the right to require evidence satisfactory to it of the rights of any
person or persons seeking to exercise the Option under this Section 6 to
exercise the Option.
7. Nontransferability. The Options granted by this Agreement shall
be exercisable, except as provided in Section 6 above, only by Xxxxxx during his
lifetime. No Option granted by this Agreement shall be transferable by Xxxxxx
other than by will or pursuant to applicable laws of descent and distribution.
The Options, and any rights and privileges in connection therewith, shall not be
transferred, assigned, pledged or hypothecated by Xxxxxx, or by any other person
or persons, in any way, whether by operation of law, or otherwise, and shall not
be subject to execution, attachment, garnishment or similar process. In the
event of such an occurrence, the Options shall automatically be terminated and
shall thereafter be null and void.
8. Adjustments in Number of Shares and Purchase Price. In the event
a stock dividend is declared upon the Stock, the remaining shares of Stock then
subject to Options under this Agreement shall be adjusted proportionately
without any change in the aggregate purchase price therefor. In the event the
Stock shall be changed into or exchanged for a different number or class of
shares of stock of the Company or of another corporation, whether through
reorganization, recapitalization, stock split, combination of shares, merger or
consolidation, there shall be substituted for each such remaining share of Stock
then subject to Options granted under this Agreement the number and class of
shares of stock into which each outstanding share of Stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to Options granted under this Agreement.
9. Delivery of Shares. No shares of Stock shall be delivered upon
exercise of the Options unless and until (i) the purchase price shall have been
paid in full in the manner herein provided; (ii) applicable taxes required to be
withheld have been paid or withheld in full; (iii) approval of any governmental
authority required in connection with the Options, or the issuance of shares
thereunder, has been received by the Company; (iv) Xxxxxx has complied with all
terms and conditions of this Agreement; and (v) if required by the Committee,
Xxxxxx has delivered to the
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Committee an Investment Letter in form and content satisfactory to the Company
as provided for in Section 10 hereof.
10. Securities Act. The Company shall have the right, but not the
obligation, to cause the shares of Stock issuable upon exercise of the Options
to be registered under the appropriate rules and regulations of the Securities
and Exchange Commission.
The Company shall not be required to deliver any shares of Stock
pursuant to the exercise of all or any part of the Options if, in the opinion of
counsel for the Company, such issuance would violate the Securities Act of 1933,
as amended (the "Securities Act"), or any other applicable federal or state
securities laws or regulations. The Company may require that Xxxxxx, prior to
the issuance of any such shares pursuant to exercise of the Options, sign and
deliver to the Company a written statement ("Investment Letter") stating (i)
that Xxxxxx is acquiring the shares for investment and not with a view to the
sale or distribution thereof; (ii) that Xxxxxx will not sell any shares received
upon exercise of the Options or any other shares of the Company that Xxxxxx may
then own or thereafter acquire except either (a) through a broker on a national
securities exchange or (b) with the prior written approval of the Company; and
(iii) containing such other terms and conditions as counsel for the Company may
reasonably require to assure compliance with the Securities Act or other
applicable federal or state securities laws and regulations. Such Investment
Letter shall be in form and content acceptable to the Committee in its sole
discretion.
If shares of Stock or other securities issuable pursuant to the exercise
of the Options have not been registered under the Securities Act of 1933 or
other applicable federal or state securities laws or regulations, the
certificates representing such shares shall bear a legend restricting the
transferability thereof, such legend to be substantially in the following form:
The Securities evidenced by this certificate have not
been registered under the Securities Act of 1993, as
amended (the "Act"), or qualified under any applicable
state securities laws. They have been acquired for
investment and not with a view to distribution thereof
within the meaning of the Act and regulations
thereunder. They may not be sold or otherwise
transferred unless (a) there is an effective
registration statement under such Act and applicable
state securities laws covering such transaction
involving said securities or (b) this Corporation
receives an opinion of legal counsel for the holder of
these securities (concurred in by legal counsel for this
Corporation) stating that such transaction is exempt
from registration or this Corporation otherwise
satisfies itself that such transaction is exempt from
resolution.
Any such shares of Stock shall also bear the restrictive legends, in
substantially the same form, that are contained in: (a) that certain Second
Amended and Restated Stockholders Agreement among the Company, Xxxxxx, and
certain other stockholders; and (b) that certain Amended and Restated Voting
Agreement among the Company, Xxxxxx, and certain other stockholders.
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11. Federal and State Taxes. Upon exercise of the Options, or any
part thereof, Xxxxxx may incur certain liabilities for federal, state or local
taxes and the Company may be required by law to withhold such taxes for payment
to taxing authorities. Upon determination by the Company of the amount of taxes
required to be withheld, if any, with respect to the shares to be issued
pursuant to the exercise of the Options, Xxxxxx shall pay to the Company by
check by authorizing the Company to withhold from monies owing by the Company to
Xxxxxx an amount equal to the amount of any taxes which the Company is required
to withhold with respect to such Stock.
In the event the Company becomes a reporting Company under the Exchange
Act, Xxxxxx may pay taxes with shares of Stock owned by Xxxxxx. Payment of
taxes with shares of Stock owned by Xxxxxx shall be made by assigning and
delivering such shares to the Company. Such shares shall be valued at Fair
Market Value on the business day coinciding with or immediately preceding the
date on which such shares are assigned or delivered. Except as otherwise
provided by law, any taxes which are required to be withheld with respect to an
exercised Option may also be paid by Xxxxxx directing the Company to withhold
from the shares of Stock that would otherwise be issued pursuant to the Option,
that number of shares having a Fair Market Value on the date the Option is
exercised (the "Applicable Date") equal to the taxes due. In the event of such
an election, Xxxxxx shall notify the Company in writing of his intent to do so
and shall receive the number of shares of Stock determined pursuant to the
following formula:
Number Number of Shares Fair Market Value _ Taxes
of = Subject to Award X on Applicable Date Due
Shares -----------------------------------------------------------------
Fair Market Value on
Applicable Date
Authorization of Xxxxxx to the Company to withhold taxes pursuant to
this Section 11 shall be in form and content acceptable to the Company. Payment
or authorization to withhold taxes by Xxxxxx shall be completed prior to the
delivery of any shares pursuant to this Agreement. An authorization to withhold
taxes pursuant to this provision shall be irrevocable unless and until the tax
liability of Xxxxxx has been fully paid.
12. Administration. This Agreement shall in all respects be
administered by the Committee. The Committee shall have the sole and complete
discretion with respect to all matters under this Agreement and decisions of the
majority of the Committee with respect to this Agreement shall be final and
binding upon Xxxxxx and the Company.
13. Continuation of Employment. This Agreement shall not be
construed to confer upon Xxxxxx any right to continue in the employ of the
Company or its subsidiaries and shall not limit any right of the Company to
terminate the employment of Xxxxxx. Xxxxxx shall not be entitled to any Future
Option based on performance during the year in which his employment terminates
for any reason or for no reason. Except as provided in Section 7, however,
termination shall not affect Xxxxxx'x entitlement to any Options that were
exercisable pursuant to Section 3 prior to his termination.
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14. Obligation to Exercise. Xxxxxx shall have no obligation to
exercise any Option granted by this Agreement.
15. Governing Law. This Agreement shall be interpreted and
administered under the internal laws, and not the laws of conflicts, of the
State of Arizona.
16. Amendment and Termination. Except as otherwise provided in this
Agreement, this Agreement may be amended or terminated only by a written
agreement executed by the Company and Xxxxxx. Any amendment or modification of
this agreement shall be signed by a duly authorized officer of the Company other
than Xxxxxx.
17. Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of the executed counterparts shall be deemed an
original hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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[SIGNATURE PAGE FOR CITADEL COMMUNICATIONS
CORPORATION NONQUALIFIED STOCK OPTION AGREEMENT]
CITADEL COMMUNICATIONS
CORPORATION
By /s/ Xxxxx X. Xxxxxxx
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Its Secretary
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/s/ Xxxxxxxx X. Xxxxxx
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XXXXXXXX X. XXXXXX
The undersigned, as spouse of Xxxxxxxx X. Xxxxxx, hereby confirms that the
community property of Xxxxxxxx X. Xxxxxx and the undersigned is subject to and
bound by the agreement set forth above.
/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
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