1
Exhibit 2.6
MERGER AGREEMENT
AMONG
XXXXXX BROADCASTING CORPORATION,
XXX X. XXXXXX, XX., XXXXXX X. XXXXXX,
CITADEL COMMUNICATIONS CORPORATION
AND
CITADEL BROADCASTING COMPANY
JUNE 2, 1997
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MERGER AGREEMENT
THIS MERGER AGREEMENT ("AGREEMENT"), made as of the 2nd day of June,
1997, among XXXXXX BROADCASTING CORPORATION, an Arkansas corporation (the
"COMPANY"); XXX X. XXXXXX, XX. and XXXXXX X. XXXXXX (collectively, the
"STOCKHOLDERS"); CITADEL COMMUNICATIONS CORPORATION, a Nevada corporation
("PARENT"); and CITADEL BROADCASTING COMPANY, a Nevada corporation ("CITADEL").
RECITALS:
A. The Company, through its wholly-owned subsidiaries, is the licensee
of and owns and operates radio station KIPR-FM licensed to Pine Bluff, Arkansas
(the "STATION").
B. The Stockholders own all of the issued and outstanding shares of
capital stock of the Company.
C. Citadel is a wholly-owned subsidiary of Parent.
D. The parties desire that the Company be merged with and into Citadel
(with Citadel surviving such merger) pursuant to the applicable laws of the
States of Arkansas and Nevada, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ACCOUNTS RECEIVABLE" means the accounts receivable of the SBC
Companies, exclusive of Trade Receivables, existing as of the Closing.
"ACCOUNTS PAYABLE" means the Obligations, described in clause (b) of
the definition thereof, of the SBC Companies, exclusive of Trade Liabilities,
existing as of the Closing.
"ACCRUED TAXES" means all Taxes attributable to a Person or its
income, operations or properties accruing up to and including the Closing.
"ACT" means the Communications Act of 1934, as amended.
"AFFILIATE" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any interests of which are owned, in
whole or in part, directly or indirectly, by the first Person.
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For purposes of this definition, the term "control" (including the correlative
meanings of the terms "controls," "controlled by," and "under direct or
indirect control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of the Person, whether through the
ownership of voting securities or by contract or otherwise.
"AGREEMENT NOT TO COMPETE" means the Agreement Not to Compete to be
executed and delivered by Citadel and each of the Stockholders at the Closing,
substantially in the form attached to this Agreement as EXHIBIT A.
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION" means the Seventh
Amended and Restated Certificate of Incorporation of Parent, in the form
attached to this Agreement as EXHIBIT B.
"AMENDMENT TO REGISTRATION RIGHTS AGREEMENT" means the Amendment to
the Third Amended and Restated Registration Rights Agreement dated as of June
28, 1996, as amended, among Parent, the Investors and Xxxxxx to be executed and
delivered at the Closing, substantially in the form attached to this Agreement
as EXHIBIT C.
"AMENDMENT TO SECURITIES PURCHASE AND EXCHANGE AGREEMENT" means the
Amendment to Securities Purchase and Exchange Agreement to be executed and
delivered at the Closing among the holders of the Series G Preferred Stock as
of the Closing Date and each of the original parties to the Securities Purchase
and Exchange Agreement dated as of June 28, 1996, as amended, among Parent,
Citadel, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment Partners,
L.P., Xxxxx, Xxxxxxxx & Company, Xxxxxxxxxxx & Co., Inc., Bank of America
Illinois, and certain other parties (the "SECURITIES PURCHASE AND EXCHANGE
AGREEMENT"), substantially in the form attached to this Agreement as EXHIBIT D.
"AMENDMENT TO STOCKHOLDERS AGREEMENT" means the Amendment to
Stockholders Agreement to be executed and delivered at the Closing among the
holders of the Series G Preferred Stock as of the Closing Date and each of the
original parties to the Second Amended and Restated Stockholders Agreement
dated as of June 28, 1996, as amended, among Parent, the Investors, Xxxxxx and
certain other parties (the "STOCKHOLDERS AGREEMENT"), substantially in the form
attached to this Agreement as EXHIBIT E.
"AMENDMENT TO VOTING AGREEMENT" means the Amendment to Voting
Agreement to be executed and delivered at the Closing among the holders of the
Series G Preferred Stock as of the Closing Date and each of the original
parties to the Third Amended and Restated Voting Agreement dated as of March
17, 1997 among Parent, the Investors and Xxxxxx, substantially in the form
attached to this Agreement as EXHIBIT F.
"ARTICLES OF MERGER" means the Articles of Merger to be executed and
delivered by Citadel and the Company at the Closing and filed with the
appropriate authorities in the States
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of Nevada and Arkansas, in form and substance mutually agreed upon by Citadel
and the Company.
"ASSETS" means all of the property of every kind or nature used in the
operation of the Station, including but not limited to the Real Property, the
Real Property Leases, the Intellectual Property, the Personal Property, the
Trade Receivables, the Accounts Receivable and the Cash (other than the
Excluded Assets), and all books, records and accounts relating to the operation
of the Station.
"BROKER" means NationsBanc Capital Markets, Inc.
"BUSINESS" means the business in which the SBC Companies are now
engaged.
"CASH" means the cash and cash equivalents of the SBC Companies
existing as of the Closing.
"CDB BROADCASTING AGREEMENT" means that certain Asset Purchase
Agreement dated as of the date hereof among CDB Broadcasting Corporation, CDB
License Corporation and Citadel.
"CITADEL PERMITS" has the meaning specified in Section 4.8.
"CITADEL STATIONS" has the meaning specified in Section 4.5.
"CITADEL SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified
in Section 8.7.
"CITADEL'S CAP EXEMPT DAMAGES" has the meaning specified in Section
13.5(b).
"CITADEL'S DISCLOSURE SCHEDULE" means SCHEDULE 1 to this Agreement.
"CLOSING" means the consummation of the transactions contemplated in
this Agreement in accordance with the provisions of Section 10.
"CLOSING CERTIFICATE" means the certificate of the President of the
Company and the Stockholders dated the Closing Date and delivered to Parent and
Citadel, which sets forth the Debt Payoff Amount and a listing of the Excluded
Assets.
"CLOSING DATE" has the meaning specified in Section 10.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY ASSET SCHEDULE" means SCHEDULE 2 to this Agreement.
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"COMPANY COMMON STOCK" means the common stock, par value $1.00 per
share, of the Company.
"COMPANY SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of October 28, 1986 among the Company and the Stockholders.
"COMPANY SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified
in Section 5.9.
"COMPANY'S DISCLOSURE SCHEDULE" means SCHEDULE 3 to this Agreement.
"CONTRACTS" means all (a) contracts, agreements, licenses, leases,
arrangements and other documents to which any of the SBC Companies is a party
or by which any of the SBC Companies or any of the assets of the SBC Companies
are bound (including, in the case of loan agreements, a description of the
amounts of any outstanding borrowings thereunder and the collateral, if any,
for such borrowings); (b) uncompleted orders for the purchase by any of the SBC
Companies of materials, supplies, equipment and services for the requirements
of the Station existing as of the date hereof and with respect to which the
remaining obligation of any of the SBC Companies is in excess of $2,500; and
(c) contingent contractual obligations and liabilities of any of the SBC
Companies known to the Company existing as of the date hereof.
"CORNERSTONE" means Cornerstone Broadcasting Corporation, an Arkansas
corporation and a wholly-owned subsidiary of the Company.
"CORNERSTONE MERGER" has the meaning specified in Section 9.7.
"CPR RULES" means the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes.
"DAMAGES" has the meaning specified in Section 13.1.
"DEBT PAYOFF AMOUNT" means the amount of Indebtedness for Borrowed
Money of the SBC Companies as of the Closing Date, as certified by the
President of the Company and the Stockholders in the Debt Certificate.
"DISSENTING SHARES" has the meaning specified in Section 2.4(b).
"DRAW CONDITION" has the meaning specified in Section 14.2(a).
"EFFECTIVE DATE" means the date upon which articles of merger, or an
equivalent document, reflecting the Merger have been filed with the appropriate
authorities of the States of Arkansas and Nevada pursuant to Section 2. The
parties intend that the Effective Date be on the Closing Date.
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"ENVIRONMENTAL CLAIMS" means and includes, without limitation: (a)
claims, demands, suits, causes of action for personal injury or lost use of
property, or consequential damages, to the extent any of the foregoing arise
directly or indirectly out of Environmental Conditions; (b) actual or
threatened damages to natural resources; (c) claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA or other
Environmental Laws; (d) a requirement to implement "corrective action" pursuant
to any order or permit issued pursuant to RCRA; (e) claims for restitution,
contribution or equitable indemnity from third parties or any governmental
agency; (f) fines, penalties or Liens against property; (g) claims for
injunctive relief or other orders or notices of violation from Governmental
Authorities; and (h) with regard to any present or former employees, exposure
to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Materials by a Person. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by a Person.
"ENVIRONMENTAL LAWS" has the meaning specified in the definition of
Hazardous Materials.
"ENVIRONMENTAL NONCOMPLIANCE" means, but is not limited to: (a) the
release or threatened release as a result of the activities of a Person of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; and
(b) any facility operations, procedures, designs, etc. which do not conform to
the statutory or regulatory requirements of the CAA, the CWA, the TSCA, the
RCRA or any other Environmental Laws intended to protect public health, welfare
and the environment.
"EQUITY SECURITIES" has the meaning ascribed thereto in the Securities
Purchase and Exchange Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means the excess, if any, of (a) the Cash and the
Accounts Receivable over (b) the Accounts Payable.
"FCC" means the Federal Communications Commission.
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"FCC APPLICATION" has the meaning specified in Section 9.1.
"FCC APPROVAL" has the meaning specified in Section 9.1.
"FCC LICENSES" means the main station license for the Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by any of the SBC Companies in
connection with, or pertaining to, the conduct of the business and operation of
the Station, together with any renewals and extensions thereof and any
applications therefor pending on the Closing Date, and any and all applications
made by any of the SBC Companies for such consents, rights, licenses, permits
and other authorizations.
"FINAL ORDER" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time
for further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"GOVERNMENTAL AUTHORITY" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
Section 9601 ET SEQ.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C.
Section 2601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C.Section 300f ET SEQ.; the Clean Air
Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ.; or any similar state law; and in
the plans, rules, regulations or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws or other similar laws,
regulations, rules or ordinances now in effect (collectively, the "ENVIRONMENTAL
LAWS"); and any other substances, constituents or wastes subject to
environmental regulations under any applicable federal, state or local law,
regulation or ordinance.
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"INDEBTEDNESS FOR BORROWED MONEY" means (a) all indebtedness of a
Person in respect of money borrowed (including, without limitation,
indebtedness which represents the unpaid amount of the purchase price of any
property), (b) all indebtedness of a Person evidenced by a promissory note,
bond or similar written obligation to pay money, (c) all indebtedness
guaranteed by a Person or for which a Person is contingently liable, including,
without limitation, guaranties in the form of an agreement to repurchase or
reimburse, and any commitment by which any such Person assures a creditor
against loss, including contingent reimbursement obligations with respect to
letters of credit, and (d) all monetary obligations of a Person under any lease
or similar arrangement, which obligations would be classified and accounted for
as capital obligations on a balance sheet of such Person under GAAP.
"INDEMNITEE" has the meaning specified in Section 13.3.
"INDEMNITOR" has the meaning specified in Section 13.3.
"INTELLECTUAL PROPERTY" means the call letters of the Station and all
of the copyrights, trademarks, trade names and other similar rights, including
applications and registrations therefor, used in connection with the past or
present operation of the Station in which any of the SBC Companies has any
right, title or interest, including, without limitation, those items listed on
the COMPANY ASSET SCHEDULE.
"INVESTORS" shall have the meaning ascribed thereto in the Securities
Purchase and Exchange Agreement.
"LETTER OF CREDIT" has the meaning specified in Section 2.6.
"LICENSE SUB" means SBC License Corporation, an Arkansas corporation
and a wholly-owned subsidiary of Cornerstone.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"LOCAL MARKETING AGREEMENT" has the meaning specified in Section 9.2.
"MERGER" has the meaning specified in Section 2.1.
"MERGER CONSIDERATION" has the meaning specified in Section 2.4(a).
"NET LIABILITIES" means the excess, if any, of (a) the Account Payable
over (b) the Cash and the Accounts Receivable.
"OBLIGATIONS" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) Accrued Taxes, accounts payable, accrued liabilities and
all other liabilities and obligations of
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the type normally required by GAAP to be reflected on a balance sheet, (c)
commitments by which a Person assures a creditor against loss, including the
face amount of all letters of credit and, without duplication, all drafts drawn
thereunder, (d) obligations guaranteed in any manner by a Person, (e)
obligations under capitalized leases in respect of which obligations a Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person assures a creditor against loss, (f)
obligations under acceptance facilities, (g) obligations secured by a Lien on
property of a Person, (h) obligations under interest rate or currency exchange
or swap agreements, (i) unsatisfied obligations for "withdrawal liability" to a
"multiemployer plan" as such terms are defined under ERISA, (j) indebtedness
issued or obligation incurred in substitution or exchange for any Obligations,
(k) costs or expenses incurred by a Person of any nature, whether or not
currently payable, and (l) other liabilities or obligations of a Person, in
each of the foregoing instances whether absolute or contingent, known or
unknown, and whether or not normally required by GAAP to be reflected on a
balance sheet.
"PERMITS" means all FCC Licenses applicable to the Station, and all
other permits, licenses, approvals, franchises, notices and authorizations
applicable to the Station issued by any Governmental Authorities.
"PERSON" means an individual, corporation, partnership, joint venture,
joint stock company, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"PERSONAL PROPERTY" means all of the tangible personal property,
improvements and fixtures of every kind or nature used in the operation of the
Station in the ordinary course of business, including, without limitation, the
personal property described on the COMPANY ASSET SCHEDULE.
"PLAN OF MERGER" means the Plan of Merger to be executed and delivered
by Citadel and the Company at the Closing and filed with the appropriate
authorities in the States of Nevada and Arkansas, in form and substance
mutually agreed upon by Citadel and the Company.
"REAL ESTATE PURCHASE AGREEMENT" means that certain Agreement of Sale
dated as of the date hereof among Xxx X. Xxxxxx, Xx., Xxxx X. Xxxxxx and
Citadel.
"REAL PROPERTY" means all of the right, title and interest of any of
the SBC Companies in and to any real property used in the operation of the
Station, including but not limited to the real property described on the
COMPANY ASSET SCHEDULE.
"REAL PROPERTY LEASES" means the leasehold interests pursuant to the
real property leases described on the COMPANY ASSET SCHEDULE.
"SBC COMPANIES" means, collectively, the Company, Cornerstone and
License Sub.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES G PREFERRED STOCK" means the Series G Convertible Preferred
Stock, par value $.001 per share, of Parent.
"XXXXXX CORPORATION AGREEMENT" means that certain Merger Agreement
dated as of the date hereof among Xxxxxx Corporation, the stockholders of
Xxxxxx Corporation, Parent and Citadel.
"STATION" has the meaning set forth in the recitals to this Agreement.
"STOCKHOLDERS' CAP EXEMPT DAMAGES" has the meaning specified in Section
13.6(b).
"SURVIVING CORPORATION" has the meaning specified in Section 2.1.
"TAXES" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld, and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority; and
such term shall include any interest, penalties, or additions to tax
attributable to such assessments.
"THRESHOLD" has the meaning specified in Section 13.5(a).
"TRADE AGREEMENTS" means and includes those agreements entered into by
any SBC Company for the sale of advertising time on the Station for
consideration other than cash, which agreements are in effect as of the
Closing.
"TRADE LIABILITIES" means the fair market value of the SBC Companies'
liability as of the Closing for unperformed time under the Trade Agreements.
"TRADE RECEIVABLES" means the fair market value of goods and services
to be received by the SBC Companies after the Closing under the Trade
Agreements.
"XXXXXX" means Xxxxxxxx X. Xxxxxx.
SECTION 2
MERGER
2.1 THE MERGER. On the Closing Date, in accordance with this Agreement
and Arkansas and Nevada law, the Company shall be merged with and into Citadel
(the "MERGER"), the separate existence of the Company shall cease, and Citadel
shall continue as the surviving
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corporation under the corporate name it possesses immediately prior to the
Closing Date. Citadel hereinafter may sometimes be referred to as the
"SURVIVING CORPORATION."
2.2 EFFECT OF THE MERGER. On the Closing Date, the effect of the
Merger shall be that (i) the Surviving Corporation shall possess all the
rights, privileges and franchises possessed by each of the Company and Citadel,
(ii) all of the property and assets of whatsoever kind or description of each
of the Company and Citadel, and all debts due on whatever account to any of
them, including subscriptions for shares or other choses in action belonging to
any of them, shall be taken and be deemed to be transferred to, and vested in,
the Surviving Corporation without further act or deed, and (iii) the Surviving
Corporation shall be responsible for all of the liabilities and obligations of
each of the Company and Citadel, as provided by applicable law, in the same
manner as if the Surviving Corporation had itself incurred such liabilities or
obligations; but the liabilities of the Company and Citadel, or of their
shareholders, directors or officers, shall not be affected by, nor shall the
rights of the creditors thereof or of any persons dealing with such
corporations be impaired by, the Merger, and any claim existing, or action or
proceeding pending, by or against either of the Company or Citadel may be
prosecuted to judgment as if the Merger had not taken place, or the Surviving
Corporation may be proceeded against, or substituted, in place of the Company
or Citadel, as the case may be.
2.3 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS. The
Articles of Incorporation of Citadel, as in effect immediately prior to the
Closing Date, shall be the Articles of Incorporation of the Surviving
Corporation after the Closing Date until thereafter amended as provided therein
and under Nevada law. The Bylaws of Citadel, as in effect immediately prior to
the Closing Date, shall be the Bylaws of the Surviving Corporation after the
Closing Date until thereafter amended as provided therein and under Nevada law.
The directors and officers of Citadel immediately prior to the Closing Date
shall be the initial directors and officers of the Surviving Corporation after
the Closing Date until their successors are elected and qualified.
2.4 MERGER CONSIDERATION; CONVERSION OF SECURITIES. On the Closing
Date, by virtue of the Merger and without any action on the part of Parent,
Citadel, the Company or the holder of any of the securities of such
corporations:
(a) MERGER CONSIDERATION. Each share of Company Common Stock
issued and outstanding immediately prior to the Closing Date shall be converted
automatically into (i) the number of shares of Series G Preferred Stock
determined pursuant to Section 2.4(b) and (ii) an amount of cash equal to (A)
the Debt Payoff Amount minus the Net Liabilities, if any, divided by (B) the
number of issued and outstanding shares of Company Common Stock on the Closing
Date (collectively, the "MERGER CONSIDERATION").
(b) SERIES G PREFERRED STOCK. Each share of Company Common
Stock issued and outstanding immediately prior to the Closing Date (other than
shares as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under applicable Arkansas law ("DISSENTING SHARES")) shall
be cancelled and extinguished and be
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converted into the right to receive (in addition to the cash consideration
specified in Section 2.4(a)) that number of shares of Series G Preferred Stock
equal to 198,350 divided by the number of shares of Company Common Stock then
issued and outstanding; provided, however, that (i) in the event that Citadel's
acquisition of all of the issued and outstanding shares of capital stock of
Tele-Media Broadcasting Company is not consummated on or prior to the Closing
Date, then the aggregate number of shares of Series G Preferred Stock issuable
as Merger Consideration shall be increased from 198,350 to 210,620 and (ii) in
the event after the date hereof and prior to the Closing Date the shares of
Series G Preferred Stock at any time outstanding shall be subdivided, by
reclassification, recapitalization, stock dividend or otherwise, into a greater
number of shares without the actual receipt by Parent of consideration for the
additional number of shares so issued, or the number of shares of Series G
Preferred Stock at any time outstanding shall be reduced, by reclassification,
recapitalization, reduction of capital stock or otherwise, or the outstanding
shares of Series G Preferred Stock shall be reclassified or changed other than
in such manner, then the number of shares of Series G Preferred Stock that each
holder of Company Common Stock shall be entitled to as Merger Consideration
shall be adjusted accordingly to the nearest share of Series G Preferred Stock.
(c) TRANSFER BOOKS. On and after the Closing Date, there
shall be no transfers on the stock transfer books of the Company with respect
to shares of Company Common Stock issued and outstanding immediately prior to
the Closing Date. If, after the Closing Date, certificates formerly
representing shares of Company Common Stock are presented to Citadel or its
transfer agent, they shall be cancelled and exchanged for the Merger
Consideration as provided in Section 2.5, subject to applicable law in the case
of Dissenting Shares.
2.5 EXCHANGE OF CERTIFICATES. From and after the Closing Date, all
certificates representing shares of Company Common Stock, with the exception of
certificates representing Dissenting Shares or shares of Company Common Stock
held by the Company, shall represent the right to receive Merger Consideration
on the basis set forth above and upon the terms and conditions of this
Agreement, subject to applicable abandoned property, escheat and similar laws.
Upon delivery of certificates representing shares of Company Common Stock to
the transfer agent of Citadel, Citadel shall cause the transfer agent to issue
certificates representing the requisite number of shares of Series G Preferred
Stock for each share of Company Common Stock represented by the certificates
therefor properly delivered, and Citadel shall pay by certified or cashier's
check the cash consideration described in Section 2.4(a). Notwithstanding the
foregoing, neither Citadel's transfer agent nor any party hereto shall be
liable to a holder of shares of Company Common Stock for any of the Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
2.6 LETTER OF CREDIT. Simultaneously with the execution of this
Agreement, Citadel shall deliver to the Company an irrevocable letter of credit
in favor of the Company, issued by a national banking association or other
issuer acceptable to the Company, in the amount of $325,000, which shall be in
the form attached as EXHIBIT G hereto (the "LETTER OF CREDIT"). The
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Letter of Credit shall provide that the issuing bank shall make payment on the
Letter of Credit upon such bank's receipt of a joint certificate from the
President of each of the Company and Citadel certifying that a Draw Condition
has occurred. Upon the Closing, the Company shall return the original Letter of
Credit to Citadel for cancellation.
2.7 TAX-FREE REORGANIZATION. The parties hereto intend that the Merger
shall qualify as a tax-free reorganization and exchange of stock within the
terms of Sections 368(a)(1)(A), 368(a)(2)(D), 354(a), 356(a) and 361(a) of the
Code, and agree to take such actions as may be necessary to conform to the
provisions of said Sections and to do any and all things they deem necessary or
advisable to carry out the purposes and intent of this Agreement.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
In connection with the Merger and in order to induce Parent and
Citadel to enter into and consummate the transactions contemplated by this
Agreement, the Company makes the following representations and warranties to
Parent and Citadel, as of the date of this Agreement and as of the date of the
Closing (except for representations and warranties expressly and specifically
relating to a time or times other than the date hereof or thereof, which shall
be made as of the specified time or times):
3.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. Each of the SBC
Companies is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arkansas and has full power and
authority to own its assets and properties and to conduct the Business. Each of
the SBC Companies has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business. The execution and delivery of this Agreement by the
Company, the performance by the Company of its covenants and agreements
hereunder and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company. This Agreement constitutes the valid and legally binding agreement of
the Company and the Stockholders, enforceable against each of them in
accordance with its terms.
3.2 SUBSIDIARIES. The Company does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person other than
Cornerstone and License Sub.
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3.3 CAPITALIZATION.
(a) AUTHORIZED AND ISSUED SHARES OF COMPANY. The authorized
capital stock of the Company consists solely of 20,000 shares of Company Common
Stock, of which 85 shares are issued and outstanding. COMPANY'S DISCLOSURE
SCHEDULE lists the names of the beneficial holders of all the outstanding
shares of Company Common Stock, and the number of shares held by each of them.
The issued and outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
(b) AUTHORIZED AND ISSUED SHARES OF CORNERSTONE. The
authorized capital stock of Cornerstone consists solely of 1,000 shares of
Common Stock, no par value per share, of which 100 shares are issued and
outstanding (all of which are owned, of record and beneficially, by the
Company). The issued and outstanding shares of Common Stock of Cornerstone have
been duly authorized and validly issued, and are fully paid and nonassessable.
Cornerstone does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
(c) AUTHORIZED AND ISSUED SHARES OF LICENSE SUB. The
authorized capital stock of License Sub consists solely of 1,000 shares of
Common Stock, no par value per share, of which 100 shares are issued and
outstanding. The issued and outstanding shares of Common Stock of License Sub
have been duly authorized and validly issued, and are fully paid and
nonassessable. License Sub does not have outstanding any stock or securities
convertible or exchangeable for any stock or securities.
(d) REPURCHASE AND OTHER OBLIGATIONS. None of the SBC
Companies is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any of its stock or other securities. No
Stockholder, SBC Company or other Person is entitled to any preemptive right,
right of first refusal or similar right with respect to any of the SBC
Companies. Except for the Company Shareholders Agreement, there are no
agreements, arrangements or trusts between or for the benefit of any of the SBC
Companies or the Stockholders with respect to the voting or transfer of stock
or other securities, or with respect to any other aspect of any of the SBC
Companies' affairs. None of the SBC Companies has violated any applicable
federal or state securities laws in connection with the offer, sale or issuance
of any of its stock or other securities.
3.4 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of the Company, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien
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pursuant to, the terms of any contract, commitment, agreement, understanding or
arrangement of any kind to which any of the SBC Companies is a party or by
which any of the SBC Companies or any of the Assets is bound. Except for the
FCC Approval and the consents disclosed in COMPANY'S DISCLOSURE SCHEDULE, no
consents, approvals or authorizations of, or filings with, any Governmental
Authority or any other Person are required in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
3.5 FINANCIAL STATEMENTS. The Company has delivered to Parent and
Citadel the following financial statements of the SBC Companies: (a) the
audited consolidated balance sheet as of December 31, 1995 and the related
consolidated statements of income and cash flows for the year then ended; (b)
the audited consolidated balance sheet as of December 31, 1996 and the related
consolidated statements of income and cash flows for the year then ended; (c)
the unaudited consolidated balance sheet as of April 30, 1997, and the related
unaudited consolidated statements of income and cash flows for the four months
then ended; and (d) the monthly unaudited balance sheets and income statements
for each month in 1996 and the first four months of 1997. Each of the foregoing
financial statements (including in all cases the notes thereto, if any) (i) is
accurate and complete in all material respects, (ii) is consistent in all
material respects with the books and records of the SBC Companies (which, in
turn, are accurate and complete in all material respects), and (iii) fairly
presents in all material respects the financial condition and results of
operations of the SBC Companies in accordance with GAAP (subject in the case of
unaudited financial statements to the lack of footnote disclosure and changes
resulting from normal year-end audit adjustments), consistently applied, as of
the dates and for the periods set forth therein.
3.6 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any of the following with respect to any
of the SBC Companies or the Station: (a) material adverse change in condition,
financial or otherwise, or in the results of operations, assets, liabilities or
business; (b) damage or destruction, whether or not insured, affecting business
operations; (c) labor dispute or threatened labor dispute involving any
employees; (d) actual or threatened dispute with any material provider of
software, hardware or services; (e) material change in the customary methods of
operations; (f) except in the ordinary course of business or to the extent not
material to the Business or financial condition of the Station, sale or
transfer of any tangible or intangible asset used or useful in the operation of
the Station, mortgage, pledge or imposition of any Lien on any such asset,
lease of real property, machinery, equipment or buildings with respect to the
Station entered into or modification, amendment or cancellation of any of its
existing leases relating to the Station, or cancellation of any debt or claim;
or (g) liability or obligation (contingent or otherwise) incurred under
agreements or otherwise, except current liabilities entered into or incurred in
the ordinary course of business consistent with past practices.
3.7 TAXES. Each of the SBC Companies has filed or caused to be filed
on a timely basis all federal, state, local and other tax returns, reports and
declarations required to be filed by it with respect to the Station and has
paid all Taxes (including, but not limited to, income,
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franchise, sales, use, unemployment, withholding, social security and workers'
compensation taxes and estimated income and franchise tax payments, penalties
and fines) reflected as due on such returns, reports or declarations (whether
or not shown on such returns, reports or declarations), or pursuant to any
assessment received by it in connection with such returns, reports or
declarations. All returns, reports and declarations filed by or on behalf of
each of the SBC Companies are true, complete and correct. No deficiency in
payment of any Taxes for any period has been asserted against any of the SBC
Companies by any taxing authority which remains unsettled at the date hereof,
no written inquiries have been received by any of the SBC Companies any taxing
authority with respect to possible claims for taxes or assessments, and there
is no basis for any additional claims or assessments for Taxes. Since December
31, 1996, none of the SBC Companies has incurred any liability for Taxes which
materially affect the operation of the Station other than in the ordinary
course of business.
3.8 COMPANY ASSET SCHEDULE. The COMPANY ASSET SCHEDULE includes
complete and accurate (a) listings of all Real Property; (b) listings of all
Personal Property; (c) descriptions of all Contracts, none of which requires
any consent of third parties in connection with the transactions contemplated
hereby, except otherwise as indicated in COMPANY'S DISCLOSURE SCHEDULE; (d)
descriptions of all of the Intellectual Property; and (e) listings of all of
the FCC Licenses, all of the foregoing of which will, as of the Closing, be
owned and held by the SBC Companies as reflected in the COMPANY ASSET SCHEDULE.
3.9 TITLE TO AND CONDITION OF PROPERTY.
(a) TITLE. The SBC Companies will as of the Closing have
good, marketable and exclusive title to and undisputed possession of all of the
Assets. Except as set forth on COMPANY'S DISCLOSURE SCHEDULE, the Assets are
now free and clear of all Liens. The Assets will, as of the Closing, be free
and clear of all Liens.
(b) CONDITION. The Personal Property is structurally sound,
in reasonably good condition, ordinary wear and tear excepted, adequate and
suitable for the operation of the Station as it is currently being operated,
and in proper condition and repair so that the Station can operate according to
the FCC Licenses, the rules, regulations and policies of the FCC and in all
other respects in compliance with the Act and all other applicable federal and
state laws.
(c) INSURANCE. The Assets are and will be insured through the
Closing Date in amounts adequate to replace or repair any casualty or other
insurable loss to any of such property.
(d) SUFFICIENCY OF ASSETS. The Assets include all of the
assets (other than the Excluded Assets), which are sufficient in nature,
condition and quantity, necessary to permit the SBC Companies to operate the
Station immediately upon the Closing in the ordinary course of business and
consistent with the past practices of the SBC Companies. The SBC Companies have
not, since December 31, 1996, removed any material item of Personal Property
from the Station other than (i) removals in the ordinary course of business
which were not done in
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contemplation of the transactions contemplated by this Agreement and (ii) as
contemplated by Section 10.2(c).
(e) REAL PROPERTY; REAL PROPERTY LEASES.
(i) The COMPANY ASSET SCHEDULE contains accurate descriptions
of the Real Property, and contains accurate descriptions of the Real Property
Leases and the location of the real estate leased thereunder and the type of
facility located thereon. The SBC Companies will as of the Closing have a valid
leasehold interest in each of the leaseholds created pursuant to the Real
Property Leases.
(ii) None of the Real Property or Real Property Leases is
subject to any covenant or restriction preventing or limiting in any material
respect the consummation of the transactions contemplated by this Agreement,
except for any consent listed on COMPANY'S DISCLOSURE SCHEDULE required of the
landlords under the Real Property Leases. The SBC Companies' right, title and
interest in and to the Real Property will at the Closing be held by the SBC
Companies, free and clear of all Liens, except those set forth in COMPANY'S
DISCLOSURE SCHEDULE. The SBC Companies' right, title and interest in and to the
leaseholds created pursuant to the Real Property Leases will at the Closing be
held by the SBC Companies free and clear of all Liens, except those set forth
in COMPANY'S DISCLOSURE SCHEDULE.
(iii) The use for which the Real Property and the leaseholds
existing under the Real Property Leases are zoned permits the use thereof for
the business of the Station consistent with past practices. The use and
occupancy of the Real Property and the leaseholds created pursuant to the Real
Property Leases by the SBC Companies are in compliance in all material respects
with all regulations, codes, ordinances and statutes applicable to the SBC
Companies and none of the SBC Companies has received any notice asserting any
material violation of sanitation laws and regulations, occupational safety and
health regulations or electrical codes.
(iv) There are no facts relating to any of the SBC Companies,
and to the best of the knowledge of the Company, no facts relating to any other
party, that would prevent the Real Property and the leaseholds existing under
the Real Property Leases from being occupied and used by Citadel and/or any
assignee of Citadel after the Closing Date in the same manner as immediately
prior to the Closing.
(v) There is not under any Real Property Lease any material
default by any of the SBC Companies, or to the best of the knowledge of the
Company, by any other party, or any condition that with notice or the passage
of time or both would constitute such a default, and none of the SBC Companies
has received, and to the best of the knowledge of the Company, no other party
has received, any notice asserting the existence of any such default or
condition.
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(vi) Each Real Property Lease is valid and binding and in
full force and effect as to the SBC Company party to such lease, and to the
best of the knowledge of the Company, as to each other party thereto, and
except as disclosed on the COMPANY ASSET SCHEDULE, has not been amended or
otherwise modified.
(vii) The Real Property and the leaseholds existing under the
Real Property Leases constitute all of the real property in which any of the
SBC Companies has a fee simple interest, leasehold interest or other interest
or right (whether as lessor or lessee) and which is or will prior to the
Closing be used in the operation of the Station.
3.10 CONTRACTUAL AND OTHER OBLIGATIONS. Set forth in the
COMPANY ASSET SCHEDULE is a description of all (a) Real Property Leases and (b)
Contracts. None of the SBC Companies, nor, to the best of the knowledge of the
Company, any other Person, is in material default in the performance of any
covenant or condition under any Contract, and no claim of such a default has
been made and no event has occurred which with the giving of notice or the
lapse of time would constitute such a default under any covenant or condition
under any Contract. None of the SBC Companies is a party to any Contract which
would terminate or be materially adversely affected by the consummation of the
transactions contemplated by this Agreement. Originals or true, correct and
complete copies of all Contracts have been provided to Parent and Citadel as of
the date of this Agreement.
3.11 COMPENSATION. Set forth in COMPANY'S DISCLOSURE SCHEDULE is a
list of (a) all agreements between the SBC Companies and their respective
employees or other Persons providing services for compensation with regard to
the Station, whether individually or collectively, and (b) all employees of the
SBC Companies or other Persons providing services for the SBC Companies with
respect to the Station entitled to receive annual compensation in excess of
$5,000 and their respective positions, job categories and salaries. The
transactions contemplated by this Agreement will not result in any liability
for severance pay to any such employee or other Person. None of the SBC
Companies has informed any such employee or other Person that such Person will
receive any increase in compensation or benefits or any ownership interest in
any of the SBC Companies, Parent, Citadel, the Business or Citadel's business.
Except as disclosed in COMPANY'S DISCLOSURE SCHEDULE, all current employees of
the SBC Companies are "at will" employees and may be terminated by the SBC
Companies at any time, without liability or obligation except the payment of
normal compensation accrued up to the time of termination of employment.
3.12 EMPLOYEE BENEFIT PLANS.
(a) None of the SBC Companies maintains or sponsors, or is
required to make contributions to, any pension, profit-sharing, savings, bonus,
incentive or deferred compensation, severance pay, medical, life insurance,
welfare or other employee benefit plan which affects the employees working at
the Station, except as set forth in COMPANY'S DISCLOSURE SCHEDULE. COMPANY'S
DISCLOSURE SCHEDULE fully discloses all of the plans, funds, policies,
programs, arrangements or understandings sponsored or maintained by any of the
SBC
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Companies pursuant to which any employee of the Station (or any dependent or
beneficiary of any such employee) might be or become entitled to (1) retirement
benefits; (2) severance or separation from service benefits; (3) incentive,
performance, stock, share appreciation or bonus awards; (4) health care
benefits; (5) disability income or wage continuation benefits; (6) supplemental
unemployment benefits; (7) life insurance, death or survivor's benefits; (8)
accrued sick pay or vacation pay; (9) any type of benefit offered under any
arrangement subject to characterization as an "employee welfare benefit plan"
within the meaning of section 3(3) of ERISA; or (10) benefits of any other type
offered through any arrangement that could be characterized as providing for
additional compensation or fringe benefits. As to any such plan, fund, policy,
program, arrangement or understanding, all of the following are true with
respect to the Station: (A) all amounts due as contributions, insurance
premiums and benefits to the date hereof have been fully paid by the SBC
Companies; (B) all applicable material requirements of law have been observed
with respect to the operation thereof, and all applicable reporting and
disclosure requirements have been timely satisfied; and (C) no claim or demand
has been made by any employee (or beneficiary or dependent of any employee) for
benefits (other than routine claims for benefits), or by any taxing authority
for taxes or penalties which has not been satisfied in full or which may be or
become subject to litigation or arbitration.
(b) The SBC Companies have no obligation to provide health or
other welfare benefits to any of their former, retired or terminated employees,
except as specifically required under Section 4980B of the Code. The SBC
Companies have substantially complied with any applicable notice and
continuation requirements of Section 4980B of the Code and the regulations
thereunder.
3.13 LABOR RELATIONS. There have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions, or the terms and conditions of
employment, wages (including overtime compensation) and hours of, any of the
SBC Companies. The Station is not engaged in any unfair labor practice or other
unlawful employment practice and there are no charges of unfair labor practices
or other employee-related complaints pending or threatened against the Station
before the National Labor Relations Board, the Equal Employment Opportunity
Commission, the Occupational Safety and Health Review Commission, the
Department of Labor or any other Governmental Authority. There is no strike,
picketing, slowdown or work stoppage or organizational attempt pending,
threatened against or involving the Station. No issue with respect to union
representation is pending or threatened with respect to the employees of the
Station.
3.14 INCREASES IN COMPENSATION OR BENEFITS. Subsequent to December 31,
1996, there have been no increases in the compensation payable or to become
payable to any of the employees of the SBC Companies, nor has any of the SBC
Companies paid or provided for any awards, bonuses, stock options, loans,
profit-sharing, pension, retirement or welfare plans or similar or other
payments or arrangements for or on behalf of such employees in each case other
than (a) pursuant to currently existing plans or arrangements set forth in
COMPANY'S
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DISCLOSURE SCHEDULE or (b) as was required from time to time by
governmental legislation affecting wages. The vacation policies of the SBC
Companies are set forth in COMPANY'S DISCLOSURE SCHEDULE. No employee of any of
the SBC Companies is entitled to vacation time in excess of two weeks (three
weeks in the case of employees with 10 or more years of service) during the
current vacation year (fiscal May 1 through April 30) and no such employee has
any accrued vacation time with respect to any period prior to the current
calendar year, except as set forth in COMPANY'S DISCLOSURE SCHEDULE.
3.15 INSURANCE. The SBC Companies maintain insurance policies covering
all of their respective properties and assets and the various occurrences which
may arise in connection with the operation of the Station, each of which
policies is summarized in COMPANY'S DISCLOSURE SCHEDULE. Such policies
maintained by the SBC Companies are in full force and effect and all
installments of premiums due thereon have been paid in full. There are no
notices of any pending or threatened termination or premium increases with
respect to any of such policies maintained by any of the SBC Companies. There
has been no casualty loss or occurrence to any of the SBC Companies which may
give rise to any claim of any kind not covered by insurance, and the Company is
not aware of any casualty occurrence to the Station which may give rise to any
claim of any kind not covered by insurance. No third party has filed any claim
against any of the SBC Companies for personal injury or property damage of a
kind for which liability insurance is generally available which is not fully
insured, subject only to the standard deductible. None of the SBC Companies'
insurance policies will terminate or be adversely affected by the consummation
of the transactions contemplated by this Agreement.
3.16 LITIGATION; DISPUTES. Except as set forth in COMPANY'S DISCLOSURE
SCHEDULE, there are no claims, disputes, actions, suits, investigations or
proceedings pending or threatened against or affecting any of the SBC Companies
or the Station and, to the best of the knowledge of the Company, there is no
basis for any such claim, dispute, action, suit, investigation or proceeding.
The Company has no knowledge of any default under any such action, suit or
proceeding. None of the SBC Companies is in default in respect of any judgment,
order, writ, injunction or decree of any Governmental Authority with respect to
the SBC Companies or the operation of the Station.
3.17 TRADE RECEIVABLES AND ACCOUNTS RECEIVABLE. All Trade Receivables
and Accounts Receivable are reflected properly on the books and records of the
SBC Companies, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts
provided for in the financial statements of the SBC Companies.
3.18 TRADE LIABILITIES. The Trade Liabilities do not, and as of the
Closing Date will not, exceed the Trade Receivables.
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3.19 ENVIRONMENTAL.
(a) Prior to the execution of this Agreement, the Company has
provided to Parent and Citadel a true and correct copy of all environmental
site assessments, studies, reports and communications relating to the Real
Property.
(b) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, to
the best of the knowledge of the Company, (i) there are no conditions,
facilities, procedures or any other facts or circumstances that constitute
Environmental Noncompliance on the Real Property or any of the leaseholds
existing under the Real Property Leases and (ii) there is not constructed,
placed, deposited, stored, disposed of, nor located on any of the Real Property
or any of the leaseholds existing under the Real Property Leases, any asbestos
in any form that has released or, unless disturbed, threatens to release
airborne asbestos fibers in excess of applicable local, state and federal
standards.
(c) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, to
the best of the Company's knowledge, no structure, improvements, equipment,
fixtures, activities or facilities located on the Real Property or any of the
leaseholds existing under the Real Property Leases uses Hazardous Materials
except those used in the ordinary course of the Business and in compliance with
applicable Environmental Laws.
(d) Except as specifically described on COMPANY'S DISCLOSURE
SCHEDULE, there have been no releases or threatened releases of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions arising in whole or in part from the activities of any of the SBC
Companies, or to the best of the knowledge of the Company arising from any
other activities, except to the extent that such releases or threatened
releases do not constitute a condition of Environmental Noncompliance relating
to the Real Property or any of the leaseholds existing under the Real Property
Leases.
(e) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE,
there are no underground storage tanks, or underground piping associated with
tanks, used for the management of Hazardous Materials, and no abandoned
underground storage tanks at the Real Property or any of the leaseholds
existing under the Real Property Leases.
(f) None of the SBC Companies is subject to any Environmental
Claims, and no Environmental Claims have been threatened against any of the SBC
Companies nor, to the best of the knowledge of the Company, is there any basis
for any such Environmental Claims.
3.20 PERMITS, COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. None of the SBC Companies is in default under
any statutes, ordinances, regulations, orders, judgments and decrees of any
Governmental Authority applicable to it or to the Business or the Assets as to
which a default or failure to comply might result in any material adverse
change in the condition, financial or otherwise, of the
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Assets or the Business. The Company has no knowledge of any basis for assertion
of any violation of the foregoing or for any claim for compensation or damages
or otherwise arising out of any violation of the foregoing. None of the SBC
Companies has received any notification of any asserted present or past failure
to comply with any of the foregoing which has not been satisfactorily responded
to in the time period required thereunder.
(b) PERMITS. Set forth in COMPANY'S DISCLOSURE SCHEDULE is a
complete and accurate list of all of the Permits held by any of the SBC
Companies and applicable to the Station. The Station is operating in accordance
with the Act and its FCC Licenses and in compliance with the Act and the rules,
regulations and policies of the FCC. The Permits set forth in COMPANY'S
DISCLOSURE SCHEDULE are all of the Permits required for the conduct of the
Business conducted by the Station. All of the Permits held by the SBC Companies
are in full force and effect, and none of the SBC Companies has engaged in any
activity which would cause or permit revocation or suspension of any such
Permit, and to the best of the knowledge of the Company, no action or
proceeding looking to or contemplating the revocation or suspension of any such
Permit is pending or threatened. There are no existing defaults or events of
default or events or state of facts which with notice or lapse of time or both
would constitute a default by any of the SBC Companies or any other Person
under any such Permit. Except for (1) the FCC Approval and (2) as set forth in
COMPANY'S DISCLOSURE SCHEDULE, the consummation of the transactions
contemplated hereby will in no way affect the continuation, validity or
effectiveness of the Permits held by any of the SBC Companies or require the
consent of any Person. Except as set forth in COMPANY'S DISCLOSURE SCHEDULE,
none of the SBC Companies is required to be licensed by, and is not subject to
the regulation of, any Governmental Authority by reason of the Business.
3.21 INTELLECTUAL PROPERTY. The use of the Intellectual Property in
connection with the operation of the Station in a manner consistent with past
practices by the SBC Companies does not infringe upon the proprietary rights of
any other Person. Citadel will, upon consummation of the transactions
contemplated by this Agreement, possess adequate rights, licenses and other
authority to use the Intellectual Property used by the Station in the operation
of the Station following the Closing in the manner now operated, without
infringement or unlawful or improper use of any of the Intellectual Property.
No director, officer or employee of any of the SBC Companies has any interest
in any of the Intellectual Property, all of which will, as of the Closing, be
free and clear of all Liens. The Company has no knowledge of any infringement
by any Person upon the rights of any of the SBC Companies with respect to the
Intellectual Property. None of the SBC Companies has granted any outstanding
licenses or other rights to any of the call letters, copyrights, trademarks,
trade names or other similar rights with regard to any of the Intellectual
Property.
3.22 BOOKS AND RECORDS. The books of account of the SBC Companies
fairly and accurately reflect their respective income, expenses, assets and
liabilities and have been maintained in accordance with good business
practices. All of such books and records will be located on the date of the
Closing on the business premises of the Station.
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3.23 ACTS TO BE PERFORMED. The Company shall perform each of the
covenants, acts and undertakings of the Company to be performed on or before
the Closing Date pursuant to the terms of this Agreement.
3.24 RELATED PARTY OBLIGATIONS. Except as set forth on COMPANY'S
DISCLOSURE SCHEDULE, no officer, director, shareholder or Affiliate of any of
the SBC Companies, or any individual related by blood or marriage to any such
Person, or any entity in which any such Person or individual owns any
beneficial interest is a party to any agreement, contract, commitment,
promissory note, loan, any other actual or proposed transaction with any of the
SBC Companies or has any material interest in any material property used by any
of the SBC Companies which is material to the operation of the Station.
3.25 DISCLOSURE. To the best of the Company's knowledge, no
representation or warranty made under this Section 3 and none of the
information furnished by the Company or the Stockholders set forth in this
Agreement or in the schedules or exhibits to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements in this Agreement or in the schedules or exhibits to this
Agreement not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND CITADEL
In connection with the Merger and in order to induce the Company and
the Stockholders to enter into and consummate the transactions contemplated by
this Agreement, Parent and Citadel jointly and severally make the following
representations and warranties to the Company and the Stockholders, as of the
date of this Agreement and as of the date of the Closing (except for
representations and warranties expressly and specifically relating to a time or
times other than the date hereof or thereof, which shall be made as of the
specified time or times):
4.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. Parent and Citadel are
corporations duly organized, validly existing and in good standing under the
laws of the State of Nevada and have full power and authority to own their
assets and properties and to conduct their respective businesses. Parent and
Citadel have full power, authority and legal right and all necessary approvals,
permits, licenses and authorizations to own their respective properties and to
conduct their respective businesses. Subject to the approval by the respective
boards of directors of Parent and Citadel of the transactions contemplated
hereby, (a) the execution and delivery of this Agreement by Parent and Citadel,
the performance by Parent and Citadel of their covenants and agreements
hereunder and the consummation by Parent and Citadel of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Parent and Citadel; and (b) this Agreement constitutes the valid and
legally binding agreement of Parent and Citadel, enforceable against each of
them in accordance with its terms.
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4.2 CAPITALIZATION.
(a) CURRENT EQUITY SECURITIES OF PARENT. The authorized and
outstanding Equity Securities of Parent are as set forth in Section 8.c. of the
Securities Purchase and Exchange Agreement. CITADEL'S DISCLOSURE SCHEDULE lists
the names of the beneficial holders of all the outstanding shares of capital
stock of Parent. Such issued and outstanding shares have been duly authorized
and validly issued, and are fully paid and nonassessable. None of Parent or
Citadel is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its Equity Securities, except as expressly
provided in the Stockholders Agreement.
(b) ISSUANCE OF SERIES G PREFERRED STOCK. The issuance of the Series G
Preferred Stock has been duly authorized by all necessary action on the part of
Parent. The Series G Preferred Stock, when issued to the Stockholders on the
Effective Date, will be validly issued, fully paid and non-assessable, and will
have the rights, preferences and privileges specified in the Amended and
Restated Certificate of Incorporation. No Series G Preferred Stock shall be
issued to any Person other than in connection with the consummation of the
transactions contemplated hereby and the transactions contemplated by the
Xxxxxx Corporation Agreement. The Series G Preferred Stock, when issued, will
be free and clear of all Liens and restrictions, other than Liens that might
have been created or suffered solely by the holders thereof, and restrictions
on transfer imposed by the Securities Act or applicable state securities laws.
4.3 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Certificate of Incorporation or
Bylaws of Parent or Citadel, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien pursuant to the terms of, any
contract, commitment, agreement, understanding or arrangement of any kind to
which Parent or Citadel is a party or by which Parent, Citadel or any of their
assets is bound. Except for the FCC Approval and the consents disclosed in
CITADEL'S DISCLOSURE SCHEDULE, no consents, approvals or authorizations of, or
filings with, any Governmental Authority or any other Person are required on
the part of Parent or Citadel in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
4.4 FINANCIAL STATEMENTS. Parent and Citadel have delivered to the
Company and the Stockholders the following financial statements of Parent: (a)
the audited consolidated balance sheet as of December 31, 1995 and the related
consolidated statements of income and cash flows for the year then ended; (b)
the audited consolidated balance sheet as of December 31, 1996 and the related
consolidated statements of income and cash flows for the year then ended; and
(c) the unaudited consolidated balance sheet as of March 31, 1997, and the
related
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unaudited consolidated statements of income and cash flows for the three months
then ended. Each of the foregoing financial statements (including in all cases
the notes thereto, if any) (i) is accurate and complete in all material
respects, (ii) is consistent in all material respects with the books and
records of Parent and Citadel (which, in turn, are accurate and complete in all
material respects), and (iii) fairly presents in all material respects the
financial condition and results of operations of Parent and Citadel in
accordance with GAAP (subject in the case of unaudited financial statements to
the lack of footnote disclosure and changes resulting from xxxxxx year-end
audit adjustments), consistently applied, as of the dates and for the periods
set forth therein.
4.5 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any (a) material adverse change in the
condition of Citadel or Parent, financial or otherwise, or in the results of
operations, assets, liabilities or business of Citadel or Parent; (b) damage or
destruction, whether or not insured, affecting the business operations of
Citadel or Parent in any material respect; (c) labor dispute or threatened
labor dispute involving any of the employees of Citadel or Parent; (d) actual
or threatened dispute pertaining to Citadel or Parent with any material
provider of software, hardware or services; (e) material change in the
customary methods of operations of Citadel or Parent; (f) except in the
ordinary course of business or to the extent not material to the business or
financial condition of Citadel or Parent, sale or transfer of any tangible or
intangible asset used or useful in the operation of radio stations owned and/or
operated by Citadel (the "CITADEL STATIONS"), mortgage, pledge or imposition of
any Lien on any such asset, lease of real property, machinery, equipment or
buildings with respect to Citadel or Parent, or modification, amendment or
cancellation of any of its existing leases relating to Citadel or Parent, or
cancellation of any debt or claim; or (g) material liability or obligation
(contingent or otherwise) incurred under agreements or otherwise, except
current liabilities entered into or incurred in the ordinary course of business
consistent with past practices and except as disclosed in CITADEL'S DISCLOSURE
SCHEDULE.
4.6 TAXES. Citadel and Parent have filed or caused to be filed on a
timely basis all federal, state, local and other tax returns, reports and
declarations required to be filed by them with respect to each Citadel Station
and has paid all Taxes (including, but not limited to, income, franchise,
sales, use, unemployment, withholding, social security and workers'
compensation taxes and estimated income and franchise tax payments, penalties
and fines) reflected as due on such returns, reports or declarations (whether
or not shown on such returns, reports or declarations), or pursuant to any
assessment received by them in connection with such returns, reports or
declarations. All returns, reports and declarations filed by or on behalf of
Citadel or Parent are true, complete and correct in all material respects. No
deficiency in payment of any Taxes for any period has been asserted by any
taxing authority which remains unsettled at the date hereof, no written
inquiries have been received by Citadel or Parent from any taxing authority
with respect to possible claims for taxes or assessments, and there is no basis
for any additional claims or assessments for Taxes. Since December 31, 1996,
neither Citadel nor Parent has incurred any liability for Taxes which
materially affect the operation of Citadel or Parent other than in the ordinary
course of business.
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4.7 CONTRACTUAL AND OTHER OBLIGATIONS WITH RESPECT TO PARENT STOCK.
Set forth in CITADEL'S DISCLOSURE SCHEDULE is a description of all contracts,
agreements, arrangements and other documents by and among Parent and its
shareholders or any lender or other third party which includes, warrants,
options, conversion rights or other obligations of Parent with respect to its
authorized stock.
4.8 PERMITS. Citadel and Parent have all the permits, licenses,
approvals, franchises, notices and authorizations issued by any Governmental
Authorities (collectively, the "CITADEL PERMITS") necessary to conduct the
operation of Citadel's business as currently conducted. Each Citadel Station is
operating in accordance with the Act and its FCC licenses and is in compliance
with the Act and the rules, regulations and policies of the FCC. The Citadel
Permits are in full force and effect, and Citadel and Parent have not engaged
in any activity which would cause or permit revocation or suspension of any
such Citadel Permit, and no action or proceeding looking to or contemplating
the revocation or suspension of any such Citadel Permit is pending or
threatened. There are no existing defaults or events of default or events or
state of facts which with notice or lapse of time or both would constitute a
default by Citadel or Parent under any such Citadel Permit. There is no default
or claimed or purported or alleged default or state of facts which with notice
or lapse of time or both would constitute a default on the part of any party in
the performance of any obligation to be performed or paid by any party under
any such Citadel Permit.
4.9 ACTS TO BE PERFORMED. Parent and Citadel shall perform each of the
covenants, acts and undertakings of Parent and Citadel to be performed on or
before the Closing Date pursuant to the terms of this Agreement.
4.10 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the best knowledge of Parent and Citadel, threatened against or
affecting Parent or Citadel that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated by this Agreement.
4.11 DISCLOSURE. To the best knowledge of Parent and Citadel, no
representation or warranty made under this Section 4 and none of the
information furnished by Parent or Citadel set forth in this Agreement or in
the schedules or exhibits to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements in this Agreement or in the schedules or exhibits to this Agreement
not misleading.
SECTION 5
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees with Parent and Citadel to:
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5.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
5.2 PAYMENT OF OBLIGATIONS. Fully discharge all Obligations of the
Company on a timely basis so that the Obligations of the Company existing as of
the Closing Date shall consist solely of Accounts Payable, Trade Liabilities
and the Debt Payoff Amount.
5.3 ACCESS. Afford Parent and Citadel and their authorized
representatives, upon reasonable notice, reasonable access during normal
business hours to the Station and the Station's employees, and permit Parent
and Citadel and their authorized representatives to examine all operations,
equipment, properties and other assets, logs, books, relevant records,
contracts and documents pertinent to the Station; provided, however, that in
each instance mutually satisfactory arrangements shall be made in advance in
order to avoid interruption and to minimize interference with the normal
business and operations of the Station.
5.4 PRESERVATION OF ORGANIZATION. Exercise all reasonable efforts to
preserve the business organization of the Station intact, and to preserve the
present relationships of the Station with employees, suppliers, advertisers and
customers and others having business relationships with the Station; provided,
however, that nothing contained in this Agreement shall require the Company to
expend money in fulfillment of its obligations set forth in this Section 5.4
other than those expenditures that the SBC Companies would have made in the
ordinary course of the business of the Station and consistent with past
practices.
5.5 BOOKS AND RECORDS. Maintain the books and records of the SBC
Companies in accordance with good business practices, on a basis consistent
with past practices, and promptly make available to Parent and Citadel the
books, records, tax returns, leases, contracts and other documents or
agreements material to the Station as Parent, Citadel or their respective
counsel, accountants or other authorized representatives may from time to time
reasonably request.
5.6 EMPLOYEES. Pay as and when the same shall become due and payable
any amounts owed by any of the SBC Companies to its employees who have
performed services up to the time of Closing, whether fixed or accrued, for
wages, vacation pay, sick pay, severance pay, employee benefits, damages and
otherwise.
5.7 COMPLIANCE WITH FCC MATTERS. Comply with the FCC Licenses
applicable to the Station and with the provisions of the Act, the rules,
regulations and policies of the FCC, and with all other laws, ordinances,
regulations, rules and orders of any Governmental Authority applicable to any
of the SBC Companies or to the Station.
5.8 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by the SBC Companies prior to the
Closing, and satisfy all Taxes related thereto which are due on or before the
Closing Date.
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5.9 COMPANY SUPPLEMENTAL FINANCIAL STATEMENTS. Provide Parent and
Citadel with copies of the monthly unaudited income statements and balance
sheets applicable to the Station prepared by the Company from the date hereof
until Closing in the ordinary course of business (collectively, the "COMPANY
SUPPLEMENTAL FINANCIAL STATEMENTS"). The Company shall provide such Company
Supplemental Financial Statements to Parent and Citadel promptly upon such
Company Supplemental Financial Statements becoming available to it. The Company
Supplemental Financial Statements shall be subject to the representations and
warranties as set forth in Section 3.5.
5.10 FURTHER INFORMATION. Furnish to Parent and Citadel prior to the
Closing such financial (including tax), legal and other information with
respect to the SBC Companies and the Station as Parent, Citadel or their
representatives may from time to time reasonably request.
5.11 NOTICE. Promptly notify Parent and Citadel in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty made by the Company in this
Agreement.
5.12 CONSENTS. Exercise all reasonable efforts (not involving the
payment by the Company of any money to any party to any Contract) to obtain,
prior to the Closing, the consent and approval (in a form reasonably approved
by Parent) of any third parties whose consent or approval is necessary in
connection with the consummation of the transactions contemplated hereby, with
respect to the Contracts set forth on COMPANY'S DISCLOSURE SCHEDULE and
requiring such consent. If any such consent or approval is not obtained, the
Company will use commercially reasonable efforts (not involving the payment of
money to any Person) to secure an arrangement satisfactory to Citadel intended
to provide for Citadel following the Closing the benefits under each Contract
for which such consent or approval is not obtained; provided, however, that
Citadel shall have the right to terminate this Agreement as a result of any
failure by the Company to obtain any such consent or approval set forth on
COMPANY'S DISCLOSURE SCHEDULE, if alternative arrangements are not satisfactory
to Citadel. The Company shall also execute a consent, in a form provided by
Citadel, allowing Parent and Citadel to assign all of their rights under this
Agreement and any related documents to one or more of Parent's and Citadel's
lenders upon default by Parent or Citadel under the relevant loan documents.
Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
5.13 TRADE SCHEDULE. Deliver to Parent and Citadel at the Closing an
accurate schedule of Trade Liabilities and Trade Receivables existing as of the
Closing. The Company
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shall exercise reasonable efforts to minimize the amount of additional Trade
Liabilities incurred after execution of this Agreement.
5.14 IMPACT OF LOCAL MARKETING AGREEMENT. From and after the effective
date of the Local Marketing Agreement, the covenants of the Company relating to
the operation of the Station and the Assets from and after such date shall be
conditioned upon Citadel's performance, in all material respects, of its
obligations under the Local Marketing Agreement.
SECTION 6
NEGATIVE COVENANTS OF THE COMPANY
From and after the date of this Agreement and until the Closing, the
Company shall not take, or cause or permit to be taken, any of the following
actions without the prior approval of Parent and Citadel, which may not be
unreasonably withheld:
6.1 SALES, TRANSFERS AND LIENS. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Assets, except in the ordinary course of business and which do
not materially interfere with the operations of the Station, and which, in the
case of a sale, transfer or assignment, is replaced with an asset of equal or
greater value, and, in the case of a conveyance, mortgage, hypothecation,
encumbrance or other Lien, is released at or prior to the Closing.
6.2 CONTRACTS. Amend, terminate or renew any of the Contracts
(including any renewal or termination resulting from the failure to provide,
after the date of this Agreement, timely notice of nonrenewal or termination as
required by the terms of any of the Contracts).
6.3 BREACHES, DEFAULTS. Do any act or omit to do any act, or permit
any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it in any respect that would have a material
adverse effect on the Assets or the business operations of the Station as
presently conducted.
6.4 OBLIGATIONS. Incur any Obligations (including but not limited to
any additional Indebtedness for Borrowed Money) except in the ordinary course
of business in a manner consistent with past practices.
6.5 SALARY INCREASES. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of the SBC
Companies except (a) in the ordinary course of business consistent with past
practices or (b) in accordance with the existing terms of contracts entered
into prior to the date of this Agreement.
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6.6 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire any of
the SBC Companies or the Station in whole or in part.
SECTION 7
COVENANTS OF THE STOCKHOLDERS
The Stockholders jointly and severally covenant and agree with Parent
and Citadel to:
7.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
7.2 NOTICE. Promptly notify Parent and Citadel in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty made by the Stockholders in
this Agreement.
7.3 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire any of
the SBC Companies or the Station in whole or in part. Prior to the Closing, the
Stockholders shall not sell, assign, pledge or otherwise transfer any of the
Company Common Stock owned by them.
7.4 COMMERCIALLY REASONABLE EFFORTS. The Stockholders shall use
commercially reasonable efforts to cause the Company to satisfy all of its
obligations hereunder.
SECTION 8
COVENANTS OF PARENT AND CITADEL
Parent and Citadel jointly and severally covenant and agree with the
Company and the Stockholders to:
8.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
8.2 NOTICE. Promptly notify the Company and the Stockholders in
writing upon the occurrence or the nonoccurrence of any event which does then,
or which upon the passing of time or the giving of notice would, constitute a
breach of or default under, or render misleading or untrue in any material
respect, any agreement, covenant, representation or warranty made by Parent or
Citadel in this Agreement.
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8.3 PERFORMANCE OF LOCAL MARKETING AGREEMENT. From and after the
effective date of the Local Marketing Agreement, Citadel shall perform and
discharge, in all material respects, its obligations in connection with the
operation of the Station and the Assets from and after such date in accordance
with the terms of the Local Marketing Agreement.
8.4 BOOKS AND RECORDS. Maintain the books and records of Parent and
Citadel in accordance with good business practices, on a basis consistent with
past practices, and promptly make available to the Company the books, records,
tax returns, leases, contracts and other documents or agreements material to
the Citadel Stations as the Company or its counsel, accountants or other
authorized representatives may from time to time reasonably request.
8.5 COMPLIANCE WITH FCC MATTERS. Comply with the FCC licenses
applicable to the Citadel Stations and with the provisions of the Act, the
rules, regulations and policies of the FCC, and with all other laws,
ordinances, regulations, rules and orders of any Governmental Authority
applicable to Parent, Citadel or to any Citadel Station.
8.6 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by Parent and/or Citadel prior to the
Closing, and satisfy all Taxes related thereto which are due on or before the
Closing Date.
8.7 CITADEL SUPPLEMENTAL FINANCIAL STATEMENTS. Provide the Company
with copies of the monthly unaudited income statements and balance sheets
applicable to the Citadel Stations prepared by Parent from the date hereof
until Closing in the ordinary course of business (collectively, the "CITADEL
SUPPLEMENTAL FINANCIAL STATEMENTS"). Parent and Citadel shall provide such
Citadel Supplemental Financial Statements to the Company promptly upon such
Citadel Supplemental Financial Statements becoming available to them. The
Citadel Supplemental Financial Statements shall be subject to the
representations and warranties as set forth in Section 4.4.
8.8 FURTHER INFORMATION. Furnish to the Company prior to the Closing
such financial (including tax), legal and other information with respect to
Parent, Citadel and the Citadel Stations as the Company or its representatives
may from time to time reasonably request.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 APPLICATION FOR TRANSFER OF CONTROL. As promptly as practicable
after the date of this Agreement, and in no event later than 10 days after the
execution of this Agreement, the Company and Citadel shall file an application
(the "FCC APPLICATION") with the FCC to approve the transfer of control of the
Station from the Company to Citadel (the "FCC APPROVAL"). Citadel shall have
primary responsibility for filing the FCC Application. The parties agree that
they shall jointly prosecute the FCC Application (and shall cooperate with
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each other in the timely prosecution thereof), in good faith and with due
diligence, and within the time allowed therefor by the rules and regulations of
the FCC. The Company and Citadel shall each take all necessary actions on its
part to obtain the FCC Approval. Citadel shall advance the filing fee for the
FCC Application, and the Stockholders shall reimburse Citadel for one-half of
such filing fee at the Closing. All other costs and expenses incurred by each
party in connection with the filing and prosecution of the FCC Application
shall be paid by the party incurring the cost or expense.
9.2 LOCAL MARKETING AGREEMENT. Concurrently with the execution of this
Agreement, Citadel and the Company shall execute and deliver a Local Marketing
Agreement for the Station in the form of EXHIBIT H attached hereto (the "LOCAL
MARKETING AGREEMENT").
9.3 BROKERAGE. Each of the parties hereto represents and warrants to
each other that, except for Broker, no Person has provided services as a
broker, agent or finder in connection with the transactions contemplated by
this Agreement. As between the parties hereto, the Stockholders are fully
responsible for the payment of any fee, commission, claim or expense of Broker,
and the Stockholders shall indemnify and hold harmless the SBC Companies,
Parent and Citadel for any and all fees, commissions, claims or expenses,
including attorneys' fees asserted by Broker. Each of the parties hereto shall
each indemnify and hold harmless the other parties hereto for any and all
claims or expenses, including attorneys' fees, asserted by any Person other
than Broker purporting to act on behalf of the respective indemnitor as a
broker, agent or finder in connection with the transactions contemplated by
this Agreement.
9.4 RISK OF LOSS. If any loss or damage to any of the Assets occurs
prior to the Closing (i) which has a material adverse effect on the Station and
(ii) such loss or damage is not susceptible of repair, replacement or
restoration with sufficient, collectible insurance proceeds available for such
purposes or by the Stockholders at their sole cost and expense to substantially
the same condition as existed before such loss or damage, then the parties
shall adjust the Merger Consideration to reflect the diminution in value of the
Station attributable to the impairment of such assets.
9.5 ACTIONS WITH FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other parties hereto in writing of such occurrence and shall thereafter
immediately take all reasonable measures to contest the same in good faith and
seek the removal or favorable resolution of such action, order, notice or
complaint.
9.6 COOPERATION. During the seven-year period immediately following
the Closing, Citadel shall cooperate with the Stockholders in providing the
Stockholders all information reasonably requested and permitting the
Stockholders access to all records relating to the period of ownership of the
Station prior to the Closing. The cost and expense in providing or permitting
access to information hereunder shall be borne by the Stockholders. The
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Stockholders, as a condition to being provided with access to information
hereunder, shall, at the request of Citadel, execute a confidentiality
agreement in form and substance acceptable to Citadel in its reasonable
discretion. Notwithstanding the foregoing, Citadel may discard any such
records during such seven-year period if (i) Citadel notifies the Stockholders
of Citadel's intent to discard such records and (ii) the Stockholders do not,
within 10 days after receipt of such notice, retrieve such records from
Citadel's premises.
9.7 CORNERSTONE MERGER. If requested by Citadel, the Company shall, at
or prior to Closing, merge Cornerstone with and into the Company, with the
Company surviving such merger (the "CORNERSTONE MERGER"). The Cornerstone
Merger shall be effected (if requested by Citadel) in accordance with all
applicable laws and regulations and pursuant to documents in form and substance
satisfactory to Citadel in its reasonable discretion.
SECTION 10
THE CLOSING
10.1 CLOSING DATE. The Closing shall occur on a date mutually selected
by the Company and Citadel which is within 10 business days following the date
on which the FCC Approval has become a Final Order. The Closing shall begin at
10:00 a.m., local time, on the date of the Closing (the "CLOSING DATE") at the
offices of Friday, Xxxxxxxx & Xxxxx, 2000 First Commercial Building, 000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, counsel for the Company and the
Stockholders, or at such other time and place as the parties may agree in
writing.
10.2 ACTIONS TO BE TAKEN IMMEDIATELY PRIOR TO THE CLOSING. The
following actions shall be taken immediately prior to the Closing, and as a
condition precedent thereto:
(a) AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. Parent
shall cause the Amended and Restated Certificate of Incorporation to be filed
with the Secretary of State of the State of Nevada.
(b) TERMINATION OF THE COMPANY SHAREHOLDERS AGREEMENT. The
parties to the Company Shareholders Agreement shall cause it to be terminated.
(c) DIVIDEND OF EXCLUDED ASSETS. The Company shall distribute to
the Stockholders as a dividend the Excluded Assets, if any.
10.3 ACTIONS TO BE TAKEN AT THE CLOSING. The following actions shall
be taken at the Closing:
(a) ARTICLES AND PLAN OF MERGER. The Articles of Merger, and if
required under applicable law, the Plan of Merger, shall be filed with the
appropriate authorities in the States of Nevada and Arkansas.
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(b) DELIVERY OF MERGER CONSIDERATION. Citadel shall deliver the
Series G Preferred Stock and cash portion of the Merger Consideration to the
holders of the Company Common Stock in accordance with Section 2.4.
(c) DELIVERY OF DOCUMENTS. Each of the parties shall deliver to
the other parties all agreements, certificates and other documents required to
be delivered by it pursuant to the terms of this Agreement or as a condition
precedent to the other parties' obligations under this Agreement, including but
not limited to the following:
(i) The parties shall deliver to each other fully executed
originals of the Amendment to Securities Purchase Agreement, the Amendment to
Registration Rights Agreement, the Amendment to Stockholders Agreement and the
Amendment to Voting Agreement.
(ii) Citadel and each of the Stockholders shall execute and
deliver an Agreement Not to Compete.
(d) REPAYMENT OF DEBT PAYOFF AMOUNT. Immediately after receipt of
the Merger Consideration, the Stockholders shall take all action necessary to
extinguish the Indebtedness for Borrowed Money represented by the Debt Payoff
Amount.
SECTION 11
CONDITIONS TO THE COMPANY'S AND
THE STOCKHOLDERS' OBLIGATION TO CLOSE
The obligation of the Company and the Stockholders to consummate the
transactions contemplated by this Agreement at the Closing is subject to the
following conditions precedent, any or all of which may be waived by the
Company and the Stockholders in their sole discretion (other than those set
forth in Section 11.7):
11.1 OPINION OF PARENT'S AND CITADEL'S COUNSEL. The Company and the
Stockholders shall have received an opinion of counsel for Parent and Citadel,
dated the date of the Closing, in form and substance satisfactory to the
Company and the Stockholders, to the effect that:
(a) Parent and Citadel are corporations duly organized, validly
existing and in good standing under the laws of the State of Nevada.
(b) Citadel is duly qualified and in good standing in the State
of Arkansas.
(c) Parent and Citadel have full corporate power and authority to
own their assets and properties and to conduct their business and have all
necessary approvals, permits,
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licenses and authorizations to own their properties and to conduct their
business in the manner and in the locations presently owned and conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by Parent or Citadel in
connection with the transactions contemplated hereby, each has been duly
authorized, executed and delivered by Parent and Citadel and constitutes a
valid and legally binding obligation of Parent and Citadel, enforceable against
each of them in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the availability of
equitable remedies.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Certificate of Incorporation or Bylaws of Parent or
Citadel or, to the knowledge of such counsel, any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate, or conflicts with or will conflict
with or will result in any breach of any of the terms of, or constitutes or
will constitute a default under, or results or will result in the termination
of or the creation or imposition of any Lien pursuant to, the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which Parent or Citadel is a party or by which Parent or Citadel or any of
their assets is bound and which is known to such counsel, all as set forth on
CITADEL'S DISCLOSURE SCHEDULE.
(f) The authorized and outstanding Equity Securities of Parent
are as set forth in Section 8.c. of the Securities Purchase and Exchange
Agreement. CITADEL'S DISCLOSURE SCHEDULE lists the names of the beneficial
holders of all the outstanding shares of Parent. Such issued and outstanding
shares have been duly authorized and validly issued, and are fully paid and
nonassessable. To the knowledge of such counsel, neither Parent nor Citadel is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of Parent's Equity Securities, except as expressly
provided in the Stockholders Agreement. The issuance of the Series G Preferred
Stock has been duly authorized by all necessary action on the part of Parent.
The Series G Preferred Stock, when issued to the holders of the Company Common
Stock on the Effective Date, will be validly issued, fully paid and
non-assessable, and will have the rights, preferences, and privileges specified
in the Amended and Restated Certificate of Incorporation. The Series G
Preferred Stock, when issued, will be free and clear of all Liens and
restrictions, other than Liens that might have been created or suffered solely
by the holders thereof, and restrictions on transfer imposed by the Securities
Act or applicable state securities laws.
Nothing contained in this Section 11.1 shall require an opinion by such counsel
with respect to FCC matters.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Citadel contained herein shall be true and correct in
all material respects at and as of the
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Closing with the same effect as though all such representations and warranties
were made at and as of the Closing (except for representations and warranties
expressly and specifically relating to a time or times other than the Closing,
which shall be true and correct in all material respects at and as of the time
or times specified except for such inaccuracies as do not, individually or in
the aggregate, have a material effect on the ability of Parent or Citadel to
consummate the transactions contemplated by this Agreement) and Parent and
Citadel shall have delivered to the Company and the Stockholders a certificate
to that effect, dated the date of the Closing, signed by the President of
Parent and Citadel.
11.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Parent, Citadel, the Company or the Stockholders relating to
the consummation of any of the transactions contemplated by this Agreement or
any action by any Governmental Authority shall have been issued.
11.4 OTHER CERTIFICATES. The Company and the Stockholders shall have
received certificates as to the good standing of Parent in the State of Nevada,
and of Citadel in the States of Nevada and Arkansas, each as of a date not more
than 20 days before the Closing, and such other certificates, instruments and
other documents, in form and substance satisfactory to the Company and the
Stockholders, as the Company and the Stockholders shall have reasonably
requested in connection with the transactions contemplated hereby.
11.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Parent and Citadel of this Agreement and
the transactions contemplated hereby shall have been duly and validly taken by
Parent and Citadel, and Parent and Citadel shall have delivered to the Company
and the Stockholders certified copies of the resolutions of Parent's and
Citadel's board of directors authorizing the execution and performance of this
Agreement and authorizing or ratifying the acts of their officers and employees
in carrying out the terms and provisions of this Agreement.
11.6 ACTS TO BE PERFORMED. Each of the covenants, acts and
undertakings of Parent and Citadel to be performed on or before the Closing
Date pursuant to the terms hereof shall have been duly performed.
11.7 FCC APPROVAL. The FCC Approval shall have been obtained.
11.8 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the CDB Broadcasting Agreement and the Xxxxxx
Corporation Agreement shall be consummated on the Closing Date.
SECTION 12
CONDITIONS TO PARENT'S AND CITADEL'S OBLIGATION TO CLOSE
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The obligation of Parent and Citadel to consummate the transactions
contemplated by this Agreement at the Closing is subject to the following
conditions precedent, any or all of which may be waived by Parent and Citadel
in their sole discretion (other than those set forth in Section 12.9):
12.1 OPINION OF THE COMPANY'S AND THE STOCKHOLDERS' COUNSEL. Parent
and Citadel shall have received an opinion of counsel for the Company and the
Stockholders, dated the date of the Closing, in form and substance satisfactory
to Parent and Citadel, to the effect that:
(a) Each of the SBC Companies is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arkansas.
(b) Each of the SBC Companies has full power and authority to own
its assets and properties and to conduct the Business and has all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business in the manner and in the locations presently owned and
conducted.
(c) This Agreement, together with all other documents and
instruments required to be executed or delivered by the Company and the
Stockholders in connection with the transactions contemplated by this
Agreement, each has been duly authorized, executed and delivered by the Company
and the Stockholders and constitutes a valid and legally binding obligation of
the Company and the Stockholders, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Articles of Incorporation or Bylaws of the Company or, to
the knowledge of such counsel, any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or, to the knowledge of such counsel after due investigation,
violates or will violate or conflicts with or will conflict with or will result
in any breach of any of the terms of, or constitutes or will constitute a
default under or results in or will result in the termination of or the
creation or imposition of any Lien pursuant to the terms of, any contract,
commitment, agreement, understanding or arrangement of any kind to which any of
the SBC Companies or any of the Stockholders is a party or by which any of the
SBC Companies, any of the Stockholders or any of the Assets is bound and which
is known to such counsel, all as set forth on COMPANY'S DISCLOSURE SCHEDULE.
Except for (1) the FCC Approval and (2) the consents disclosed on COMPANY'S
DISCLOSURE SCHEDULE, no consents, approvals or authorizations of, or filings
with, any Governmental Authority or any other Person are required on the part
of the SBC Companies or the Stockholders, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
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(e) To the knowledge of such counsel, except as disclosed on COMPANY'S
DISCLOSURE SCHEDULE, there are no claims, disputes, actions, suits or
proceedings pending or threatened against the SBC Companies or any of the
Assets.
(f) Prior to the Merger, the authorized capital stock of the Company
consists of 20,000 shares of Company Common Stock, of which 85 shares are
issued and outstanding. To the knowledge of such counsel, COMPANY'S DISCLOSURE
SCHEDULE lists the names of the beneficial holders of all the outstanding
shares of Company Common Stock, and the number of shares held by each of them.
The issued and outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
(g) The authorized capital stock of Cornerstone consists of 1,000
shares of Common Stock, no par value per share, of which 100 shares are issued
and outstanding. To the knowledge of such counsel, the Company owns, of record
and beneficially, all of the issued and outstanding shares of Common Stock of
Cornerstone. The issued and outstanding shares of Common Stock of Cornerstone
have been duly authorized and validly issued, and are fully paid and
nonassessable. Cornerstone does not have outstanding any stock or securities
convertible or exchangeable for any stock or securities.
(h) The authorized capital stock of License Sub consists of 1,000
shares of Common Stock, no par value per share, of which 100 shares are issued
and outstanding. To the knowledge of such counsel, Cornerstone owns, of record
and beneficially, all of the issued and outstanding shares of Common Stock of
License Sub. The issued and outstanding shares of Common Stock of License Sub
have been duly authorized and validly issued, and are fully paid and
nonassessable. License Sub does not have outstanding any stock or securities
convertible or exchangeable for any stock or securities.
Nothing contained in this Section 12.1 shall require an opinion of such counsel
with respect to FCC matters.
12.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects at and as of the Closing (except for representations and
warranties expressly and specifically relating to a time or times other than
the Closing, which shall be true and correct in all material respects at and as
of the time or times specified except for such inaccuracies as do not,
individually or in the aggregate, have a material effect on the Station, the
Company's or any Stockholder's ability to consummate the transactions
contemplated by this Agreement, or the Business as a whole) with the same
effect as though all such representations and warranties were made at and as of
the Closing, and the Company and the Stockholders shall have complied with all
of their respective covenants contained herein; and the Company and the
Stockholders shall have delivered to Parent and Citadel a certificate to that
effect, dated the date of the Closing, signed by the President of the Company
and by the Stockholders.
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12.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against the SBC Companies, the Stockholders, Parent or Citadel
relating to the consummation of any of the transactions contemplated by this
Agreement shall have been issued.
12.4 OTHER CERTIFICATES. Parent and Citadel shall have received a
certificate as to the good standing of each of the SBC Companies as a
corporation in Arkansas as of a date not more than 20 days before the Closing,
and such other certificates, instruments and other documents customary for
transactions of the nature provided for in this Agreement, in form and
substance reasonably satisfactory to Parent and Citadel, as Parent and Citadel
shall have reasonably requested in connection with the transactions
contemplated by this Agreement.
12.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by the
Company, and the Company shall have delivered to Parent and Citadel certified
copies of the resolutions of the Company's board of directors and of the
Stockholders authorizing the execution and performance of this Agreement and
authorizing or ratifying the acts of its officers and employees in carrying out
the terms and provisions of this Agreement.
12.6 ACTS TO PERFORMED. Each of the covenants, acts and undertakings
of the Company and the Stockholders to be performed on or before the Closing
Date pursuant to the terms of this Agreement shall have been duly performed.
12.7 UCC SEARCHES. The Company and the Stockholders shall have
delivered to Parent and Citadel Uniform Commercial Code judgment and lien
searches from the appropriate county and state agencies showing all Liens on
the Assets, which searches shall be conducted not more than 30 days prior to
the Closing. The Company and the Stockholders may cause such lien searches to
be prepared by a third party, in which case the Company and the Stockholders
shall not be responsible for any inaccuracies in such lien searches unless the
Company and the Stockholders have actual knowledge of their inaccuracy.
Notwithstanding the foregoing, the Company and the Stockholders shall remain
responsible for satisfying any Lien on the Assets even if such searches are
inaccurate.
12.8 FILINGS, CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. All
filings, consents, approvals and estoppel certificates required by or
reasonably requested by Parent and Citadel pursuant to this Agreement, or
necessary to consummate the transactions contemplated by this Agreement, shall
have been obtained.
12.9 FCC APPROVAL. The FCC Approval shall have been obtained.
12.10 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the CDB Broadcasting Agreement and the Xxxxxx
Corporation Agreement shall be consummated on the Closing Date.
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12.11 DISSENTING SHARES. There shall not be any Dissenting Shares.
SECTION 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY THE COMPANY AND THE STOCKHOLDERS. Subject to
the limitations and procedures set forth in this Section 13, the Company and
the Stockholders shall jointly and severally indemnify and hold harmless Parent
and Citadel from and against all losses, claims, demands, damages, liabilities,
obligations, costs and/or expenses, including, without limitation, reasonable
fees and disbursements of counsel (hereinafter referred to collectively as
"DAMAGES"), which are sustained or incurred by Parent or Citadel, to the extent
that such Damages are sustained or incurred by reason of (i) the breach of any
of the obligations or covenants of the Company or the Stockholders in this
Agreement or (ii) the breach of any of the representations or warranties made
by the Company or the Stockholders in this Agreement. The foregoing
notwithstanding, from and after the Closing Date, the Stockholders shall be
solely responsible for any indemnification due under this Section 13.1 and
shall have no right to seek contribution or indemnification from the Company.
13.2 INDEMNIFICATION BY PARENT AND CITADEL. Subject to the limitations
and procedures set forth in this Section 13, Parent and Citadel shall jointly
and severally indemnify and hold harmless the Stockholders from and against any
and all Damages sustained or incurred by Stockholders, to the extent such
Damages are sustained or incurred by the Stockholders by reason of (i) the
breach of any of the obligations or covenants of Parent or Citadel in this
Agreement or (ii) the breach of any of the representations or warranties made
by Parent or Citadel in this Agreement.
13.3 PROCEDURE FOR INDEMNIFICATION. In the event that any party to
this Agreement shall incur any Damages in respect of which indemnity may be
sought by such party pursuant to this Section 13 or any other provision of this
Agreement, the party indemnified hereunder (the "INDEMNITEE") shall notify the
party providing indemnification (the "INDEMNITOR") promptly. In the case of
third party claims, such notice shall in any event be given within 10 days of
the filing or assertion of any claim against the Indemnitee stating the nature
and basis of such claim; provided, however, that any delay or failure to notify
any Indemnitor of any claim shall not relieve it from any liability except to
the extent that the Indemnitor demonstrates that the defense of such action has
been materially prejudiced by such delay or failure to notify. In the case of
third party claims, the Indemnitor shall, within 10 days of receipt of notice
of such claim, notify the Indemnitee of its intention to assume the defense of
such claim. If the Indemnitor assumes the defense of the claim, the Indemnitor
shall have the right and obligation (a) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (b) to take all other required steps or proceedings to settle or
defend any such claims, and (c) to employ counsel to contest any such claim or
liability in the name of the Indemnitee or otherwise. If the Indemnitor shall
not assume the
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defense of any such claim or litigation resulting therefrom, the Indemnitee may
defend against any such claim or litigation in such manner as it may deem
appropriate and the Indemnitee may settle such claim or litigation on such
terms as it may deem appropriate, and assert against the Indemnitor any rights
or claims to which the Indemnitee is entitled. Payment of Damages shall be made
within 10 days of a final determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
13.4 SURVIVAL.
(a) COMPANY AND STOCKHOLDERS. Each of the representations and
warranties made by the Company and the Stockholders in this Agreement shall
survive for a period of 24 months after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of Parent or Citadel, and upon
the expiration of such 24-month period such representations and warranties
shall expire except as follows: (i) the representations and warranties of the
Company contained in Sections 3.7 and 3.12 shall expire at the time the period
of limitations expires for the assessment by the taxing authority of additional
Taxes with respect to which the representations and warranties relate; (ii) the
representations and warranties of the Company contained in Sections 3.19 and
3.20 shall expire at the time the latest period of limitations expires for the
enforcement by an applicable Governmental Authority of any remedy with respect
to which the particular representation or warranty relates; and (iii) the
representations and warranties of the Company contained in Sections 3.1, 3.3,
3.4 and 3.9(a) shall not expire but shall continue indefinitely. No claim for
the recovery of Damages may be asserted by Parent or Citadel against the
Company, the Stockholders or their successors in interest after such
representations and warranties shall thus expire; provided, however, that
claims for Damages first asserted in writing within the applicable period shall
not thereafter be barred.
(b) PARENT AND CITADEL. Each of the representations and
warranties made by Parent and Citadel in this Agreement shall survive for a
period of 24 months after the Closing Date, notwithstanding any investigation
at any time made by or on behalf of the Company or the Stockholders, and upon
the expiration of such 24-month period such representations and warranties
shall expire except as follows: (i) the representations and warranties of
Parent and Citadel contained in Section 4.6 shall expire at the time the period
of limitations expires for the assessment by the taxing authority of additional
Taxes with respect to which the representations and warranties relate; (ii) the
representations and warranties of Parent and
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Citadel contained in Section 4.8 shall expire at the time the latest period of
limitations expires for the enforcement by an applicable Governmental Authority
of any remedy with respect to which the particular representation or warranty
relates; and (iii) the representations and warranties of Parent and Citadel
contained in Sections 4.1, 4.2 and 4.3 shall not expire but shall continue
indefinitely. No claim for the recovery of Damages may be asserted by the
Company or the Stockholders against Parent, Citadel or their successors in
interest after such representations and warranties shall thus expire; provided,
however, that claims for Damages first asserted in writing within the
applicable period shall not thereafter be barred.
13.5 LIMITATION OF COMPANY'S AND STOCKHOLDERS' LIABILITY.
(a) THRESHOLD. Parent and Citadel shall not be entitled to
recover Damages pursuant to clause (ii) of Section 13.1 (other than Damages
arising by reason of a breach of the representations and warranties made in
Sections 3.1, 3.3, 3.4, 3.7 and 3.9(a)) until the aggregate of all such Damages
suffered by Parent and Citadel exceeds $25,000 (the "THRESHOLD"); provided,
however, that once such aggregate exceeds the Threshold, Parent and Citadel may
recover all such Damages suffered since the Closing Date.
(b) CEILING. Parent and Citadel shall not be entitled to
recover Damages pursuant to clause (ii) of Section 13.1 (other than Damages
arising by reason of a breach of the representations and warranties made in
Sections 3.7, 3.9(a), 3.12, 3.19 and 3.20 ("CITADEL'S CAP EXEMPT DAMAGES")) in
excess of the Merger Consideration. No maximum limitation shall apply, however,
to the right of Parent and Citadel to recover Citadel's Cap Exempt Damages or
Damages pursuant to clause (i) of Section 13.1.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply
with respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by the Company or the Stockholders, nor
shall there be any survival limitation for any such claim.
13.6 LIMITATION OF PARENT'S AND CITADEL'S LIABILITY.
(a) THRESHOLD. The Company and the Stockholders shall not be
entitled to recover Damages pursuant to clause (ii) of Section 13.2 (other than
as a result of a breach of the representations and warranties made in Sections
4.1, 4.2, 4.3 and 4.6) until the aggregate of all such Damages suffered by the
Company and the Stockholders exceeds the Threshold; provided, however, that
once such aggregate exceeds the Threshold, the Company and the Stockholders may
recover all such Damages suffered since the Closing Date.
(b) CEILING. The Company and the Stockholders shall not be
entitled to recover Damages pursuant to clause (ii) of Section 13.2 (other than
Damages arising by reason of a breach of the representations and warranties
made in Sections 4.2, 4.6 and 4.8 ("STOCKHOLDERS' CAP EXEMPT DAMAGES")) in
excess of the Merger Consideration. No maximum
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limitation shall apply, however, to the right of the Company and the
Stockholders to recover Stockholders' Cap Exempt Damages or Damages pursuant to
clause (i) of Section 13.2.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply
with respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by Parent or Citadel, nor shall there be
any survival limitation for any such claim.
SECTION 14
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
14.1 MANNER. This Agreement and the transactions contemplated hereby
may be terminated prior to completion of the Closing:
(a) by mutual written consent of Citadel and the Company;
(b) by either Citadel or the Company upon providing written
notice to the other party at any time after December 31, 1997 if the FCC
Approval has not been granted by the FCC, but only if the party providing such
notice is not then in material breach of this Agreement;
(c) by Citadel, upon providing written notice to the Company,
if as of the time set for Closing any of the conditions in Section 12 of this
Agreement (except Section 12.9) has not been satisfied or waived by Citadel in
writing, provided Citadel is not then in material breach of this Agreement;
(d) by the Company, upon providing written notice to Citadel,
if as of the time set for Closing any of the conditions in Section 11 of this
Agreement (except Section 11.7) has not been satisfied or waived by the Company
in writing, provided the Company is not then in material breach of this
Agreement;
(e) by the Company, upon providing written notice to Citadel,
if Citadel fails to consummate the transactions contemplated hereunder after
all conditions in Section 12 of the Agreement have been satisfied, provided the
Company is not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to the Company,
if the Company fails to consummate the transactions contemplated hereunder
after all conditions in Section 11 of this Agreement have been satisfied,
provided Citadel is not then in material breach of this Agreement;
(g) by either party upon denial by the FCC of the FCC
Application; and
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(h) by either party if any court of competent jurisdiction in
the United States or any other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other actions shall have become
final and non-appealable.
The foregoing notwithstanding, in the event any party hereto elects to
terminate this Agreement in accordance with paragraphs (a) through (h) above,
then any party hereto shall have the right to terminate, or cause its Affiliate
to terminate, the Real Estate Purchase Agreement, the Xxxxxx Corporation
Agreement and the CDB Broadcasting Agreement.
14.2 ADDITIONAL REMEDIES.
(a) In the event of the termination of this Agreement by the
Company (i) pursuant to Section 14.1(d) or 14.1(e) (any such event being a
"DRAW CONDITION"), the Company shall be entitled to draw upon and receive the
proceeds of the Letter of Credit, but shall not retain any rights to recover
any actual damages it suffers as a result of such termination and the breach
relating to such damages. In the event of any other termination of this
Agreement pursuant to any other provision of Section 14.1, Citadel shall be
entitled to a return of, and the Company shall return to Citadel, the original
Letter of Credit and, in that event, the Company and the Stockholders will no
longer have any liability under this Agreement.
(b) The parties recognize and agree that Parent and Citadel
have relied on this Agreement and expended considerable effort and resources
related to the transactions contemplated hereunder, that the rights and
benefits conferred upon Parent and Citadel herein are unique, and that damages
may not be adequate to compensate Parent and Citadel in the event the Company
and the Stockholders improperly refuse to consummate the transactions
contemplated hereunder. The parties therefore agree that Parent and Citadel
shall be entitled, at their option and in lieu of terminating this Agreement
pursuant to Section 14.1, to have this Agreement specifically enforced by a
court of competent jurisdiction in addition all other remedies available at law
or in equity; provided, however, that Parent and Citadel may not specifically
enforce this Agreement if Citadel has previously terminated this Agreement and
received the original Letter of Credit.
SECTION 15
GENERAL
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation and
warranty herein contained shall survive the Closing for the periods described
in Section 13.4, notwithstanding any investigation at any time made by or on
behalf of any party to this Agreement.
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15.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
State of Arkansas.
15.3 NOTICES. Any notices or other communications required or
permitted under this Agreement shall be delivered personally or sent by
registered or certified mail, postage prepaid, delivered by overnight delivery
or sent by facsimile, addressed as follows:
To Parent or Citadel: Citadel Broadcasting Company
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx
Fax: (000) 000-0000
With copy to: Citadel Broadcasting Company
000 Xxxxx Xxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
With copy to: Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxxxx, Esq.
Fax: (000) 000-0000
To the Company or Xxxxxx Broadcasting Corporation
the Stockholders: 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxx, Xx.
Fax: (000) 000-0000
With copy to: Friday, Xxxxxxxx & Xxxxx
2000 First Commercial Building
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Price X. Xxxxxxx, Esq.
Fax: (000) 000-0000
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
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15.4 ENTIRE AGREEMENT. This instrument supersedes all prior
communications, understandings and agreements of or between the parties with
respect to the subject matter of this Agreement and contains the entire
agreement between the parties with respect to the transactions contemplated in
this Agreement. Except as otherwise set forth in this Agreement, there are no
other representations, warranties or covenants of any party hereto with respect
to the subject matter of this Agreement.
15.5 HEADINGS. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
15.6 SCHEDULES, EXHIBITS. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
15.7 EXPENSES. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions pursuant to this Agreement.
15.8 AMENDMENT. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed on behalf of all of
the parties or, in the case of a waiver, by the party waiving compliance.
15.9 WAIVER. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of this Agreement at any
time thereafter.
15.10 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by any party without the prior
written consent, in its sole discretion, of each other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, and no other person
shall have any right, benefit or obligation under this Agreement.
15.11 PRIOR CONTROL. Until the Closing, the SBC Companies shall
maintain control of the Station.
15.12 ATTORNEYS' FEES. In the event of any action arising out of this
Agreement, the prevailing party shall be entitled to recover its costs,
expenses and reasonable attorney's fees incurred in connection with the dispute
from the other party.
15.13 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
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15.14 DISPUTE RESOLUTION. Except as provided below, any dispute
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by arbitration conducted expeditiously
in accordance with the CPR Rules. The Center for Public Resources shall appoint
a neutral advisor from its National CPR Panel. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Little Rock,
Arkansas.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate; provided, however,
such proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within 45 days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings
to take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearing.
The provisions of this Section 15.14 shall not apply with regard to any
equitable remedies to which a party may be entitled under this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
XXXXXX BROADCASTING CORPORATION
By: /s/ Xxx X. Xxxxxx
------------------------------
Xxx X. Xxxxxx, Xx., President
Xxx X. Xxxxxx
---------------------------
Xxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------
Xxxxxxxx X. Xxxxxx
Its: President
-----------------------
CITADEL BROADCASTING COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------
Xxxxxxxx X. Xxxxxx
Its: President
-----------------------
-47-
49
INDEX OF SCHEDULES AND EXHIBITS
Schedule 1 - Citadel's Disclosure Schedule
Schedule 2 - Company Asset Schedule
Schedule 3 - Company's Disclosure Schedule
Exhibit A - Agreement Not to Compete
Exhibit B - Amended and Restated Certificate of Incorporation
Exhibit C - Amendment to Registration Rights Agreement
Exhibit D - Amendment to Securities Purchase and Exchange Agreement
Exhibit E - Amendment to Stockholders Agreement
Exhibit F - Amendment to Voting Agreement
Exhibit G - Letter of Credit
Exhibit H - Local Marketing Agreement
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
