EXHIBIT 10.7
June 26, 2001
Forstmann Little & Co. Equity Partnership - VI, X.X.
Xxxxxxxxx Little & Co. Equity Partnership - VII, X.X.
Xxxxxxxxx Little & Co. Subordinated Debt and Equity Management Buyout
Partnership - VII, X.X.
Xxxxxxxxx Little & Co. Subordinated Debt and Equity Management Buyout
Partnership - VIII, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This letter will confirm our agreement that in connection with and in
consideration for your participation in the acquisition of Citadel
Communications Corporation and the formation of FLCC Holdings, Inc. (the
"Company"), each of Forstmann Little & Co. Equity Partnership - VI, L.P.,
Forstmann Little & Co. Equity Partnership - VII, L.P., Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-VII, L.P. and
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VIII, L.P. (each individually, "Investor" and collectively,
"Investors"), will separately be entitled, without further action required or
permitted by the other Investor, to the following contractual management rights
relating to the Company so long as such Investor shall own any voting securities
of the Company (collectively, the "Management Rights"):
(1) Each Investor shall be entitled to routinely consult with and advise
management of the Company's business and financial matters, including
management's proposed annual operating plans, and management will meet with
representatives of each Investor (the "Representatives") at the Company's
facilities at mutually agreeable times for such consultation and advice,
including to review progress in achieving said plans. The Company shall
give each Investor reasonable advance written notice of any significant new
initiatives or material changes to existing operating plans and shall
afford each Investor adequate time to meet with management to consult on
such initiatives or changes prior to implementation. The Company agrees to
give due consideration to the advice given and any proposals made by either
Investor;
(2) Each Investor may inspect all contracts, books, records, personnel, offices
and other facilities and properties of the Company and, to the extent
available to the Company after the Company uses reasonable efforts to
obtain them, the records of its legal advisors and accountants, including
the accountants' work papers, and each Investor may make such copies and
inspections thereof as either Investor may reasonably request. The Company
shall furnish each Investor with such financial and operating data and
other information with respect to the business and properties of the
Company as each Investor may request. The Company shall permit the
Representatives to discuss the affairs, finances and accounts of the
Company with, and to make proposals and furnish advice with respect
thereto, the principal officers of the Company;
(3) Each Investor shall have the following rights regarding the appointment of
a representative to the Company's Board of Directors (the "Board"). Each
Investor shall
provide to the Board, a reasonable period of time before the Board or the
Company distributes to stockholders a proxy statement or other materials in
connection with the election of directors, the name of each Investor's
nominee as director (each a "Nominee"), as well as any other information
regarding each Nominee as the Company may reasonably request. The selection
by Investors of their respective Nominee shall be made after consultation
with the Company, and neither Investor shall designate a Nominee who is
unsatisfactory to the existing directors. The Board and/or the Company
shall include each Nominee as one of the persons recommended by the Board
for election as a director of the Company, solicit proxies from
stockholders in favor of the election of each Nominee as a director, and
otherwise use all reasonable efforts to cause each Nominee to be elected as
a director of the Company. In the event any Nominee elected to the Board
shall cease to serve as a director for any reason, the Board shall fill the
vacancy resulting therefrom with another Nominee selected by the applicable
Investor. If the Company has a classified Board of Directors, each Investor
shall be permitted to elect the class of directors in which its Nominee is
to be included, and the Company's obligation under this paragraph (3) shall
be to take the steps set forth herein to cause such Nominee to be elected
in the year in which such Nominee's class of directors is up for election.
The Board shall not be required to fulfill its obligations under this
paragraph to the extent that doing so would be in contravention of its
fiduciary duties to the Company's stockholders; and
(4) At any time during which any Investor does not have a representative on the
Board, the Company shall, after receiving notice from such Investor as to
the identity of any Representative, (i) permit a Representative to attend
all Board meetings and all committees thereof as an observer; (ii) provide
the Representative advance notice of each such meeting, including such
meeting's time and place, at the same time and in the same manner as such
notice is provided to the members of the Board (or such committee thereof)
and copies of all materials distributed to the members of the Board (or
such committee thereof) at the same time as such materials are distributed
to such Board (or such committee thereof) and shall permit the
Representative to have the same access as members of the Board to
information concerning the business and operations of the Company; and
(iii) permit the Representative to discuss the affairs, finances and
accounts of the Company with, and to make proposals and furnish advice with
respect thereto to, the Board, without voting, and the Board and the
Company's officers shall take such proposals or advice seriously and give
due consideration thereto. Reasonable costs and expenses incurred by the
Representative for the purposes of attending Board (or committee) meetings
and conducting other Company business will be paid by the Company.
The rights set forth in this letter agreement are intended to satisfy the
requirement of contractual management rights for purposes of qualifying each
Investor's interests in the Company as venture capital investments for purposes
of the Department of Labor's "plan assets" regulations, and in the event that,
after the date hereof, as a result of any change in applicable law or regulation
or a judicial or administrative interpretation of applicable law or regulation,
it is determined that such rights are not satisfactory for such purpose, each
Investor and the Company shall reasonably cooperate in good faith to agree upon
mutually satisfactory management rights which satisfy such regulations.
In addition, each Investor agrees, and shall cause each of their respective
Representatives to agree, to hold in confidence and trust and not use or
disclose any confidential information provided to or learned by it in connection
with the exercise of each Investor's Management Rights under this letter
agreement, unless otherwise required by law or unless such confidential
information otherwise becomes publicly available or available to it other than
through this letter agreement.
Very truly yours,
FLCC HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President, Assistant Secretary and
Treasurer
AGREED AND ACCEPTED THIS
26th day of June, 2001
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - VI, L.P.
By: FLC XXXII Partnership, L.P.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx, a General Partner
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP - VII, L.P.
By: FLC XXXII Partnership, L.P.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx, a General Partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP - VII, L.P.
By: FLC XXXIII Partnership, L.P.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx, a General Partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP - VII, L.P.
By: FLC XXXIII Partnership, L.P.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx, a General Partner
