<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 1998.
REGISTRATION NO. 333-48819
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
CAPSTAR BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4832 74-2833106
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
</TABLE>
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600 CONGRESS AVENUE, SUITE 1400
AUSTIN, TEXAS 78701
(512) 340-7800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
R. STEVEN HICKS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CAPSTAR BROADCASTING CORPORATION
600 CONGRESS AVENUE, SUITE 1400
AUSTIN, TEXAS 78701
(512) 340-7800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies of Communications to:
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<S> <C> <C>
WILLIAM S. BANOWSKY, JR. MICHAEL D. WORTLEY JEREMY W. DICKENS
CAPSTAR BROADCASTING CORPORATION VINSON & ELKINS L.L.P. WEIL, GOTSHAL & MANGES LLP
600 CONGRESS AVENUE, SUITE 1400 3700 TRAMMELL CROW CENTER 100 CRESCENT COURT, SUITE 1300
AUSTIN, TEXAS 78701 2001 ROSS AVENUE DALLAS, TEXAS 75201
(512) 340-7800 DALLAS, TEXAS 75201 (214) 746-7700
(214) 220-7700
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
---------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by Capstar Broadcasting Corporation (the
"Registrant" or the "Company") in connection with the registration of the
securities offered hereby, other than underwriting discounts and commissions,
are as follows:
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<S> <C>
SEC registration fee........................................ $ 220,852
NASD filing fee............................................. 30,500
New York Stock Exchange listing fee......................... 500,000
Accounting fees and expenses................................ 1,100,000
Legal fees and expenses..................................... 325,000
Blue Sky fees and expenses.................................. 2,500
Transfer agent and registrar fees........................... 12,500
Printing and engraving expenses............................. 1,000,000
Miscellaneous............................................... 133,648
----------
Total............................................. $3,325,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Eight of the Certificate of Incorporation (the "Certificate of
Incorporation") of the Registrant provides that the Registrant shall indemnify
its officers and director to the maximum extent allowed by the Delaware General
Corporation Law. Pursuant to Section 145 of the Delaware General Corporation
Law, the Registrant generally has the power to indemnify its current and former
directors against expenses and liabilities incurred by them in connection with
any suit to which they are, or are threatened to be made, a party by reason of
their serving in those positions so long as they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to the best interests
of the Registrant, and with respect to any criminal action, so long as they had
no reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of the Registrant, however, indemnification is generally
limited to attorneys' fees and other expenses and is not available if the person
is adjudged to be liable to the Registrant, unless the court determines that
indemnification is appropriate. The statute expressly provides that the power to
indemnify authorized thereby is not exclusive of any rights granted under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
The Registrant also has the power to purchase an maintain insurance for its
directors and officers and has purchased a policy providing such insurance.
Article Nine of the Certificate of Incorporation provides that no director
of the Registrant will be personally liable to the Registrant or any of its
stockholders for monetary damages arising from the director's breach of
fiduciary duty as a director. However, this does not apply with respect to any
action in which the director would be liable (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the General Corporation
Laws of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
The preceding discussion of the Registrant's Certificate of Incorporation
and Section 145 of the Delaware General Corporation Law is not intended to be
exhaustive and is qualified in its entirety by the Certificate of Incorporation
and Section 145 of the Delaware General Corporation Law.
The Registrant has entered into indemnification agreements with the
Registrant's directors and officers. Pursuant to such agreements, the Registrant
will, to the extent permitted by applicable law, indemnify such persons against
all expenses, judgments, fines and penalties incurred in connection with the
defense or settlement of any actions brought against them by reason of the fact
that they were directors or officers of the Registrant or assumed certain
responsibilities at the direction of the Registrant.
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<PAGE> 3
The form of Underwriting Agreement and Subscription Agreement included as
Exhibits 1.1 and 1.2, respectively, herein provide for indemnification of the
Registrant and certain controlling persons under certain circumstances,
including indemnification for liabilities under the Securities Act of 1933 (the
"Securities Act").
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information relates to all securities issued or sold by the
Registrant in the last three years and not registered under the Securities Act.
Each of the transactions described below was conducted in reliance upon the
exemption from registration provided in Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder. Each of the certificates
representing the Registrant's securities issued in connection with such
transaction contains a restrictive legend. The information provided in this Item
takes into account a one for ten reverse stock split of the Common Stock (as
defined) that will occur immediately prior to the consummation of the Offering.
On June 20, 1997, the Registrant became the holding company for Capstar
Broadcasting Partners, Inc. ("Capstar Partners") by exchanging shares of its
Class A Common Stock, par value $0.01 per share ("Class A Common Stock"), Class
B Common Stock, par value $0.01 per share ("Class B Common Stock"), and Class C
Common Stock, par value $0.01 per share (the "Class C Common Stock" and together
with the Class A Common Stock and the Class B Common Stock, the "Common Stock"),
for all of the outstanding common stock of Capstar Partners (the "Exchange").
Pursuant to the Exchange, the holders of the outstanding common stock of Capstar
Partners received, in an amount equal to the equivalent number and class of
stock they held in Capstar Partners, 747,999 shares of Class A Common Stock,
1,818,181 shares of Class B Common Stock and 12,473,452 shares of Class C Common
Stock. The Registrant received no cash consideration in the Exchange.
On July 1, 1997, the Registrant sold 7,518 shares of Class A Common Stock
to R. Gerald Turner for a purchase price of $100,000.
On July 8, 1997, the Registrant issued 1,724,186 shares of Class A Common
Stock, 2,162,063 shares of Class B Common Stock and 4,624,796 shares of Class C
Common Stock having a deemed value of approximately $113.0 million to the former
stockholders of GulfStar Communications, Inc. ("GulfStar") in connection with
the merger of GulfStar with and into a wholly-owned subsidiary of the Registrant
(the "GulfStar Acquisition").
On July 8, 1997, the Registrant sold 5,639,097 shares of Class C Common
Stock to Capstar Broadcasting Partners, L.P. for a purchase price of
$75,000,000.
On July 8, 1997, the Registrant sold 837,744 shares of Class B Common Stock
to Capstar BT Partners, L.P. for a purchase price of $11,100,000.
On August 6, 1997, the Registrant sold 161,538 shares of Class A Common
Stock to Joseph L. Mathias for a purchase price of $2,100,000 and sold 75,000
shares of Class C Common Stock to Capstar Broadcasting Partners, L.P. for a
purchase price of $750,000.
On September 30, 1997, the Registrant sold 45,112 shares and 11,278 shares
of Class A Common Stock to Steven Dinetz and Eric W. Neumann, respectively, for
a purchase price of $600,000 and $150,000, respectively.
On January 26, 1998, the Registrant sold 558,496 shares of Class B Common
Stock to Capstar BT Partners, L.P. for a purchase price of $7,428,000.
On January 27, 1998, the Registrant sold 7,518,797 shares of Class C Common
Stock to Capstar Broadcasting Partners, L.P. for a purchase price of
$100,000,000.
On February 4, 1998, the Registrant sold 11,278,195 shares of Class C
Common Stock to Capstar Broadcasting Partners, L.P. for a purchase price of
$150,000,000.
II-2
<PAGE> 4
On March 19, 1998, the Registrant sold 21,428,571 shares of Class C Common
Stock to Capstar Broadcasting Partners, L.P. for a purchase price of
$300,000,000.
On April 3, 1998, the Registrant sold 3,571,428 shares of Class C Common
Stock to Capstar Broadcasting Partners, L.P. for a purchase price of
$50,000,000.
On April 10, 1998, the Registrant sold 1,905,301 shares of Class B Common
Stock to Capstar BT Partners, L.P. for a purchase price of $26,674,224.
On May 6, 1998, the Registrant sold 85,000 shares of Class A Common Stock
to R. Steven Dinetz for a purchase price of $1,130,500.
On May 18, 1998, the Registrant exchanged 1,200,064 shares of Class C
Common Stock for the same number of shares of Class B Common Stock held of
record by Thomas O. Hicks. The Registrant received no cash consideration.
On May , 1998, the Registrant sold 35,000 shares of Class A Common Stock
to Claude C. Turner for a purchase price of $465,000.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
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<C> <S>
1.1 -- Form of Underwriting Agreement.*
1.2 -- Form of Subscription Agreement.*
2.1.1 -- Agreement and Plan of Merger, dated June 21, 1996, by and
among CMI Acquisition Company, Inc., Commodore Media,
Inc. ("Commodore") and the stockholders and other
signatories thereto.(1)
2.1.2 -- First Amendment to Agreement and Plan of Merger, dated
September 3, 1996.(2)
2.1.3 -- Second Amendment to Agreement and Plan of Merger, dated
October 16, 1996.(2)
3.1 -- Amended and Restated Certificate of Incorporation of the
Company.*
3.2 -- Amended and Restated By-Laws of the Company.*
4.1 -- Stock Certificate of Class A Common Stock, par value
$0.01 per share, of the Company.*
4.2.1 -- Indenture, dated February 20, 1997, between Capstar
Broadcasting Partners, Inc. ("Capstar Partners") and U.S.
Trust Company of Texas, governing Capstar Partners'
outstanding 12 3/4% Senior Discount Notes due 2009 (the
"12 3/4% Capstar Indenture").(5)
4.2.2 -- First Supplemental to 12 3/4% Capstar Indenture.(15)
4.3 -- Indenture, dated June 17, 1997, between Capstar Radio and
U.S. Trust Company of Texas, N.A. governing Capstar
Radio's outstanding 9 1/4% Senior Subordinated Notes due
2007.(4)
4.4 -- Indenture, dated June 17, 1997, between Capstar Partners
and U.S. Trust Company of Texas, N.A. governing Capstar
Partners's 12% Subordinated Exchange Debentures due
2009.(4)
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.5 -- Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special
Rights of 12% Senior Exchangeable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of
Capstar Partners, dated June 17, 1997.(4)
4.6.1 -- Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations
and Restrictions Thereof of 12 5/8% Series E Cumulative
Exchangeable Preferred Stock of SFX, due October 31, 2006
("SFX Certificated Designation").(19)
4.6.2 -- Certificate of Amendment to SFX Certificate of
Amendment.(22)
4.7 -- Indenture, governing SFX's 12 5/8% Subordinated Exchange
Debentures due 2006.(18)
4.8.1 -- Indenture, dated May 31, 1996, between SFX, the
guarantors name therein and Chemical Bank, governing
SFX's 10 3/4% Senior Subordinated Notes due 2006 (the
"10 3/4% SFX Notes Indenture").(21)
4.8.2 -- First Supplement to 10 3/4% SFX Notes Indenture.(18)
4.8.3 -- Second Supplement to 10 3/4% SFX Notes Indenture.(18)
4.8.4 -- Third Supplement to 10 3/4% SFX Notes Indenture.(18)
4.8.5 -- Fourth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.6 -- Fifth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.7 -- Sixth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.8 -- Seventh Supplement to 10 3/4% SFX Notes Indenture.#
4.8.9 -- Eighth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.10 -- Ninth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.11 -- Tenth Supplement to 10 3/4% SFX Notes Indenture.(20)
4.9.1 -- Indenture, dated October 7, 1993, between SFX and
Chemical Bank, as trustee, governing SFX's 11 3/8% Senior
Subordinated Notes due 2000 (the "11 3/8% SFX
Indenture").(23)
4.9.2 -- First Supplement to 11 3/8% SFX Indenture.(21)
5.1 -- Opinion of Vinson & Elkins L.L.P.*
10.1 -- Form of Commitment Letter for the Capstar Credit
Facility.#
10.2 -- Financial Advisory Agreement, dated as of July 1, 1997,
between the Company and Hicks, Muse & Co. Partners, L.P.
("HMCo").(4)
10.3 -- Financial Advisory Agreement, dated as of October 16,
1996, between Capstar Partners and HMCo.(5)
10.4 -- Monitoring and Oversight Agreement, dated as of July 1,
1997, between the Company and HMCo.(4)
10.5 -- Monitoring and Oversight Agreement, dated as of October
16, 1996, between Capstar Partners and HMCo.(5)
10.6 -- Form of Indemnification Agreement between the Company and
each of its directors and officers.(4)
10.7.1 -- Employment Agreement, dated February 14, 1997, between
Capstar Partners and R. Steven Hicks.(5)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.7.2 -- First Amendment to Employment Agreement, effective July
1, 1997, between R. Steven Hicks, Capstar Partners, and
the Company.(7)
10.8 -- Employment Agreement, dated July 1, 1997, between the
Company and Paul D. Stone.(4)
10.9 -- Employment Agreement dated July 1, 1997, between the
Company and William S. Banowsky, Jr.(4)
10.10 -- Amended and Restated Employment Agreement, dated October
16, 1996, between Capstar Radio, Capstar Partners and
James T. Shea, Jr.(5)
10.11 -- Employment Agreement, dated May 4, 1998, by and among the
Company, Capstar Employee Management Company, Inc. and
James P. Donahoe.#
10.12.1 -- Employment Agreement between GulfStar Communications,
Inc. and John D. Cullen.(6)
10.12.2 -- First Amendment to Employment Agreement between GulfStar
Communications, Inc. and John D. Cullen.(15)
10.13 -- Employment Agreement, dated January 16, 1998, among
Central Star Communications, Inc., the Company, and Mary
K. Quass.(15)
10.14 -- Not Used.
10.15 -- Consulting, Non-Compete and Separation Agreement, dated
March 1, 1998, between Southern Star and Frank D.
Osborn.(15)
10.16 -- Amended and Restated Capstar Broadcasting Corporation
1998 Stock Option Plan.#
10.17.1 -- Form of Incentive Stock Option Agreement.(4)
10.17.2 -- Form of Non-Qualified Stock Option Agreement for
Employees.(4)
10.17.3 -- Form of Non-Qualified Stock Option Agreement for
Non-Employees.(6)
10.18.1 -- Affiliate Stockholders Agreement, dated October 16, 1996,
among Capstar Partners, Hicks, Muse, Tate & Furst
Incorporated ("Hicks Muse"), R. Steven Hicks and the
security holders listed therein.(5)
10.18.2 -- First Amendment and Supplement to Affiliate Stockholders
Agreement, dated January 27, 1997, by and among Capstar
Partners, the securityholders listed therein and Hicks
Muse.(5)
10.18.3 -- Second Amendment to Affiliate Stockholders Agreement,
dated February 20, 1997, by and among Capstar Partners,
the security holders listed therein and Hicks Muse.(3)
10.18.4 -- Third Amendment to Affiliate Stockholders Agreement,
dated June 20, 1997, by and among the Company, Capstar
Partners, the security holders listed therein and Hicks
Muse.(4)
10.18.5 -- Fourth Amendment to Affiliate Stockholders Agreement,
dated May 18, 1998, by and among the Company, Capstar
Partners, the securityholders listed therein and Hicks
Muse.*
10.19.1 -- Management Stockholders Agreement, dated November 26,
1996, among Capstar Partners, the securityholders listed
therein and Hicks Muse.(5)
10.19.2 -- First Amendment to Management Stockholders Agreement,
dated January 27, 1997, by and among Capstar Partners and
the securityholders listed therein.(5)
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.19.3 -- Second Amendment to Management Stockholders Agreement,
dated June 20, 1997, by and among the Company, Capstar
Partners, the security holders listed therein and Hicks
Muse.(4)
10.19.4 -- Third Amendment to Management Stockholders Agreement,
dated May 18, 1998, by and among the Company, Capstar
Partners, the securityholders listed therein and Hicks
Muse.*
10.20.1 -- Amended and Restated GulfStar Stockholders Agreement,
dated May 18, 1998, by and among the Company, the
security holders listed therein, and Hicks Muse.*
10.21 -- Form of Amended and Restated Warrant, dated April 1,
1998, issued to R. Steven Hicks.*
10.22 -- Form of Amended and Restated Warrant, dated April 1,
1998, issued to R. Steven Hicks.*
10.23 -- Form of Amended and Restated Warrant, dated April 1,
1998, issued to R. Steven Hicks.*
10.24.1 -- Stock Purchase Agreement, dated June 12, 1997, by and
among Capstar Acquisition Company, Inc., Capstar
Partners, Patterson Broadcasting, Inc. and the selling
stockholders named therein (the "Patterson Stock Purchase
Agreement").(4)
10.24.2 -- First Amendment to Patterson Stock Purchase Agreement.(6)
10.24.3 -- Second Amendment to Patterson Stock Purchase
Agreement.(9)
10.24.4 -- Third Amendment to Patterson Stock Purchase Agreement.(9)
10.24.5 -- Fourth Amendment to Patterson Stock Purchase
Agreement.(9)
10.25 -- Agreement and Plan of Merger, dated June 16, 1997, by and
among GulfStar Communications, Inc., the Company,
CBC-GulfStar Merger Sub, Inc. and the stockholders listed
therein.(4)
10.26.1 -- Agreement and Plan of Merger, dated July 23, 1997, by and
among OCC Acquisition Corporation, Osborn Communications
Corporation, and OCC Holding Corporation (the "Osborn
Merger Agreement").(10)
10.26.2 -- First Amendment to Osborn Merger Agreement.(10)
10.27.1 -- Agreement and Plan of Merger, dated as of December 9,
1996, by and among Benchmark Communications Radio Limited
Partnership, Benchmark Acquisition, Inc., Benchmark Radio
Acquisition Fund I Limited Partnership, Benchmark Radio
Acquisition Fund IV Limited Partnership, Benchmark Radio
Acquisition Fund VII Limited Partnership, Benchmark Radio
Acquisition Fund VIII Limited Partnership, Joe L. Mathis
IV, Bruce R. Spector, Capstar Partners and BCR Holding,
Inc. ("Benchmark Merger Agreement").(3)
10.27.2 -- Letter Agreement Amending Benchmark Merger Agreement.(3)
10.27.3 -- Letter Agreement amending Benchmark Merger Agreement.(3)
10.27.4 -- Letter Agreement amending Benchmark Merger Agreement.(3)
10.27.5 -- First Amendment to the Benchmark Merger Agreement.(11)
10.27.6 -- Second Amendment to the Benchmark Merger Agreement.(11)
10.28.1 -- Agreement and Plan of Merger, dated August 24, 1997, by
and among SBI Holding Corporation, SBI Radio Acquisition
Corporation and SFX Broadcasting, Inc. (the "SFX Merger
Agreement")(16)
10.28.2 -- Amendment No. 1 to SFX Merger Agreement.(22)
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.28.3 -- Amendment No. 2 to the SFX Merger Agreement.(17)
10.29.1 -- Letter Agreement, dated February 20, 1998, between
Chancellor Media Corporation of Los Angeles and the
Company ("Chancellor Letter Agreement").#
10.29.2 -- Amendment to Chancellor Letter Agreement.*
10.30 -- Form of Time Brokerage Agreement with Chancellor Media
Corporation.*
10.31.1 -- Form of Capstar Broadcasting Corporation Pledge
Agreement.*
10.31.2 -- Form of Note due to Chancellor Media Corporation.*
10.32 -- Form of Warrant, dated April 1, 1998, issued to R. Steven
Hicks.*
10.33 -- Form of Warrant, dated April 1, 1998, issued to R. Steven
Hicks.*
10.34 -- Not used.
10.35 -- Form of Warrant, dated April 1, 1998, issued to Paul D.
Stone.*
10.36 -- Form of Warrant, dated April 1, 1998, issued to William
S. Banowsky, Jr.*
10.37 -- Form of Asset Exchange Agreement among Chancellor Media
Corporation of Los Angeles, Chancellor Media Licensee
Company and SFXTX Limited Partnership.*
11.1 -- Statement re computation of historical and pro forma
historical per share earnings.#
11.2 -- Statement of computation of pro forma per share
earnings.#
21.1 -- List of Subsidiaries.#
23.1 -- Consent of Vinson & Elkins L.L.P. (included in its
opinion filed as Exhibit 5.1 hereto).*
23.2 -- Consent of Coopers & Lybrand L.L.P. -- the Company.
23.3 -- Consent of Ernst & Young LLP -- Commodore Media, Inc.,
Southern Star Communications, Inc. and SFX Broadcasting,
Inc.
23.4 -- Consent of Coopers & Lybrand L.L.P. -- Benchmark
Communications.
23.5 -- Consent of Coopers & Lybrand L.L.P. -- Community Pacific
Broadcasting Company, L.P.
23.6 -- Consent of Coopers & Lybrand L.L.P. -- Midcontinent
Broadcasting Co. of Wisconsin, Inc.
23.7 -- Consent of Coopers & Lybrand L.L.P. -- Point
Communications Limited Partnership.
23.8 -- Consent of Arthur Andersen LLP -- Ameron Broadcasting,
Inc.
23.9 -- Consent of Arthur Andersen LLP -- Patterson Broadcasting,
Inc.
24.1 -- Powers of Attorney.#
27.1 -- Financial Data Schedule.#
</TABLE>
- ---------------
* Filed herewith.
# Previously filed.
(1) Incorporated by reference to Commodore Media, Inc.'s ("Commodore")
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, File No.
33-92732.
(2) Incorporated by reference to Commodore's Current Report on Form 8-K filed
October 31, 1996, File No. 33-92732.
(3) Incorporated by reference to Capstar Partners's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File No. 333-25638.
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<PAGE> 9
(4) Incorporated by reference to Capstar Partners's Amendment No. 1 to
Registration Statement on Form S-4, dated July 8, 1997, File No. 333-25638.
(5) Incorporated by reference to Capstar Partners's Registration Statement on
Form S-1, dated April 16, 1997, File No. 333-25263.
(6) Incorporated by reference to Capstar Partners's Amendment No. 2 to
Registration Statement on Form S-4, dated August 5, 1997, File No.
333-25638.
(7) Incorporated by reference to Capstar Partners's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, File No. 333-25638.
(8) Incorporated by reference to Capstar Radio's Current Report on Form 8-K,
dated November 26, 1997, File No. 33-92732.
(9) Incorporated by reference to Capstar Radio's Current Report on Form 8-K,
dated February 13, 1998, File No. 333-25683.
(10) Incorporated by reference to Commodore's Current Report on Form 8-K, dated
March 6, 1997, File No. 33-92732.
(11) Incorporated by reference to Capstar Radio's Current Report on Form 8-K,
dated August 6, 1997, File No. 33-92732.
(12) Incorporated by reference to Capstar Radio's Annual Report on Form 10-K for
the year ended December 31, 1996, File No. 33-02732.
(13) Incorporated by reference to Capstar Radio's Registration Statement on Form
S-4, dated August 6, 1997, File No. 33-02732.
(14) Incorporated by reference to Commodore's Registration Statement on Form
S-4, dated July 26, 1995, File No. 33-02732.
(15) Incorporated by reference to Capstar Partners' and Capstar Radio's Annual
Report on Form 10-K for the year ended December 31, 1997, File No.
333-25638.
(16) Incorporated by reference to SFX's Current Report on Form 8-K, dated August
26, 1997, File No. 000-22486.
(17) Incorporated by reference to SFX's Current Report on Form 8-K, dated
February 17, 1998, File No. 000-22486.
(18) Incorporated by reference to SFX's Current Report on Form 8-K, dated
January 17, 1997, File No. 000-22486.
(19) Incorporated by reference to SFX's Current Report on Form 8-K, dated
January 27, 1997, File No. 000-22486.
(20) Incorporated by reference to SFX's Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 000-22486.
(21) Incorporated by reference to SFX's Registration Statement on Form S-4,
dated June 21, 1996, File No. 333-06553.
(22) Incorporated by reference to SFX's Annual Report on Form 10-K for the year
ended December 31, 1997, File No. 000-22486.
(23) Incorporated by reference to SFX's Amendment No. 3 to Registration
Statement on Form S-1, dated September 29, 1993, File No. 33-66718.
(b) Financial Statement Schedules:
The following financial statement schedules are included in this
Registration Statement:
Reports of Independent Accountants
I -- Condensed Financial Information of Registrant
II -- Valuation and Qualifying Accounts
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<PAGE> 10
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Company has duly caused this Amendment No. 3 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Austin, State of Texas, on the 19th day of May,
1998.
CAPSTAR BROADCASTING
CORPORATION
By:/s/ WILLIAM S. BANOWSKY, JR.
----------------------------------
William S. Banowsky, Jr.
Executive Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act, this Amendment No. 3 to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
* President and Chief Executive Officer
- ----------------------------------------------------- (Principal Executive Officer)
R. Steven Hicks May 19, 1998
* Executive Vice President and Chief
- ----------------------------------------------------- Financial Officer (Principal
Paul D. Stone Financial and Accounting Officer) May 19, 1998
* Chairman of the Board
- -----------------------------------------------------
Thomas O. Hicks May 19, 1998
* Director
- -----------------------------------------------------
Michael J. Levitt May 19, 1998
* Director
- -----------------------------------------------------
Eric C. Neuman May 19, 1998
* Director
- -----------------------------------------------------
Lawrence D. Stuart, Jr. May 19, 1998
* Director
- -----------------------------------------------------
R. Gerald Turner May 19, 1998
By: /s/ WILLIAM S. BANOWSKY, JR.
- -----------------------------------------------------
William S. Banowsky, Jr.
Attorney-in-Fact
</TABLE>
II-10
<PAGE> 12
INDEX TO EXHIBITS
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1 -- Form of Underwriting Agreement.*
1.2 -- Form of Subscription Agreement.*
2.1.1 -- Agreement and Plan of Merger, dated June 21, 1996, by and
among CMI Acquisition Company, Inc., Commodore Media,
Inc. ("Commodore") and the stockholders and other
signatories thereto.(1)
2.1.2 -- First Amendment to Agreement and Plan of Merger, dated
September 3, 1996.(2)
2.1.3 -- Second Amendment to Agreement and Plan of Merger, dated
October 16, 1996.(2)
3.1 -- Amended and Restated Certificate of Incorporation of the
Company.*
3.2 -- Amended and Restated By-Laws of the Company.*
4.1 -- Stock Certificate of Class A Common Stock, par value
$0.01 per share, of the Company.*
4.2.1 -- Indenture, dated February 20, 1997, between Capstar
Broadcasting Partners, Inc. ("Capstar Partners") and U.S.
Trust Company of Texas, governing Capstar Partners'
outstanding 12 3/4% Senior Discount Notes due 2009 (the
"12 3/4% Capstar Indenture").(5)
4.2.2 -- First Supplemental to 12 3/4% Capstar Indenture.(15)
4.3 -- Indenture, dated June 17, 1997, between Capstar Radio and
U.S. Trust Company of Texas, N.A. governing Capstar
Radio's outstanding 9 1/4% Senior Subordinated Notes due
2007.(4)
4.4 -- Indenture, dated June 17, 1997, between Capstar Partners
and U.S. Trust Company of Texas, N.A. governing Capstar
Partners's 12% Subordinated Exchange Debentures due
2009.(4)
4.5 -- Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special
Rights of 12% Senior Exchangeable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of
Capstar Partners, dated June 17, 1997.(4)
4.6.1 -- Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations
and Restrictions Thereof of 12 5/8% Series E Cumulative
Exchangeable Preferred Stock of SFX, due October 31, 2006
("SFX Certificated Designation").(19)
4.6.2 -- Certificate of Amendment to SFX Certificate of
Amendment.(22)
4.7 -- Indenture, governing SFX's 12 5/8% Subordinated Exchange
Debentures due 2006.(18)
4.8.1 -- Indenture, dated May 31, 1996, between SFX, the
guarantors name therein and Chemical Bank, governing
SFX's 10 3/4% Senior Subordinated Notes due 2006 (the
"10 3/4% SFX Notes Indenture").(21)
4.8.2 -- First Supplement to 10 3/4% SFX Notes Indenture.(18)
4.8.3 -- Second Supplement to 10 3/4% SFX Notes Indenture.(18)
4.8.4 -- Third Supplement to 10 3/4% SFX Notes Indenture.(18)
4.8.5 -- Fourth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.6 -- Fifth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.7 -- Sixth Supplement to 10 3/4% SFX Notes Indenture.#
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.8.8 -- Seventh Supplement to 10 3/4% SFX Notes Indenture.#
4.8.9 -- Eighth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.10 -- Ninth Supplement to 10 3/4% SFX Notes Indenture.#
4.8.11 -- Tenth Supplement to 10 3/4% SFX Notes Indenture.(20)
4.9.1 -- Indenture, dated October 7, 1993, between SFX and
Chemical Bank, as trustee, governing SFX's 11 3/8% Senior
Subordinated Notes due 2000 (the "11 3/8% SFX
Indenture").(23)
4.9.2 -- First Supplement to 11 3/8% SFX Indenture.(21)
5.1 -- Opinion of Vinson & Elkins L.L.P.*
10.1 -- Form of Commitment Letter for the Capstar Credit
Facility.#
10.2 -- Financial Advisory Agreement, dated as of July 1, 1997,
between the Company and Hicks, Muse & Co. Partners, L.P.
("HMCo").(4)
10.3 -- Financial Advisory Agreement, dated as of October 16,
1996, between Capstar Partners and HMCo.(5)
10.4 -- Monitoring and Oversight Agreement, dated as of July 1,
1997, between the Company and HMCo.(4)
10.5 -- Monitoring and Oversight Agreement, dated as of October
16, 1996, between Capstar Partners and HMCo.(5)
10.6 -- Form of Indemnification Agreement between the Company and
each of its directors and officers.(4)
10.7.1 -- Employment Agreement, dated February 14, 1997, between
Capstar Partners and R. Steven Hicks.(5)
10.7.2 -- First Amendment to Employment Agreement, effective July
1, 1997, between R. Steven Hicks, Capstar Partners, and
the Company.(7)
10.8 -- Employment Agreement, dated July 1, 1997, between the
Company and Paul D. Stone.(4)
10.9 -- Employment Agreement dated July 1, 1997, between the
Company and William S. Banowsky, Jr.(4)
10.10 -- Amended and Restated Employment Agreement, dated October
16, 1996, between Capstar Radio, Capstar Partners and
James T. Shea, Jr.(5)
10.11 -- Employment Agreement, dated May 4, 1998, by and among the
Company, Capstar Employee Management Company, Inc. and
James P. Donahoe.#
10.12.1 -- Employment Agreement between GulfStar Communications,
Inc. and John D. Cullen.(6)
10.12.2 -- First Amendment to Employment Agreement between GulfStar
Communications, Inc. and John D. Cullen.(15)
10.13 -- Employment Agreement, dated January 16, 1998, among
Central Star Communications, Inc., the Company, and Mary
K. Quass.(15)
10.14 -- Not Used.
10.15 -- Consulting, Non-Compete and Separation Agreement, dated
March 1, 1998, between Southern Star and Frank D.
Osborn.(15)
10.16 -- Amended and Restated Capstar Broadcasting Corporation
1998 Stock Option Plan.#
10.17.1 -- Form of Incentive Stock Option Agreement.(4)
10.17.2 -- Form of Non-Qualified Stock Option Agreement for
Employees.(4)
10.17.3 -- Form of Non-Qualified Stock Option Agreement for
Non-Employees.(6)
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.18.1 -- Affiliate Stockholders Agreement, dated October 16, 1996,
among Capstar Partners, Hicks, Muse, Tate & Furst
Incorporated ("Hicks Muse"), R. Steven Hicks and the
security holders listed therein.(5)
10.18.2 -- First Amendment and Supplement to Affiliate Stockholders
Agreement, dated January 27, 1997, by and among Capstar
Partners, the securityholders listed therein and Hicks
Muse.(5)
10.18.3 -- Second Amendment to Affiliate Stockholders Agreement,
dated February 20, 1997, by and among Capstar Partners,
the security holders listed therein and Hicks Muse.(3)
10.18.4 -- Third Amendment to Affiliate Stockholders Agreement,
dated June 20, 1997, by and among the Company, Capstar
Partners, the security holders listed therein and Hicks
Muse.(4)
10.18.5 -- Fourth Amendment to Affiliate Stockholders Agreement,
dated May 18, 1998, by and among the Company, Capstar
Partners, the securityholders listed therein and Hicks
Muse.*
10.19.1 -- Management Stockholders Agreement, dated November 26,
1996, among Capstar Partners, the securityholders listed
therein and Hicks Muse.(5)
10.19.2 -- First Amendment to Management Stockholders Agreement,
dated January 27, 1997, by and among Capstar Partners and
the securityholders listed therein.(5)
10.19.3 -- Second Amendment to Management Stockholders Agreement,
dated June 20, 1997, by and among the Company, Capstar
Partners, the security holders listed therein and Hicks
Muse.(4)
10.19.4 -- Third Amendment to Management Stockholders Agreement,
dated May 18, 1998, by and among the Company, Capstar
Partners, the securityholders listed therein and Hicks
Muse.*
10.20.1 -- Amended and Restated GulfStar Stockholders Agreement,
dated May 18, 1998, by and among the Company, the
security holders listed therein, and Hicks Muse.*
10.21 -- Form of Amended and Restated Warrant, dated April 1,
1998, issued to R. Steven Hicks.*
10.22 -- Form of Amended and Restated Warrant, dated April 1,
1998, issued to R. Steven Hicks.*
10.23 -- Form of Amended and Restated Warrant, dated April 1,
1998, issued to R. Steven Hicks.*
10.24.1 -- Stock Purchase Agreement, dated June 12, 1997, by and
among Capstar Acquisition Company, Inc., Capstar
Partners, Patterson Broadcasting, Inc. and the selling
stockholders named therein (the "Patterson Stock Purchase
Agreement").(4)
10.24.2 -- First Amendment to Patterson Stock Purchase Agreement.(6)
10.24.3 -- Second Amendment to Patterson Stock Purchase
Agreement.(9)
10.24.4 -- Third Amendment to Patterson Stock Purchase Agreement.(9)
10.24.5 -- Fourth Amendment to Patterson Stock Purchase
Agreement.(9)
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.25 -- Agreement and Plan of Merger, dated June 16, 1997, by and
among GulfStar Communications, Inc., the Company,
CBC-GulfStar Merger Sub, Inc. and the stockholders listed
therein.(4)
10.26.1 -- Agreement and Plan of Merger, dated July 23, 1997, by and
among OCC Acquisition Corporation, Osborn Communications
Corporation, and OCC Holding Corporation (the "Osborn
Merger Agreement").(10)
10.26.2 -- First Amendment to Osborn Merger Agreement.(10)
10.27.1 -- Agreement and Plan of Merger, dated as of December 9,
1996, by and among Benchmark Communications Radio Limited
Partnership, Benchmark Acquisition, Inc., Benchmark Radio
Acquisition Fund I Limited Partnership, Benchmark Radio
Acquisition Fund IV Limited Partnership, Benchmark Radio
Acquisition Fund VII Limited Partnership, Benchmark Radio
Acquisition Fund VIII Limited Partnership, Joe L. Mathis
IV, Bruce R. Spector, Capstar Partners and BCR Holding,
Inc. ("Benchmark Merger Agreement").(3)
10.27.2 -- Letter Agreement Amending Benchmark Merger Agreement.(3)
10.27.3 -- Letter Agreement amending Benchmark Merger Agreement.(3)
10.27.4 -- Letter Agreement amending Benchmark Merger Agreement.(3)
10.27.5 -- First Amendment to the Benchmark Merger Agreement.(11)
10.27.6 -- Second Amendment to the Benchmark Merger Agreement.(11)
10.28.1 -- Agreement and Plan of Merger, dated August 24, 1997, by
and among SBI Holding Corporation, SBI Radio Acquisition
Corporation and SFX Broadcasting, Inc. (the "SFX Merger
Agreement")(16)
10.28.2 -- Amendment No. 1 to SFX Merger Agreement.(22)
10.28.3 -- Amendment No. 2 to the SFX Merger Agreement.(17)
10.29.1 -- Letter Agreement, dated February 20, 1998, between
Chancellor Media Corporation of Los Angeles and the
Company ("Chancellor Letter Agreement").#
10.29.2 -- Amendment to Chancellor Letter Agreement.*
10.30 -- Form of Time Brokerage Agreement with Chancellor Media
Corporation.*
10.31.1 -- Form of Capstar Broadcasting Corporation Pledge
Agreement.*
10.31.2 -- Form of Note due to Chancellor Media Corporation.*
10.32 -- Form of Warrant, dated April 1, 1998, issued to R. Steven
Hicks.*
10.33 -- Form of Warrant, dated April 1, 1998, issued to R. Steven
Hicks.*
10.34 -- Not used.
10.35 -- Form of Warrant, dated April 1, 1998, issued to Paul D.
Stone.*
10.36 -- Form of Warrant, dated April 1, 1998, issued to William
S. Banowsky, Jr.*
10.37 -- Form of Asset Exchange Agreement among Chancellor Media
Corporation of Los Angeles, Chancellor Media Licensee
Company and SFXTX Limited Partnership.*
11.1 -- Statement re computation of historical and pro forma
historical per share earnings.#
11.2 -- Statement of computation of pro forma per share
earnings.#
21.1 -- List of Subsidiaries.#
23.1 -- Consent of Vinson & Elkins L.L.P. (included in its
opinion filed as Exhibit 5.1 hereto).*
23.2 -- Consent of Coopers & Lybrand L.L.P. -- the Company.
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
23.3 -- Consent of Ernst & Young LLP -- Commodore Media, Inc.,
Southern Star Communications, Inc. and SFX Broadcasting,
Inc.
23.4 -- Consent of Coopers & Lybrand L.L.P. -- Benchmark
Communications.
23.5 -- Consent of Coopers & Lybrand L.L.P. -- Community Pacific
Broadcasting Company, L.P.
23.6 -- Consent of Coopers & Lybrand L.L.P. -- Midcontinent
Broadcasting Co. of Wisconsin, Inc.
23.7 -- Consent of Coopers & Lybrand L.L.P. -- Point
Communications Limited Partnership.
23.8 -- Consent of Arthur Andersen LLP -- Ameron Broadcasting,
Inc.
23.9 -- Consent of Arthur Andersen LLP -- Patterson Broadcasting,
Inc.
24.1 -- Powers of Attorney.#
27.1 -- Financial Data Schedule.#
</TABLE>
- ---------------
* Filed herewith.
# Previously filed.
(1) Incorporated by reference to Commodore Media, Inc.'s ("Commodore")
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, File No.
33-92732.
(2) Incorporated by reference to Commodore's Current Report on Form 8-K filed
October 31, 1996, File No. 33-92732.
(3) Incorporated by reference to Capstar Partners's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File No. 333-25638.
(4) Incorporated by reference to Capstar Partners's Amendment No. 1 to
Registration Statement on Form S-4, dated July 8, 1997, File No. 333-25638.
(5) Incorporated by reference to Capstar Partners's Registration Statement on
Form S-1, dated April 16, 1997, File No. 333-25263.
(6) Incorporated by reference to Capstar Partners's Amendment No. 2 to
Registration Statement on Form S-4, dated August 5, 1997, File No.
333-25638.
(7) Incorporated by reference to Capstar Partners's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, File No. 333-25638.
(8) Incorporated by reference to Capstar Radio's Current Report on Form 8-K,
dated November 26, 1997, File No. 33-92732.
(9) Incorporated by reference to Capstar Radio's Current Report on Form 8-K,
dated February 13, 1998, File No. 333-25683.
(10) Incorporated by reference to Commodore's Current Report on Form 8-K, dated
March 6, 1997, File No. 33-92732.
(11) Incorporated by reference to Capstar Radio's Current Report on Form 8-K,
dated August 6, 1997, File No. 33-92732.
(12) Incorporated by reference to Capstar Radio's Annual Report on Form 10-K for
the year ended December 31, 1996, File No. 33-02732.
(13) Incorporated by reference to Capstar Radio's Registration Statement on Form
S-4, dated August 6, 1997, File No. 33-02732.
(14) Incorporated by reference to Commodore's Registration Statement on Form
S-4, dated July 26, 1995, File No. 33-02732.
<PAGE> 17
(15) Incorporated by reference to Capstar Partners' and Capstar Radio's Annual
Report on Form 10-K for the year ended December 31, 1997, File No.
333-25638.
(16) Incorporated by reference to SFX's Current Report on Form 8-K, dated August
26, 1997, File No. 000-22486.
(17) Incorporated by reference to SFX's Current Report on Form 8-K, dated
February 17, 1998, File No. 000-22486.
(18) Incorporated by reference to SFX's Current Report on Form 8-K, dated
January 17, 1997, File No. 000-22486.
(19) Incorporated by reference to SFX's Current Report on Form 8-K, dated
January 27, 1997, File No. 000-22486.
(20) Incorporated by reference to SFX's Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 000-22486.
(21) Incorporated by reference to SFX's Registration Statement on Form S-4,
dated June 21, 1996, File No. 333-06553.
(22) Incorporated by reference to SFX's Annual Report on Form 10-K for the year
ended December 31, 1997, File No. 000-22486.
(23) Incorporated by reference to SFX's Amendment No. 3 to Registration
Statement on Form S-1, dated September 29, 1993, File No. 33-66718.
<PAGE> 1
EXHIBIT 1.1
31,000,000 SHARES
CAPSTAR BROADCASTING CORPORATION
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
May _____, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
BT ALEX. BROWN INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
As Representatives of the Several Underwriters
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Capstar Broadcasting Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell (the "U.S. Offering")
to the several Underwriters named in Schedule A hereto (the "Underwriters"),
for which Credit Suisse First Boston Corporation, BT Alex. Brown Incorporated
and Morgan Stanley & Co. Incorporated are acting as representatives (the
"Representatives"), 24,800,000 shares (the "U.S. Firm Shares") of its Class A
Common Stock, par value $.01 per share (the "Class A Common Stock").
It is understood that the Company is concurrently entering into a
Subscription Agreement, dated the date hereof (the "Subscription Agreement"),
with Credit Suisse First Boston (Europe) Limited ("CSFBL"), BT Alex. Brown
International, Morgan Stanley & Co. International Limited, and the other
managers named therein (the "Managers") relating to the concurrent offering and
sale of 6,200,000 shares of Class A Common Stock (the "International Firm
Shares") outside the United States and Canada (the "International Offering").
In addition, as set forth below the Company proposes to issue and sell
(i) to the Underwriters, at the option of the Underwriters, an aggregate of not
more than 3,720,000 additional shares of Class A Common Stock ("U.S. Optional
Shares") and (ii) to the Managers, at the option of the Managers, an aggregate
of not more than 930,000 additional shares of Class A Common Stock
("International Optional Shares"). The U.S. Firm Shares and the U.S. Optional
Shares are hereinafter called the "U.S. Shares"; the International Firm Shares
and the International Optional Shares are hereinafter called the "International
Shares"; the U.S. Firm
<PAGE> 2
Shares and the International Firm Shares are hereinafter called the "Firm
Shares"; the U.S. Optional Shares and the International Optional Shares are
hereinafter called the "Optional Shares". The U.S. Shares and the International
Shares are collectively referred to as the "Offered Shares". To provide for the
coordination of their activities, the Underwriters and the Managers have
entered into an Agreement between U.S. Underwriters and Managers which permits
them, among other things, to sell the Offered Shares to each other for purposes
of resale.
The Company hereby agrees with the several Underwriters as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (No. 333-48819) relating to
the Offered Shares, including a form of prospectus relating to the
U.S. Shares and a form of prospectus relating to the International
Shares being offered in the International Offering has been filed with
the Securities and Exchange Commission (the "Commission") and either
(i) has been declared effective under the Securities Act of 1933, as
amended (the "Securities Act"), and is not proposed to be amended or
(ii) is proposed to be amended by amendment or post-effective
amendment. If such registration statement (the "initial registration
statement") has been declared effective, either (A) an additional
registration statement (the "additional registration statement")
relating to the Offered Shares may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Securities Act and,
if so filed, has become effective upon filing pursuant to such Rule
and the Offered Shares all have been duly registered under the
Securities Act pursuant to the initial registration statement and, if
applicable, the additional registration statement or (B) such an
additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing the Offered Shares
will all have been duly registered under the Securities Act pursuant
to the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has
been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has
been filed with the Commission prior to the execution and delivery of
this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Securities Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"Effective Time" with respect to the initial registration statement
or, if filed prior to the execution and delivery of this Agreement,
the additional registration statement means (i) if the Company has
advised the Representatives that it does not propose to amend such
registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the
2
<PAGE> 3
Commission or has become effective upon filing pursuant to Rule
462(c), or (ii) if the Company has advised the Representatives that it
proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such
registration statement, as amended by such amendment or post-
effective amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed
prior to the execution and delivery of this Agreement but the Company
has advised the Representatives that it proposes to file one,
"Effective Time" with respect to such additional registration
statement means the date and time as of which such registration
statement is filed and becomes effective pursuant to Rule 462(b).
"Effective Date" with respect to the initial registration statement or
the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended
at its Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of
its Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the
Securities Act, is hereinafter referred to as the "Initial
Registration Statement." The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the Additional
Registration Statement are hereinafter referred to collectively as the
"Registration Statements" and individually as a "Registration
Statement". The form of prospectus relating to the U.S. Shares and the
form of prospectus relating to the International Shares, each as first
filed with the Commission pursuant to and in accordance with Rule
424(b) ("Rule 424(b)") under the Securities Act or (if no such filing
is required) as included in the Registration Statement, are
hereinafter referred to as the "U.S. Prospectus" and the
"International Prospectus," respectively, and collectively as the
"Prospectuses". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act.
(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(i) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Securities Act and the rules and regulations of
the Commission (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed, or will conform, in all respects to the requirements of the
Securities Act and the Rules and Regulations and did not include, or
will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be
stated
3
<PAGE> 4
therein or necessary to make the statements therein not misleading,
and (iii) on the date of this Agreement, the Initial Registration
Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement,
the Additional Registration Statement each conforms, and at the time
of filing of each of the Prospectuses pursuant to Rule 424(b) or (if
no such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectuses are included, each
Registration Statement and each of the Prospectuses will conform, in
all respects to the requirements of the Securities Act and the Rules
and Regulations, and none of such documents includes, or will include,
any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading. If the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and each of
the Prospectuses will conform in all respects to the requirements of
the Securities Act and the Rules and Regulations, none of such
documents will include any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or either of the Prospectuses based upon
written information furnished to the Company by any Underwriter
through the Representatives or by any Manager through CSFBL
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b)
hereof.
(c) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectuses;
and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the condition (financial or
other), business, properties or results of operations of the Company
and the Subsidiaries (as defined below) taken as a whole ("Material
Adverse Effect").
(d) Each subsidiary of the Company and each subsidiary to
be acquired in the SFX Acquisition (as defined in the Prospectuses)
(collectively, the "Subsidiaries") has been duly incorporated and is
an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectuses; and each Subsidiary is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect;
all of the issued and outstanding capital stock of each Subsidiary has
been duly authorized and validly issued and is fully
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<PAGE> 5
paid and nonassessable; and the capital stock of each Subsidiary,
directly or through subsidiaries, is owned free from liens,
encumbrances and defects, except for liens disclosed in the
Prospectuses.
(e) The Offered Shares and all other outstanding shares
of capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Shares have been delivered and paid for in accordance with
this Agreement and the Subscription Agreement on each Closing Date (as
defined below), such Offered Shares will have been, validly issued,
fully paid and nonassessable and will conform to the description
thereof contained in the Prospectuses; the stockholders of the Company
have no preemptive rights with respect to the Class A Common Stock;
and except as described in the Prospectuses, there are no outstanding
options, warrants or other rights calling for the issuance of, or any
commitment, plan or arrangement to issue, any shares of capital stock
of the Company or any security convertible into or exchangeable or
exercisable for any capital stock of the Company.
(f) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter or Manager for a brokerage commission, finder's fee or
other like payment in connection with this offering.
(g) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Securities Act.
(h) The Offered Shares have been approved for listing on
the New York Stock Exchange subject to notice of issuance.
(i) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body (including, without
limitation, the Federal Communications Commission (the "FCC")) or any
court is required for the consummation of the transactions
contemplated by this Agreement or the Subscription Agreement in
connection with the issuance and sale of the Offered Shares by the
Company, except such as have been obtained and made under the
Securities Act and such as may be required under state securities
laws.
(j) The execution, delivery and performance of this
Agreement and the Subscription Agreement, and the issuance and sale of
the Offered Shares will not result
5
<PAGE> 6
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order
of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
properties, except for breaches, violations or defaults that would not
individually or in the aggregate have a Material Adverse Effect, or
any agreement or instrument to which the Company or any such
Subsidiary is a party or by which the Company or any such Subsidiary
is bound or to which any of the properties of the Company or any such
Subsidiary is subject, or the charter or by-laws of the Company or any
such Subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Shares pursuant to this
Agreement and the Subscription Agreement, respectively.
(k) This Agreement and the Subscription Agreement have
been duly authorized, executed and delivered by the Company.
(l) Except as disclosed in the Prospectuses, the Company
and the Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them that are
material to the Company and its Subsidiaries considered as a whole, in
each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Prospectuses, the Company and the Subsidiaries hold any such leased
real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be
made thereof by them.
(m) The Company and the Subsidiaries possess adequate
certificates, authorities or permits and hold all necessary licenses
(including without limitation licenses issued by the FCC) issued by
appropriate governmental agencies or bodies necessary to conduct the
business now operated by them, except where the failure to possess
such certificates, authorities or permits or to hold such licenses
would not individually or in the aggregate have a Material Adverse
Effect, and have not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority,
permit or license that, if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
(n) No labor dispute with the employees of the Company or
any Subsidiary exists or, to the knowledge of the Company, is imminent
that could reasonably be expected to have a Material Adverse Effect.
(o) The Company and the Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct
the business now
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<PAGE> 7
operated by them, or presently employed by them, except where the
failure to own, possess or acquire such intellectual property rights
would not individually or in the aggregate have a Material Adverse
Effect, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to the
Company or any of the Subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(p) Each of the Company and the Subsidiaries has filed
all necessary federal, state, local and foreign income and franchise
tax returns, except where the failure to file such returns would not
have a Material Adverse Effect, and each of the Company and the
Subsidiaries has paid all taxes shown as due thereon; and other than
tax deficiencies that the Company or its Subsidiaries is contesting in
good faith and for which adequate reserves have been provided, there
is no tax deficiency that has been asserted against the Company or the
Subsidiaries that would, individually or in the aggregate, have a
Material Adverse Effect.
(q) Except as disclosed in the Prospectuses, neither the
Company nor any of the Subsidiaries is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
(r) Except as disclosed in the Prospectuses, there are no
pending actions, suits, proceedings, inquiries or investigations
before or brought by any court or governmental agency or body
(including, without limitation, the FCC) against or affecting the
Company, any of the Subsidiaries or any of their respective properties
that, if determined adversely to the Company or any of the
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability
of the Company to perform its obligations under this Agreement or the
Subscription Agreement, or which are otherwise material in the context
of the sale of the Offered Shares; and no such actions, suits or
proceedings are threatened or, to the Company's knowledge,
contemplated.
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<PAGE> 8
(s) The financial statements included in each
Registration Statement and the Prospectuses present fairly the
financial position of the Company and its consolidated Subsidiaries as
of the dates shown and their results of operations and cash flows for
the periods shown, and, except as otherwise disclosed in the
Prospectuses, such financial statements have been prepared in
conformity with the generally accepted accounting principles in the
United States applied on a consistent basis; the schedules included in
each Registration Statement present fairly the information required to
be stated therein; and the assumptions used in preparing the pro forma
financial statements included in each Registration Statement and the
Prospectuses provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding
historical financial statement amounts.
(t) Except as disclosed in the Prospectuses, since the
date of the latest audited financial statements included in the
Prospectuses there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and the Subsidiaries taken as a whole,
and, except as disclosed in or contemplated by the Prospectuses, there
has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(u) The statistical and market-related data included in
the Prospectuses are based on or derived from sources that the Company
believes to be accurate and reliable.
(v) Each of the Company and the Subsidiaries (i) makes
and keeps accurate books and records and (ii) maintains internal
accounting controls that provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain profitability
for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(w) The Company is not and, after giving effect to the
offering and sale of the Offered Shares and the application of the
proceeds thereof as described in the Prospectuses, will not be an
"investment company" as defined in the Investment Company Act of 1940.
(x) Each of Coopers & Lybrand L.L.P., Arthur Andersen LLP
and Ernst & Young LLP, which firms have examined the consolidated
financial statements as set forth in their reports included in the
Prospectuses, is an independent public accounting
8
<PAGE> 9
firm within the meaning of the Securities Act and the rules and
regulations promulgated thereunder.
(y) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075 Florida
Statutes, and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Shares it
commences doing such business.
3. Purchase, Sale and Delivery of Offered Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of U.S.$ per share,
the respective numbers of U.S. Firm Shares set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the U.S. Firm Shares to the Representatives
for the accounts of the Underwriters, against payment of the purchase price in
Federal (same day) funds by official bank check or checks or wire transfer to
an account at a bank acceptable to Credit Suisse First Boston Corporation
("CSFBC") drawn to the order of the Company at the office of Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, New York, at 10:00 A.M., New York time,
on May __, 1998, or at such other time not later than seven full business days
thereafter as CSFBC and the Company determine, such time being herein referred
to as the "First Closing Date". For purposes of Rule 15c6-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Shares sold pursuant to the U.S. Offering and the International
Offering. The certificates for the U.S. Firm Shares so to be delivered will be
in definitive form, in such denominations and registered in such names as CSFBC
requests and will be made available for checking and packaging at the above
office of Weil, Gotshal & Manges LLP, at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CSFBC given to the Company from
time to time not more than 30 days subsequent to the date of the Prospectuses,
the Underwriters may purchase all or less than all of the U.S. Optional Shares
at the purchase price per share of Class A Common Stock to be paid for the U.S.
Firm Shares. The U.S. Optional Shares to be purchased by the Underwriters on
any Optional Closing Date (as defined below) shall be in the same proportion to
all the Optional Shares to be purchased by the Underwriters and the Managers on
such Optional Closing Date as the U.S. Firm Shares bear to all the Firm Shares.
The Company agrees to sell to the Underwriters such U.S. Optional Shares and
the Underwriters agree, severally and not jointly, to purchase such U.S.
Optional Shares. Such U.S. Optional Shares shall be purchased for the account
of each Underwriter in the same proportion as the number of U.S. Firm Shares
set forth opposite such Underwriter's name bears to the total number of shares
of U.S. Firm Shares (subject to adjustment by CSFBC to
9
<PAGE> 10
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the
U.S. Firm Shares. No Optional Shares shall be sold or delivered unless the U.S.
Firm Shares and the International Firm Shares previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Shares or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC on behalf of Underwriters and the Managers to the Company.
It is understood that CSFBC is authorized to make payment for and accept
delivery of such Optional Shares on behalf of the Underwriters and Managers
pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the U.S. Optional
Shares, being herein referred to as an "Optional Closing Date", which may be
the First Closing Date (the First Closing Date and each Optional Closing Date,
if any, being sometimes referred to as a "Closing Date"), shall be determined
by CSFBC but shall be not later than five full business days after written
notice of election to purchase Optional Shares is given. The Company will
deliver the U.S. Optional Shares being purchased on each Optional Closing Date
to the Representatives for the accounts of the several Underwriters, against
payment of the purchase price therefor in Federal (same day) funds by official
bank check or checks or wire transfer to an account at a bank acceptable to
CSFBC drawn to the order of the Company, at the above office of Weil, Gotshal &
Manges LLP. The certificates for the U.S. Optional Shares will be in definitive
form, in such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made
available for checking and packaging at the above office of Weil, Gotshal &
Manges LLP, at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the U.S. Shares for sale to the public as set
forth in the U.S. Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file each of the Prospectuses with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable
and if consented to by CSFBC, subparagraph (4)) of Rule 424(b) not
later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifteenth business
day after the Effective Date of the Initial Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a
portion of the Offered Shares under the Securities Act but the
Effective Time
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<PAGE> 11
thereof has not occurred as of such execution and delivery, the
Company will file the additional registration statement or, if filed,
will file a post-effective amendment thereto with the Commission
pursuant to and in accordance with Rule 462(b) on or prior to 10:00
P.M., New York time, on the date of this Agreement or, if earlier, on
or prior to the time either Prospectus is printed and distributed to
any Underwriter or Manager, or will make such filing at such later
date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or either of the related prospectuses
or the Initial Registration Statement, the Additional Registration
Statement (if any) or either of the Prospectuses and will not effect
such amendment or supplementation without CSFBC's prior consent; and
the Company will also advise CSFBC promptly of the effectiveness of
each Registration Statement (if its Effective Time is subsequent to
the execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop
order proceedings in respect of a Registration Statement and will use
its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the
Offered Shares is required to be delivered under the Securities Act in
connection with sales by any Underwriter, Manager or dealer, any event
occurs as a result of which either or both of the Prospectuses as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend
either or both of the Prospectuses to comply with the Securities Act,
the Company will promptly notify CSFBC of such event and will promptly
prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent
to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of
the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Securities Act. For the purpose of
the preceding sentence, "Availability Date" means the 45th day after
the end of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.
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<PAGE> 12
(e) The Company will furnish to the Representatives
copies of the Registration Statement (four of which will be signed and
will include all exhibits), each preliminary prospectus relating to
the U.S. Shares, and, so long as a prospectus relating to the Offered
Shares is required to be delivered under the Securities Act in
connection with sales by any Underwriter or dealer, the U.S.
Prospectus and all amendments and supplements to such documents, in
each case in such quantities as CSFBC requests. The U.S. Prospectus
shall be so furnished on or prior to 3:00 P.M., New York time, on the
business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement.
All other such documents shall be so furnished as soon as available.
The Company will pay the expenses of printing and distributing to the
Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Shares for sale under the laws of such jurisdictions in the
United States as CSFBC designates and will continue such
qualifications in effect so long as required for the distribution.
(g) During the period of five years hereafter, the
Company will furnish to the Representatives and, upon request, to each
of the other Underwriters, as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to the Representatives (i) as soon
as available, a copy of each report and any definitive proxy statement
of the Company filed with the Commission under the Exchange Act, or
mailed to stockholders, and (ii) from time to time, such other
information concerning the Company as CSFBC may reasonably request.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for any filing
fees and other expenses (including fees and disbursements of counsel)
in connection with qualification of the Offered Shares for sale under
the laws of such jurisdictions in the United States as CSFBC
designates and the printing of memoranda relating thereto, for the
filing fee incidental to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the
National Association of Securities Dealers, Inc. of the Offered
Shares, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the
Offered Shares and for expenses incurred in distributing preliminary
prospectuses and the Prospectuses (including any amendments and
supplements thereto) to the Underwriters.
(i) For a period of 180 days after the date of the
initial public offering of the Offered Shares, the Company will not
offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, or file with the Commission a registration
statement under the Securities Act relating to, any additional shares
of its shares of Class A Common Stock or securities convertible into
or exchangeable or exercisable for any shares of Class A Common Stock,
or publicly disclose the intention to make any
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<PAGE> 13
such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC, except (i) pursuant to or in connection with
employee stock option plans, the Warrants or other employee or
non-employee director compensation arrangements or agreements, in each
case, in effect on the date of the Prospectuses; (ii) in connection
with any acquisition by the Company so long as the recipient of such
securities agrees in writing prior to such issuance to be subject to
the foregoing lockup for the remainder of the 180-day lockup period;
(iii) in connection with the conversion of shares of Class B Common
Stock or Class C Common Stock; and (iv) the sale and issuance of
shares of Common Stock to new directors of the Company in connection
with their election or appointment to the board of directors of the
Company.
6. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the U.S.
Firm Shares on the First Closing Date and the U.S. Optional Shares to be
purchased on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions precedent:
(a) The Representatives shall have received letters,
dated the date of delivery thereof (which, if the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Coopers & Lybrand L.L.P.,
Arthur Andersen LLP and Ernst & Young LLP (the "Independent
Accountants"), confirming that they are independent public accountants
within the meaning of the Securities Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and
the related published Rules and Regulations;
(ii) with respect to Coopers & Lybrand, L.L.P. only,
they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on
the unaudited financial statements included in the
Registration Statements;
(iii) with respect to Coopers & Lybrand, L.L.P. only,
on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who
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<PAGE> 14
have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention
that caused them to believe that:
(A) the unaudited financial statements
included in the Registration Statements do not comply
as to form in all material respects with the
applicable accounting requirements of the Securities
Act and the related published Rules and Regulations
or any material modifications should be made to such
unaudited financial statements for them to be in
conformity with generally accepted accounting
principles;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or,
at the date of the latest available balance sheet
read by such accountants, there was any decrease in
consolidated net assets, as compared with amounts
shown on the latest balance sheet included in the
Prospectuses; or
(C) for the period from the closing date
of the latest income statement included in the
Prospectuses to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year and with
the period of corresponding length ended the date of
the latest income statement included in the
Prospectuses, in consolidated net broadcast revenue,
net income (loss) or in the total or per share
amounts of income (loss) before extraordinary item.
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Company and its
subsidiaries (or SFX (as defined below) and its subsidiaries)
subject to the internal controls of the Company's (or SFX's)
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to
be in agreement with such results, except as otherwise
specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, "Registration Statements" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective
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<PAGE> 15
Time, (ii) if the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement but the
Effective Time of the Additional Registration is subsequent to such
execution and delivery, "Registration Statements" shall mean the
Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective
Time, and (iii) "Prospectuses" shall mean the prospectuses included in
the Registration Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by CSFBC. If the Effective Time
of the Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time either Prospectus is printed
and distributed to any Underwriter or Manager, or shall have occurred
at such later date as shall have been consented to by CSFBC. If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, each of the Prospectuses
shall have been filed with the Commission in accordance with the Rules
and Regulations and Section 5(a) of this Agreement. Prior to such
Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Company or the Representatives, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company or its subsidiaries which, in the judgment of a majority
in interest of the Underwriters including the Representatives, is
material and adverse and makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and
payment for the U.S. Shares; (ii) any downgrading in the rating of any
debt securities or preferred stock of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Securities Act), or any public announcement
that any such organization has under surveillance or review its rating
of any debt securities or preferred stock of the Company (other than
an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating); (iii)
any suspension or limitation of trading in securities generally on the
New York Stock Exchange, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of
the Company on any exchange or in the over-the-counter market; (iv)
any banking moratorium declared by U.S. Federal, New York or Delaware
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by
Congress or any other
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<PAGE> 16
substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters including the
Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and
payment for the U.S. Shares.
(d) The Representatives shall have received an opinion,
dated such Closing Date, of Vinson & Elkins L.L.P., counsel for the
Company, to the effect that:
(i) Each of the Company and Capstar Broadcasting
Partners, Inc., Capstar Radio Broadcasting Partners, Inc.,
Atlantic Star Communications, Inc., Southern Star
Communications, Inc., GulfStar Communications, Inc., Central
Star Communications, Inc., Pacific Star Communications, Inc.,
Patterson Broadcasting, Inc., Benchmark Communications
Holdings Inc. and Capstar Acquisition Company Inc. (together,
the "Significant Subsidiaries") has been duly incorporated or
organized and is an existing corporation or partnership in
good standing under the laws of the state of its incorporation
or organization, with corporate or partnership power and
authority to own its properties and conduct its business as
described in the Prospectuses; and each of the Company and the
Significant Subsidiaries is duly qualified to do business as a
foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or other),
business, properties or results of operations of the Company
and the Significant Subsidiaries taken as a whole;
(ii) Except as set forth in the Prospectuses, all of
the outstanding shares of capital stock of, or other ownership
interests in, each of the Significant Subsidiaries have been
duly authorized and validly issued and are fully paid and
non-assessable, and were not issued in violation of any
preemptive rights, rights of first refusal or other similar
rights (in each case created by statute or under any
Significant Subsidiary's certificate of incorporation or
bylaws or any agreement to which any Significant Subsidiary is
a party of which we have knowledge); to such counsel's
knowledge, all such shares are owned by the Company, free and
clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature, except liens set forth in the
Prospectuses;
(iii) The Offered Shares delivered on such Closing Date
and all other outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description
thereof contained in the Prospectuses; and the stockholders of
the Company have no preemptive rights, rights of first refusal
or other similar rights (in each case created by statute or
under the Company's certificate of incorporation or bylaws or
any agreement to which the Company is a party of
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<PAGE> 17
which we have knowledge) with respect to the Offered Shares or
the other outstanding shares of capital stock of the Company,
except for those that have been satisfied or waived in writing;
(iv) Except as described in the Prospectuses, to such
counsel's knowledge, there are no outstanding options,
warrants or other rights calling for the issuance of, or any
commitment, plan or arrangement to issue, any shares of
capital stock of the Company or any security convertible into
or exchangeable or exercisable for any capital stock of the
Company;
(v) There are no contracts, agreements or
understandings known to such counsel between the Company and
any person granting such person the right to require the
Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Securities Act, other than those which have
been satisfied or waived in writing;
(vi) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required for the consummation of the transactions
contemplated by this Agreement or the Subscription Agreement
in connection with the issuance or sale of the Offered Shares
by the Company, except such as have been obtained and made
under the Securities Act and such as may be required under
state securities laws;
(vii) The execution, delivery and performance of this
Agreement and the Subscription Agreement and the issuance and
sale of the Offered Shares will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of
any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to
which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is
subject, or the charter or by-laws of the Company or any such
subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Shares as contemplated
by this Agreement and the Subscription Agreement,
respectively;
(viii) The Initial Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Additional Registration
Statement (if any) was filed and became effective under the
Securities Act as of the date and time (if determinable)
specified in such
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<PAGE> 18
opinion, each of the Prospectuses either were filed with the
Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or
were included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and,
to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or
any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated
under the Securities Act, and each Registration Statement and
each of the Prospectuses and each amendment or supplement
thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the
requirements of the Securities Act and the Rules and
Regulations; nothing has come to the attention of such counsel
that has caused it to believe that any part of a Registration
Statement or any amendment thereto, as of its effective date
or as of such Closing Date, contained any untrue statement of
a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading or that either of the Prospectuses or
any amendment or supplement thereto, as of its issue date or
as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; the
descriptions in the Registration Statements and the
Prospectuses of statutes, legal and governmental proceedings
and contracts and other documents are accurate in all material
respects and fairly present the information required to be
shown; and such counsel do not know of any legal or
governmental proceedings required to be described in a
Registration Statement or the Prospectuses which are not
described as required or of any contracts or documents of a
character required to be described in a Registration Statement
or the Prospectuses or to be filed as exhibits to a
Registration Statement which are not described and filed as
required; it being understood that such counsel need express
no opinion as to the financial statements or other financial
data contained in the Registration Statement or the
Prospectuses;
(ix) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and the
Subscription Agreement and to perform its obligations
hereunder and thereunder. This Agreement and the Subscription
Agreement have been duly and validly authorized and executed
by the Company and (assuming the due authorization, execution
and delivery thereof by the Underwriters or the Managers, as
the case may be) constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except that the enforcement
hereof or thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws affecting creditors' rights and remedies
generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor
may be brought (regardless of
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<PAGE> 19
whether enforcement is sought in a proceeding at law or in
equity), and except that the enforceability of rights to
indemnification and contribution hereunder or thereunder may
be limited by federal or state securities laws or regulations
or the public policy underlying such laws or regulations; and
(x) The merger of SBI Radio Acquisition Corporation
with and into SFX Broadcasting, Inc. ("SFX") has become
effective under the laws of the State of Delaware, pursuant to
the terms of the Agreement and Plan of Merger among SBI
Holding Corporation, SBI Radio Acquisition Corporation and
SFX, dated as of August 24, 1997, as amended (the "SFX Merger
Agreement").
In rendering the foregoing opinion, Vinson & Elkins L.L.P. may state
that such opinion does not apply to any FCC matters.
(e) The Representatives shall have received an opinion,
dated such Closing Date, of Wiley, Rein & Fielding, FCC counsel for
the Company, to the effect that:
(i) The issuance and sale of the Offered Shares by
the Company in accordance with this Agreement and the
Subscription Agreement does not require FCC approval assuming
that, in connection therewith, (i) no individual or entity
will acquire an attributable interest (as defined by the FCC)
in the Company that requires any such consent or approval; and
(ii) not more than 25% of the capital stock of the Company
will be owned by alien individuals or entities, or
representatives thereof.
(ii) The execution and delivery by the Company of this
Agreement and the Subscription Agreement and the issuance and
sale of the Offered Shares by the Company in accordance with
this Agreement and the Subscription Agreement does not
constitute a violation by the Company of the Communications
Laws assuming that, in connection therewith: (i) no individual
or entity will acquire an attributable interest (as defined by
the FCC) in the Company that violates the Communications Laws;
and (ii) not more than 25% of the capital stock of the Company
will be owned by alien individuals or entities, or
representatives thereof.
(iii) The entities listed on Exhibit A and on Exhibit B
attached to such opinion (the "Licensees") hold the respective
FCC Licenses listed thereon. Such FCC Licenses are in full
force and effect.
(iv) To the knowledge of such counsel, except for
those disclosed in this Agreement, the Registration Statement
or on Exhibit C attached to such opinion, and except for
proceedings affecting the radio broadcasting industry
generally, there are no proceedings pending or threatened in
writing under the Communications Laws against the Company, the
Licensees or the stations by or
19
<PAGE> 20
before the FCC or before any court having jurisdiction of
matters under the Communications Laws which seek the
revocation, non-renewal, or material adverse modification of
any of the FCC Licenses.
(v) The FCC Statements (which include the statements
of the Company in the Registration Statements under the
captions "Risk Factors -- Governmental Regulation of
Broadcasting Industry," "Business -- Federal Regulation of
Radio Broadcasting" and "Business -- Competition; Changes in
Broadcasting Industry"), insofar as they constitute summaries
of the Communications Laws and material proceedings
thereunder, are accurate and fairly present the information
set forth therein in all material respects.
(vi) The FCC has granted its consent (the "FCC
Consent") to the transfer of control of SFX Broadcasting, Inc.
to SBI Holding Corporation. FCC Consent is not subject to any
material adverse conditions imposed by the FCC outside the
ordinary course, except as set forth in the FCC Mass Media
Bureau Memorandum Opinion and Order, DA 98-______, released
_________, 1998. Without limiting the other qualifications set
forth in such opinion, in providing the foregoing opinion such
counsel may assume that all other conditions set forth on the
FCC forms evidencing the FCC Consent, those set forth in the
FCC orders granting the FCC Licenses or any renewal thereof,
those set forth on the FCC forms evidencing the FCC Licenses
or any renewal thereof, and those set forth in the
Communications Laws imposed upon licensees generally or radio
broadcasting licensees specifically, are conditions in the
ordinary course, and such counsel need not express any view on
such matters.
(vii) To such counsel's knowledge, no petition for
reconsideration or review of the FCC Consent has been filed
with the FCC and the FCC has not rescinded or revoked the FCC
Consent or given public notice of review of the FCC Consent on
its own motion.
(f) The Representatives shall have received from Weil,
Gotshal & Manges LLP, counsel for the Underwriters, such opinion or
opinions, dated such Closing Date, with respect to the incorporation
of the Company, the validity of the Offered Shares delivered on such
Closing Date, the Registration Statements, the Prospectuses and other
related matters as the Representatives may require, and the Company
shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(g) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and
the Chief Financial Officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall
state that: the representations and warranties of the Company in this
Agreement are true and correct; the Company has complied in all
material respects with
20
<PAGE> 21
all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date; no
stop order suspending the effectiveness of any Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule
462(b), including payment of the applicable filing fee in accordance
with Rule 111(a) or (b) under the Securities Act and Rule 3a, Part 202
-- Informal and Other Procedures under the Securities Act, prior to
the time either Prospectus was printed and distributed to any
Underwriter or Manager; and, subsequent to the date of the most recent
financial statements in the Prospectuses, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated
by the Prospectuses or as described in such certificate.
(h) The Representatives shall have received letters, dated
such Closing Date, of the Independent Accountants which meet the
requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not more
than three business days prior to such Closing Date for the purposes
of this subsection.
(i) On such Closing Date, the Managers shall have purchased
the International Firm Shares or the International Optional Shares, as
the case may be, pursuant to the Subscription Agreement.
(j) The merger of SBI Radio Acquisition Corporation with and
into SFX shall have been consummated in accordance with the SFX Merger
Agreement.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
requests. CSFBC may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters
hereunder, whether in respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or
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<PAGE> 22
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only information furnished by any Underwriter consists of
the information described as such in subsection (b) below; and, provided
further, that with respect to any untrue statement or alleged untrue statement
in or omission or alleged omission from any preliminary prospectus the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Offered Securities concerned, to
the extent that a prospectus relating to such Offered Securities was required
to be delivered by such Underwriter under the Securities Act in connection with
such purchase and any such loss, claim, damage or liability of such Underwriter
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Offered Securities to
such person, a copy of the U.S. Prospectus if the Company had previously
furnished copies thereof to such Underwriter.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, either
of the Prospectuses, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
(i) the following information in the U.S. Prospectus furnished on behalf of
each Underwriter: the last paragraph at the bottom of the cover page concerning
the terms of the offering by the Underwriters, the legend concerning
over-allotments and stabilizing on the inside front cover page, the
over-allotment and stabilization information contained in the last paragraph
under the caption "Underwriting," the concession and reallowance figures
appearing in the fifth paragraph under the caption "Underwriting," and the
information concerning discretionary sales in the sixth paragraph under the
caption "Underwriting"; and (ii) the following information in the U.S.
Prospectus furnished on behalf of BT Alex. Brown Incorporated: the information
contained in the fourteenth paragraph under the caption "Underwriting."
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<PAGE> 23
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section, for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action. No indemnified party shall,
without the prior written consent of the indemnifying party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party seeks indemnification pursuant to this Section; provided,
however, that if the indemnifying party does so consent in writing, the
indemnifying party agrees to be liable to the indemnified party under this
Section for any such settlement; and, provided, further, that the indemnified
party may effect a settlement if the settlement is entered into more than
twenty business days after the indemnifying party shall have received a request
from the indemnified party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are the responsibility of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the U.S. Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the U.S.
23
<PAGE> 24
Shares (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the U.S. Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Securities Act; and the
obligations of the Underwriters under this Section shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Company, to
each officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase U.S. Shares hereunder on either the First
Closing Date or any Optional Closing Date and the aggregate number of shares of
U.S. Shares that such defaulting Underwriter or Underwriters agreed but failed
to purchase does not exceed 10% of the total number of shares of U.S. Shares
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company for the purchase of such U.S.
Shares by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the U.S. Shares that such defaulting Underwriters agreed
but failed to purchase on such Closing Date. If any Underwriter or Underwriters
so default and the aggregate number of shares of U.S. Shares with respect to
which such default or defaults occur exceeds 10% of the total number of shares
of constituting the U.S. Shares that the Underwriters are obligated to purchase
on such Closing Date and arrangements satisfactory to CSFBC and the Company for
the purchase of such U.S. Shares by other persons are not made within 36 hours
after such
24
<PAGE> 25
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9
(provided that if such default occurs with respect to U.S. Optional Shares
after the First Closing Date, this Agreement will not terminate as to the U.S.
Firm Shares or any U.S. Optional Shares purchased prior to such termination).
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers and of the several Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made
by or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the U.S. Shares. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the U.S.
Shares by the Underwriters is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5 and the respective obligations of the Company and the Underwriters pursuant
to Section 7 shall remain in effect and if any U.S. Shares have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. If the purchase of the U.S. Shares
by the Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence of
any event specified in clause (iii), (iv), or (v) of Section 6(c), the Company
will reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel) reasonably incurred by them in connection with
the offering of the U.S. Shares.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representatives, c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group, or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 600 Congress Avenue,
Suite 1400, Austin, Texas 78701, Attention: General Counsel; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for
the several Underwriters in connection with this financing, and any action
under this Agreement taken by the Representatives jointly or by CSFBC will be
binding upon all the Underwriters.
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<PAGE> 26
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
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<PAGE> 27
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement between
the Company and the several Underwriters in accordance with its terms.
Very truly yours,
CAPSTAR BROADCASTING CORPORATION
By
--------------------------------
R. Steven Hicks
President and Chief
Executive Officer
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BT ALEX. BROWN INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
Acting on behalf of themselves and as the Representatives
of the several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By
------------------------------------
Kristin Allen
Managing Director
27
<PAGE> 28
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER U.S. FIRM SHARES
----------- ----------------
<S> <C>
Credit Suisse First Boston Corporation . . . . . . . . . . . . . . .
BT Alex. Brown Incorporated . . . . . . . . . . . . . . . . . . . .
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . .
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . .
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . .
NationsBanc Montgomery Securities LLC . . . . . . . . . . . . . . .
Smith Barney, Inc. . . . . . . . . . . . . . . . . . . . . . . . . .
----------------
TOTAL . . . . . . . . . . . . . . . . . . . 24,800,000
================
</TABLE>
28
<PAGE> 1
EXHIBIT 1.2
31,000,000 SHARES
CAPSTAR BROADCASTING CORPORATION
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
SUBSCRIPTION AGREEMENT
London, England
, 1998
To: CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
BT ALEX. BROWN INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
BEAR, STEARNS INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
NATIONSBANC MONTGOMERY SECURITIES LLC
SMITH BARNEY INC.
c/o: CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED ("CSFBL")
One Cabot Square
London, England E14 4QJ
Dear Sirs:
1. Introductory. Capstar Broadcasting Company, a Delaware
corporation ("Company"), proposes to issue and sell (the "International
Offering") to the several Managers named in Schedule A hereto (the "Managers")
6,200,000 shares ("International Firm Shares") of its Class A Common Stock, par
value $.01 per share (the "Class A Common Stock").
It is understood that the Company is concurrently entering into an
Underwriting Agreement, dated the date hereof (the "Underwriting Agreement"),
with certain United States underwriters listed in Schedule A thereto (the "U.S.
Underwriters"), for whom Credit Suisse First Boston Corporation ("CSFBC"), BT
Alex. Brown Incorporated and Morgan Stanley & Co. Incorporated are acting as
representatives (the "U.S. Representatives"), relating to the concurrent
offering and sale of 24,800,000 shares of Class A Common Stock (" U.S. Firm
Shares") in the United States and Canada (the "U.S. Offering").
In addition, the Company proposes to issue and sell (i) to the U.S.
Underwriters, at the option of the U.S. Underwriters, an aggregate of not more
than 3,720,000 additional shares of Class A Common Stock ("U.S. Optional
Shares") and (ii) to the Managers, at the option of the Managers, an aggregate
of not more than 930,000 additional shares of Class A Common Stock
("International Optional Shares"). The U.S. Firm Shares and the U.S.
<PAGE> 2
Optional Shares are hereinafter called the "U.S. Shares"; the International
Firm Shares and the International Optional Shares are hereinafter called the
"International Shares"; the U.S. Firm Shares and the International Firm Shares
are hereinafter called the "Firm Shares"; the U.S. Optional Shares and the
International Optional Shares are hereinafter called the "Optional Shares".
The U.S. Shares and the International Shares are collectively referred to as
the "Offered Shares". To provide for the coordination of their activities, the
U.S. Underwriters and the Managers have entered into an Agreement Between U.S.
Underwriters and Managers which permits them, among other things, to sell the
Offered Shares to each other for purposes of resale.
The Company hereby agrees with the several Managers as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Managers that:
(a) A registration statement (No. 333-48819) relating to
the Offered Shares, including a form of prospectus relating to the
U.S. Shares and a form of prospectus relating to the International
Shares being offered in the International Offering has been filed with
the Securities and Exchange Commission (the "Commission") and either
(i) has been declared effective under the Securities Act of 1933, as
amended (the "Securities Act"), and is not proposed to be amended or
(ii) is proposed to be amended by amendment or post- effective
amendment. If such registration statement (the "initial registration
statement") has been declared effective, either (A) an additional
registration statement (the "additional registration statement")
relating to the Offered Shares may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Securities Act and,
if so filed, has become effective upon filing pursuant to such Rule
and the Offered Shares all have been duly registered under the
Securities Act pursuant to the initial registration statement and, if
applicable, the additional registration statement or (B) such an
additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing the Offered Shares
will all have been duly registered under the Securities Act pursuant
to the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has
been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has
been filed with the Commission prior to the execution and delivery of
this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Securities Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"Effective Time" with respect to the initial registration statement
or, if filed prior to the execution and delivery of this Agreement,
the additional registration statement means (i) if the Company has
advised the Representatives that it does not propose to
2
<PAGE> 3
amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (ii) if the Company
has advised the Representatives that it proposes to file an amendment
or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement
has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it
proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration
statement, as amended at its Effective Time, including all information
contained in the additional registration statement (if any) and deemed
to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Securities Act, is hereinafter referred to as the
"Initial Registration Statement." The additional registration
statement, as amended at its Effective Time, including the contents of
the initial registration statement incorporated by reference therein
and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to
Rule 430A(b), is hereinafter referred to as the "Additional
Registration Statement". The Initial Registration Statement and the
Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the U.S.
Shares and the form of prospectus relating to the International
Shares, each as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Securities Act
or (if no such filing is required) as included in the Registration
Statement, are hereinafter referred to as the "U.S. Prospectus" and
the "International Prospectus," respectively, and collectively as the
"Prospectuses". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act.
(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(i) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Securities Act and the rules and regulations of
the Commission (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) on the Effective Date of
3
<PAGE> 4
the Additional Registration Statement (if any), each Registration
Statement conformed, or will conform, in all respects to the
requirements of the Securities Act and the Rules and Regulations and
did not include, or will not include, any untrue statement of a
material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (iii) on the date of this
Agreement, the Initial Registration Statement and, if the Effective
Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of each of the
Prospectuses pursuant to Rule 424(b) or (if no such filing is
required) at the Effective Date of the Additional Registration
Statement in which the Prospectuses are included, each Registration
Statement and each of the Prospectuses will conform, in all respects
to the requirements of the Securities Act and the Rules and
Regulations, and none of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and each of
the Prospectuses will conform in all respects to the requirements of
the Securities Act and the Rules and Regulations, none of such
documents will include any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or either of the Prospectuses based upon
written information furnished to the Company by any Underwriter
through the Representatives or by any Manager through CSFBL
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b)
hereof.
(c) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectuses;
and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the condition (financial or
other), business, properties or results of operations of the Company
and the Subsidiaries (as defined below) taken as a whole ("Material
Adverse Effect").
(d) Each subsidiary of the Company and each subsidiary to
be acquired in the SFX Acquisition (as defined in the Prospectuses)
(collectively, the "Subsidiaries") has been duly incorporated and is
an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectuses;
4
<PAGE> 5
and each Subsidiary is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect; all of the issued and outstanding
capital stock of each Subsidiary has been duly authorized and validly
issued and is fully paid and nonassessable; and the capital stock of
each Subsidiary, directly or through subsidiaries, is owned free from
liens, encumbrances and defects, except for liens disclosed in the
Prospectuses.
(e) The Offered Shares and all other outstanding shares
of capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Shares have been delivered and paid for in accordance with
this Agreement and the Subscription Agreement on each Closing Date (as
defined below), such Offered Shares will have been, validly issued,
fully paid and nonassessable and will conform to the description
thereof contained in the Prospectuses; the stockholders of the Company
have no preemptive rights with respect to the Class A Common Stock;
and except as described in the Prospectuses, there are no outstanding
options, warrants or other rights calling for the issuance of, or any
commitment, plan or arrangement to issue, any shares of capital stock
of the Company or any security convertible into or exchangeable or
exercisable for any capital stock of the Company.
(f) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter or Manager for a brokerage commission, finder's fee or
other like payment in connection with this offering.
(g) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Securities Act.
(h) The Offered Shares have been approved for listing on
the New York Stock Exchange subject to notice of issuance.
(i) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body (including, without
limitation, the Federal Communications Commission (the "FCC")) or any
court is required for the consummation of the transactions
contemplated by this Agreement or the Subscription
5
<PAGE> 6
Agreement in connection with the issuance and sale of the Offered
Shares by the Company, except such as have been obtained and made
under the Securities Act and such as may be required under state
securities laws.
(j) The execution, delivery and performance of this
Agreement and the Subscription Agreement, and the issuance and sale of
the Offered Shares will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their properties, except for
breaches, violations or defaults that would not individually or in the
aggregate have a Material Adverse Effect, or any agreement or
instrument to which the Company or any such Subsidiary is a party or
by which the Company or any such Subsidiary is bound or to which any
of the properties of the Company or any such Subsidiary is subject, or
the charter or by-laws of the Company or any such Subsidiary, and the
Company has full power and authority to authorize, issue and sell the
Offered Shares pursuant to this Agreement and the Subscription
Agreement, respectively.
(k) This Agreement and the Subscription Agreement have
been duly authorized, executed and delivered by the Company.
(l) Except as disclosed in the Prospectuses, the Company
and the Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them that are
material to the Company and its Subsidiaries considered as a whole, in
each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Prospectuses, the Company and the Subsidiaries hold any such leased
real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be
made thereof by them.
(m) The Company and the Subsidiaries possess adequate
certificates, authorities or permits and hold all necessary licenses
(including without limitation licenses issued by the FCC) issued by
appropriate governmental agencies or bodies necessary to conduct the
business now operated by them, except where the failure to possess
such certificates, authorities or permits or to hold such licenses
would not individually or in the aggregate have a Material Adverse
Effect, and have not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority,
permit or license that, if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
6
<PAGE> 7
(n) No labor dispute with the employees of the Company or
any Subsidiary exists or, to the knowledge of the Company, is imminent
that could reasonably be expected to have a Material Adverse Effect.
(o) The Company and the Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct
the business now operated by them, except where the failure to own,
possess or acquire such intellectual property rights would not
individually or in the aggregate have a Material Adverse Effect, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined
adversely to the Company or any of the Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(p) Each of the Company and the Subsidiaries has filed
all necessary federal, state, local and foreign income and franchise
tax returns, except where the failure to file such returns would not
have a Material Adverse Effect, and each of the Company and the
Subsidiaries has paid all taxes shown as due thereon; and other than
tax deficiencies that the Company or its Subsidiaries is contesting
in good faith and for which adequate reserves have been provided,
there is no tax deficiency that has been asserted against the Company
or the Subsidiaries that would, individually or in the aggregate, have
a Material Adverse Effect.
(q) Except as disclosed in the Prospectuses, neither the
Company nor any of the Subsidiaries is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
(r) Except as disclosed in the Prospectuses, there are no
pending actions, suits, proceedings, inquiries or investigations
before or brought by any court or governmental agency or body
(including, without limitation, the FCC) against or affecting the
Company, any of the Subsidiaries or any of their respective properties
that, if determined adversely to the Company or any of the
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability
of the Company to perform its obligations under this
7
<PAGE> 8
Agreement or the Subscription Agreement, or which are otherwise
material in the context of the sale of the Offered Shares; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(s) The financial statements included in each
Registration Statement and the Prospectuses present fairly the
financial position of the Company and its consolidated Subsidiaries as
of the dates shown and their results of operations and cash flows for
the periods shown, and, except as otherwise disclosed in the
Prospectuses, such financial statements have been prepared in
conformity with the generally accepted accounting principles in the
United States applied on a consistent basis; the schedules included in
each Registration Statement present fairly the information required to
be stated therein; and the assumptions used in preparing the pro forma
financial statements included in each Registration Statement and the
Prospectuses provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding
historical financial statement amounts.
(t) Except as disclosed in the Prospectuses, since the
date of the latest audited financial statements included in the
Prospectuses there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and the Subsidiaries taken as a whole,
and, except as disclosed in or contemplated by the Prospectuses, there
has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(u) The statistical and market-related data included in
the Prospectuses are based on or derived from sources that the Company
believes to be accurate and reliable.
(v) Each of the Company and the Subsidiaries (i) makes
and keeps accurate books and records and (ii) maintains internal
accounting controls that provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain profitability
for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(w) The Company is not and, after giving effect to the
offering and sale of the Offered Shares and the application of the
proceeds thereof as described in the
8
<PAGE> 9
Prospectuses, will not be an "investment company" as defined in the
Investment Company Act of 1940.
(x) Each of Coopers & Lybrand L.L.P., Arthur Andersen LLP
and Ernst & Young LLP, which firms have examined the consolidated
financial statements as set forth in their reports included in the
Prospectuses, is an independent public accounting firm within the
meaning of the Securities Act and the rules and regulations
promulgated thereunder.
(y) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075 Florida
Statutes, and the Company agrees to comply with such Section if prior
to the completion of the distribution of the Offered Shares it
commences doing such business.
3. Purchase, Sale and Delivery of Offered Shares. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to sell to the
Managers, and the Managers agree, severally and not jointly, to purchase from
the Company, at a purchase price of U.S. $ per share, the
respective numbers of International Firm Shares set forth opposite the names of
the Managers in Schedule A hereto.
The Company will deliver the International Firm Shares to CSFBL for
the accounts of the Managers, against payment of the purchase price in U.S.
dollars in Federal (same day) funds by official bank check or checks or wire
transfer to an account at a bank acceptable to CSFBL drawn to the order of the
Company at the office of Weil, Gotshal & Manges LLP, at 10:00 A.M., New York
time, on May ____, 1998, or at such other time not later than seven full
business days thereafter as CSFBL and the Company determine, such time being
herein referred to as the "First Closing Date". For purposes of Rule 15c6-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
First Closing Date (if later than the otherwise applicable settlement date)
shall be the settlement date for payment of funds and delivery of securities
for all the Offered Shares sold pursuant to the U.S. Offering and the
International Offering. The certificates for the International Firm Shares so
to be delivered will be in definitive form, in such denominations and
registered in such names as CSFBL requests and will be made available for
checking and packaging at the above office of Weil, Gotshal & Manges LLP, at
least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from
time to time not more than 30 days subsequent to the date of the Prospectuses,
the Managers may purchase all or less than all of the International Optional
Shares at the purchase price to be paid for the International Firm Shares. The
International Optional Shares to be purchased by the Managers on any Optional
Closing Date shall be in the same proportion to all the Optional Shares to be
purchased by the Managers and U.S. Underwriters on such Optional Closing Date
as the International Firm Shares bear to all the Firm Shares. The Company
9
<PAGE> 10
agrees to sell to the Managers such International Optional Shares and the
Managers agree, severally and not jointly, to purchase such International
Optional Shares. Such International Optional Shares shall be purchased for the
account of each Manager in the same proportion as the number of International
Firm Shares set forth opposite such Manager's name bears to the total number of
International Firm Shares (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Managers only for the purpose of
covering over-allotments made in connection with the sale of the International
Firm Shares. No Optional Shares shall be sold or delivered unless the
International Firm Shares and the U.S. Firm Shares previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Shares or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC on behalf of the Managers and the U.S. Underwriters to the
Company. It is understood that CSFBC is authorized to make payment for and
accept delivery of such Optional Shares on behalf of the U.S. Underwriters and
Managers pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the International
Optional Shares, being herein referred to as an "Optional Closing Date", which
may be the First Closing Date (the First Closing Date and each Optional Closing
Date, if any, being sometimes referred to as a "Closing Date"), shall be
determined by CSFBC but shall be not later than five full business days after
written notice of election to purchase Optional Shares is given. The Company
will deliver the International Optional Shares being purchased on each Optional
Closing Date to CSFBL for the accounts of the several Managers, against payment
of the purchase price therefor in Federal (same day) funds by official bank
check or checks or wire transfer to an account at a bank acceptable to CSFBL
drawn to the order of the Company, at the above office of Weil, Gotshal &
Manges LLP. The certificates for the International Optional Shares will be in
definitive form, in such denominations and registered in such names as CSFBL
requests upon reasonable notice prior to such Optional Closing Date and will be
made available for checking and packaging at the above office of Weil, Gotshal
& Manges LLP, at a reasonable time in advance of such Optional Closing Date.
The Company will pay to the Managers as aggregate compensation for
their commitments hereunder and for their services in connection with the
purchase of the International Shares and the management of the offering
thereof, if the sale and delivery of the International Shares to the Managers
provided herein is consummated, an amount equal to U.S.$ per
International Share purchased, which may be divided among the Managers in such
proportions as they may determine. Such payment will be made on the First
Closing Date in the case of the International Firm Shares and on each Optional
Closing Date in the case of the International Optional Shares sold to the
Manager on such Closing Date, in each case by way of deduction by the Managers
of said amount from the purchase price for the International Shares referred to
above.
10
<PAGE> 11
4. Offering by Managers. It is understood that the several
Managers propose to offer the International Shares for sale to the public as
set forth in the International Prospectus.
In connection with the distribution of the International Shares, the
Managers, through a stabilizing manager, may over-allot or effect transactions
on any exchange, in any over-the-counter market or otherwise which stabilize or
maintain the market prices of the International Shares at levels other than
those which might otherwise prevail, but in such event and in relation thereto,
the Managers will act for themselves and not as agents of the Company, and any
loss resulting from over-allotment and stabilization will be borne, and any
profit arising therefrom will be beneficially retained, by the Managers. Such
stabilizing, if commenced, may be discontinued at any time.
5. Certain Agreements of the Company. The Company agrees with
the several Managers that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file each of the Prospectuses with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable
and if consented to by CSFBL, subparagraph (4)) of Rule 424(b) not
later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifteenth business
day after the Effective Date of the Initial Registration Statement.
The Company will advise CSFBL promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a
portion of the Offered Shares under the Securities Act but the
Effective Time thereof has not occurred as of such execution and
delivery, the Company will file the additional registration statement
or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior
to 10:00 P.M., New York time, on the date of this Agreement or, if
earlier, on or prior to the time either Prospectus is printed and
distributed to any Manager or U.S. Underwriter, or will make such
filing at such later date as shall have been consented to by CSFBL.
(b) The Company will advise CSFBL promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or either of the related prospectuses
or the Initial Registration Statement, the Additional Registration
Statement (if any) or either of the Prospectuses and will not effect
such amendment or supplementation without CSFBL's prior consent; and
the Company will also advise CSFBL promptly of the effectiveness of
each Registration Statement (if its Effective Time is subsequent to
the execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or either of the
11
<PAGE> 12
Prospectuses and of the institution by the Commission of any stop
order proceedings in respect of a Registration Statement and will use
its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the
Offered Shares is required to be delivered under the Securities Act in
connection with sales by any U.S. Underwriter, Manager or dealer, any
event occurs as a result of which either or both of the Prospectuses
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend
either or both of the Prospectuses to comply with the Securities Act,
the Company will promptly notify CSFBL of such event and will promptly
prepare, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect
such compliance. Neither CSFBL's consent to, nor the Managers'
delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of
the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Securities Act. For the purpose of
the preceding sentence, "Availability Date" means the 45th day after
the end of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.
(e) The Company will furnish to the Managers copies of
the Registration Statement (four) of which will be signed and will
include all exhibits), each preliminary prospectus relating to the
International Shares, and, until completion of the distribution of the
International Shares as determined by CSFBL, the International
Prospectus and all amendments and supplements to such documents, in
each case in such quantities as CSFBL requests. The International
Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial
Registration Statement. All other such documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Managers all such documents.
(f) No action has been or, prior to the completion of the
distribution of the Offered Shares, will be taken by the Company in
any jurisdiction outside the United States and Canada that would
permit a public offering of the Offered Shares, or
12
<PAGE> 13
possession or distribution of the International Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus
issued in connection with the offering of the Offered Shares, or any
other offering material, in any country or jurisdiction where action
for that purpose is required.
(g) During the period of five years hereafter, the
Company will furnish to CSFBL and, upon request, to each of the other
Managers, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the
Company will furnish to CSFBL (i) as soon as available, a copy of each
report and any definitive proxy statement of the Company filed with
the Commission under the Exchange Act or mailed to stockholders, and
(ii) from time to time, such other information concerning the Company
as CSFBL may reasonably request.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for the filing
fee incidental to, and the reasonable fees and disbursements of
counsel to the Managers in connection with, the review by the National
Association of Securities Dealers, Inc. of the Offered Shares, for any
travel expenses of the Company's officers and employees and any other
expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Shares and for
expenses incurred in distributing preliminary prospectuses and the
Prospectuses (including any amendments and supplements thereto) to the
Managers.
(i) For a period of 180 days after the date of the
initial public offering of the Offered Shares, the Company will not
offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, or file with the Commission a registration
statement under the Securities Act relating to, any additional shares
of its shares of Class A Common Stock or securities convertible into
or exchangeable or exercisable for any shares of Class A Common Stock,
or publicly disclose the intention to make any such offer, sale,
pledge, disposition or filing, without the prior written consent of
CSFBC, except (i) pursuant to or in connection with employee stock
option plans, the Warrants or other employee or non-employee director
compensation arrangements or agreements, in each case, in effect on
the date of the Prospectuses; (ii) in connection with any acquisition
by the Company so long as the recipient of such securities agrees in
writing prior to such issuance to be subject to the foregoing lockup
for the remainder of the 180-day lockup period; (iii) in connection
with the conversion of shares of Class B Common Stock or Class C
Common Stock; and (iv) the sale and issuance of shares of Common Stock
to new directors of the Company in connection with their election or
appointment to the board of directors of the Company.
6. Conditions of the Obligations of the Managers. The
obligations of the several Managers to purchase and pay for the International
Firm Shares on the First Closing Date and the International Optional Shares to
be purchased on each Optional Closing Date will be subject to the accuracy of
the representations and warranties on the part of the Company
13
<PAGE> 14
herein, to the accuracy of the statements of Company officers made pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The Managers shall have received letters, dated the
date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if
the Effective Time of the Initial Registration Statement is subsequent
to the execution and delivery of this Agreement, shall be prior to the
filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective
Time), of Coopers & Lybrand, L.L.P., Arthur Andersen LLP and Ernst &
Young LLP (the "Independent Accountants") in the agreed form.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by CSFBL. If the Effective Time
of the Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time either Prospectus is printed
and distributed to any Manager or U.S. Underwriter, or shall have
occurred at such later date as shall have been consented to by CSFBL.
If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, each of the
Prospectuses shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a) of this Agreement.
Prior to such Closing Date, no stop order suspending the effectiveness
of a Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of
the Company or the Managers, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (A) a change in U.S. or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of
CSFBL, be likely to prejudice materially the success of the proposed
issue, sale or distribution of the International Shares, whether in
the primary market or in respect of dealings in the secondary market,
or (B)(i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business,
properties or results of operations of the Company or its subsidiaries
which, in the judgment of CSFBL, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the International Shares; (ii)
any downgrading in the rating of any debt securities or preferred
stock of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the
Securities Act),
14
<PAGE> 15
or any public announcement that any such organization has under
surveillance or review its rating of any debt securities or preferred
stock of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal, New York or Delaware authorities; or (v) any
outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by the United States Congress or
any other substantial national or international calamity or emergency
if, in the judgment of CSFBL, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the International Shares.
(d) The Managers shall have received opinions, dated such
Closing Date, of Vinson & Elkins, L.L.P., counsel for the Company, and
Wiley, Rein & Fielding, FCC counsel for the Company, in the agreed
form.
(e) The Managers shall have received from Weil, Gotshal &
Manges LLP, counsel for the Managers, such opinion or opinions, dated
such Closing Date, with respect to the incorporation of the Company,
the validity of the Offered Shares delivered on such Closing Date, the
Registration Statements, the Prospectuses and other related matters as
the Managers may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(f) The Managers shall have received a certificate, dated
such Closing Date, of the President or any Vice President and the
Chief Financial Officer of the Company in which such officers, to the
best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this
Agreement are true and correct; the Company has complied in all
material respects with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to such
Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission;
the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing
fee in accordance with Rule 111(a) or (b) under the Securities Act and
Rule 3a, Part 202 -- Informal and Other Procedures under the
Securities Act, prior to the time either Prospectus was printed and
distributed to any Manager or U.S. Underwriter; and, subsequent to the
date of the most recent financial statements in the Prospectuses,
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
15
<PAGE> 16
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except
as set forth in or contemplated by the Prospectuses or as described in
such certificate.
(g) The Managers shall have received letters, dated such
Closing Date, of the Independent Accountants which meet the
requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not more
than three business days prior to such Closing Date for the purposes
of this subsection.
(h) On such Closing Date, the U.S. Underwriters shall
have purchased the U.S. Firm Shares or the U.S. Optional Shares, as
the case may be, pursuant to the Underwriting Agreement.
(i) The merger of SBI Radio Acquisition Corporation with and
into SFX Broadcasting, Inc. shall have been consummated pursuant to
the terms of the Agreement and Plan of Merger among SBI Holding
Corporation, SBI Radio Acquisition Corporation and SFX Broadcasting,
Inc., dated as of August 24, 1997, as amended.
Documents described as being "in the agreed form" are documents which are in
the forms which have been initialed for the purpose of identification by Weil,
Gotshal & Manges LLP, copies of which are held by the Company and CSFBL with
such changes as CSFBL may approve. The Company will furnish the Managers with
such conformed copies of such opinions, certificates, letters and documents as
the Managers reasonably request. CSFBL may in its sole discretion waive on
behalf of the Managers compliance with any conditions to the obligations of the
Managers hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Manager against any losses, claims, damages or
liabilities, joint or several, to which such Manager may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each Manager for any legal or other expenses
reasonably incurred by such Manager in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
16
<PAGE> 17
Manager through CSFBL specifically for use therein, it being understood and
agreed that the only information furnished by any Manager consists of the
information described as such in subsection (b) below; and, provided further,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of
any Manager from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Manager under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Underwriter results from the fact
that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the International Prospectus if the Company had previously furnished copies
thereof to such Manager.
(b) Each Manager will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, either
of the Prospectuses, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Manager
through CSFBL specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Manager consists of (i) the following information
in the International Prospectus furnished on behalf of each Manager: the last
paragraph at the bottom of the cover page concerning the terms of the offering
by the Managers, the legend concerning over-allotments and stabilizing on the
inside front cover page, the commission and reallowance figures appearing in
the fifth paragraph under the caption "Subscription and Sale," and the
information concerning discretionary sales in the sixth paragraph under the
caption "Subscription and Sale"; and (ii) the following information in the
International Prospectus furnished on behalf of BT Alex. Brown International:
the information contained in the fifteenth paragraph under the caption
"Subscription and Sale".
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified
17
<PAGE> 18
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. No indemnified party shall, without the prior written consent
of the indemnifying party, effect any settlement of any pending or threatened
action in respect of which any indemnified party seeks indemnification pursuant
to this Section; provided, however, that if the indemnifying party does so
consent in writing, the indemnifying party agrees to be liable to the
indemnified party under this Section for any such settlement; and, provided,
further, that the indemnified party may effect a settlement if the settlement
is entered into more than twenty business days after the indemnifying party
shall have received a request from the indemnified party for reimbursement for
the fees and expenses of counsel (in any case where such fees and expenses are
the responsibility of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Managers on the other from the offering
of the International Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Managers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Managers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the International Shares (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Managers. The relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
18
<PAGE> 19
omission to state a material fact relates to information supplied by the
Company or the Managers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Manager shall be
required to contribute any amount in excess of the amount by which the total
price at which the International Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Manager has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Managers' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Manager within the meaning of the Securities Act; and the
obligations of the Managers under this Section shall be in addition to any
liability which the respective Managers may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
8. Default of Managers. If any Manager or Managers default in
their obligations to purchase International Shares hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of
International Shares that such defaulting Manager or Managers agreed but failed
to purchase does not exceed 10% of the total number of shares of International
Shares that the Managers are obligated to purchase on such Closing Date, CSFBL
may make arrangements satisfactory to the Company for the purchase of such
International Shares by other persons, including any of the Managers, but if no
such arrangements are made by such Closing Date the non-defaulting Managers
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the International Shares that such defaulting Managers
agreed but failed to purchase on such Closing Date. If any Manager or Managers
so default and the aggregate number of shares of International Shares with
respect to which such default or defaults occur exceeds 10% of the total number
of shares of International Shares that the Managers are obligated to purchase
on such Closing Date and arrangements satisfactory to CSFBL and the Company for
the purchase of such International Shares by other persons are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non- defaulting Manager or the Company, except as provided in
Section 9 (provided that if such default occurs with respect to International
Optional Shares after the First Closing Date, this
19
<PAGE> 20
Agreement will not terminate as to the International Firm Shares or any
International Optional Shares purchased prior to such termination). As used in
this Agreement, the term "Manager" includes any person substituted for a
Manager under this Section. Nothing herein will relieve a defaulting Manager
from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Managers set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made
by or on behalf of any Manager, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the International Shares. If this
Agreement is terminated pursuant to Section 8 or if for any reason the purchase
of the International Shares by the Managers is not consummated, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Company and the
Managers pursuant to Section 7 shall remain in effect and if any International
Shares have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the International Shares by the Managers is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in Section
6(c)(A) or clause (iii), (iv), or (v) of Section 6(c)(B), the Company will
reimburse the Managers for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the International Shares.
10. Notices. All communications hereunder will be in writing and,
if sent to the Managers, will be mailed, delivered or telexed and confirmed to
CSFBL at One Cabot Square, London E14 4QJ England, Attention: Company
Secretary, or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at 600 Congress Avenue, Suite 1400, Austin, Texas 78701,
Attention: General Counsel; provided, however, that any notice to a Manager
pursuant to Section 7 will be mailed, delivered or telexed and confirmed to
such Manager.
11. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
12. Representation of Managers. CSFBL will act for the several
Managers in connection with this financing, and any action under this Agreement
taken by CSFBL will be binding upon all the Managers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
20
<PAGE> 21
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
21
<PAGE> 22
If the foregoing is in accordance with the Managers' understanding of
our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and
the several Managers in accordance with its terms.
Very truly yours,
CAPSTAR BROADCASTING CORPORATION
By
----------------------------------------
R. Steven Hicks
President and Chief Executive Officer
The foregoing Subscription Agreement is hereby confirmed and accepted
as of the first above written.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
By:
------------------------------------
[Insert title]
BT ALEX. BROWN INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
BEAR, STEARNS INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
NATIONSBANC MONTGOMERY SECURITIES LLC
SMITH BARNEY INC.
Each by its duly authorized attorney-in-fact:
---------------------------------------
[Insert name]
22
<PAGE> 23
SCHEDULE A
<TABLE>
<CAPTION>
MANAGER INTERNATIONAL FIRM SHARES
------- -------------------------
<S> <C>
Credit Suisse First Boston (Europe) Limited . . . . . . . . . . . . .
BT Alex. Brown International . . . . . . . . . . . . . . . . . . . .
Morgan Stanley & Co. International Limited . . . . . . . . . . . . .
Bear, Stearns International Limited . . . . . . . . . . . . . . . . .
Goldman Sachs International . . . . . . . . . . . . . . . . . . . .
NationsBanc Montgomery Securities LLC . . . . . . . . . . . . . . . .
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .
----------
Total . . . . . . . . . . . . . . . . . . . 6,200,000
==========
</TABLE>
23
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CAPSTAR BROADCASTING CORPORATION
(Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware)
________________________________________________________________________________
Capstar Broadcasting Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify as follows:
A. The Corporation's original Certificate of Incorporation was
filed under the name Capstar Broadcasting Corporation with the Secretary of
State of the State of Delaware on May 19, 1997.
B. This Amended and Restated Certificate of Incorporation (the
"Amended and Restated Certificate of Incorporation") restates and integrates
and further amends the Certificate of Incorporation of the Corporation.
C. This Amended and Restated Certificate of Incorporation was
duly adopted by vote of the stockholders in accordance with Sections 228, 242
and 245 of the General Corporation Law of the state of Delaware.
D. The text of the Certificate of Incorporation, as amended or
supplemented heretofore, is further amended hereby and restated to read in full
as set forth herein:
FIRST: The name of the corporation is Capstar Broadcasting Corporation
(the "Corporation").
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, County of
New Castle, City of Wilmington, State of Delaware 19801. The name of the
registered agent of the Corporation at such address is The Corporation Trust
Company.
THIRD: The purpose for which the Corporation is organized is to engage
in any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
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FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 1,150,000,000 shares
consisting of (a) 100,000,000 shares of preferred stock, par value of One Cent
($.01) per share (the "Preferred Stock"), (b) 750,000,000 shares of Class A
Common Stock, par value of One Cent ($.01) per share (the "Class A Common
Stock"), (c) 150,000,000 shares of Class B Common Stock, par value of One Cent
($.01) per share (the "Class B Common Stock), and (d) 150,000,000 shares of
Class C Common Stock, par value of One Cent ($.01) per share (the "Class C
Common Stock," and together with the Class A Common Stock and the Class B
Common Stock, the "Common Stock").
Upon the filing of this Amended and Restated Certificate of
Incorporation with the Delaware Secretary of State, each share of Common Stock
(the "Old Common Stock") issued and outstanding immediately prior to such
filing shall, without any action on the part of the holder thereof, be
converted and reclassified into, and immediately represent 0.10 validly issued,
fully paid and non-assessable shares of Common Stock of the same class as the
Old Common Stock being converted and reclassified. Any fraction of a share of
Common Stock that would otherwise result pursuant to the preceding sentence
(after aggregating all fractional shares held by each stockholder) shall
automatically be eliminated and, in lieu thereof, the holder thereof shall be
entitled to receive a cash adjustment in respect of such fraction of a share in
an amount based upon a value of the Common Stock equal to $19.50 per whole
share. Each certificate representing shares of Old Common Stock shall
thereafter represent that number of shares of Common Stock determined in the
previous sentences; provided, however, that each person holding of record a
stock certificate or certificates representing shares of Old Common Stock shall
receive, upon surrender of such certificate or certificates, a new certificate
or certificates evidencing and representing the number of shares of Common
Stock to which such person is entitled.
The designations, powers, preferences, rights, qualifications,
limitations and restrictions of the Preferred Stock and the Common Stock are as
follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time
in one or more classes or series, the shares of each class or series to have
such designations, powers, preferences and rights and such qualifications,
limitations and restrictions thereof as are stated and expressed herein and in
the resolution or resolutions providing for the issue of such class or series
adopted by the board of directors of the Corporation (the "Board of Directors")
as hereafter prescribed.
(b) Authority is hereby expressly granted to and vested
in the Board of Directors to authorize the issuance of the Preferred Stock from
time to time in one or more classes or series, and with respect to each class
or series of the Preferred Stock, to fix and state by the resolution or
resolutions from time to time adopted providing for the issuance thereof the
following:
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(i) whether or not the class or series is to have
voting rights, full, special or limited, or is to be without voting
rights, and whether or not such class or series is to be entitled to
vote as a separate class either alone or together with the holders of
one or more other classes or series of capital stock;
(ii) the number of shares to constitute the class
or series and the designations thereof;
(iii) the preferences and relative, participating,
optional or other special rights, if any, and the qualifications,
limitations or restrictions thereof, if any, with respect to any class
or series;
(iv) whether or not the shares of any class or
series shall be redeemable at the option of the Corporation or the
holders thereof or upon the happening of any specified event, and, if
redeemable, the redemption price or prices (which may be payable in
the form of cash, notes, securities or other property) and the time or
times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or
series shall be subject to the operation of retirement or sinking
funds to be applied to the purchase or redemption of such shares for
retirement, and, if such retirement or sinking fund or funds are to be
established, the annual amount thereof and the terms and provisions
relative to the operation thereof;
(vi) the dividend rate, whether dividends are
payable in cash, securities of the Corporation or other property, the
conditions upon which and the times when such dividends are payable,
the preference to or the relation to the payment of dividends payable
on any other class or classes or series of capital stock, whether or
not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall
accumulate;
(vii) the preferences, if any, and the amounts
thereof which the holders of any class or series thereof shall be
entitled to receive upon the voluntary or involuntary dissolution of,
or upon any distribution of the assets of, the Corporation;
(viii) whether or not the shares of any class or
series, at the option of the Corporation or the holder thereof or upon
the happening of any specified event, shall be convertible into or
exchangeable for the shares of any other class or classes or of any
other series of the same or any other class or classes of capital
stock, securities, or other property of the Corporation or any other
entity and the conversion price or prices, ratio or ratios, or the
rate or rates at which such conversion or exchange may be made, with
such adjustments, if any, as shall be stated and expressed or provided
for in such resolution or resolutions; and
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(ix) such other special rights and protective
provisions with respect to any class or series the Board of Directors
may provide.
(c) The shares of each class or series of the Preferred
Stock may vary from the shares of any other class or series thereof in any or
all of the foregoing respects. The Board of Directors may increase the number
of shares of the Preferred Stock designated for any existing class or series by
a resolution adding to such class or series authorized and unissued shares of
the Preferred Stock not designated for any other class or series. The Board of
Directors may decrease the number of shares of the Preferred Stock designated
for any existing class or series by a resolution subtracting from such class or
series authorized and unissued shares of the Preferred Stock designated for
such existing class or series, and the shares so subtracted shall become
authorized, unissued and undesignated shares of the Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) General. Except as otherwise provided herein or as
otherwise provided by applicable law, all shares of Common Stock shall have
identical rights and privileges in every respect.
(b) Dividends. Subject to the prior rights and
preferences, if any, applicable to shares of the Preferred Stock, the holders
of the Common Stock shall be entitled to participate ratably, on a
share-for-share basis as if all shares were of a single class, in such
dividends, whether in cash, stock or otherwise, as may be declared by the Board
of Directors from time to time out of funds of the Corporation legally
available therefor; provided, however, that any dividends payable in shares of
Common Stock (or payable in rights to subscribe for or purchase shares of
Common Stock or securities or indebtedness convertible into or exchangeable for
shares of Common Stock) shall be declared and paid at the same rate on each
class of Common Stock and only in shares of Class A Common Stock (or rights to
subscribe for or to purchase shares of Class A Common Stock or securities or
indebtedness convertible into or exchangeable for shares of Class A Common
Stock) to holders of Class A Common Stock, in shares of Class B Common Stock
(or rights to subscribe for or to purchase shares of Class B Common Stock or
securities or indebtedness convertible into or exchangeable for shares of Class
B Common Stock) to holders of Class B Common Stock and in shares of Class C
Common Stock (or rights to subscribe for or to purchase shares of Class C
Common Stock or securities or indebtedness convertible into or exchangeable for
shares of Class C Common Stock) to holders of Class C Common Stock.
(c) Voting.
(i) The holders of Class A Common Stock and Class
C Common Stock shall vote together as a single class with respect to all
matters submitted to a vote of stockholders with each such holder having the
number of votes specified in subparagraph (ii) below, except (A)
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with respect to the election of directors after completion of an IPO (as
hereinafter defined), which shall be governed by subparagraphs (iii), (iv), and
(v) below, (B) with respect to any Going Private Transaction (as hereinafter
defined) after completion of an IPO that is between the Corporation and Hicks
Muse (as hereinafter defined) or any Affiliate (as hereinafter defined) of
Hicks Muse, which shall be governed by subparagraph (vi) below, and (C) as
otherwise provided by law. The Class B Common Stock shall not be entitled to
vote, except as required by law; provided, however, that the Class B Common
Stock shall not have the right to vote on any matter if such right would cause
the Class B Common Stock to become voting securities within the meaning of 12
C.F.R. 225.2(p), as that section may be amended from time to time.
(ii) The Class A Common Stock shall entitle the
holders thereof to one vote per share. The Class C Common Stock shall entitle
the holders thereof to ten (10) votes per share.
(iii) Commencing with the first annual meeting of
stockholders after completion of an IPO, the holders of Class A Common Stock
shall be entitled by class vote, exclusive of all other stockholders, to elect
two directors of the Corporation with each share of Class A Common Stock
entitling the holder thereof to one vote; provided, each director elected
pursuant to this subparagraph must be an Independent Director (as hereinafter
defined).
(iv) The holders of Class A Common Stock and Class
C Common Stock, voting as a single class, shall have the right to vote on the
election or removal of all directors of the Corporation (other than the
directors elected pursuant to subparagraph (iii) above and the directors, if
any, who may be elected by the holders of the Preferred Stock), with each share
of Class A Common Stock and each share of Class C Common Stock entitling the
holder thereof to the number of votes specified in subparagraph (ii) above.
(v) Notwithstanding subparagraphs (iii) and (iv)
above, upon the earlier to occur of (A) the date on which Hicks Muse and its
Affiliates cease to own beneficially more than 50% of the number of shares of
Class C Common Stock owned by them upon completion of an IPO, subject to
appropriate adjustment in respect of any subdivisions or combinations affecting
Class C Common Stock and (B) the third anniversary date of the completion of
an IPO, the holders of Class A Common Stock and Class C Common Stock shall vote
together as a single class upon the election or removal of all directors with
each share of Class A Common Stock and each share of Class C Common Stock
entitling the holder thereof to the number of votes specified in subparagraph
(ii) above.
(vi) With respect to any Going Private Transaction
between the Corporation and Hicks Muse or an Affiliate of Hicks Muse after
completion of an IPO, the holders of Class A Common Stock and Class C Common
Stock shall vote as a single class, with each share of Class A Common Stock and
Class C Common Stock entitled to one vote.
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(d) Conversion.
(i) Automatic Conversion. Subject to any
necessary approval of the FCC, each share of Class B Common Stock and Class C
Common Stock shall convert automatically into one fully paid and non-assessable
share of Class A Common Stock for no additional consideration upon its sale,
gift or other transfer, voluntary or involuntary, to a party other than Hicks
Muse or an Affiliate of Hicks Muse or, with respect to Class B Common Stock, a
Regulated Entity.
(ii) Voluntary Conversion. Subject to any
necessary approval of the FCC, the shares of Class B Common Stock and Class C
Common Stock shall be convertible in whole or in part at any time at the option
of the holder or holders thereof, if such holder(s) is not a Regulated Entity
(as hereinafter defined), into an equal number of fully paid and non-assessable
shares of Class A Common Stock, for no additional consideration.
(iii) Automatic Conversion Procedure. Promptly
upon the occurrence of an Event of Automatic Conversion (as hereinafter
defined) pursuant to subparagraph (i) above, the holder of the shares of Class
B Common Stock or Class C Common Stock being converted shall surrender the
certificate or certificates therefor, duly endorsed in blank or accompanied by
duly executed proper instruments of transfer, at the office of the Corporation,
or of any transfer agent for the Common Stock, and shall give written notice to
the Corporation, at its office: (A) stating that the shares are being
converted pursuant to an Event of Automatic Conversion into Class A Common
Stock as provided in subparagraph (i); (B) specifying the Event of Automatic
Conversion (and, if the occurrence of such event is within the control of the
transferor, stating the transferor's intent to effect an Event of Automatic
Conversion); (C) identifying the number of shares of Class B Common Stock or
Class C Common Stock, as the case may be, being converted; and (D) setting out
the name or names (with addresses) and denominations in which the certificate
or certificates for shares of Class A Common Stock shall be issued and
instructions for delivery thereof. Delivery of such notice together with the
certificates representing the shares of Class B Common Stock or Class C Common
Stock being converted shall obligate the Corporation to issue one or more
certificates representing the shares of Class A Common Stock to be issued upon
such conversion. To the extent permitted by law, conversion pursuant to an
Event of Automatic Conversion shall be deemed to have been effected as of the
date and time on which the Event of Automatic Conversion occurred (such date
and time being the "Automatic Conversion Time"). To the extent an Event of
Automatic Conversion shall require the approval of the FCC, the Automatic
Conversion Time shall be such time and date as the order of the FCC approving
such event shall become a Final Order (as hereinafter defined). The person
entitled to receive the Class A Common Stock issuable upon a conversion
pursuant to subparagraph (i) above shall be treated for all purposes as the
record holder of such Class A Common Stock at and as of the Automatic
Conversion Time, and the right of such person as a holder of shares of Class B
Common Stock or Class C Common Stock, as the case may be, shall cease and
terminate at and as of the Automatic Conversion Time, in each case without
regard to any failure by the holder to deliver the certificate or the notice
required by this subparagraph (iii).
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(iv) Voluntary Conversion Procedure. At the time
of a voluntary conversion pursuant to subparagraph (ii) above or, in the event
such conversion requires the consent of the FCC, at the time the FCC order
approving such a conversion becomes a Final Order, the holder or holders of
Class B Common Stock or Class C Common Stock, as the case may be, shall deliver
to the office of the Corporation or any transfer agent for the Common Stock (A)
the certificate or certificates representing the shares of Class B Common Stock
or Class C Common Stock, as the case may be, to be converted, duly endorsed in
blank or accompanied by duly executed proper instruments of transfer, and (B)
written notice to the Corporation stating that such holder or holders elect(s)
to convert such share or shares and stating the name and addresses in which
each certificate for shares of Class A Common Stock issued upon such conversion
is to be issued. Conversion shall be deemed to have been effected at the time
and date when such delivery is made to the Corporation or the transfer agent of
the shares to be converted, and the person exercising such voluntary conversion
shall be deemed to be the holder of record of the number of shares of Class A
Common Stock issuable upon such conversion at such time.
(v) Issuance of Conversion Shares. As promptly
as practicable following any holder's conversion of shares of Common Stock, the
Corporation shall issue and deliver to the converting holder or to such
holder's transferee, as the case may be, (A) one or more certificates (as such
holder may request) evidencing the shares of Common Stock issuable in respect
of the applicable conversion and (B) if the certificates surrendered by the
converting holder evidence more shares of Common Stock than the holder has
elected to convert or that automatically have been converted, as the case may
be, one or more certificates (as such holder may request) evidencing the shares
of Common Stock which have not been converted. Pending the issuance and
delivery of the foregoing certificates, the certificate or certificates
evidencing the shares of Common Stock that have been surrendered for conversion
shall be deemed to evidence the shares of Common Stock issuable upon such
conversion.
(vi) Dividends on Converted Shares. Any dividends
declared and not paid on shares of Common Stock prior to their conversion as
provided above shall be paid, on the payment date, to the holder or holders
entitled thereto on the record date for such dividend payment, notwithstanding
such conversion; provided, however, that such holder or holders shall not be
entitled to receive the corresponding dividends declared but not paid on the
shares of Common Stock issuable upon such conversion.
(e) Reservation of Shares. The Corporation shall at all
times reserve and keep available out of its authorized but unissued shares of
Class A Common Stock, solely for the purpose of effecting the conversions
provided for herein, such number of shares of Class A Common Stock as shall
from time to time be sufficient to effect the conversions provided for herein
and shall take all such corporate action as may be necessary to assure that
such shares of Class A Common Stock shall be validly issued, fully paid and
non-assessable upon conversion of all of the outstanding shares of Class B
Common Stock and Class C Common Stock, as applicable; moreover, if at any time
the
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number of authorized but unissued shares of Class A Common Stock shall not be
sufficient to effect the conversions provided for herein, the Corporation shall
take such corporate action as may be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as shall be
sufficient for such purpose.
(f) Adjustments for Stock Splits and Stock Dividends.
The Corporation shall treat the shares of Common Stock identically in respect
of any subdivisions or combinations (for example, if the Corporation effects a
two-for-one stock split with respect to the Class A Common Stock, it shall at
the same time effect a two-for-one stock split with respect to the Class B
Common Stock and the Class C Common Stock).
(g) Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation, after
all creditors of the Corporation shall have been paid in full and after payment
of all sums payable in respect of Preferred Stock, if any, the holders of the
Common Stock shall share ratably on a share-for-share basis in all
distributions of assets pursuant to such voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation. For the purposes of this
paragraph (g), neither the merger nor the consolidation of the Corporation into
or with another entity or the merger or consolidation of any other entity into
or with the Corporation, or the sale, transfer, or other disposition of all or
substantially all the assets of the Corporation, shall be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding-up of the
Corporation.
(h) Reissue of Shares. Shares of Class B Common Stock
and Class C Common Stock that are converted into shares of Class A Common
Stock, as provided herein, shall be retired and canceled and shall not be
reissued.
(i) Transferability. Notwithstanding any other provision
contained in this Amended and Restated Certificate of Incorporation, if a
holder of the Class B Common Stock is a Regulated Entity, such holder may
transfer the Class B Common Stock only under the following circumstances: (i)
in a widely distributed public offering; (ii) in a transfer pursuant to Rule
144 under the Securities Act of 1933 or any similar rule then in force; (iii)
in a transfer constituting two percent or less of the outstanding shares of the
Class B Common Stock; (iv) in a transfer to a person if such person already
owns or has negotiated to purchase at least a majority of the Class A Common
Stock; (v) in a transfer to the Corporation; (vi) in a transfer to an Affiliate
of such holder or to any other Regulated Entity; or (vii) in any method of
transfer permitted by the Board of Governors of the Federal Reserve System.
(j) Definitions. Capitalized terms used in this Amended
and Restated Certificate of Incorporation and not otherwise defined are used
with the meanings set forth below.
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"Affiliate" shall have the same meaning as such term has under
Rule 12b-2 of the Exchange Act.
"Event of Automatic Conversion" shall mean any of the events
set forth in paragraph (d)(i) above.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"FCC" shall mean the Federal Communications Commission.
"Final Order" shall mean an order, action or decision of the
FCC (without the inclusion of any material adverse conditions not customarily
imposed with respect to such orders, actions or decisions) (i) that has not
been reversed, stayed, enjoined, set aside, annulled or suspended and (ii) with
respect to which (A) no timely request has been filed for administrative or
judicial review, reconsideration, appeal, or stay, and the time for filing any
such requests and for the FCC to set aside the action on its own motion has
expired or (B) in the event of review, reconsideration, or appeal, such review,
reconsideration, or appeal has been denied and the time for further review,
reconsideration, or appeal has expired.
"Going Private Transaction" shall mean any transaction that is
a "Rule 13e-3 transaction," as such term is defined in Rule 13e-3(a)(3)
promulgated under the Exchange Act; provided, however, that the term
"affiliate" as used in Rule 13e-3(a)(3)(i) shall be deemed to include an
Affiliate, as defined in this paragraph.
"Hicks Muse" shall mean Hicks Muse, Tate & Furst Incorporated,
a Delaware corporation.
"Independent Director" shall mean a person who is not an
officer or employee of the Corporation or its subsidiaries, and who does not
have a relationship which, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
"IPO" shall mean a firm commitment underwritten public
offering of Class A Common Stock for cash pursuant to a registration statement
under the Securities Act of 1933 where the aggregate proceeds to the Company
(prior to deducting any underwriters' discounts and commissions from such
offering and any similar prior public offering) exceed $10 million.
"Regulated Entity" means (i) any entity that is a "bank
holding company" (as defined in Section 2(a) of the Bank Holding Company Act of
1956, as amended (the "BHC Act")) or any non-bank subsidiary of such an entity
and (ii) any entity that, pursuant to Section 8(a) of the
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International Banking Act of 1978, as amended, is subject to the provisions of
the BHC Act or any non-bank subsidiary of such an entity.
3. General.
(a) Subject to the foregoing provisions of this Amended
and Restated Certificate of Incorporation, the Corporation may issue shares of
its Common Stock or Preferred Stock from time to time for such consideration
(not less than the par value thereof) as may be fixed by the Board of
Directors, which is expressly authorized to fix the same in its absolute and
uncontrolled discretion subject to the foregoing conditions. Shares so issued
for which the consideration shall have been paid or delivered to the
Corporation shall be deemed fully paid capital stock and shall not be liable to
any further call or assessment thereon, and the holders of such shares shall
not be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and
issue rights and options entitling their holders to purchase shares of the
Corporation's capital stock of any class or series or other securities of the
Corporation, and such rights and options shall be evidenced by instrument(s)
approved by the Board of Directors or a committee of the Board of Directors.
The Board of Directors or a committee of the Board of Directors shall be
empowered to set the exercise price, duration, times for exercise, and other
terms of such options or rights; provided, however, that the consideration to
be received for any shares of capital stock subject thereto shall not be less
than the par value thereof.
FIFTH: The number, classification, and terms of the Board of
Directors of the Corporation and the procedures to elect directors, to remove
directors, and to fill vacancies in the Board of Directors shall be as follows:
(a) The number of directors constituting the Board of
Directors shall be no less than one and no more than twenty-one, plus such
number of directors as may be elected from time to time by the holders of any
class or series of Preferred Stock.
(b) Commencing on the completion of an IPO, the directors
of the Corporation (other than those elected pursuant to Section 2(c)(iii) of
Article FOURTH, if any (the "Class A Directors"), and those appointed pursuant
to the terms of this paragraph (b)) shall be divided by the Board of Directors
into three classes (the "Classified Directors") with the first class ("Class
I"), second class ("Class II") and third class ("Class III") each to consist as
nearly as practicable of an equal number of directors. The term of office of
the Class I directors shall expire at the first annual meeting of stockholders
after completion of an IPO, the term of office of the Class II directors shall
expire at the second annual meeting of stockholders after completion of an IPO
and the term of office of the Class III directors shall expire at the third
annual meeting of stockholders after completion of an IPO, with each director
to hold office until his or her successor shall have been duly
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elected and qualified. At each annual meeting of stockholders, commencing with
the first annual meeting after completion of an IPO, Classified Directors
elected to succeed those Classified Directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election. The term of office of each Class A
Director shall expire annually, and commencing with the first annual meeting of
stockholders after completion of an IPO, Class A Directors will be elected at
each annual meeting. The Board of Directors shall appoint the Class A
Directors after the completion of an IPO and before the first annual meeting of
stockholders. Each Classified Director and Class A Director shall hold office
until his or her respective successor shall have been duly elected and
qualified. The directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
(c) Upon the earlier to occur of (i) the date on which
Hicks Muse and its Affiliates cease to own beneficially more than 50% of the
number of shares of Class C Common Stock owned by them upon completion of an
IPO, subject to appropriate adjustment in respect of any subdivisions or
combinations affecting Class C Common Stock, and (ii) the third anniversary
date of the completion of an IPO, no Class A Directors shall be elected
thereafter pursuant to Section 2(c)(iii) of Article FOURTH and each Class A
Director then holding office shall receive the classification (Class I, II or
III) that at least a majority of the Board of Directors designates and shall
hold office until the first meeting of stockholders held after his election for
the purpose of electing directors of that classification and until his
successor is elected and qualified.
SIXTH: The following provisions are included for the purpose of
ensuring that control and management of the Corporation remain with citizens of
the United States and/or corporations formed under the laws of the Unites
States or any of the states of the United States, as required by the
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as the same may be amended from time to time
(collectively, the "Communications Act"):
(a) The Corporation shall not issue to (i) a person who
is a citizen of a country other than the United States; (ii) any entity
organized under the laws of a government other than the government of the
United States or any state, territory, or possession of the United States;
(iii) a government other than the government of the United States or of any
state, territory, or possession of the United States; or (iv) a representative
of, or an individual or entity controlled by, any of the foregoing
(individually, an "Alien"; collectively, "Aliens") any shares of capital stock
of the Corporation if such issuance would result in the total number of shares
of such capital stock held or voted by Aliens (or for or by the account of
Aliens) to exceed 25% of (A) the total number of all shares of such capital
stock outstanding at any time and from time to time or (B) the total voting
power of all shares of such capital stock outstanding and entitled to vote at
any time and from time to time and shall not permit the transfer on the books
of the Corporation of any capital stock to any Alien that would result in the
total number of shares of such capital stock held or voted by Aliens (or for or
by the account of Aliens) exceeding such 25% limits.
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(b) No Alien or Aliens, individually or collectively,
shall be entitled to vote or direct or control the vote of more than 25% of (i)
the total number of all shares of capital stock of the Corporation outstanding
at any time and from time to time or (ii) the total voting power of all shares
of capital stock of the Corporation outstanding and entitled to vote at any
time and from time to time, and issuances and transfers of capital stock of the
Corporation in violation of this subsection (b) shall be prohibited.
(c) The Board of Directors shall have all powers
necessary to implement the provisions of this Article SIXTH and to ensure
compliance with the alien ownership restrictions (the "Alien Ownership
Restrictions") of the Communications Act, including, without limitation, the
power to prohibit the transfer of any shares of capital stock of the
Corporation to any Alien and to take or cause to be taken such action as it
deems appropriate to implement such prohibition, including placing a legend
regarding restrictions on foreign ownership of the capital stock on
certificates representing such capital stock.
(d) Without limiting the generality of the foregoing and
notwithstanding any other provision of this Amended and Restated Certificate of
Incorporation to the contrary, any shares of capital stock of the Corporation
determined by the Board of Directors to be owned beneficially by an Alien or
Aliens shall always be subject to redemption by the Corporation by action of
the Board of Directors, pursuant to Section 151 of the General Corporation Law
of the State of Delaware, or any other applicable provision of law, to the
extent necessary in the judgment of the Board of Directors to comply with the
Alien Ownership Restrictions. The terms and conditions of such redemption
shall be as follows:
(i) the redemption price of the shares to be
redeemed pursuant to this Article SIXTH shall be equal to the lower of
(A) the fair market value of the shares to be redeemed, as determined
by the Board of Directors in good faith, and (B) such Alien's purchase
price for such shares;
(ii) the redemption price of such shares may be
paid in cash, securities or any combination thereof;
(iii) if less than all the shares held by Aliens
are to be redeemed, the shares to be redeemed shall be selected in any
manner determined by the Board of Directors to be fair and equitable;
(iv) at least 10 days' written notice of the
redemption date shall be given to the holders of record of the shares
selected to be redeemed (unless waived in writing by any such holder),
provided that the redemption date may be the date on which written
notice shall be given to holders if the cash or securities necessary
to effect the redemption shall have been deposited in trust for the
benefit of such holders and subject to immediate withdrawal
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<PAGE> 13
by them upon surrender of the stock certificates for their shares to
be redeemed duly endorsed in blank or accompanied by duly executed
proper instruments of transfer;
(v) from and after the redemption date, the
shares to be redeemed shall cease to be regarded as outstanding and
any and all rights of the holders in respect of the shares to be
redeemed or attaching to such shares of whatever nature (including
without limitation any rights to vote or participate in dividends
declared on capital stock of the same class or series as such shares)
shall cease and terminate, and the holders thereof thereafter shall be
entitled only to receive the cash or securities payable upon
redemption; and
(vi) such other terms and conditions as the Board
of Directors shall determine.
For purposes of this Article SIXTH, the determination of beneficial ownership
of shares of capital stock of the Corporation shall be made pursuant to Rule
13d-3 under the Exchange Act.
SEVENTH: No contract or transaction between the Corporation and one
or more of its directors, officers, or stockholders or between the Corporation
and any Person (as hereinafter defined) in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board of Directors or committee which authorizes the contract or
transaction, or solely because his, her, or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; (ii) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
"Person" as used herein means any corporation, partnership, limited liability
company, association, firm, trust, joint venture, political subdivision or
instrumentality.
EIGHTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint
13
<PAGE> 14
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article EIGHTH is in effect. Any repeal
or amendment of this Article EIGHTH shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services
of such director or officer in any of the foregoing capacities prior to any
such repeal or amendment to this Article EIGHTH. Such right shall include the
right to be paid by the Corporation expenses incurred in investigating or
defending any such proceeding in advance of its final disposition to the
maximum extent permitted under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses
of prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense is not permitted under the
General Corporation Law of the State of Delaware, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having
a right of indemnification under the foregoing provisions, such right shall
inure to the benefit of his or her heirs, executors, administrators, and
personal representatives. The rights conferred above shall not be exclusive of
any other right which any Person may have or hereafter acquire under any
statute, bylaw, resolution of stockholders or directors, agreement, or
otherwise.
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent
permitted by then applicable law, the grant of mandatory indemnification
pursuant to this Article EIGHTH shall extend to proceedings involving the
negligence of such Person.
As used herein, the term "proceeding" means any threatened, pending,
or completion action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal
14
<PAGE> 15
in such an action, suit, or proceeding, and any inquiry or investigation that
could lead to such an action, suit, or proceeding.
NINTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware; or (iv) for any transaction from which the
director derived an improper personal benefit. Any repeal or amendment of this
Article NINTH by the stockholders of the Corporation shall be prospective only,
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation arising from an act or omission occurring prior to
the time of such repeal or amendment. In addition to the circumstances in
which a director of the Corporation is not personally liable as set forth in
the foregoing provisions of this Article NINTH, a director shall not be liable
to the Corporation or its stockholders to such further extent as permitted by
any law hereafter enacted, including without limitation any subsequent
amendment to the General Corporation Law of the State of Delaware.
TENTH: All of the power of the Corporation, insofar as it may be
lawfully vested by this Amended and Restated Certificate of Incorporation in
the Board of Directors, is hereby conferred upon the Board of Directors of the
Corporation. In furtherance of and not in limitation of that power or the
powers conferred by law, a majority of directors then in office (or such higher
percentage as may be specified in the bylaws with respect to any provision
thereof) shall have the power to adopt, amend and repeal the bylaws of the
Corporation.
15
<PAGE> 16
IN WITNESS WHEREOF, said Capstar Broadcasting Corporation has caused
this Amended and Restated Certificate of Incorporation to be signed by William
S. Banowsky, Jr. this ______ day of May, 1998.
CAPSTAR BROADCASTING CORPORATION
By:
----------------------------------
William S. Banowsky, Jr.
Executive Vice President, General
Counsel and Secretary
16
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
CAPSTAR BROADCASTING CORPORATION
A DELAWARE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I: OFFICES
1.1 Registered Office and Agent.....................................................................1
1.2 Other Offices...................................................................................1
ARTICLE II: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting................................................................................ 1
2.2 Special Meeting............................................................................... 1
2.3 Place of Meetings............................................................................. 2
2.4 Notice........................................................................................ 2
2.5 Notice of Stockholder Business at Annual Meeting.............................................. 2
2.6 Voting List................................................................................... 3
2.7 Quorum........................................................................................ 3
2.8 Required Vote; Withdrawal of Quorum........................................................... 3
2.9 Method of Voting; Proxies..................................................................... 3
2.10 Record Date................................................................................... 4
ARTICLE III: DIRECTORS
3.1 Management.................................................................................... 5
3.2 Number; Qualification; Election; Eligibility; Term............................................ 5
3.3 Nomination of Director Candidates............................................................. 5
3.4 Change in Number.............................................................................. 6
3.5 Removal....................................................................................... 6
3.6 Newly Created Directorships and Vacancies..................................................... 6
3.7 Meetings of Directors......................................................................... 6
3.8 Election of Officers.......................................................................... 7
3.9 Regular Meetings.............................................................................. 7
3.10 Special Meetings.............................................................................. 7
3.11 Notice........................................................................................ 7
3.12 Quorum; Majority Vote......................................................................... 7
3.13 Procedure..................................................................................... 7
3.14 Presumption of Assent......................................................................... 7
3.15 Compensation.................................................................................. 7
ARTICLE IV: COMMITTEES
4.1 Designation................................................................................... 8
4.2 Number; Qualification; Term................................................................... 8
4.3 Committee Changes............................................................................. 8
4.4 Alternate Members of Committees............................................................... 8
4.5 Regular Meetings.............................................................................. 8
4.6 Special Meetings.............................................................................. 8
4.7 Quorum; Majority Vote......................................................................... 8
4.8 Minutes....................................................................................... 8
4.9 Compensation.................................................................................. 9
4.10 Responsibility................................................................................ 9
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V: NOTICE
5.1 Method........................................................................................ 9
5.2 Waiver........................................................................................ 9
ARTICLE VI: OFFICERS
6.1 Number; Titles; Term of Office................................................................ 9
6.2 Removal....................................................................................... 9
6.3 Vacancies..................................................................................... 10
6.4 Authority..................................................................................... 10
6.5 Compensation.................................................................................. 10
6.6 Chairman of the Board......................................................................... 10
6.7 Chief Executive Officer....................................................................... 10
6.8 President..................................................................................... 10
6.9 Vice Presidents............................................................................... 10
6.10 Treasurer..................................................................................... 10
6.11 Assistant Treasurers.......................................................................... 11
6.12 Secretary..................................................................................... 11
6.13 Assistant Secretaries......................................................................... 11
ARTICLE VII: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares....................................................................... 11
7.2 Replacement of Lost or Destroyed Certificates................................................. 11
7.3 Transfer of Shares............................................................................ 12
7.4 Registered Stockholders....................................................................... 12
7.5 Regulations................................................................................... 12
7.6 Legends....................................................................................... 12
ARTICLE VIII: MISCELLANEOUS PROVISIONS
8.1 Dividends..................................................................................... 12
8.2 Reserves...................................................................................... 12
8.3 Books and Records............................................................................. 12
8.4 Fiscal Year................................................................................... 12
8.5 Seal.......................................................................................... 12
8.6 Resignations.................................................................................. 12
8.7 Securities of Other Corporations.............................................................. 13
8.8 Telephone Meetings............................................................................ 13
8.9 Action Without a Meeting...................................................................... 13
8.10 Invalid Provisions............................................................................ 14
8.11 Mortgages, etc................................................................................ 14
8.12 Headings...................................................................................... 14
8.13 References.................................................................................... 14
8.14 Amendments.................................................................................... 14
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
CAPSTAR BROADCASTING CORPORATION
A DELAWARE CORPORATION
PREAMBLE
These Bylaws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation (as the same may be amended and restated from time
to time) of Capstar Broadcasting Corporation, a Delaware corporation (the
"Corporation"). In the event of a direct conflict between the provisions of
these Bylaws and the mandatory provisions of the Delaware General Corporation
Law or the provisions of the certificate of incorporation of the Corporation,
such provisions of the Delaware General Corporation Law or the certificate of
incorporation of the Corporation, as the case may be, will be controlling.
ARTICLE I: OFFICES
1.1 Registered Office and Agent. The registered agent of the
Corporation shall be as designated from time to time by the appropriate filing
by the Corporation in the office of the Secretary of State of the State of
Delaware.
1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
2.2 Special Meeting. Except as otherwise required by law, special
meetings of the stockholders of the Corporation, and any proposals to be
considered at such meetings, may be called and proposed exclusively by the board
of directors, pursuant to a resolution approved by a majority of the members of
the board of directors serving at the time of that vote, and no stockholder of
the Corporation shall require the board of directors to call a special meeting
of stockholders or to propose business at a special meeting of stockholders. A
special meeting shall be held on such date and at such time as shall be
designated by the board of directors and stated in the notice of the meeting or
in a duly executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
<PAGE> 5
2.3 Place of Meetings. An annual meeting of stockholders may be held
at any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waive of notice of such meeting. Meetings of stockholders shall be held
at the principal office of the Corporation unless another place is designated
for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary, or the officer or person(s) calling the meeting, to each stockholder
of record entitled to vote at such meeting. If such notice is to be sent by
mail, it shall be directed to each stockholder at his address as it appears on
the records of the Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address. Notice
of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy and shall not,
at the beginning of such meeting, object to the transaction of any business
because the meeting is not lawfully called or convened, or who shall, either
before or after the meeting, submit a signed waiver of notice, in person or by
proxy.
2.5 Notice of Stockholder Business at Annual Meeting. (a) At an
annual meeting of the stockholders, only such business shall be conducted as
shall have been brought before the meeting (i) pursuant to the Corporation's
notice of meeting, (ii) by or at the direction of a majority of the members of
the board of directors, or (iii) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of notice provided for in this
bylaw, who shall be entitled to vote at such meeting, and who complies with the
notice procedures set forth in paragraph (b) of this bylaw.
(b) No business proposed by a stockholder to be considered at
an annual meeting of the common stockholders (including the nomination of any
person to be elected as a director of the Corporation) shall be considered by
the common stockholders at that meeting unless, no later than sixty days before
the annual meeting of common stockholders or (if later) ten days after the first
public notice of that meeting is sent to common stockholders, the Corporation
receives from the stockholder proposing that business a written notice that sets
forth (1) the nature of the proposed business with reasonable particularity,
including the exact text of any proposal to be presented for adoption, and the
reasons for conducting that business at the annual meeting; (2) with respect to
each such stockholder, that stockholder's name and address (as they appear on
the records of the Corporation), business address and telephone number,
residence address and telephone number, and the number of shares of each class
and series of stock of the Corporation beneficially owned by that stockholder;
(3) any interest of the stockholder in the proposed business; (4) the name or
names of each person nominated by the stockholder to be elected or reelected as
a director, if any; and (5) with respect to each nominee and such stockholder
the information and notices required by Section 3.3 of these Bylaws.
Notwithstanding the previous sentence, the Corporation may exclude from its
proxy materials any proposed business that may be excluded by applicable law.
(c) Notwithstanding anything in these Bylaws to the contrary,
no business shall be conducted at an annual meeting except in accordance with
the procedures set forth in this bylaw. The person presiding at the annual
meeting shall determine whether business (including the nomination of any person
as a director) has been properly brought before the meeting and, if the facts so
warrant, shall not permit any business (or voting with respect to any particular
nominee) to be transacted that has not been properly brought before the meeting.
Nothing in this Section 2.5 shall relieve a stockholder who proposes to conduct
business
2
<PAGE> 6
at an annual meeting from complying with all applicable requirements, if any, of
the Exchange Act, and the rules and regulations thereunder.
2.6 Voting List. At least ten days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder. For
a period of ten days prior to such meeting, such list shall be kept on file at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of meeting or a duly executed waiver of notice of such
meeting or, if not so specified, at the place where the meeting is to be held
and shall be open to examination by any stockholder during ordinary business
hours. Such list shall be produced at such meeting and kept at the meeting at
all times during such meeting and may be inspected by any stockholder who is
present.
2.7 Quorum. The holders of a majority in voting power of the
outstanding shares then entitled to vote on a matter, present in person or by
proxy, shall constitute a quorum at any meeting of stockholders, except as
otherwise provided by law, the certificate of incorporation of the Corporation,
or these Bylaws. Notwithstanding the preceding sentence, in no event shall a
quorum consist of less than one-third of the shares entitled to vote at the
meeting of stockholders. If a quorum shall not be present, in person or by
proxy, at any meeting of stockholders, the stockholders entitled to vote thereat
who are present, in person or by proxy, or, if no stockholder entitled to vote
is present, any officer of the Corporation may adjourn the meeting from time to
time, without notice other than announcement at the meeting (unless the board of
directors, after such adjournment, fixes a new record date for the adjourned
meeting), until a quorum shall be present, in person or by proxy. At any
adjourned meeting at which a quorum shall be present, in person or by proxy, any
business may be transacted which may have been transacted at the original
meeting had a quorum been present; provided that, if the adjournment is for more
than 30 days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.
2.8 Required Vote; Withdrawal of Quorum. When a quorum is present at
any meeting, the vote of the holders of at least a majority in voting power of
the outstanding shares then entitled to vote who are present, in person or by
proxy, shall decide any question brought before such meeting, unless the
question is one on which, by express provision of statute, the certificate of
incorporation of the Corporation, or these Bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. The stockholders present at a duly constituted meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
2.9 Method of Voting; Proxies. Except as otherwise provided in the
certificate of incorporation of the Corporation or bylaw, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
3
<PAGE> 7
2.10 Record Date. (a) For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination of
stockholders, such date in any case to be not more than sixty (60) days and not
less than ten (10) days prior to such meeting nor more than sixty (60) days
prior to any other action. If no record date is fixed:
(i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the date on which
notice is given or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for
any other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the
board of directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the board of directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the board of directors. If no record date has been fixed by the board of
directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the board
of directors is required by law or these Bylaws, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office in the State of Delaware, principal place of business, or such officer or
agent shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directors is required by law or these Bylaws, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on which
the board of directors adopts the resolution taking such prior action.
(c) Conduct of Meeting. The Chairman of the Board, if such
office has been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these Bylaws or by some person
appointed by the meeting.
(d) Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act, the chairman of the meeting shall, or if inspectors shall not
have been
4
<PAGE> 8
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
ARTICLE III: DIRECTORS
3.1 Management. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these Bylaws, the board
of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Eligibility; Term. The number of
directors which shall constitute the entire board of directors shall be as set
forth in the Certificate of Incorporation. Within the limits above specified,
the number of directors which shall constitute the entire board of directors
shall from time to time be fixed exclusively by the board of directors by a
resolution adopted by a majority of the entire board of directors serving at the
time of that vote. Except as otherwise required by law or the certificate of
incorporation of the Corporation, the directors of the Corporation shall be
elected at an annual meeting of stockholders at which a quorum is present by a
plurality of the votes of the shares present in person or represented by proxy
and entitled to vote on the election of directors or a class of directors. None
of the directors need be a stockholder of the Corporation or a resident of the
State of Delaware. Each director must have attained the age of majority. All
directors must, in order to be elected or reelected, meet the eligibility
requirements of Section 3.3.
3.3 Nomination of Director Candidates. (a) Nominations of persons for
election to the board of directors of the Corporation at a meeting of
stockholders may be made (i) by or at the direction of the board of directors or
(ii) by any stockholder of the Corporation who is a stockholder of record at the
time of giving of notice provided for in this bylaw, who shall be entitled to
vote for the election of the director so nominated.
(b) Nominations by stockholders shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation (i) in the case of an annual
meeting, no later than sixty days before the annual meeting of stockholders or
(if later) ten days after the first public notice of that meeting is sent to
stockholders, and (ii) in the case of a special meeting at which directors are
to be elected, not later than the close of business on the tenth day following
the earlier of the day on which notice of the date of the meeting was mailed or
public disclosure of the meeting date was made. The other provisions of these
Bylaws notwithstanding, in order to be eligible for election as a director, an
individual must have been nominated, by written notice delivered to the
Corporation at its principal place of business in Austin, Texas. Such notice
shall set forth (i) as to each nominee for election as a director that nominee's
name, business address and telephone number, and residence address and telephone
number, the number of shares, if any, of each class and series of stock of the
Corporation owned beneficially by that nominee, and all information relating to
that nominee that is required to be disclosed in solicitations of proxies for
elections of directors or
5
<PAGE> 9
is otherwise required, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (or any provision of law
subsequently replacing Regulation 14A), together with a notarized letter signed
by the nominee stating his acceptance of the nomination by that stockholder,
stating his intention to serve as director if elected, and consenting to being
named as a nominee for director in any proxy statement relating to such
election, and (ii) if the nomination is submitted by a stockholder of record,
(A) the name and address, as they appear on the Corporation's books, of such
stockholder of record and the name and address of the beneficial owner, if
different, on whose behalf the nomination is made and (B) the class and number
of shares of the Corporation which are beneficially owned and owned of record by
such stockholder of record and such beneficial owner.
(c) No person shall be eligible to serve as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
bylaw. The election of any director in violation of this bylaw shall be void and
of no effect. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by these Bylaws, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
Nothing in this Section 3.3(c) shall release a stockholder from complying with
all applicable requirements, if any, of the Exchange Act, and the rules and
regulations thereunder.
3.4 Change in Number. If the number of directors that constitutes the
whole board of directors is changed in accordance with the certificate of
incorporation and these Bylaws, the majority of the whole board of directors
that adopts the change shall also fix and determine the number of directors
comprising each class; provided, however, that any increase or decrease in the
number of directors shall be apportioned among the classes as equally as
possible. No decrease in the number of directors constituting the entire board
of directors shall have the effect of shortening the term of any incumbent
director.
3.5 Removal. Except as otherwise provided by law, no director of any
class of directors of the Corporation shall be removed before the expiration of
that director's term of office except by an affirmative vote of the holders of
not less than a majority in voting power of the outstanding shares entitled to
vote thereon cast at the annual meeting of stockholders or at any special
meeting of stockholders called for this purpose by a majority of the members of
the board of directors serving at the time of that vote. Except as provided by
law, a director of the Corporation may be removed with or without cause.
3.6 Newly Created Directorships and Vacancies. Vacancies in the board
of directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause and newly-created directorships resulting
from any increase in the authorized number of directors shall be filled by a
majority vote of the remaining directors then in office, or by the sole
remaining director, and each director so chosen shall receive the classification
of the vacant directorship to which he has been appointed or, if it is a newly
created directorship, shall receive the classification that at least a majority
of the board of directors designates and shall hold office until the first
meeting of stockholders held after his election for the purpose of electing
directors of that classification and until his successor is elected and
qualified or until his earlier death, resignation or removal from office. If
there are no directors in office (or where holders of any class or classes or
series thereof are entitled to elect one or more directors, there are no
directors of such class in office), an election of directors may be held in the
manner provided by statute.
3.7 Meetings of Directors. The directors may hold their meetings and
may have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
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<PAGE> 10
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors
shall be held at such times and places as shall be designated from time to time
by resolution of the board of directors. Notice of such regular meetings shall
not be required.
3.10 Special Meetings. Special meetings of the board of directors
shall be held whenever called by the Chairman of the Board, the President, or
any director.
3.11 Notice. The Secretary shall give written or printed notice of
each special meeting to each director no later than ten (10) days before the
meeting. Notice of any such meeting need not be given to any party entitled to
notice who shall, either before or after the meeting, submit a signed waiver of
notice or who shall attend such meeting without protesting, prior to or at its
commencement, the lack of notice to him. Such notice shall state the place, day
and time of the meeting and the purpose or purposes for which the meeting is
called.
3.12 Quorum; Majority Vote. At all meetings of the board of directors,
a majority of the directors fixed in the manner provided in these Bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these Bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote per director on any matter, every reference in these Bylaws to a majority
or other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall
be transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President, if he is a director, shall preside at all meetings of the board of
directors. In the absence or inability to act of either such officer, a chairman
shall be chosen by the board of directors from among the directors present. The
Secretary of the Corporation shall act as the secretary of each meeting of the
board of directors unless the board of directors appoints another person to act
as secretary of the meeting. The board of directors shall keep regular minutes
of its proceedings which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by certified or registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who vote in favor of such action.
3.15 Compensation. The board of directors shall have the authority to
fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings
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of the board of directors or any committee thereof; provided, that nothing
contained herein shall be construed to preclude any director from serving the
Corporation in any other capacity or receiving compensation therefor.
ARTICLE IV: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted
by a majority of the entire board of directors, designate one or more
committees.
4.2 Number; Qualification; Term. Each committee shall consist of one
or more directors appointed by resolution adopted by a majority of the entire
board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the earliest
of (i) the expiration of his term as director, (ii) his resignation as a
committee member or as a director, or (iii) his removal as a committee member or
as a director.
4.3 Committee Changes. The board of directors shall have the power at
any time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.4 Alternate Members of Committees. The board of directors may
designate one or more directors as alternate members of any committee. Any such
alternate member may replace any absent or disqualified member at any meeting of
the committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee members is absent or disqualified,
the member or members of such committee present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
4.5 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.6 Special Meetings. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting.
4.7 Quorum; Majority Vote. At meetings of any committee, a majority
of the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present any adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these Bylaws.
4.8 Minutes. Each committee shall cause minutes of its proceedings to
be prepared and shall report the same to the board of directors upon the request
of the board of directors. The minutes of the proceedings of each committee
shall be delivered to the Secretary of the Corporation for placement in the
minute books of the Corporation.
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4.9 Compensation. Committee members may, by resolution of the board
of directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.10 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed by law upon it or such
director.
ARTICLE V: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of
the Corporation, or these Bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice required
or permitted to be given by telegram, telex or telefax shall be deemed to be
delivered and given at the time transmitted with transmission confirmed and all
charges prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE VI: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation
shall be a Chief Executive Officer, a President, a Secretary, and such other
officers as the board of directors may from time to time elect or appoint,
including a Chairman of the Board, one or more Vice Presidents (with each Vice
President to have such descriptive title, if any, as the board of directors
shall determine), and a Treasurer. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, until his
death, or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two or more offices may be held by the same person.
None of the officers need be a stockholder or a director of the Corporation or a
resident of the State of Delaware.
6.2 Removal. Any officer or agent elected or appointed by the board
of directors may be removed by the board of directors whenever in its judgment
the best interest of the Corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
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6.3 Vacancies. Any vacancy occurring in any office of the Corporation
(by death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 Authority. Officers shall have such authority and perform such
duties in the management of the Corporation as are provided in these Bylaws or
as may be determined by resolution of the board of directors not inconsistent
with these Bylaws.
6.5 Compensation. The compensation, if any, of officers and agents
shall be fixed from time to time by the board of directors; provided, however,
that the board of directors may delegate to a committee of the board of
directors, the Chairman of the Board or the President the power to determine the
compensation of any officer or agent (other than the officer to whom such power
is delegated).
6.6 Chairman of the Board. The Chairman of the Board, if elected by
the board of directors, shall have such powers and duties as may be prescribed
by the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 Chief Executive Officer. The Chief Executive Officer shall,
subject to the board of directors, have general executive charge, management,
and control of the properties and operations of the Corporation in the ordinary
course of its business, with all such powers with respect to such properties and
operations as may be reasonably incident to such responsibilities. If the board
of directors has not elected a Chairman of the Board or in the absence of
inability to act of the Chairman of the Board, the Chief Executive Officer shall
exercise all of the powers and discharge all of the duties of the Chairman of
the Board. As between the Corporation and third parties, any action taken by the
Chief Executive Officer in the performance of the duties of the Chairman of the
Board shall be conclusive evidence that there is no Chairman of the Board or
that the Chairman of the Board is absent or unable to act.
6.8 President. The President shall have such powers and duties as may
be assigned to him by the board of directors, the Chairman of the Board, or the
Chief Executive Officer, and shall exercise the powers of the Chief Executive
Officer during that officer's absence or inability to act. As between the
Corporation and third parties, any action taken by the President in the
performance of the duties of the Chief Executive Officer shall be conclusive
evidence of the absence or inability to act of the Chief Executive Officer at
the time such action was taken.
6.9 Vice Presidents. Each Vice President shall have such powers and
duties as may be assigned to him by the board of directors, the Chairman of the
Board, the Chief Executive Officer, or the President, and (in order of their
seniority as determined by the board of directors, or in the absence of such
determination, as determined by the length of time they have held the office of
Vice President) shall exercise the powers of the President during that officer's
absence or inability to act. As between the Corporation and third parties, any
action taken by a Vice President in the performance of the duties of the
President shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken.
6.10 Treasurer. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as may
be prescribed by the board of directors, the Chairman of the Board, the Chief
Executive Officer, or the President.
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6.11 Assistant Treasurers. Each Assistant Treasurer shall have such
power and duties as may be assigned to him by the board of directors, the
Chairman of the Board, the Chief Executive Officer, or the President. The
Assistant Treasurers (in the order of their seniority as determined by the board
of directors or, in the absence of such a determination, as determined by the
length of time they have held the office of Assistant Treasurer) shall exercise
the powers of the Treasurer during that officer's absence or inability to act.
6.12 Secretary. Except as otherwise provided in these Bylaws, the
Secretary shall keep the minutes of all minutes of all meetings of the board of
directors and of the stockholders in books provided for that purpose, and he
shall attend to the giving and service of all notices. He may sign with the
Chairman of the Board, the Chief Executive Officer, or the President, in the
name of the Corporation, all contracts of the Corporation and affix the seal of
the Corporation thereto. He may sign with the Chairman of the Board, the Chief
Executive Officer, or the President all certificates for shares of stock of the
Corporation, and he shall have charge of the certificate books, transfer books,
and stock papers as the board of directors may direct, all of which shall at all
reasonable times be open to inspection by any director upon application at the
office of the Corporation during business hours. He shall in general perform all
duties incident to the office of the Secretary, subject to the control of the
board of directors, the Chairman of the Board, the Chief Executive Officer, and
the President.
6.13 Assistant Secretaries. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, the Chief Executive Officer, or the President. The
Assistant Secretaries (in the order of their seniority as determined by the
board of directors or, in the absence of such a determination, as determined by
the length of time they have held the office of Assistant Secretary) shall
exercise the powers of the Secretary during that officer's absence or inability
to act.
ARTICLE VII: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President and also by the
Secretary or an Assistant Secretary or by the Treasurer or an Assistant
Treasurer. Any and all signatures on the certificate may be a facsimile and may
be sealed with the seal of the Corporation or a facsimile thereof. If any
officer, transfer agent, or registrar who has signed, or whose facsimile
signature has been placed upon, a certificate has ceased to be such officer,
transfer agent, or registrar before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue. The certificates
shall be consecutively numbered and shall be entered in the books of the
Corporation as they are issued and shall exhibit the holder's name and the
number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
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7.3 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and
authority to provide that certificates representing shares of stock bear such
legends as the board of directors deems appropriate to assure that the
Corporation does not become liable for violations of federal or state securities
laws or other applicable law.
ARTICLE VIII: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of capital stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of
funds of the Corporation legally available therefor such reserve or reserves as
the directors from time to time, in their discretion, consider proper to provide
for contingencies, to equalize dividends, or to repair or maintain any property
of the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its stockholders and board of directors and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders, giving the names and
addresses of all stockholders and the number and class of the shares held by
each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by
the board of directors; provided, that if such fiscal year is not fixed by the
board of directors and the selection of the fiscal year is not expressly
deferred by the board of directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to
time may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the Chairman of the
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Board, the Chief Executive Officer, the President, or the Secretary. Such
resignation shall take effect at the time specified therein or, if no time is
specified therein, immediately upon its receipt. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
8.7 Securities of Other Corporations. With the prior approval of a
majority of the Corporation's board of directors, the Chairman of the Board, the
Chief Executive Officer, the President, or any Vice President, the Corporation
shall have the power and authority to transfer, endorse for transfer, vote,
consent, or take any other action with respect to any securities of another
issuer which may be held or owned by the Corporation and to make, execute, and
deliver any waiver, proxy or consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or
through a proxy), members of the board of directors and members of a committee
of the board of directors may participate in and hold a meeting of such
stockholders, board of directors or committee by means of a conference telephone
or similar communications equipment by means of which persons participating in
the meeting can hear each other and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation or these Bylaws, any action
required by the Delaware General Corporation Law to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders (acting for
themselves or through a proxy) of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which the holders of all shares entitled to vote thereon were
present and voted and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Every written consent of
stockholders shall bear the date of signature of each stockholder who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty (60) days of the earliest dated consent
delivered in the manner required by this Section 8.9(a) to the Corporation,
written consents signed by holders of sufficient voting power to take action are
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office,
principal place of business, or such officer or agent shall be by hand or by
certified or registered mail, return receipt requested. Prompt notice of the
taking of corporation action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and who, if the action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of holders to take the action
were delivered to the Corporation as provided by law.
(b) Unless otherwise restricted by the certificate of
incorporation of the Corporation or by these Bylaws, any action required or
permitted to be taken at a meeting of the board of directors, or of any
committee of the board of directors, may be taken without a meeting if a consent
or consents in writing, setting forth the action so taken, shall be signed by
all the directors or all the committee members, as the case may be, entitled to
vote with respect to the subject matter thereof, and such consent shall have the
same force and effect as a vote of such directors or committee members, as the
case may be, and may be stated as such in any certificate or document filed with
the Secretary of State of the State of Delaware or in any certificate delivered
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<PAGE> 17
to any person. Such consent or consents shall be filed with the minutes of
proceedings of the board or committee, as the case may be.
8.10 Invalid Provisions. If any part of these Bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage
or other instrument executed by the Corporation through its duly authorized
officer or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 Headings. The headings used in these Bylaws have been inserted
for administrative convenience only and do not constitute matter to be construed
in interpretation.
8.13 References. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include the other gender where appropriate.
8.14 Amendments. These Bylaws may be altered, amended, or repealed or
new Bylaws may be adopted by the board of directors at any regular meeting of
the board of directors or at any special meeting of the board of directors if
notice of such alteration, amendment, repeal, or adoption of new Bylaws be
contained in the notice of such special meeting. Notwithstanding any provision
of law that might otherwise permit a lesser or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital
stock of the Corporation required by law or by the Certificate of Incorporation
of the Corporation, these Bylaws shall not be altered, amended or repealed by
the stockholders of the Corporation except in accordance with the provisions of
these Bylaws and by the vote of the holders of not less than a majority in
voting power of the outstanding shares of stock then entitled to vote upon the
election of directors, voting together as a single class.
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<PAGE> 1
<TABLE>
<S> <C> <C>
Temporary Certificate - Exchangeable for Definitive Engraved Certificate When Ready for Delivery
CLASS A COMMON STOCK CLASS A COMMON STOCK
NUMBER SHARES
A- [CAPSTAR BROADCASTING CORPORATION LOGO]
PAR VALUE $0.01 PAR VALUE $0.01
CUSIP 14067G 10 5
SEE REVERSE FOR
CAPSTAR BROADCASTING CORPORATION CERTAIN DEFINITIONS
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON STOCK OF
Capstar Broadcasting Corporation transferable on the books of the Corporation by the holder hereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued under
and shall be subject to all of the provisions of the Certificate of Incorporation and Bylaws of the Corporation and any amendments
thereto, copies of which are on file with the Corporation and the Transfer Agent, to all of which the holder, by acceptance hereof,
assents. This certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
[CERTIFICATE OF STOCK]
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
/s/ R. STEVEN HICKS Dated:
CHIEF EXECUTIVE OFFICER AND [CAPSTAR BROADCASTING CORPORATION SEAL]
PRESIDENT COUNTERSIGNED AND REGISTERED:
HARRIS TRUST AND SAVINGS BANK
TRANSFER AGENT
AND REGISTRAR
/s/ WILLIAM S. BANOWSKY, JR. BY
SECRETARY
AUTHORIZED SIGNATURE
</TABLE>
<PAGE> 2
CAPSTAR BROADCASTING CORPORATION
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF WHICH THE CORPORATION IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST
MAY BE MADE TO THE CORPORATION OR THE TRANSFER AGENT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
UNDER THE COMMUNICATIONS ACT OF 1934, AS AMENDED (THE "ACT"), RELATING TO
OWNERSHIP BY FOREIGN NATIONALS, FOREIGN ENTITIES, FOREIGN GOVERNMENTS OR
REPRESENTATIVES OF THE FOREGOING (AN "ALIEN"). IN ADDITION, THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION PROVIDES THAT THE
BOARD OF DIRECTORS OF THE CORPORATION SHALL HAVE ALL POWERS NECESSARY TO
IMPLEMENT THE ALIEN OWNERSHIP RESTRICTIONS OF THE ACT.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- __________ Custodian ________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of Under Uniform Gifts to Minors
survivorship and not as tenants Act _________________________
in common (State)
UNIF TRF MIN ACT -- __________ Custodian (until age ___)
(Cust)
__________ under Uniform Transfers
(Minor)
to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For Value Received, ______________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Shares
- ---------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named
Corporation, with full power of substitution in the premises.
Dated
-----------------------
NOTICE:
THE SIGNATURE(S) TO
THIS ASSIGNMENT MUST X
CORRESPOND WITH THE --------------------------------------------
NAME(S) AS WRITTEN (SIGNATURE)
UPON THE FACE OF THE -->
CERTIFICATE IN EVERY X
PARTICULAR WITHOUT --------------------------------------------
ALTERATION OR EN- (SIGNATURE)
LARGEMENT OR ANY
CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
SIGNATURE(S) GUARANTEED BY:
</TABLE>
<PAGE> 1
EXHIBIT 5.1
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Telephone (214) 220-7700
May 19, 1998
Capstar Broadcasting Corporation
600 Congress Avenue, Suite 1400
Austin, Texas 78701
Ladies and Gentlemen:
We have acted as counsel for Capstar Broadcasting Corporation, a
Delaware corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-1 (as may hereafter be amended, the
"Registration Statement"), which has been filed by the Company with the
Securities and Exchange Commission for the purpose of registering under the
Securities Act of 1933 (the "1933 Act") and the rules and regulations
thereunder the sale of up to 35,650,000 shares (the "Shares") of the Company's
Class A Common Stock, $.01 par value per share ("Common Stock"). The Shares
will be offered and sold (the "Offering") pursuant to an underwriting agreement
(the "Underwriting Agreement") to be entered into between the Company, Credit
Suisse First Boston Corporation, BT Alex. Brown Incorporated and Morgan Stanley
& Co. Incorporated (the "U.S. Underwriters") and a subscription agreement (the
"Subscription Agreement") to be entered into between the Company, Credit Suisse
First Boston (Europe) Limited, BT Alex. Brown International and Morgan Stanley
& Co. International Limited (the "Managers" and collectively with the U.S.
Underwriters, the "Underwriters").
We are rendering this opinion as of the time the Registration
Statement becomes effective in accordance with Section 8(a) of the 1933 Act.
Before rendering the opinions hereinafter set forth, we examined,
among other things, the proposed form of Underwriting Agreement, the
Subscription Agreement, the Registration Statement, the Company's Amended and
Restated Certificate of Incorporation, the Company's Amended and Restated
Bylaws, resolutions of the Company's Board of Directors, and originals or
photostatic or certified copies of all those corporate records of the Company
and of all those agreements, communications and other instruments, certificates
of public officials, certificates of corporate officials and such other
documents as we have deemed relevant and necessary as a basis for the opinions
hereinafter set forth. As to factual matters, information with respect to
which is in the possession of the Company relevant to the opinions herein
stated, we have relied without
<PAGE> 2
investigation, to the extent we deem such reliance proper, upon certificates or
representations made by its duly authorized representative.
Based upon the foregoing assumptions, and subject to the
qualifications set forth hereinafter, we are of the opinion that, when the
Shares have been issued and delivered in accordance with the terms of the
Underwriting Agreement and the Subscription Agreement (including the receipt by
the Company of the consideration for the Shares described therein), the Shares
will be validly issued, fully paid and non-assessable.
The opinion expressed above is subject to the following assumptions,
exceptions and qualifications:
(a) We have assumed that (i) all information contained in all
documents reviewed by us is true and correct, (ii) all signatures on all
documents reviewed by us are genuine, (iii) all documents submitted to us as
originals are true and complete, (iv) all documents submitted to us as copies
are true and complete copies of the originals thereof, (v) each natural person
signing any document reviewed by us had the legal capacity to do so, (vi) each
natural person signing in a representative capacity any document reviewed by us
had authority to sign in such capacity, and (vii) the laws of any jurisdiction
other than Texas that govern any of the documents reviewed by us (other than
the Company's Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws) do not modify the terms that appear in any such document.
(b) The opinion expressed in this letter is limited to the laws of
the State of Texas, the General Corporation Law of the State of Delaware, and
the federal laws of the United States of America. We are not admitted to the
practice of law in the State of Delaware.
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and the references to us under the heading "Legal
Matters" in the prospectus that forms a part of the Registration Statement. We
also consent to the incorporation by reference of this consent into any
subsequent registration statement filed pursuant to Rule 462(b) under the 1933
Act in connection with the Offering. In giving this consent, we do not hereby
admit that we are within the category of persons whose consent is required
under Section 7 of the 1933 Act and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder.
We express no opinion as to any matter other than as expressly set
forth above, and no opinion, other than the opinion given herein, is to or may
be inferred or implied herefrom. We undertake no, and hereby disclaim any,
obligation to advise the Company or anyone else of any change in any matter set
forth herein.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
<PAGE> 1
EXHIBIT 10.18.5
FOURTH AMENDMENT
TO
STOCKHOLDERS AGREEMENT
This FOURTH AMENDMENT TO STOCKHOLDERS AGREEMENT (this "Fourth
Amendment") amends that certain Stockholders Agreement dated as of October 16,
1996, as amended (the "Stockholders Agreement"), by and among Capstar
Broadcasting Partners, Inc., a Delaware corporation, the securityholders listed
on the signature pages thereto, and HMTF Operating, Inc., a Texas corporation
(formerly named Hicks, Muse, Tate & Furst Incorporated, "HMTF"), and is entered
into as of May 18, 1998, by and among Capstar Broadcasting Corporation, a
Delaware corporation (the "Company"), HMTF and the Holders (as defined in the
Stockholders Agreement). A copy of the Stockholders Agreement is attached hereto
as Exhibit A.
RECITALS:
WHEREAS, the parties to the Stockholders Agreement desire to amend the
Stockholders Agreement as provided herein pursuant to Section 10.7.2 of the
Stockholders Agreement; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Stockholders Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto covenant and agree as follows:
1. Section 1.1 of the Stockholders Agreement is hereby amended by
adding the following definitions:
"Class A Common Stock" means shares of the Class A
Common Stock, $0.01 par value per share, of the Company, and
any capital stock into which such Class A Common Stock
thereafter may be changed.
"Class B Common Stock" means shares of the Class B
Common Stock, $0.01 par value per share, of the Company, and
any capital stock into which such Class B Common Stock
thereafter may be changed.
"Class C Common Stock" means shares of the Class C
Common Stock, $0.01 par value per share, of the company, and
any capital stock into which such Class C Common Stock
thereafter may be changed.
2. Each of the following definitions that are set forth in
Section 1.1 of the Stockholders Agreement is hereby amended and restated to read
in its entirety as follows:
<PAGE> 2
"Common Stock" means shares of the Class A Common
Stock, Class B Common Stock and Class C Common Stock of the
Company, and any capital stock into which such Common Stock
thereafter may be changed.
"Registrable Shares" means at any time (i) the Class
A Common Stock owned by the HMC Group or the holders, whether
owned on the date hereof or acquired hereafter and any capital
stock into which such Class A Common Stock may be changed and
(ii) the Warrant Shares; provided, however that Registrable
Shares shall not include any shares i. the sale of which has
been registered pursuant to the Securities Act and which
shares have been sold pursuant to such registration or ii.
which have been sold to the public pursuant to Rule 144 of the
SEC under the Securities Act. For purposes of determining a
Holder's right to any benefit afforded, or to exercise any
rights granted, to a Holder of Registrable Shares hereunder,
any Securities that are convertible into or exercisable or
exchangeable for Registrable Shares shall be deemed to be that
number of Registrable Shares into which such Securities may be
converted or for which such Securities may be exercised or
exchanged at any point in time.
"Warrant" means that certain Warrant dated July 1,
1997, as it may be amended from time to time, for 9,300,000
shares of Common Stock, issued by the Company to R. Steven
Hicks.
3. The term "Rights Holder," as used in Article 7, is hereby
amended to refer to each of R. Steven Hicks and Capstar BT Partners, L.P., a
Delaware limited partnership, and shall be deemed to refer to each of them
severally (and not jointly). The term "Rights Holder," as used in Article 8 of
the Stockholders Agreement, shall refer only to R. Steven Hicks (and not to
Capstar BT Partners, L.P.).
4. Section 6.1 of the Stockholders Agreement is hereby amended by
replacing the term "Warrants" with the phrase "the Warrant, the New Warrants."
5. Section 7.2 of the Stockholders Agreement is hereby amended by
replacing the reference to Section 7.2 with a reference to Section 7.1.
6. Section 10.4 is hereby amended by adding the following
sentence after the last sentence of Section 10.4:
If other than the Company, the issuer of any capital stock
into which Common Stock may be changed shall execute and
deliver to the Holders, as a condition precedent to effecting
such change, an agreement substantially similar to this
Stockholders Agreement in which the issuer is the "Company."
7. Section 10.7.2 of the Stockholders Agreement is hereby amended
by replacing each reference therein to Section 8.7.2 with a reference to Section
10.7.2.
2
<PAGE> 3
8. Except as herein specifically amended or supplemented, the
Stockholders Agreement shall continue in full force and effect in accordance
with its terms.
9. This Fourth Amendment may be executed and delivered (including
by facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to be
duly executed, all as of the date first written above.
CAPSTAR BROADCASTING CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
HMTF OPERATING, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
HOLDERS:
-------------------------------------------
Shelly Mabry Ellard
-------------------------------------------
Kristen Lea Hicks
-------------------------------------------
R. Steven Hicks
-------------------------------------------
Jason Mabry
S-1
<PAGE> 5
-------------------------------------------
R. Steven Hicks as custodian for Dean
McClure Taylor under the Texas Uniform
Gifts to Minors Act
-------------------------------------------
Larry Taylor as Custodian for Brandon
Vaughan Hicks under the Texas Uniform Gifts
to Minors Act
-------------------------------------------
Larry Taylor as Custodian for Robert S.
Hicks, Jr. under the Texas Uniform Gifts to
Minors Act
CAPSTAR BT PARTNERS, L.P.
By: HM3/GP Partners, L.P.,
its General Partner
By: Hicks, Muse GP Partners III, L.P.,
its General Partner
By: Hicks, Muse Fund III Incorporated,
its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
S-2
<PAGE> 6
CAPSTAR BOSTON PARTNERS, L.L.C.
By: HM3/GP Partners, L.P.,
its Manager
By: Hicks, Muse GP Partners III, L.P.,
its General Partner
By: Hicks, Muse Fund III Incorporated,
its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
CAPSTAR BROADCASTING PARTNERS, L.P.
By: HM3/Capstar Partners, L.P.,
its General Partner
By: HM3/Capstar, Inc.
its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
S-3
<PAGE> 7
EXHIBIT A
(STOCKHOLDERS AGREEMENT)
<PAGE> 1
EXHIBIT 10.19.4
THIRD AMENDMENT
TO
STOCKHOLDERS AGREEMENT
THIS THIRD AMENDMENT TO STOCKHOLDERS AGREEMENT (this "Third
Amendment") amends that certain Stockholders Agreement, dated as of November
26, 1996, as amended (the "Stockholders Agreement"), by and among Capstar
Broadcasting Partners, Inc., a Delaware corporation, the securityholders listed
on the signature pages thereto, and HMTF Operating, Inc., a Texas corporation
(formerly named Hicks, Muse, Tate & Furst Incorporated, "HMTF"), and is entered
into as of May 18, 1998, by and among Capstar Broadcasting Corporation, a
Delaware corporation (the "Company"), HMTF and the Holders (as defined in the
Stockholders Agreement). A copy of the Stockholders Agreement is attached
hereto as Exhibit A.
RECITALS:
WHEREAS, the parties to the Stockholders Agreement desire to amend the
Stockholders Agreement as provided herein pursuant to Section 8.7.2 of the
Stockholders Agreement; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Stockholders Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto covenant and agree as follows:
1. Section 1.1 of the Stockholders Agreement is amended by adding
the following definitions:
"Class A Common Stock" means shares of the Class A
Common Stock, $0.01 par value per share, of the Company, and
any capital stock into which such Class A Common Stock
thereafter may be changed.
"Class B Common Stock" means shares of the Class B
Common Stock, $0.01 par value per share, of the Company, and
any capital stock into which such Class B Common Stock
thereafter may be changed.
"Class C Common Stock" means shares of the Class C
Common Stock, $0.01 par value per share, of the Company, and
any capital stock into which such Class C Common Stock
thereafter may be changed.
<PAGE> 2
"Warrant" means that certain Warrant dated April 1,
1998, for 1,500,000 shares of Class A Common Stock, issued by
the Company to William S. Banowsky, Jr.
"Warrant Shares" means shares of Class A Common Stock
issuable to a Holder upon the exercise of the Warrant.
2. Each of the following definitions that are set forth in
Section 1.1 of the Stockholders Agreement is amended and restated to read in
its entirety as follows:
"Common Stock" means shares of the Class A Common
Stock, Class B Common Stock and Class C Common Stock of the
Company, and any capital stock into which such Common Stock
thereafter may be changed.
"Common Stock Equivalents" means, other than the
Warrant, without duplication with any other Common Stock or
Common Stock Equivalents, any rights, warrants, options,
convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights, exercisable for
or convertible or exchangeable into, directly or indirectly,
Common Stock of the Company and securities convertible or
exchangeable into Common Stock of the Company, whether at the
time of issuance or upon the passage of time or the occurrence
of some future event; provided, however, Common Stock
Equivalents shall not include any options awarded under the
Company's 1997 Stock Option Plan or any successor plan thereto
or any shares of Common Stock issued upon exercise of such
options or any securities into which such shares may be
converted pursuant to such Plan.
"Fully-Diluted Common Stock" means, at any time, the
then outstanding Common Stock of the Company plus (without
duplication) all shares of Common Stock issuable, whether at
such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion, or exchange of
(i) all then outstanding Common Stock Equivalents and (ii) the
Warrant.
"Registrable Shares" means at any time (i) the Class
A Common Stock owned by the Holders on the date hereof or on
the date that any Holder executes this Stockholders Agreement
and any capital stock into which such Class A Common Stock may
be changed and (ii) the Warrant Shares; provided, however,
that Registrable Shares shall not include any shares (i) the
sale of which has been registered pursuant to the Securities
Act and which shares have been sold pursuant to such
registration, (ii) which have been sold to the public pursuant
to Rule 144 of the SEC under the Securities Act, or (iii)
issued upon the exercise of any options awarded under the
Company's
2
<PAGE> 3
1997 Stock Option Plan or any successor plan thereto. For
purposes of determining a Holder's right to any benefit
afforded, or to exercise any rights granted, to a Holder of
Registrable Shares hereunder, any Securities that are
convertible into or exercisable or exchangeable for
Registrable Shares shall be deemed to be that number of
Registrable Shares into which such Securities may be converted
or for which such Securities may be exercised or exchanged at
any point in time.
"Securities" means the Common Stock, the Warrant
Shares and the Warrant; provided, however, that Securities
shall not include any shares of Common Stock issued upon the
exercise of any options awarded under the Company's 1997 Stock
Option Plan or any successor plan thereto.
3. Section 6.1.1 is amended and restated in its entirety as
follows:
6.1.1 Purchase Option. If (i), and at such time
as, a Holder is no longer a director, officer or employee of
the Company or any Subsidiary of the Company, for any reason
at any time or (ii) a Change of Control occurs, the Company
shall have the option (the "Purchase Option") to purchase, and
if the Purchase Option is exercised, such Holder (or the
executor or administrator of such Holder's estate, in the
event of such Holder's death, or such Holder's legal
representative in the event of his incapacity) (hereinafter,
collectively with such Holder, the "Grantor") shall sell to
HMTF, (or as provided in Section 6.1.4 an assignee of HMTF)
all or any portion (at the option of HMTF acting for itself
or, if applicable, its assignee) of the shares of Common
Stock, the Warrant and/or Common Stock Equivalents held by the
Grantor (such shares of Common Stock, the Warrant and/or
Common Stock Equivalents collectively being referred to as the
"Purchasable Securities"), subject to HMTF's (or, if
applicable, its assignee) compliance with the conditions
hereinafter set forth. HMTF (acting for itself or, if
applicable, its assignee) shall give notice (the "Purchase
Notice") in writing to the Grantor of the exercise of the
Purchase Option within one year from the date such Holder is
no longer a director, officer or employee of the Company or
any Subsidiary of the Company or such Change of Control. Such
Purchase Notice shall state the number of Purchasable
Securities to be purchased and the exercise price for each
Purchasable Security (on a per share basis or, in the case of
securities other than capital stock, other applicable
denomination). If no notice is given within the time limit
specified above, the Purchase Option shall terminate.
3
<PAGE> 4
4. Section 8.4 is amended by adding the following after the last
sentence of Section 8.4:
If other than the Company, the issuer of any capital stock
into which Common Stock may be changed shall execute and
deliver to the Holders, as a condition precedent to effecting
such change, an agreement substantially similar to this
Stockholders Agreement in which the issuer is the "Company."
5. Except as herein specifically amended or supplemented, the
Stockholders Agreement shall continue in full force and effect in accordance
with its terms.
6. This Third Amendment may be executed and delivered (including
by facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
[Remainder of page intentionally left blank]
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment effective as of the date first written above.
CAPSTAR BROADCASTING CORPORATION
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
HMTF OPERATING, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
HOLDERS:
-----------------------------------------
Scott J. Bacherman
-----------------------------------------
William S. Banowsky, Jr.
-----------------------------------------
Marc Berman
-----------------------------------------
Sharon A. Chambers
-----------------------------------------
Steven Dinetz
-----------------------------------------
Charles DiToro
S-1
<PAGE> 6
-----------------------------------------
Patia A. Gaugh
-----------------------------------------
Judy Jennings-Riffe
-----------------------------------------
Rich Lewis
-----------------------------------------
Joseph L. Mathias
-----------------------------------------
Frank D. Osborn
-----------------------------------------
Josephine N. Osborn as custodian for
Allison W. Osborn under the Uniform Gifts
to Minors Act
-----------------------------------------
Josephine N. Osborn as custodian for
Caroline L. Osborn under the Uniform
Gifts to Minors Act
-----------------------------------------
Josephine N. Osborn as custodian for
Elizabeth A. Osborn under the Uniform
Gifts to Minors Act
-----------------------------------------
Josephine N. Osborn as custodian for
Frank W. Osborn under the Uniform Gifts
to Minors Act
-----------------------------------------
Josephine N. Osborn as custodian for
Katherine N. Osborn under the Uniform
Gifts to Minors Act
S-2
<PAGE> 7
-----------------------------------------
Mary K. Quass
-----------------------------------------
James T. Shea
-----------------------------------------
Jay Sterin
-----------------------------------------
Claude C. Turner
-----------------------------------------
R. Gerald Turner
S-3
<PAGE> 8
EXHIBIT A
Stockholders Agreement
<PAGE> 1
EXHIBIT 10.20.1
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Amended and
Restated Stockholders Agreement") dated as of May 18, 1998, is entered into by
and among Capstar Broadcasting Corporation, a Delaware corporation (the
"Company"), the securityholders listed on the signature pages hereof
(collectively, the "Holders"), and HMTF Operating, Inc., a Texas corporation
(formerly named Hicks, Muse, Tate & Furst Incorporated, "HMTF").
WHEREAS, on July 8, 1997, the Company, the Holders and HMTF entered
into that certain Stockholders Agreement (the "Stockholders Agreement"); and
WHEREAS, this Amended and Restated Stockholders Agreement restates,
integrates and amends the Stockholders Agreement.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
"Accredited Investor" means an "Accredited Investor," as defined in
Regulation D, or any successor rule then in effect.
"Advice" shall have the meaning provided in Section 3.4 hereof.
"Affiliate," means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Amended and Restated Stockholders Agreement" means this Amended and
Restated Stockholders Agreement, as such from time to time may be amended.
"Appraised Value" means, as to any Securities, the fair market value
of such Securities at the date of the Purchase Notice or the Option Notice, as
applicable, as determined by an Independent Financial Expert selected by HMTF;
provided, however, if a Holder shall object to such determination within 10
days after being notified thereof by HMTF, such Holder shall within such
ten-day period select an Independent Financial Expert to determine the fair
market value of such Securities on behalf of such Holder. In the event that
the Independent Financial Experts selected by each of HMTF and such Holder
cannot agree on the fair market value of such Securities, then the two
Independent Financial Experts shall mutually select a third Independent
Financial Expert to determine the fair market value of such Securities, and the
value selected by such third firm shall be binding on all the parties hereto.
Each such Independent Financial Expert may use any customary method of
determining fair market value. The cost of the Independent Financial Expert
selected by HMTF shall be paid by HMTF, the cost of the Independent Financial
Expert, if any, selected by such Holder shall be paid by such Holder, and the
cost of the Independent Financial Expert, if any, mutually selected by the two
1
<PAGE> 2
Independent Financial Experts appointed by each of HMTF and such Holder shall
be paid one-half by HMTF and one-half by such Holder.
"Authorization Date" shall have the meaning set forth in Section 5.3.1
hereof.
"Business Day" means a day that is not a Legal Holiday.
"Change of Control" means the first to occur of the following events:
(i) any sale, lease, exchange, or other transfer (in one transaction or series
of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group"), other than one or more members of the HMC
Group, (ii) a majority of the Board of Directors of the Company shall consist
of Persons who are not Continuing Directors; or (iii) the acquisition by any
Person or Group (other than one or more members of the HMC Group) of the power,
directly or indirectly, to vote or direct the voting of securities having more
than 50% of the ordinary voting power for the election of directors of the
Company.
"Class A Common Stock" means shares of the Class A Common Stock, $0.01
par value per share, of the Company, and any capital stock into which such
Class A Common Stock thereafter may be changed.
"Class B Common Stock" means shares of the Class B Common Stock, $0.01
par value per share, of the Company, and any capital stock into which such
Class B Common Stock thereafter may be changed.
"Class C Common Stock" means shares of the Class C Common Stock, $0.01
par value per share, of the Company, and any capital stock into which such
Class C Common Stock thereafter may be changed.
"Common Stock" means shares of the Class A Common Stock, Class B
Common Stock and Class C Common Stock of the Company, and any capital stock
into which such Common Stock thereafter may be changed.
"Common Stock Equivalents" means, other than the Warrants, without
duplication with any other Common Stock or Common Stock Equivalents, any
rights, warrants, options, convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights, exercisable for or convertible or
exchangeable into, directly or indirectly, Common Stock of the Company and
securities convertible or exchangeable into Common Stock of the Company,
whether at the time of issuance or upon the passage of time or the occurrence
of some future event; provided, however, Common Stock Equivalents shall not
include any options awarded under the Company's 1996 Stock Option Plan or any
shares of Common Stock issued upon exercise of such options or any securities
into which such shares may be converted pursuant to such Plan.
"Company" shall have the meaning set forth in the introductory
paragraph hereof.
"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the Board of Directors of the Company on the
date hereof, (ii) was nominated for election or elected to the Board of
Directors of the Company with the affirmative vote of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election, or (iii) is a member of the HMC Group.
"Co-Seller" shall have the meaning set forth in Section 4.1 hereof.
"Demand Registration" shall have the meaning set forth in Section
3.1.1 hereof.
"Demand Request" shall have the meaning set forth in Section 3.1.1
hereof.
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"Election Notice" shall have the meaning set forth in Section 5.3.1
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Excluded Registration" means a registration under the Securities Act
of (i) a registration to effect a Qualified IPO if such registration only
includes equity securities to be issued by the Company and does not include any
equity securities for the account of any other securityholder of the Company,
(ii) securities registered on Form S-8 or any similar successor form and (iii)
securities registered to effect the acquisition of or combination with another
Person.
"Fully-Diluted Common Stock" means, at any time, the then outstanding
Common Stock of the Company plus (without duplication) all shares of Common
Stock issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the exercise, conversion, or exchange of (i)
all then outstanding Common Stock Equivalents and the (ii) the Warrants.
"Grantor" shall have the meaning set forth in Section 6.1.1 hereof.
"HMC Group" means HMTF and its Affiliates (including Capstar L.P.) and
its and their respective officers, directors, and employees (and members of
their respective families and trusts for the primary benefit of such family
members).
"HMC Group Designee" shall have the meaning set forth in Section 2.1.1
hereof.
"HMTF" shall have the meaning set forth in the introductory paragraph
hereof.
"Holders" shall have the meaning set forth in the introductory
paragraph hereof and shall include any direct or indirect transferee of any
such Holder who shall become a party to this Amended and Restated Stockholders
Agreement.
"Independent Financial Expert" means any investment bank which is
registered as a broker dealer under the Exchange Act and has aggregate net
capital of at least $50 million.
"Inspectors" shall have the meaning provided in Section 3.3 hereof.
"Legal Holiday" shall have the meaning provided in Section 9.2 hereof.
"Material Adverse Effect" shall have the meaning provided in Section
3.1.4 hereof.
"NASD" shall have the meaning provided in Section 3.3 hereof.
"Offered Securities" shall have the meaning provided in Section 5.3.1
hereof.
"Option" shall have the meaning provided in Section 6.2.1 hereof.
"Option Notice" shall have the meaning provided in Section 6.2.3
hereof.
"Option Securities" shall have the meaning provided in Section 6.2.1
hereof.
"Option Transaction" shall have the meaning provided in Section 6.2.2
hereof.
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"Participation Offer" shall have the meaning provided in Section 4.2.1
hereof.
"Person" or "person" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"Purchase Notice" shall have the meaning provided in Section 6.1.1
hereof.
"Purchase Option" shall have the meaning provided in Section 6.1.1
hereof.
"Purchasable Securities" shall have the meaning provided in Section
6.1.1 hereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $10 million.
"Records" shall have the meaning provided in Section 3.3 hereof.
"Registrable Shares" means at any time (x) the Class A Common Stock
owned by the Holders on July 8, 1997 or on the date that any Holder executed
the Stockholders Agreement or executes this Amended and Restated Stockholders
Agreement and any capital stock into which such Class A Common Stock may be
changed or (y) the Warrant Shares; provided, however, that Registrable Shares
shall not include any shares (i) the sale of which has been registered pursuant
to the Securities Act and which shares have been sold pursuant to such
registration, (ii) which have been sold to the public pursuant to Rule 144 of
the SEC under the Securities Act, or (iii) issued upon the exercise of any
options awarded under the Company's 1997 Stock Option Plan or any successor
plan thereto. For purposes of determining a Holder's right to any benefit
afforded, or to exercise any rights granted, to a Holder of Registrable Shares
hereunder, any Securities that are convertible into or exercisable or
exchangeable for Registrable Shares shall be deemed to be that number of
Registrable Shares into which such Securities may be converted or for which
such Securities may be exercised or exchanged at any point in time.
"Registration Expenses" shall have the meaning provided in Section 3.6
hereof.
"Regulation D" means Regulation D promulgated under the Securities Act
by the SEC.
"Requesting Holder" shall have the meaning provided in Section 3.1.1.
hereof.
"Required Filing Date" shall have the meaning provided in Section
3.1.1(b) hereof.
"Required Holders" means Holders who then own beneficially more than
66-2/3% of the aggregate number of Registrable Shares.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Common Stock, the Warrant Shares and the
Warrants; provided, however, that Securities shall not include any shares of
Common Stock issued upon the exercise of any options awarded under the
Company's 1997 Stock Option Plan or any successor plan thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
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"Seller Affiliates" shall have the meaning provided in Section 3.6.1
hereof.
"Significant Sale" shall have the meaning provided in Section 4.1
hereof.
"Subsidiary" of any Person means (i) a corporation a majority of whose
outstanding shares of capital stock or other equity interests with voting
power, under ordinary circumstances, to elect directors, is at the time,
directly or indirectly, owned by such Person, by one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person, and
(ii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (x)
at least a majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"Suspension Notice" shall have the meaning provided in Section 3.4
hereof.
"Transfer" means any disposition of any Security or any interest
therein that would constitute a "sale" thereof within the meaning of the
Securities Act.
"Transfer Notice" shall have the meaning provided in Section 5.3.1
hereof.
"Unaccredited Holder" shall have the meaning provided in Section 6.2.2
hereof.
"Warrants" means (i) that certain Warrant dated April 1, 1998, for
1,500,000 shares of Class A Common Stock, issued by the Company to Paul D.
Stone and (ii) that certain Warrant dated April 1, 1998, for 2,000,000 shares
of Class A Common Stock, issued by the Company to D. Geoffrey Armstrong.
"Warrant Shares" means shares of Class A Common Stock issuable to a
Holder upon the exercise of the Warrants.
Section 1.2 Rules of Construction. Unless the context otherwise
requires
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words
in the plural include the singular;
(4) provisions apply to successive events and
transactions; and
(5) "herein," "thereof" and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
Section 2.1 Board of Directors.
2.1.1 Board Representation. Subject to Section 2.1.3, the Board of
Directors of the Company shall consist of such individuals as may be designated
from time to time by the HMC Group (an "HMC Group Designee"). Each Holder
shall vote his or its shares of Common Stock, to the extent such shares are
entitled to vote, at any regular or special meeting of stockholders of the
Company or in any written consent executed
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in lieu of such a meeting of stockholders and shall take all other actions
necessary to give effect to the agreements contained in this Agreement
(including without limitation the election of persons designated by the HMC
Group to be elected as directors as described in the preceding sentence) and to
ensure that the certificate of incorporation and bylaws as in effect
immediately following the date hereof do not, at any time thereafter, conflict
in any respect with the provisions of this Agreement.
2.1.2 Vacancies. If, prior to his election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any HMC Group
Designee shall be unable or unwilling to serve as a director of the Company,
the HMC Group shall be entitled to nominate a replacement who shall then be an
HMC Group Designee for purposes of this Section 2. If, following an election to
the Board of Directors of the Company pursuant to Section 2.1.1 hereof, any HMC
Group Designee shall resign or be removed or be unable to serve for any reason
prior to the expiration of his term as a director of the Company, the HMC Group
shall, within 30 days of such event, notify the Board of Directors of the
Company in writing of a replacement HMC Group Designee, and either (i) the
Holders shall vote their shares of Common Stock, to the extent such shares are
entitled to vote, at any regular or special meeting called for the purpose of
filling positions on the Board of Directors of the Company or in any written
consent executed in lieu of such a meeting of stockholders, and shall take all
such other actions necessary to ensure the election to the Board of Directors
of the Company of such replacement HMC Group Designee to fill the unexpired
term of the HMC Group Designee who such new HMC Group Designee is replacing or
(ii) the Board of Directors shall elect such replacement HMC Group Designee to
fill the unexpired term of the HMC Group Designee who such new HMC Group
Designee is replacing. If the HMC Group requests that any HMC Group Designee
be removed as a Director (with or without cause) by written notice thereof to
the Company, then the Company shall take all actions necessary to effect, and
each of the Holders shall vote all its or his capital stock in favor of, such
removal upon such request.
2.1.3 Termination of Rights. The right of the HMC Group to
designate directors under Section 2.1.1, and the obligation of the Holders to
vote their shares as provided herein, shall terminate upon the first to occur
of (i) the termination or expiration of this Amended and Restated Stockholders
Agreement or this Article 2, (ii) such time as the HMC Group elects in writing
to terminate its rights under this Article 2, or (iii) such time as the HMC
Group cease to own any shares of Common Stock.
2.1.4 Costs and Expenses. The Company will pay all reasonable
out-of-pocket expenses incurred by the designees of the HMC Group in connection
with their participation in meetings of the Board of Directors (and committees
thereof) of the Company and the Boards of Directors (and committees thereof) of
the Subsidiaries of the Company.
Section 2.2 Other Activities of the Holders; Fiduciary Duties.
It is understood and accepted that the Holders and their Affiliates have
interests in other business ventures which may be in conflict with the
activities of the Company and its Subsidiaries and that, subject to applicable
law, nothing in this Amended and Restated Stockholders Agreement shall limit
the current or future business activities of the Holders whether or not such
activities are competitive with those of the Company and its Subsidiaries.
Nothing in this Amended and Restated Stockholders Agreement, express or
implied, shall relieve any officer or director of the Company or any of its
Subsidiaries, or any Holder, of any fiduciary or other duties or obligations
they may have to the Company's stockholders.
Section 2.3 Grant of Proxy. Each Holder hereby constitutes and
appoints HMTF with full power of substitution, as its true and lawful proxy and
attorney-in-fact to vote any and all shares of any class or series of capital
stock of the Company or any Subsidiary of the Company held by such Holder in
accordance with the provisions of Section 2.1 of this Amended and Restated
Stockholders Agreement. Each Holder acknowledges that the proxy granted hereby
is irrevocable, being coupled with an interest, and that such proxy will
continue until the termination of such Holder's obligation to vote any shares
in accordance with this Article 2.
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ARTICLE 3
REGISTRATION RIGHTS
Section 3.1 Demand Registration.
3.1.1 Request for Registration.
(a) At any time after the first anniversary of the
consummation of a Qualified IPO, any Holder or Holders may request the Company,
in writing (a "Demand Request"), to effect the registration under the
Securities Act of all or part of its or their Registrable Shares (a "Demand
Registration"); provided that the Registrable Shares proposed to be sold by the
Holders requesting a Demand Registration (the "Requesting Holders," which term
shall include parties deemed "Requesting Holders" pursuant to Section 3.1.5
hereof) represent, in the aggregate, more than 35% of the total number of
Registrable Shares held by all Holders.
(b) Each Demand Request shall specify the number of
Registrable Shares proposed to be sold. Subject to Section 3.1.6, the Company
shall file the Demand Registration within 90 days after receiving a Demand
Request (the "Required Filing Date") and shall use all commercially reasonable
efforts to cause the same to be declared effective by the SEC as promptly as
practicable after such filing; provided, that the Company need effect only
three Demand Registrations; provided, further, that if any Registrable Shares
requested to be registered pursuant to a Demand Request under this Section 3.1
are excluded from a registration pursuant to Section 3.1.4 below, the Holders
shall have the right, with respect to each such exclusion, to one additional
Demand Registration under this Section 3.1 with respect to such excluded
Registrable Shares.
3.1.2 Effective Registration and Expenses. A registration will not
count as a Demand Registration until it has become effective (unless the
Requesting Holders withdraw all their Registrable Shares and the Company has
performed its obligations hereunder in all material respects, in which case
such demand will count as a Demand Registration unless the Requesting Holders
pay all Registration Expenses, as hereinafter defined, in connection with such
withdrawn registration); provided, that if, after it has become effective, an
offering of Registrable Shares pursuant to a registration is interfered with by
any stop order, injunction, or other order or requirement of the SEC or other
governmental agency or court, such registration will be deemed not to have been
effected and will not count as a Demand Registration.
3.1.3 Selection of Underwriters. The offering of Registrable Shares
pursuant to a Demand Registration shall be in the form of a "firm commitment"
underwritten offering. The Requesting Holders of a majority of the Registrable
Shares to be registered in a Demand Registration shall select the investment
banking firm or firms to manage the underwritten offering; provided that such
selection shall be subject to the consent of the Company, which consent shall
not be unreasonably withheld.
3.1.4 Priority on Demand Registrations. No securities to be sold
for the account of any Person (including the Company) other than a Requesting
Holder shall be included in a Demand Registration unless the managing
underwriter or underwriters shall advise the Company or the Requesting Holders
in writing that the inclusion of such securities will not materially and
adversely affect the price or success of the offering (a "Material Adverse
Effect"). Furthermore, in the event the managing underwriter or underwriters
shall advise the Company or the Requesting Holders that even after exclusion of
all securities of other Persons pursuant to the immediately preceding sentence,
the amount of Registrable Shares proposed to be included in such Demand
Registration by Requesting Holders is sufficiently large to cause a Material
Adverse Effect, the Registrable Shares of the Requesting Holders to be included
in such Demand Registration shall equal the
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number of shares which the Company is so advised can be sold in such offering
without a Material Adverse Effect and such shares shall be allocated pro rata
among the Requesting Holders on the basis of the number of Registrable Shares
requested to be included in such registration by each such Requesting Holder.
3.1.5 Rights of Nonrequesting Holders. Upon receipt of any Demand
Request, the Company shall promptly (but in any event within 10 days) give
written notice of such proposed Demand Registration to all other Holders, who
shall have the right, exercisable by written notice to the Company within 20
days of their receipt of the Company's notice, to elect to include in such
Demand Registration such portion of their Registrable Securities as they may
request. All Holders requesting to have their Registrable Shares included in a
Demand Registration in accordance with the preceding sentence shall be deemed
to be "Requesting Holders" for purposes of this Section 3.1.
3.1.6 Deferral of Filing. The Company may defer the filing (but not
the preparation) of a registration statement required by Section 3.1 until a
date not later than 180 days after the Required Filing Date (or, if longer, 180
days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives the Demand Request,
the Company or any of its Subsidiaries are engaged in confidential negotiations
or other confidential business activities, disclosure of which would be
required in such registration statement (but would not be required if such
registration statement were not filed), and the Board of Directors of the
Company determines in good faith that such disclosure would be materially
detrimental to the Company and its stockholders or would have a material
adverse effect on any such confidential negotiations or other confidential
business activities, or (ii) prior to receiving the Demand Request, the Board
of Directors had determined to effect a registered underwritten public offering
of the Company's securities for the Company's account and the Company had taken
substantial steps (including, but not limited to, selecting a managing
underwriter for such offering) and is proceeding with reasonable diligence to
effect such offering. A deferral of the filing of a registration statement
pursuant to this Section 3.1.6 shall be lifted, and the requested registration
statement shall be filed forthwith, if, in the case of a deferral pursuant to
clause (i) of the preceding sentence, the negotiations or other activities are
disclosed or terminated, or, in the case of a deferral pursuant to clause (ii)
of the preceding sentence, the proposed registration for the Company's account
is abandoned. In order to defer the filing of a registration statement
pursuant to this Section 3.1.6, the Company shall promptly (but in any event
within 10 days), upon determining to seek such deferral, deliver to each
Requesting Holder a certificate signed by an executive officer of the Company
stating that the Company is deferring such filing pursuant to this Section
3.1.6 and a general statement of the reason for such deferral and an
approximation of the anticipated delay. Within 20 days after receiving such
certificate, the holders of a majority of the Registrable Shares held by the
Requesting Holders and for which registration was previously requested may
withdraw such Demand Request by giving notice to the Company; if withdrawn, the
Demand Request shall be deemed not to have been made for all purposes of this
Agreement. The Company may defer the filing of a particular registration
statement pursuant to this Section 3.1.6 only once.
Section 3.2 Piggyback Registrations.
3.2.1 Right to Piggyback. Each time the Company proposes to
register any of its equity securities (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public (whether for the
account of the Company, pursuant to a Demand Registration, or otherwise for the
account of any securityholder of the Company) and the form of registration
statement to be used permits the registration of Registrable Shares, the
Company shall give prompt written notice to each Holder of Registrable Shares
(which notice shall be given not less than 30 days prior to the effective date
of the Company's registration statement), which notice shall offer each such
Holder the opportunity to include any or all of its or his Registrable Shares
in such registration statement, subject to the limitations contained in Section
3.2.2 hereof. Each Holder who desires to have its or his Registrable Shares
included in such registration statement shall so advise the Company in writing
(stating the number of shares desired to be registered) within 20 days after
the date of such notice from the Company. Any Holder shall have the right to
withdraw such Holder's request for inclusion
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of such Holder's Registrable Shares in any registration statement pursuant to
this Section 3.2.1 by giving written notice to the Company of such withdrawal.
Subject to Section 3.2.2 below, the Company shall include in such registration
statement all such Registrable Shares so requested to be included therein;
provided, however, that the Company may at any time withdraw or cease
proceeding with any such registration if it shall at the same time withdraw or
cease proceeding with the registration of all other equity securities
originally proposed to be registered.
3.2.2 Priority on Registrations. If the Registrable Shares
requested to be included in the registration statement by any Holder differ
from the type of securities proposed to be registered by the Company and the
managing underwriter advises the Company that due to such differences the
inclusion of such Registrable Shares would have a Material Adverse Effect, then
(i) the number of such Holder's or Holders' Registrable Shares to be included
in the registration statement shall be reduced to an amount which, in the
judgment of the managing underwriter, would eliminate such Material Adverse
Effect or (ii) if no such reduction would, in the judgment of the managing
underwriter, eliminate such Material Adverse Effect, then the Company shall
have the right to exclude all such Registrable Shares from such registration
statement provided no other securities of such type are included and offered
for the account of any other Person in such registration statement. Any
partial reduction in the number of Registrable Shares to be included in the
registration statement pursuant to clause (i) of the immediately preceding
sentence shall be effected pro rata based on the ratio which such Holder's
requested shares bears to the total number of shares requested to be included
in such registration statement by all Persons who have requested that their
shares be included in such registration statement. If the Registrable Shares
requested to be included in the registration statement are of the same type as
the securities being registered by the Company and the managing underwriter
advises the Company that the inclusion of such Registrable Shares would cause a
Material Adverse Effect, the Company will be obligated to include in such
registration statement, as to each Holder, only a portion of the shares such
Holder has requested be registered equal to the ratio which such Holder's
requested shares bears to the total number of shares requested to be included
in such registration statement by all Persons (other than (i) the Company, if
such registration has been initiated by the Company for securities to be
offered by the Company and (ii) by Persons exercising their right to cause a
Demand Registration) who have requested that their shares be included in such
registration statement. It is acknowledged by the Holders, that pursuant to
the foregoing provision, the securities to be included in such registration
shall be allocated (x) first, to the Company, if such registration has been
initiated by the Company for securities to be offered by the Company, (y)
second, to securities offered by Persons exercising their right to cause a
Demand Registration, if such registration is a Demand Registration and (z)
third, to the Holders and all other persons requesting securities to be
included therein in accordance with the above described ratio. If as a result
of the provisions of this Section 3.2.2 any Holder shall not be entitled to
include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder's request to
include Registrable Shares in such registration statement. No Person may
participate in any registration statement hereunder unless such Person (x)
agrees to sell such person's Registrable Shares on the basis provided in any
underwriting arrangements approved by the Company and (y) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of such
underwriting arrangements; provided, however, that no such Person shall be
required to make any representations or warranties in connection with any such
registration other than representations and warranties as to (i) such Person's
ownership of his or its Registrable Shares to be sold or transferred free and
clear of all liens, claims, and encumbrances, (ii) such Person's power and
authority to effect such transfer, and (iii) such matters pertaining to
compliance with securities laws as may be reasonably requested; provided
further, however, that the obligation of such Person to indemnify pursuant to
any such underwriting arrangements shall be several, not joint and several,
among such Persons selling Registrable Shares, and the liability of each such
Person will be in proportion to, and provided further that such liability will
be limited to, the net amount received by such Person from the sale of his or
its Registrable Shares pursuant to such registration.
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3.3 Holdback Agreement. Unless the managing underwriter otherwise
agrees, each of the Company and the Holders agrees, and the Company agrees, in
connection with any underwritten registration, to use its reasonable efforts to
cause its Affiliates to agree, not to effect any public sale or private offer
or distribution of any Common Stock or Common Stock Equivalents during the ten
business days prior to the effectiveness under the Securities Act of any
underwritten registration and during such time period after the effectiveness
under the Securities Act of any underwritten registration (not to exceed 120
days) (except, if applicable, as part of such underwritten registration) as the
Company and the managing underwriter may agree.
3.4 Registration Procedures. Whenever any Holder has requested
that any Registrable Shares be registered pursuant to this Amended and Restated
Stockholders Agreement, the Company will use its commercially reasonable
efforts to effect the registration and the sale of such Registrable Shares in
accordance with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(i) prepare and file with the SEC a registration
statement on any appropriate form under the Securities Act with respect to such
Registrable Shares and use its commercially reasonable efforts to cause such
registration statement to become effective;
(ii) prepare and file with the SEC such amendments,
post-effective amendments, and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days (or
such lesser period as is necessary for the underwriters in an underwritten
offering to sell unsold allotments) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(iii) furnish to each seller of Registrable Shares and the
underwriters of the securities being registered such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), any documents incorporated by reference therein and such other
documents as such seller or underwriters may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by such seller or
the sale of such securities by such underwriters (it being understood that,
subject to Section 3.5 and the requirements of the Securities Act and
applicable State securities laws, the Company consents to the use of the
prospectus and any amendment or supplement thereto by each seller and the
underwriters in connection with the offering and sale of the Registrable Shares
covered by the registration statement of which such prospectus, amendment or
supplement is a part);
(iv) use its commercially reasonable efforts to register
or qualify such Registrable Shares under such other securities or blue sky laws
of such jurisdictions as the managing underwriter reasonably requests; use its
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions (provided, however, that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (B) consent to
general service of process in any such jurisdiction);
(v) promptly notify each seller and each underwriter and
(if requested by any such Person) confirm such notice in writing (A) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (B) of the issuance by any state
securities or other regulatory authority of any
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order suspending the qualification or exemption from qualification of any of
the Registrable Shares under state securities or "blue sky" laws or the
initiation of any proceedings for that purpose, and (C) of the happening of any
event which makes any statement made in a registration statement or related
prospectus untrue or which requires the making of any changes in such
registration statement, prospectus or documents so that they will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and, as promptly as practicable thereafter, prepare and file with
the SEC and furnish a supplement or amendment to such prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Shares, such
prospectus will not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) make generally available to the Company's
securityholders an earnings statement satisfying the provisions of Section
11(a) of the Securities Act no later than 30 days after the end of the 12-month
period beginning with the first day of the Company's first fiscal quarter
commencing after the effective date of a registration statement, which earnings
statement shall cover said 12-month period, and which requirement will be
deemed to be satisfied if the Company timely files complete and accurate
information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise
complies with Rule 158 under the Securities Act;
(vii) if requested by the managing underwriter or any
seller promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or any seller reasonably
requests to be included therein, including, without limitation, with respect to
the Registrable Shares being sold by such seller, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
underwritten offering of the Registrable Shares to be sold in such offering,
and promptly make all required filings of such prospectus supplement or
post-effective amendment;
(viii) as promptly as practicable after filing with the SEC
of any document which is incorporated by reference into a registration
statement (in the form in which it was incorporated), deliver a copy of each
such document to each seller;
(ix) cooperate with the sellers and the managing
underwriter to facilitate the timely preparation and delivery of certificates
(which shall not bear any restrictive legends unless required under applicable
law) representing securities sold under any registration statement, and enable
such securities to be in such denominations and registered in such names as the
managing underwriter or such sellers may request and keep available and make
available to the Company's transfer agent prior to the effectiveness of such
registration statement a supply of such certificates;
(x) promptly make available for inspection by any seller,
any underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative
retained by any such seller or underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties
of the Company (collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information requested
by any such Inspector in connection with such registration statement; provided,
that, unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide any
information under this subparagraph (x) if (A) the Company believes, after
consultation with counsel for the Company, that to do so would cause the
Company to forfeit an attorney-client privilege that was applicable to such
information or (B) if either (1) the Company has requested and been granted
from the SEC confidential treatment of such information contained in any filing
with the SEC or documents provided supplementally or otherwise or (2) the
Company reasonably determines in good faith that
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such Records are confidential and so notifies the Inspectors in writing unless
prior to furnishing any such information with respect to (A) or (B) such Holder
of Registrable Securities requesting such information agrees to enter into a
confidentiality agreement in customary form and subject to customary
exceptions; and provided, further that each Holder of Registrable Securities
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company at its expense, to undertake appropriate action and to prevent
disclosure of the Records deemed confidential;
(xi) furnish to each seller underwriter a signed
counterpart of (A) an opinion or opinions of counsel to the Company, and (B) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
sellers or managing underwriter reasonably requests;
(xii) cause the Registrable Shares included in any
registration statement to be (A) listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed, or (B)
authorized to be quoted and/or listed (to the extent applicable) on the
National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") or the NASDAQ National Market System if the Registrable Shares so
qualify;
(xiii) provide a CUSIP number for the Registrable Shares
included in any registration statement not later than the effective date of
such registration statement;
(xiv) cooperate with each seller and each underwriter
participating in the disposition of such Registrable Shares and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD");
(xv) during the period when the prospectus is required to
be delivered under the Securities Act, promptly file all documents required to
be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act;
(xvi) notify each seller of Registrable Shares promptly of
any request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
(xvii) prepare and file with the SEC promptly any amendments
or supplements to such registration statement or prospectus which, in the
opinion of counsel for the Company or the managing underwriter, is required in
connection with the distribution of the Registrable Shares;
(xviii) enter into such agreements (including underwriting
agreements in the managing underwriter's customary form) as are customary in
connection with an underwritten registration; and
(xix) advise each seller of such Registrable Shares,
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
3.5 Suspension of Dispositions. Each Holder agrees by acquisition
of any Registrable Shares that, upon receipt of any notice (a "Suspension
Notice") from the Company of the happening of any event of the kind described
in Section 3.4(v)(C), such Holder will forthwith discontinue disposition of
Registrable Shares until such Holder's receipt of the copies of the
supplemented or amended prospectus, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so
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directed by the Company, such Holder will deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Shares current at the time of receipt of
such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of registration statements set forth in
Section 3.4(ii) hereof shall be extended by the number of days during the
period from and including the date of the giving of the Suspension Notice to
and including the date when each seller of Registrable Shares covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus or the Advice. The Company shall use its commercially
reasonable efforts and take such actions as are reasonably necessary to render
the Advice as promptly as practicable.
3.6 Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Article 3 including, without limitation,
all registration and filing fees, all fees and expenses associated with filings
required to be made with the NASD (including, if applicable, the fees and
expenses of any "qualified independent underwriter" as such term is defined in
Schedule E of the By-Laws of the NASD, and of its counsel), as may be required
by the rules and regulations of the NASD, fees and expenses of compliance with
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualifications of the Registrable
Shares), rating agency fees, printing expenses (including expenses of printing
certificates for the Registrable Shares in a form eligible for deposit with
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by a holder of Registrable Shares), messenger and
delivery expenses, the Company's internal expenses (including without
limitation all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
any listing of the Registrable Shares, fees and expenses of counsel for the
Company and its independent certified public accountants (including the
expenses of any special audit or "cold comfort" letters required by or incident
to such performance), securities acts liability insurance (if the Company
elects to obtain such insurance), the fees and expenses of any special experts
retained by the Company in connection with such registration, and the fees and
expenses of other persons retained by the Company and reasonable fees and
expenses of one firm of counsel for the sellers (which shall be selected by the
holders of a majority of the Registrable Shares being included in any
particular registration statement) (all such expenses being herein called
"Registration Expenses") will be borne by the Company whether or not any
registration statement becomes effective; provided that, except as expressly
otherwise provided above, in no event shall Registration Expenses include any
underwriting discounts, commissions, or fees attributable to the sale of the
Registrable Shares or any counsel, accountants, or other persons retained or
employed by the Holders.
3.7 Indemnification.
3.7.1 The Company agrees to indemnify and reimburse, to the fullest
extent permitted by law, each seller of Registrable Shares, and each of its
employees, advisors, agents, representatives, partners, officers, and directors
and each Person who controls such seller (within the meaning of the Securities
Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by 3.7.3) based
upon, arising out of, related to or resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, or preliminary prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, (B)
against any and all loss, liability, claim, damage, and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based
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upon, arising out of, related to or resulting from any such untrue statement or
omission or alleged untrue statement or omission, and (C) against any and all
costs and expenses (including reasonable fees and disbursements of counsel) as
may be reasonably incurred in investigating, preparing, or defending against
any litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon, arising out
of, related to or resulting from any such untrue statement or omission or
alleged untrue statement or omission, to the extent that any such expense or
cost is not paid under subparagraph (A) or (B) above; except insofar as the
same are made in reliance upon and in strict conformity with information
furnished in writing to the Company by such seller or any Seller Affiliate for
use therein or arise from such seller's or any Seller Affiliate's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such seller or Seller
Affiliate with a sufficient number of copies of the same. The reimbursements
required by this Section 3.7.1 will be made by periodic payments during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
3.7.2 In connection with any registration statement in which a
seller of Registrable Shares is participating, each such seller will furnish to
the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the fullest extent permitted by law, each such seller
will indemnify the Company and its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act or the Exchange
Act) against any and all losses, claims, damages, liabilities, and expenses
(including, without limitation, reasonable attorneys' fees and disbursements
except as limited by Section 3.7.3) resulting from any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, prospectus, or any preliminary prospectus or any amendment thereof
or supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission is contained in any information or
affidavit so furnished in writing by such seller or any of its Seller
Affiliates specifically for inclusion in the registration statement; provided
that the obligation to indemnify will be several, not joint and several, among
such sellers of Registrable Shares, and the liability of each such seller of
Registrable Shares will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such seller from the
sale of Registrable Shares pursuant to such registration statement; provided,
however, that such seller of Registrable Shares shall not be liable in any such
case to the extent that prior to the filing of any such registration statement
or prospectus or amendment thereof or supplement thereto, such seller has
furnished in writing to the Company information expressly for use in such
registration statement or prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Company.
3.7.3 Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such notice
shall not limit the rights of such Person) and (B) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person unless (x) the
indemnifying party has agreed to pay such fees or expenses, or (y) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person. If such defense is not
assumed by the indemnifying party as permitted hereunder, the indemnifying
party will not be subject to any liability for any settlement made by the
indemnified party without its consent (but such consent will not be
unreasonably withheld). If such defense is assumed by the indemnifying party
pursuant to the provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (1) such settlement or
compromise contains a full and unconditional release of the indemnified party
or (2) the indemnified party otherwise consents in writing. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party, a conflict of
interest may exist between such indemnified party and any other of such
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indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and disbursements of such
additional counsel or counsels.
3.7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 3.7.1 or Section 3.7.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, liabilities, or expenses (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or indemnified party, and
the parties relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 3.7.4 were determined by pro rata allocation (even if the Holders or
any underwriters or all of them were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in this Section 3.7.4. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages,
liabilities, or expenses (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or, except
as provided in Section 3.7.3, defending any such action or claim.
Notwithstanding the provisions of this Section 3.7.4, no Holder shall be
required to contribute an amount greater than the dollar amount by which the
proceeds received by such Holder with respect to the sale of any Registrable
Shares exceeds the amount of damages which such Holder has otherwise been
required to pay by reason of such statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations in this
Section 3.7.4 to contribute shall be several in proportion to the amount of
Registrable Shares registered by them and not joint.
If indemnification is available under this Section 3.7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 3.7.1 and Section 3.7.2 without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 3.7.4.
3.7.5 The indemnification and contribution provided for under this
Amended and Restated Stockholders Agreement will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director, or controlling Person of such indemnified party
and will survive the transfer of securities.
ARTICLE 4
TRANSFERS OF SECURITIES
Section 4.1 Drag Along Rights.
4.1.1 Applicability. In connection with any Transfer by members of
the HMC Group of shares of Common Stock representing more than 50% of the
shares of Common Stock then held by the HMC Group (a "Significant Sale"), the
HMC Group shall have the right to require each non-selling Holder (each, a
"Co-Seller") to Transfer a portion of its Common Stock which represents the
same percentage of the Fully-Diluted Common Stock held by such Co-Seller as the
shares being disposed of by the HMC Group represent of the
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Fully-Diluted Common Stock held by the HMC Group. (For example, if the HMC
Group is selling 50% of their Fully-Diluted Common Stock position, each
Co-Seller shall be required to sell 50% of its Fully-Diluted Common Stock
position.) All Common Stock Transferred by Holders pursuant to this Section 4.1
shall be sold at the same price and otherwise treated identically with the
Common Stock being sold by the HMC Group in all respects; provided, that the
Co-Seller shall not be required to make any representations or warranties in
connection with such Transfer other than representations and warranties as to
(i) such Co-Seller's ownership of his or its Common Stock to be Transferred
free and clear of all liens, claims and encumbrances, (ii) such Co-Seller's
power and authority to effect such transfer, and (iii) such matters pertaining
to compliance with securities laws as the transferee may reasonably require
except that the transferee may not require that each Transferring Co-Seller be
an Accredited Investor.
4.1.2 Notice of Significant Sale. HMTF, on behalf of the HMC Group,
shall give each Co-Seller at least 30 days' prior written notice of any
Significant Sale as to which the HMC Group intends to exercise its rights under
Section 4.1. If the HMC Group elects to exercise its rights under Section 4.1,
the Co-Sellers shall take such actions as may be reasonably required and
otherwise cooperate in good faith with the HMC Group in connection with
consummating the Significant Sale (including, without limitation, the voting of
any Common Stock or other voting capital stock of the Company to approve such
Significant Sale). At the closing of such Significant Sale, each Co-Seller
shall deliver certificates for all shares of Common Stock to be sold by such
Co-Seller, duly endorsed for transfer, with the signature guaranteed, to the
purchaser against payment of the appropriate purchase price.
Section 4.2 Tag Along Rights.
4.2.1 Applicability. If the HMC Group desires to effect a
Significant Sale and it does not elect to exercise its rights under Section 4.1
hereof, then at least 30 days prior to the closing of such Significant Sale,
HMTF and the Company shall cause the HMC Group to make an offer (the
"Participation Offer") to each Co-Seller to include in the proposed Significant
Sale a portion of its Common Stock which represent the same percentage of such
Co-Seller's Fully Diluted Common Stock as the shares being sold by the HMC
Group represent of its Fully-Diluted Common Stock; provided that, if the
consideration to be received by the HMC Group includes any securities, then,
unless HMTF and the transferee both reasonably determine that an exemption is
otherwise available under the Securities Act and all applicable state
securities laws for such transaction, only Co-Sellers who have certified to the
reasonable satisfaction of HMTF that they are Accredited Investors shall be
entitled to participate in such transaction, unless the transferee consents
otherwise.
4.2.2 Terms of Participation Offer. The Participation Offer shall
describe the terms and conditions of the proposed Significant Sale and shall be
conditioned upon (i) the consummation of the transactions contemplated in the
Participation Offer with the transferee named therein, and (ii) each
Co-Seller's execution and delivery of all agreements and other documents as the
members of the HMC Group are required to execute and deliver in connection with
such Significant Sale (provided that the Co-Seller shall not be required to
make any representations or warranties in connection with such sale or transfer
other than representations and warranties as to (A) such Co-Seller's ownership
of his Common Stock to be sold or transferred free and clear of all liens,
claims, and encumbrances, (B) such Co-Seller's power and authority to effect
such transfer and (C) such matters pertaining to compliance with securities
laws as the transferee may reasonably require). If any Co-Seller shall accept
the Participation Offer, HMTF and the Company shall cause the HMC Group to
reduce, to the extent necessary, the number of shares of Common Stock it
otherwise would have sold in the proposed transfer so as to permit those
Co-Sellers who have accepted the Participation Offer to sell the number of
shares of Common Stock that they are entitled to sell under this Section 4.2,
and HMTF shall cause the HMC Group to transfer and such Co-Sellers shall
transfer the number of shares Common Stock specified in the Participation Offer
to the proposed transferee in accordance with the terms of such transfer as set
forth in the Participation Offer.
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Section 4.3 Certain Events Not Deemed Transfers. In no event
shall any exchange, reclassification, or other conversion of shares into any
cash, securities, or other property pursuant to a merger or consolidation of
the Company or any Subsidiary with, or any sale or transfer by the Company or
any Subsidiary of all or substantially all its assets to, any Person constitute
a Significant Sale of shares of Common Stock by the HMC Group for purposes of
Section 4.1 or 4.2. In addition, Sections 4.1 and 4.2 hereof shall not apply
to any transfer, sale, or disposition of shares of Common Stock solely among
members of the HMC Group.
Section 4.4 Transfer and Exchange. When Securities are presented
to the Company with a request to register the transfer of such Securities or to
exchange such Securities for Securities of other authorized denominations, the
Company shall register the transfer or make the exchange as requested if the
requirements of this Amended and Restated Stockholders Agreement for such
transaction are met; provided, however, that the Securities surrendered for
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company, duly executed by
the Holder thereof or its attorney and duly authorized in writing. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith.
Section 4.5 Replacement Securities. If a mutilated Security is
surrendered to the Company or if the Holder of a Security claims and submits an
affidavit or other evidence, satisfactory to the Company, to the effect that
the Security has been lost, destroyed or wrongfully taken, the Company shall
issue a replacement Security if the Company's requirements are met. If
required by the Company, such Securityholder must provide an indemnity bond, or
other form of indemnity, sufficient in the judgment of the Company to protect
the Company against any loss which may be suffered. The Company may charge
such Securityholder for its reasonable out-of-pocket expenses in replacing a
Security which has been mutilated, lost, destroyed or wrongfully taken.
ARTICLE 5
LIMITATION ON TRANSFERS
Section 5.1 Restrictions on Transfer. The Securities shall not
be Transferred or otherwise conveyed, assigned or hypothecated before
satisfaction of (i) the conditions specified in this Section 5.1 and Sections
5.2 through 5.3, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Security
and (ii) if applicable, Article 4 hereof. Any purported Transfer in violation
of this Article 5 and/or, if applicable, Article 4 hereof shall be void
Achievement Bonus initio and of no force or effect. Except for Transfers made
pursuant to Sections 4.1 or 4.2 hereof (it being understood that transactions
pursuant to such Sections are not subject to this Article 5) and except for
Transfers to the public pursuant to an effective registration statement or
sales to the public pursuant to Rule 144 under the Securities Act otherwise
permitted hereunder, each Holder will cause any proposed transferee of any
Security or any interest therein held by it to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Amended and Restated Stockholders Agreement. Each Holder shall not Transfer,
convey, assign or hypothecate any Securities to any Affiliate of such Holder or
any member of such Holder's family unless such Holder shall have and retain all
voting rights with respect to such Securities.
Section 5.2 Restrictive Legends.
5.2.1 Securities Act Legend. Except as otherwise provided in
Section 5.4 hereof, each Security held by a Holder, and each Security issued to
any subsequent transferee of such Security, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE
SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE
AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE,
PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR
STATE SECURITIES LAWS.
5.2.2 Other Legends. Each Security issued to each Holder or a
subsequent transferee shall include a legend in substantially the following
form:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING AND OTHER
TERMS AND CONDITIONS SET FORTH IN THE AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT DATED AS OF MAY ___, 1998, A COPY OF WHICH MAY BE OBTAINED FROM
CAPSTAR BROADCASTING CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICES.
Section 5.3 Right of First Refusal.
5.3.1 Right of First Refusal. Prior to any Transfer or attempted
Transfer by any Holder of any Securities or Common Stock Equivalents (the
"Offered Securities") other than pursuant to a registration under the
Securities Act, the Holder of such Offered Securities shall (i) give prior
written notice (a "Transfer Notice") to HMTF of such Holder's intention to
effect such Transfer, describing the terms and conditions of the proposed
Transfer, including the identity of the prospective transferee(s), the number
of shares of Offered Securities such Holder desires to sell and the purchase
price. After receipt of the Transfer Notice, HMTF (or as provided in Section
5.3.3, an assignee of HMTF who is a member of the HMC Group) shall have the
option for 15 days from the date of receipt of the Transfer Notice to elect to
purchase all, but not less than all, of the Offered Securities upon the same
terms and conditions as those set forth in the Transfer Notice by delivering a
written notice (the "Election Notice") of such election to such Holder within
such 15-day period. The Holder shall not consummate such Transfer until the
earlier to occur of the lapse of the 15-day period or the date on which HMTF
(acting for itself or, if applicable, its assignee) notifies such Holder in
writing that it will not exercise its rights under this Section 5.3 (the
"Authorization Date"). If neither HMTF (nor any assignee) has elected to
purchase all of the Offered Securities or has failed to make a timely election,
such Holder may Transfer all, but not less than all, of the Offered Securities
to the prospective transferee(s) thereof specified in the Transfer Notice, at a
price and on terms no more favorable to such prospective transferee(s) than as
specified in the Transfer Notice, during the 30-day period immediately
following the Authorization Date, provided that, if required by the Company,
such Holder shall either (i) provide to the Company an opinion reasonably
satisfactory to the Company (or supply such other evidence reasonably
satisfactory to the Company) that the proposed Transfer may be effected without
registration under the Securities Act, or (ii) certify to the Company that the
Holder reasonably believes that each proposed transferee is a "qualified
institutional buyer" and that such Holder has taken reasonable steps to make
each proposed transferee aware that such Holder may rely on Rule 144A under the
Securities Act in effecting such Transfer. Each Security issued upon such
Transfer shall bear the restrictive legends set forth in Section 5.2, unless in
the reasonable judgment of counsel for the Company such legend is not required
in order to ensure compliance with the Securities Act. If the Offered
Securities are not so transferred within such 30-day period, such Offered
Securities must be reoffered to HMTF in accordance with the provisions of this
Section 5.3 if such Holder still desires to Transfer the Offered Securities.
5.3.2 Closing. If HMTF (or an assignee) exercises the right to
purchase the Offered Securities by timely delivery of the Election Notice,
unless otherwise agreed by the Holder of the Offered Securities and HMTF
(acting for itself, or if applicable, its assignee), the closing will take
place at the offices of the Company
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in Dallas, Texas on the fifth business day after the date of the Election
Notice. At the closing, HMTF (or, if applicable, its assignee) will pay the
purchase price set forth in the Transfer Notice in cash (by certified or
cashier's check) solely upon such Holder's delivery to HMTF (or, if applicable,
its assignee) of valid certificates or agreements evidencing all of the Offered
Securities then being purchased pursuant to the Election Notice. Certificates
or agreements representing the Offered Securities will be duly endorsed (with
signature guaranteed) for transfer to HMTF (or, if applicable, its assignee).
By delivery of such certificates or agreements to HMTF (or, if applicable, its
assignee) such Holder will be deemed to represent and warrant to HMTF (or, if
applicable, its assignee) that the transferred Offered Securities are owned by
such Holder free and clear of all liens, adverse claims, and other encumbrances
other than as provided in this Amended and Restated Stockholders Agreement.
The Holder will promptly perform, whether before or after any such closing,
such additional acts (including without limitation executing and delivering
additional documents) as are reasonably required by either such party to effect
more fully the transactions contemplated by this Section 5.3.
5.3.3 Assignment. The rights of HMTF under this Section 5.3 may be
assigned or transferred in whole or in part by HMTF, without any consent or
other action on the part of any other party hereto, to any one or more members
of the HMC Group.
Section 5.4 Termination of Certain Restrictions. Notwithstanding
the foregoing provisions of this Section 5, the restrictions imposed by Section
5.3.1 upon the transferability of the Securities and the legend requirements of
Section 5.2.1 shall terminate as to any Security (i) when and so long as such
Security shall have been effectively registered under the Securities Act and
disposed of pursuant thereto or disposed of pursuant to the provisions of Rule
144 or (ii) when the Company shall have received an opinion of counsel
reasonably satisfactory to it that such Security may be transferred without
registration thereof under the Securities Act and that such legend may be
removed. Whenever the restrictions imposed by Section 5.2 shall terminate as
to any Security, the Holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new Security not bearing the restrictive
legend set forth in Section 5.2.
ARTICLE 6
PURCHASE OPTION
Section 6.1. Purchase Option.
6.1.1 Purchase Option. If (i), and at such time as, a Holder is no
longer a director, officer or employee of the Company or any Subsidiary of the
Company, for any reason at any time or (ii) a Change of Control occurs, the
Company shall have the option (the "Purchase Option") to purchase, and if the
Purchase Option is exercised, such Holder (or the executor or administrator of
such Holder's estate, in the event of such Holder's death, or such Holder's
legal representative in the event of his incapacity) (hereinafter, collectively
with such Holder, the "Grantor") shall sell to HMTF (or, as provided in Section
6.1.4, an assignee of HMTF) all or any portion (at the option of HMTF acting
for itself or, if applicable, its assignee) of the shares of Common Stock, the
Warrants, and/or Common Stock Equivalents held by the Grantor (such shares of
Common Stock, the Warrants, and/or Common Stock Equivalents collectively being
referred to as the "Purchasable Securities"), subject to HMTF's (or, if
applicable, its assignee's) compliance with the conditions hereinafter set
forth. HMTF (acting for itself or, if applicable, its assignee) shall give
notice (the "Purchase Notice") in writing to the Grantor of the exercise of the
Purchase Option within one year from the date such Holder is no longer a
director, officer or employee of the Company or any Subsidiary of the Company
or such Change of Control. Such Purchase Notice shall state the number of
Purchasable Securities to be purchased and the exercise price for each
Purchasable Security (on a per share basis or, in the case of securities other
than capital stock, other applicable denomination). If no notice is given
within the time limit specified above, the Purchase Option shall terminate.
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<PAGE> 20
6.1.2 Closing. Unless otherwise agreed by the Grantor and HMTF
(acting for itself or, if applicable, its assignee), the closing of each
exercise of the Purchase Option will take place at the offices of the Company
in Dallas, Texas, on the fifth business day after the Purchase Notice is mailed
or delivered in accordance with this Section 6.1. At the closing, HMTF (of, if
applicable, its assignee) will pay the exercise price to the Grantor in cash
(by certified or cashier's check) solely upon such Grantor's delivering to HMTF
(or, if applicable, its assignee) of valid certificates or agreements
evidencing all Purchasable Securities then being purchased pursuant to the
exercise of the Purchase Option. Certificates or agreements representing the
Purchasable Securities will be duly endorsed (with signature guaranteed) for
transfer to HMTF (or, if applicable, its assignee). Upon delivery of such
certificates or agreements to HMTF (or, if applicable, its assignee) , the
Grantor will be deemed to represent and warrant to HMTF (or, if applicable, its
assignee) that the transferred Purchasable Securities are owned by the Grantor
free and clear of all liens, adverse claims, and other encumbrances other than
as provided in this Amended and Restated Stockholders Agreement. In the event
that, notwithstanding the foregoing, the Grantor shall have failed to obtain
the release of any lien, adverse claim or other encumbrance on any Purchasable
Securities by the scheduled closing date, at the option of HMTF (acting, for
itself or, if applicable, its assignee) such closing shall nevertheless occur
on such scheduled closing date, with the exercise price being reduced to the
extent of all unpaid indebtedness for which such Purchasable Securities are
then encumbered. Payment of the exercise price for the Purchasable Securities
is not required in order to effect the timely exercise of the Purchase Option.
In order to ensure the transfer of the Purchasable Securities purchased upon
exercise of the Purchase Option, the Grantor hereby appoints HMTF as his or its
attorney in fact for the purpose of effecting any such transfer, and the
Grantor acknowledges and agrees that such power of attorney is coupled with an
interest and is irrevocable. Moreover, HMTF (or, if applicable, its assignee)
and the Grantor will promptly perform, whether before or after any Purchase
Option closing, such additional acts (including without limitation executing
and delivering additional documents) as are reasonably required by either such
party to effect more fully the transactions contemplated hereby.
6.1.3 Exercise Price. The exercise price for each Purchasable
Security will equal the Appraised Value per share (or, in the case of
securities other than capital stock, other applicable denomination) to be paid
in connection with the exercise of the Purchase Option.
6.1.4 Assignment of Purchase Option. The Purchase Option may be
assigned or transferred in whole or in part by HMTF to any one or more members
of the HMC Group without any consent or other action on the part of any other
party hereto.
Section 6.2 Option by Certain Unaccredited Holders.
6.2.1 Grant of Option. Upon the occurrence of an Option Transaction
(as defined in Section 6.2.2 hereof) with respect to the Company, each Holder
shall be deemed to have granted to HMTF, an option ("Option") to purchase, upon
the terms and conditions set forth herein, all Securities held by such Holder
and all shares, notes, or other securities now or hereafter issued or issuable
in respect of any such Securities (whether issued or issuable by the Company or
any other person or entity) (collectively, the "Option Securities").
6.2.2 Option Transaction. The Option may be exercised only if (a)
the Company is engaged in or proposes to engage in a transaction in which any
shares, notes, or other securities will be issued to such Holder in a
transaction constituting a "sale" within the meaning of Section 2(3) of the
Securities Act (whether through a merger, consolidation, exchange, or
purchase), (b) the Holder is not an Accredited Investor at the time of the
respective transaction (an "Unaccredited Holder"), (c) no security holder
(except for such Unaccredited Holder or any other person granting a similar
option to HMTF) of the Company involved in the respective transaction fails at
the time of such transaction to qualify as an Accredited Investor, and (d) the
issuer of the shares, notes, or other securities involved in such transaction
(as conclusively evidenced by any notice signed in good faith
20
<PAGE> 21
by an executive officer or other authorized representative of HMTF) has not
prepared and is not expected to prepare in connection with such transaction
appropriate disclosure documents that are sufficient to register such shares,
notes, or other securities under the Securities Act or to exempt such
registration in accordance with Regulation D. Each transaction for which the
Option may be exercised as provided in this Section 6.2.2 is herein referred to
as an "Option Transaction."
6.2.3 Exercise of Option. HMTF may exercise the Option solely with
respect to all, but not less than all, of such Unaccredited Holder's Option
Securities involved in the respective Option Transaction. The Option may be
exercised with respect to such Option Securities at any time before the
consummation of the respective Option Transaction for which the Option is then
exercisable. The exercise of the Option will be timely and effectively made if
HMTF provides written notice (the "Option Notice") of such exercise to such
Unaccredited Holder before such consummation of the respective Option
Transaction. The earliest date on which such notice is so mailed or delivered
will constitute the respective exercise date of the Option to which such notice
relates.
6.2.4 Closing. Unless otherwise agreed by HMTF and such
Unaccredited Holder, the closing of each exercise of the Option will take place
at the offices of the Company in Dallas, Texas, on the fifth business day after
notice of the Option's exercise is mailed or delivered in accordance with
Section 6.2.3. At the closing, HMTF will pay the exercise price to such
Unaccredited Holder in cash (by certified or cashier's check) solely upon such
Unaccredited Holder's delivering to HMTF valid certificates evidencing all
Option Securities then being purchased pursuant to the exercise of the Option.
Such certificates will be duly endorsed (with signature guaranteed) for
transfer to HMTF, and upon delivery of such certificates to HMTF, such
Unaccredited Holder will be deemed to represent and warrant to HMTF that the
transferred Option Securities are owned by such Unaccredited Holder free and
clear of all liens, adverse claims, and other encumbrances other than as
provided in this Amended and Restated Stockholders Agreement. Payment of the
exercise price for the Option Securities is not required in order to effect the
timely exercise of the Option. In order to ensure the transfer of the Option
Securities purchased upon exercise of the Option, each Unaccredited Holder
hereby severally appoints HMTF as his or its attorney in fact for the purpose
of effecting any such transfer, and each Unaccredited Holder acknowledges and
agrees that such power of attorney is coupled with an interest and is
irrevocable. Moreover, HMTF and each Unaccredited Holder will promptly
perform, whether before or after any Option closing, such additional acts
(including without limitation executing and delivering additional documents) as
are reasonably required by either such party to effect more fully the
transactions contemplated hereby.
6.2.5 Exercise Price. The exercise price for each Option Security
will equal the Appraised Value per share (or, in the case of securities other
than capital stock, other applicable denomination) to be paid in connection
with the Option Transaction.
6.2.6 Assignment of Option. The Option may be assigned or
transferred in whole or in part by HMTF to any one or more members of the HMC
Group without any consent or other action on the part of any Holder, and all
references herein to "HMTF" will include without limitation each assignee or
transferee of all or any part of the Option.
ARTICLE 7
TERMINATION
The provisions of this Agreement shall terminate on July 8, 2007;
provided, however, that Sections 4.1 and 4.2 and Articles 2, 5 (other than
Sections 5.2 and 5.4) and 6 of this Agreement shall terminate upon the
consummation prior to July 8, 2007 of a Qualified IPO.
21
<PAGE> 22
ARTICLE 8
MISCELLANEOUS
Section 8.1 Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows
(or at such other address as may be substituted by notice given as herein
provided):
If to the Company:
Capstar Broadcasting Partners, Inc.
600 Congress Avenue, Suite 1270
Austin, Texas 78701
Attention: R. Steven Hicks
Copies to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
If to HMTF:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Thomas 0. Hicks
John R. Muse
Jack D. Furst
Lawrence D. Stuart, Jr.
Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Attention: Charles W. Tate
Alan B. Menkes
Michael J. Levitt
Copies to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
If to any Holder, at its address listed on the signature pages hereof.
22
<PAGE> 23
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five calendar days after mailing if sent by registered or certified mail
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 8.2 Legal Holidays. A "Legal Holiday" used with respect
to a particular place of payment is a Saturday, a Sunday or a day on which
banking institutions at such place are not required to be open. If a payment
date is a Legal Holiday at such place, payment may be made at such place on the
next succeeding day that is not a Legal Holiday, and no interest on the amount
of such payment shall accrue for the intervening period.
Section 8.3 Governing Law; Jurisdiction. THIS AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Section 8.4 Successors and Assigns. Whether or not an express
assignment has been made pursuant to the provisions of this Amended and
Restated Stockholders Agreement, provisions of this Amended and Restated
Stockholders Agreement that are for the Holders' benefit as the holders of any
Securities are also for the benefit of, and enforceable by, all subsequent
holders of Securities, except as otherwise expressly provided herein. This
Amended and Restated Stockholders Agreement shall be binding upon the Company,
each Holder, and their respective successors and assigns. If other than the
Company, the issuer of any capital stock into which Common Stock may be changed
shall execute and deliver to the Holders, as a condition precedent to effecting
such change, an agreement substantially similar to this Amended and Restated
Stockholders Agreement in which the issuer is the "Company."
Section 8.5 Duplicate Originals. All parties may sign any number
of copies of this Amended and Restated Stockholders Agreement. Each signed
copy shall be an original, but all of them together shall represent the same
agreement.
Section 8.6 Severability. In case any provision in this Amended
and Restated Stockholders Agreement shall be held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and the remaining
provisions shall not in any way be affected or impaired thereby.
Section 8.7 No Waivers; Amendments.
8.7.1 No failure or delay on the part of the Company or any Holder
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
8.7.2 Any provision of this Amended and Restated Stockholders
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Company and the Required Holders; provided that
no such amendment or waiver shall, (i) unless signed by all of the Holders,
amend the provisions of Section 2.1, (ii) unless signed by all of the Holders
affected, (A) amend the provisions of this
23
<PAGE> 24
Section 8.7.2 or (B) change the number of Holders which shall be required for
the Holders or any of them to take any action under this Section 8.7.2 or any
other provision of this Amended and Restated Stockholders Agreement, and (iii)
unless signed by a majority in interest of the Holders who are not members of
the HMC Group, amend Article 3, Section 4.1, Section 4.2 or Articles 5 or 6, or
grant a waiver thereunder.
Section 8.8 Third Parties. Each member of the HMC Group is an
intended third party beneficiary of this Amended and Restated Stockholders
Agreement and, to the extent applicable, bound by the provisions hereof
including without limitation Article III and Section 4.2 hereof.
Section 8.9 Additional Holders. From time to time, additional
securityholders of the Company may become "Holders" under this Amended and
Restated Stockholders Agreement, without the consent of any other Holder, upon
the execution by the President of the Company (the "President") and such party
of a supplement to this Amended and Restated Stockholders Agreement in
substantially the same form as Exhibit A attached hereto (each, a
"Supplement"). Each Holder and HMTF hereby consents to the execution of
Supplements by the President and irrevocably agrees that the President's
execution of a Supplement shall be binding on each of the Holders and HMTF as
if it had executed such Supplement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 25
SIGNATURES TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Stockholders Agreement to be duly executed, all as of the date first
written above.
CAPSTAR BROADCASTING CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HMTF OPERATING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HOLDERS:
----------------------------------------
D. Geoffrey Armstrong
----------------------------------------
Darla S. John W. Barger
----------------------------------------
Kim Borron
BT CAPITAL PARTNERS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
S-1
<PAGE> 26
----------------------------------------
John D. Cullen
----------------------------------------
Thomas O. Hicks
----------------------------------------
William R. Hicks
----------------------------------------
Rebecca A. McConnell
ERIC C. NEUMAN SPECIAL TRUST
By:
-------------------------------------
Reed W. Neuman, Trustee
----------------------------------------
Eric W. Neuman
----------------------------------------
Bill Schwartz
STANSELL COMMUNICATIONS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
S-2
<PAGE> 27
----------------------------------------
James I. Stansell, Jr.
----------------------------------------
Paul D. Stone
----------------------------------------
Lawrence D. Stuart, Jr.
S-3
<PAGE> 28
EXHIBIT A
SUPPLEMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Supplement (this "Supplement") to the Amended and Restated
Stockholders Agreement dated as of May 18, 1998, by and among Capstar
Broadcasting Corporation, a Delaware corporation (the "Company"), the
securityholders listed on the signature pages thereto, and Hicks, Muse, Tate &
Furst Incorporated, a Texas corporation, as amended or supplemented (the
"Amended and Restated Stockholders Agreement"), is entered into as of
_________________, 199__, between ________________________ (the "New Holder"),
and the President of the Company, pursuant to the terms of the Amended and
Restated Stockholders Agreement.
AGREEMENTS
For valuable consideration, the receipt of which is hereby
acknowledged, New Holder is added as a "Holder" under the Amended and Restated
Stockholders Agreement and New Holder hereby agrees that it shall be bound by
the terms thereof.
Executed as of the date first written above.
NEW HOLDER:
----------------------------------------
----------------------------------------
Address:
----------------------------------------
----------------------------------------
PRESIDENT:
----------------------------------------
, President
---------------------------
A-1
<PAGE> 1
EXHIBIT 10.21
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL IN REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO
THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN
REVIEWED OR APPROVED BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND
THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A
STOCKHOLDERS AGREEMENT, AS AMENDED, DATED AS OF OCTOBER 16, 1996, BY AND AMONG
THE COMPANY AND THE OTHER PARTIES LISTED THEREIN, COPIES OF WHICH ARE ON FILE
WITH THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 9,300,000 Shares of Class C Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING OCTOBER 16, 2006.
THIS IS TO CERTIFY THAT, for value received, R. Steven Hicks, or
registered assigns as a holder of this Warrant (the "Holder") is entitled to
purchase from the Company (as hereinafter defined) at any time or from time to
time prior to 5:00 p.m., Dallas, Texas time, October 16, 2006 at the place
where the Warrant Agency (as hereinafter defined) is located, at the Exercise
Price (as hereinafter defined) 7,440,000 shares of Class C common stock, par
value $.01 per share (the "Common Stock"), of the Company (the "A Warrant") and
at the Exercise Price 1,860,000 shares of the Common Stock (the "B Warrant",
and, collectively with the A Warrant, the "Warrant"), all subject to adjustment
and upon the terms and conditions as hereinafter provided; provided, however,
that, except as provided in Section 3.1, in no event may the B Warrant be
exercised by the Holder until the earlier to occur of June 30, 2001 or
immediately preceding the consummation of a Sale of the Company (as hereinafter
defined); and provided further, however, that the B Warrant shall terminate and
not be exercisable pursuant to the provisions of Section 3.1 or 3.2. The
Holder shall designate at the time of exercise whether the Holder is exercising
an A Warrant or a B Warrant and the number of shares of Common Stock to be
purchased respectively thereunder. This Warrant amends and restates,
supersedes and replaces that certain Warrant dated July 1, 1997, among the
Company, the Initial Holder and Capstar Broadcasting Partners, Inc.
Certain terms used in this Warrant are defined in Article V.
<PAGE> 2
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) whether the Holder is exercising an A
Warrant and/or a B Warrant, (ii) the number of shares of Common Stock to be
purchased under an A Warrant and/or a B Warrant, as applicable, (iii) the
denominations of the share certificate or certificates desired, and (iv) the
name or names in which such certificates are to the registered, (c) if the
Common Stock to be received upon the exercise of this Warrant has not been
registered under the Securities Act, a written certification in substantially
the form of the Certification attached hereto as Annex B, and (d) payment of
the Exercise Price with respect to such shares. Such payment may be made, at
the option of the Holder, by cash, money order, certified or bank cashier's
check or wire transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
2
<PAGE> 3
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of
3
<PAGE> 4
assignment, and this Warrant shall promptly be canceled. The Warrant Agency
shall not be required to register any transfers if the Holder fails to furnish
to the Company, after a request therefor, an opinion of counsel (who may be an
employee of such Holder) reasonably satisfactory to the Company that such
transfer is exempt from the registration requirements of the Securities Act and
applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which the new Warrants are to be
issued, signed by the Holder. Subject to compliance with Section 2.3 as to any
transfer which may be involved in the division, the Company shall execute and
deliver new Warrants in exchange for the Warrant or Warrants to be divided in
accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Termination of Employment.
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, the B Warrant shall become exercisable on the Date of Termination, and
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise the B Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the Date of Termination, exercise the B Warrant with respect to
all or any part of the shares of Common Stock purchasable under the B Warrant;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise the B Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days after the Date of Termination to
exercise the B Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, the B Warrant shall become exercisable on the Date of Termination,
and the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, , 2003 or the first anniversary of the Date of Termination,
exercise the B Warrant with respect to all or any part of the shares of Common
Stock purchasable under the B Warrant; provided, however, that in no event will
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days after the Date of Termination to
exercise the B Warrant.
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<PAGE> 5
(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial Holder's resignation for
other than Good Reason, the Holder shall forfeit all of the Holder's rights
under the B Warrant, except as to those shares of Common Stock already
purchased under the B Warrant, and the B Warrant shall automatically, and
without notice, terminate and become null and void at 5:00 p.m., Dallas, Texas
time, on the Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, the B Warrant
shall become exercisable on the Date of Termination, and the Holder may, until
the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the
90th day after the Date of Termination, exercise the B Warrant with respect to
all or any part of the shares of Common Stock purchasable under the B Warrant;
provided, however, that in no event will the Holder have less than 90 days
after the Date of Termination to exercise the B Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, if the B Warrant
has become exercisable on or before the Date of Termination, then the Holder
may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31,
2003 or the 30th day after the Date of Termination, exercise the B Warrant with
respect to all or any part of the shares of Common Stock purchasable under the
B Warrant; provided, however, that in no event will the Holder have less than
30 days after the Date of Termination to exercise the B Warrant. If the B
Warrant has not become exercisable on or before the Date of Termination, the B
Warrant shall automatically, and without notice, terminate and become null and
void at 5:00 p.m., Dallas, Texas time, on the Date of Termination.
(f) If, pursuant to Section 3.2, the B Warrant shall
terminate earlier than provided for in this Section 3.1, then the provisions of
Section 3.2 shall prevail.
3.2 Termination of B Warrant. Notwithstanding any provision of
this Warrant to the contrary, the B Warrant shall expire and no longer be
exercisable upon either (a) the consummation of a Sale of the Company or (b)
the consummation of a Capital Reorganization in which (i) the stockholders of
the Company receive only cash consideration for each share of common stock of
the Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the HMC Group. The Company shall give the Holder reasonable prior
notice of the consummation of a Capital Reorganization. Appropriate per share
adjustments shall be made to take into account, on a comparable per share
basis, any cash consideration attributable to any prior Capital Reorganization.
3.3 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement,
dated as of October 16, 1996, as amended, by and among the Company and the
other parties listed therein (the "Stockholders Agreement"). The Company shall
keep a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
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<PAGE> 6
3.4 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of the A Warrant and the B Warrant shall each
be adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares outstanding after giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related persons for the purposes of Section 13(d) of the
Exchange Act (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to the Holder an agreement as to the
Holder's rights in accordance with this Section 4.3, providing for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article IV. The provisions of this Section 4.3 shall
similarly apply to successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not,
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<PAGE> 7
in the good faith judgment of the Board of Directors of the Company (the
"Board"), fairly protect the purchase rights of the Holder in accordance with
the essential intent and principles of such provisions, then the Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine
the holders of shares of Common Stock for purposes of a Common Stock
Reorganization or Capital Reorganization, and shall legally abandon such action
prior to effecting such action, then no adjustment shall be made pursuant to
this Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable
upon exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made
hereunder if such adjustment would reduce the exercise price to an amount below
par value of the Common Stock, which par value shall initially be $.01 per
share of Common Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock of the Company is listed or admitted to trading is open for
business or (b) if no
7
<PAGE> 8
class of common stock of the Company is so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company, and any capital stock into which such Class A Common
Stock thereafter may be changed.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation or merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
"Employment Agreement" means that certain Executive Employment
Agreement dated as of February 14, 1997, as amended, by and between the Company
and the Initial Holder, a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercise Price" means a per share price of $1.44.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board, provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
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<PAGE> 9
"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
"Initial Holder" means R. Steven Hicks.
"IPO Offering Price" means the initial public offering price per share
of Class A Common Stock in a Qualified IPO, prior to deducting any
underwriters' discounts and commissions from such offering price.
"Market Price", with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of common stock of the Company, the Market Price is determined during a
period following the announcement by the Company of any subdivision,
combination or reclassification of common stock of the Company or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the Market Price shall be appropriately adjusted to reflect the
current market price per share equivalent of common stock of the Company.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Class A Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) $6.00 per share or (ii)
the greater of (A) a per share amount equal to $1.40 compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization. Upon the completion of a Common Stock Reorganization,
each of the per share amounts set forth in the foregoing sentence shall be
adjusted, effective immediately after the record date at which the holders of
shares of Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying such
9
<PAGE> 10
amount in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that (when added to any cash
consideration attributable to any prior Capital Reorganization) equals or
exceeds the Qualifying Cash Consideration, (ii) a majority of directors of the
purchaser or surviving entity in such Capital Reorganization consists of
persons who are not Continuing Directors, and (iii) such purchaser or surviving
entity is not a member of the HMC Group. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.2.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
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<PAGE> 11
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
[Remainder of page intentionally left blank]
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<PAGE> 12
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
------------------------------------
William S. Banowsky, Jr.
Executive Vice President
ACCEPTED AND AGREED TO:
- ----------------------------------
Name: R. Steven Hicks
Address: 600 Congress Avenue
Suite 1400
Austin, TX 78701
<PAGE> 13
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder, in exercise of the [ ] A Warrant for _____
shares of Common Stock and/or [ ] B Warrant for _________ shares of Common
Stock in payment of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ,
------------------- ------
---------------------------------------
Note: The above signature should
correspond exactly with the
name on the face of the
attached Warrant or with the
name of the assignee appearing
in the assignment form below.
<PAGE> 14
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
For Individuals: For Entities:
- --------------------------------- ---------------------------------
Signature Printed Name of Entity
By:
- --------------------------------- ------------------------------
Printed Name Name:
----------------------------
Title:
---------------------------
<PAGE> 15
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.22
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL IN REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO
THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN
REVIEWED OR APPROVED BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND
THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A
STOCKHOLDERS AGREEMENT, AS AMENDED, DATED AS OF OCTOBER 16, 1996, BY AND AMONG
THE COMPANY AND THE OTHER PARTIES LISTED THEREIN, COPIES OF WHICH ARE ON FILE
WITH THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 2,553,182 Shares of Class C Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING FEBRUARY 20, 2007
THIS IS TO CERTIFY THAT, for value received, R. Steven Hicks, or
registered assigns as a holder of this Warrant (the "Holder") is entitled to
purchase from the Company (as hereinafter defined) at any time or from time to
time prior to 5:00 p.m., Dallas, Texas time, February 20, 2007 at the place
where the Warrant Agency (as hereinafter defined) is located, at the Exercise
Price (as hereinafter defined) 2,042,546 shares of Class C common stock, par
value $.01 per share (the "Common Stock"), of the Company (the "A Warrant") and
at the Exercise Price 510,636 shares of the Common Stock (the "B Warrant", and,
collectively with the A Warrant, the "Warrant"), all subject to adjustment and
upon the terms and conditions as hereinafter provided; provided, however, that,
except as provided in Section 3.1, in no event may the B Warrant be exercised
by the Holder until the earlier to occur of June 30, 2001 or immediately
preceding the consummation of a Sale of the Company (as hereinafter defined);
and provided further, however, that the B Warrant shall terminate and not be
exercisable pursuant to the provisions of Section 3.1 or 3.2. The Holder shall
designate at the time of exercise whether the Holder is exercising an A Warrant
or a B Warrant and the number of shares of Common Stock to be purchased
respectively thereunder. This Warrant amends and restates, supersedes and
replaces that certain Warrant dated July 1, 1997, among the Company, the
Initial Holder and Capstar Broadcasting Partners, Inc.
Certain terms used in this Warrant are defined in Article V.
<PAGE> 2
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) whether the Holder is exercising an A
Warrant and/or a B Warrant, (ii) the number of shares of Common Stock to be
purchased under an A Warrant and/or a B Warrant, as applicable, (iii) the
denominations of the share certificate or certificates desired, and (iv) the
name or names in which such certificates are to the registered, (c) if the
Common Stock to be received upon the exercise of this Warrant has not been
registered under the Securities Act, a written certification in substantially
the form of the Certification attached hereto as Annex B, and (d) payment of
the Exercise Price with respect to such shares. Such payment may be made, at
the option of the Holder, by cash, money order, certified or bank cashier's
check or wire transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
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"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of
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assignment, and this Warrant shall promptly be canceled. The Warrant Agency
shall not be required to register any transfers if the Holder fails to furnish
to the Company, after a request therefor, an opinion of counsel (who may be an
employee of such Holder) reasonably satisfactory to the Company that such
transfer is exempt from the registration requirements of the Securities Act and
applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which the new Warrants are to be
issued, signed by the Holder. Subject to compliance with Section 2.3 as to any
transfer which may be involved in the division, the Company shall execute and
deliver new Warrants in exchange for the Warrant or Warrants to be divided in
accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Termination of Employment.
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, the B Warrant shall become exercisable on the Date of Termination, and
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise the B Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the Date of Termination, exercise the B Warrant with respect to
all or any part of the shares of Common Stock purchasable under the B Warrant;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise the B Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days after the Date of Termination to
exercise the B Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, the B Warrant shall become exercisable on the Date of Termination,
and the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, 2003 or the first anniversary of the Date of Termination,
exercise the B Warrant with respect to all or any part of the shares of Common
Stock purchasable under the B Warrant; provided, however, that in no event will
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days after the Date of Termination to
exercise the B Warrant.
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(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial Holder's resignation for
other than Good Reason, the Holder shall forfeit all of the Holder's rights
under the B Warrant, except as to those shares of Common Stock already
purchased under the B Warrant, and the B Warrant shall automatically, and
without notice, terminate and become null and void at 5:00 p.m., Dallas, Texas
time, on the Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, the B Warrant
shall become exercisable on the Date of Termination, and the Holder may, until
the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the
90th day after the Date of Termination, exercise the B Warrant with respect to
all or any part of the shares of Common Stock purchasable under the B Warrant;
provided, however, that in no event will the Holder have less than 90 days
after the Date of Termination to exercise the B Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, if the B Warrant
has become exercisable on or before the Date of Termination, then the Holder
may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31,
2003 or the 30th day after the Date of Termination, exercise the B Warrant with
respect to all or any part of the shares of Common Stock purchasable under the
B Warrant; provided, however, that in no event will the Holder have less than
30 days after the Date of Termination to exercise the B Warrant. If the B
Warrant has not become exercisable on or before the Date of Termination, the B
Warrant shall automatically, and without notice, terminate and become null and
void at 5:00 p.m., Dallas, Texas time, on the Date of Termination.
(f) If, pursuant to Section 3.2, the B Warrant shall
terminate earlier than provided for in this Section 3.1, then the provisions of
Section 3.2 shall prevail.
3.2 Termination of B Warrant. Notwithstanding any provision of
this Warrant to the contrary, the B Warrant shall expire and no longer be
exercisable upon either (a) the consummation of a Sale of the Company or (b)
the consummation of a Capital Reorganization in which (i) the stockholders of
the Company receive only cash consideration for each share of common stock of
the Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the HMC Group. The Company shall give the Holder reasonable prior
notice of the consummation of a Capital Reorganization. Appropriate per share
adjustments shall be made to take into account, on a comparable per share
basis, any cash consideration attributable to any prior Capital Reorganization.
3.3 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement,
dated as of October 16, 1996, as amended, by and among the Company and the
other parties listed therein (the "Stockholders Agreement"). The Company shall
keep a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
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3.4 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of the A Warrant and the B Warrant shall each
be adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares outstanding after giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related persons for the purposes of Section 13(d) of the
Exchange Act (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to the Holder an agreement as to the
Holder's rights in accordance with this Section 4.3, providing for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article IV. The provisions of this Section 4.3 shall
similarly apply to successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not,
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in the good faith judgment of the Board of Directors of the Company (the
"Board"), fairly protect the purchase rights of the Holder in accordance with
the essential intent and principles of such provisions, then the Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine
the holders of shares of Common Stock for purposes of a Common Stock
Reorganization or Capital Reorganization, and shall legally abandon such action
prior to effecting such action, then no adjustment shall be made pursuant to
this Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable
upon exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made
hereunder if such adjustment would reduce the exercise price to an amount below
par value of the Common Stock, which par value shall initially be $.01 per
share of Common Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock of the Company is listed or admitted to trading is open for
business or (b) if no
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class of common stock of the Company is so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company, and any capital stock into which such Class A Common
Stock thereafter may be changed.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation or merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
"Employment Agreement" means that certain Executive Employment
Agreement dated as of February 14, 1997, as amended, by and between the Company
and the Initial Holder, a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercise Price" means a per share price of $1.54.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board, provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
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"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
"Initial Holder" means R. Steven Hicks.
"IPO Offering Price" means the initial public offering price per share
of Class A Common Stock in a Qualified IPO, prior to deducting any
underwriters' discounts and commissions from such offering price.
"Market Price", with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of common stock of the Company, the Market Price is determined during a
period following the announcement by the Company of any subdivision,
combination or reclassification of common stock of the Company or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the Market Price shall be appropriately adjusted to reflect the
current market price per share equivalent of common stock of the Company.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Class A Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) $6.00 per share or (ii)
the greater of (A) a per share amount equal to $1.40 compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization. Upon the completion of a Common Stock Reorganization,
each of the per share amounts set forth in the foregoing sentence shall be
adjusted, effective immediately after the record date at which the holders of
shares of Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying such
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amount in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that (when added to any cash
consideration attributable to any prior Capital Reorganization) equals or
exceeds the Qualifying Cash Consideration, (ii) a majority of directors of the
purchaser or surviving entity in such Capital Reorganization consists of
persons who are not Continuing Directors, and (iii) such purchaser or surviving
entity is not a member of the HMC Group. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
"Securities Act,, shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.2.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
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Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
----------------------------
William S. Banowsky, Jr.
Executive Vice President
ACCEPTED AND AGREED TO:
Name: R. Steven Hicks
Address: 600 Congress Avenue
Suite 1400
Austin, TX 78701
<PAGE> 13
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder, in exercise of the [ ] A Warrant for _____
shares of Common Stock and/or [ ] B Warrant for _________ shares of Common
Stock in payment of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ___________________, ______
----------------------------------
Note: The above signature should
correspond exactly with the name
on the face of the attached
Warrant or with the name of the
assignee appearing in the
assignment form below.
<PAGE> 14
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
For Individuals: For Entities:
- --------------------------------- --------------------------------
Signature Printed Name of Entity
By:
- --------------------------------- -----------------------------
Printed Name Name:
---------------------------
Title:
--------------------------
<PAGE> 15
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.23
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL IN REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO
THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN
REVIEWED OR APPROVED BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND
THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A
STOCKHOLDERS AGREEMENT, AS AMENDED, DATED AS OF OCTOBER 16, 1996, BY AND AMONG
THE COMPANY AND THE OTHER PARTIES LISTED THEREIN, COPIES OF WHICH ARE ON FILE
WITH THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 3,231,203 Shares of Class C Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING JULY 8, 2007
THIS IS TO CERTIFY THAT, for value received, R. Steven Hicks, or
registered assigns as a holder of this Warrant (the "Holder") is entitled to
purchase from the Company (as hereinafter defined) at any time or from time to
time prior to 5:00 p.m., Dallas, Texas time, July 8, 2007 at the place where
the Warrant Agency (as hereinafter defined) is located, at the Exercise Price
(as hereinafter defined) 987,970 shares of Class C common stock, par value $.01
per share (the "Common Stock"), of the Company (the "A Warrant") and at the
Exercise Price 2,243,233 shares of the Common Stock (the "B Warrant", and,
collectively with the A Warrant, the "Warrant"), all subject to adjustment and
upon the terms and conditions as hereinafter provided; provided, however, that,
except as provided in Section 3.1, in no event may the B Warrant be exercised
by the Holder until the earlier to occur of June 30, 2001 or immediately
preceding the consummation of a Sale of the Company (as hereinafter defined);
and provided further, however, that the B Warrant shall terminate and not be
exercisable pursuant to the provisions of Section 3.1 or 3.2. The Holder shall
designate at the time of exercise whether the Holder is exercising an A Warrant
or a B Warrant and the number of shares of Common Stock to be purchased
respectively thereunder. This Warrant amends and restates, supersedes and
replaces that certain Warrant dated July 1, 1997, among the Company, the
Initial Holder and Capstar Broadcasting Partners, Inc.
Certain terms used in this Warrant are defined in Article V.
<PAGE> 2
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) whether the Holder is exercising an A
Warrant and/or a B Warrant, (ii) the number of shares of Common Stock to be
purchased under an A Warrant and/or a B Warrant, as applicable, (iii) the
denominations of the share certificate or certificates desired, and (iv) the
name or names in which such certificates are to the registered, (c) if the
Common Stock to be received upon the exercise of this Warrant has not been
registered under the Securities Act, a written certification in substantially
the form of the Certification attached hereto as Annex B, and (d) payment of
the Exercise Price with respect to such shares. Such payment may be made, at
the option of the Holder, by cash, money order, certified or bank cashier's
check or wire transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
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<PAGE> 3
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of
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<PAGE> 4
assignment, and this Warrant shall promptly be canceled. The Warrant Agency
shall not be required to register any transfers if the Holder fails to furnish
to the Company, after a request therefor, an opinion of counsel (who may be an
employee of such Holder) reasonably satisfactory to the Company that such
transfer is exempt from the registration requirements of the Securities Act and
applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which the new Warrants are to be
issued, signed by the Holder. Subject to compliance with Section 2.3 as to any
transfer which may be involved in the division, the Company shall execute and
deliver new Warrants in exchange for the Warrant or Warrants to be divided in
accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Termination of Employment.
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, the B Warrant shall become exercisable on the Date of Termination, and
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise the B Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the Date of Termination, exercise the B Warrant with respect to
all or any part of the shares of Common Stock purchasable under the B Warrant;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise the B Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days after the Date of Termination to
exercise the B Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, the B Warrant shall become exercisable on the Date of Termination,
and the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, 2003 or the first anniversary of the Date of Termination,
exercise the B Warrant with respect to all or any part of the shares of Common
Stock purchasable under the B Warrant; provided, however, that in no event will
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days after the Date of Termination to
exercise the B Warrant.
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<PAGE> 5
(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial Holder's resignation for
other than Good Reason, the Holder shall forfeit all of the Holder's rights
under the B Warrant, except as to those shares of Common Stock already
purchased under the B Warrant, and the B Warrant shall automatically, and
without notice, terminate and become null and void at 5:00 p.m., Dallas, Texas
time, on the Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, the B Warrant
shall become exercisable on the Date of Termination, and the Holder may, until
the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the
90th day after the Date of Termination, exercise the B Warrant with respect to
all or any part of the shares of Common Stock purchasable under the B Warrant;
provided, however, that in no event will the Holder have less than 90 days
after the Date of Termination to exercise the B Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, if the B Warrant
has become exercisable on or before the Date of Termination, then the Holder
may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31,
2003 or the 30th day after the Date of Termination, exercise the B Warrant with
respect to all or any part of the shares of Common Stock purchasable under the
B Warrant; provided, however, that in no event will the Holder have less than
30 days after the Date of Termination to exercise the B Warrant. If the B
Warrant has not become exercisable on or before the Date of Termination, the B
Warrant shall automatically, and without notice, terminate and become null and
void at 5:00 p.m., Dallas, Texas time, on the Date of Termination.
(f) If, pursuant to Section 3.2, the B Warrant shall
terminate earlier than provided for in this Section 3.1, then the provisions of
Section 3.2 shall prevail.
3.2 Termination of B Warrant. Notwithstanding any provision of
this Warrant to the contrary, the B Warrant shall expire and no longer be
exercisable upon either (a) the consummation of a Sale of the Company or (b)
the consummation of a Capital Reorganization in which (i) the stockholders of
the Company receive only cash consideration for each share of common stock of
the Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the HMC Group. The Company shall give the Holder reasonable prior
notice of the consummation of a Capital Reorganization. Appropriate per share
adjustments shall be made to take into account, on a comparable per share
basis, any cash consideration attributable to any prior Capital Reorganization.
3.3 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement,
dated as of October 16, 1996, as amended, by and among the Company and the
other parties listed therein (the "Stockholders Agreement"). The Company shall
keep a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
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<PAGE> 6
3.4 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of the A Warrant and the B Warrant shall each
be adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares outstanding after giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related persons for the purposes of Section 13(d) of the
Exchange Act (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to the Holder an agreement as to the
Holder's rights in accordance with this Section 4.3, providing for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article IV. The provisions of this Section 4.3 shall
similarly apply to successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not,
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<PAGE> 7
in the good faith judgment of the Board of Directors of the Company (the
"Board"), fairly protect the purchase rights of the Holder in accordance with
the essential intent and principles of such provisions, then the Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine
the holders of shares of Common Stock for purposes of a Common Stock
Reorganization or Capital Reorganization, and shall legally abandon such action
prior to effecting such action, then no adjustment shall be made pursuant to
this Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable
upon exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made
hereunder if such adjustment would reduce the exercise price to an amount below
par value of the Common Stock, which par value shall initially be $.01 per
share of Common Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock of the Company is listed or admitted to trading is open for
business or (b) if no
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<PAGE> 8
class of common stock of the Company is so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company, and any capital stock into which such Class A Common
Stock thereafter may be changed.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation or merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
"Employment Agreement" means that certain Executive Employment
Agreement dated as of February 14, 1997, as amended, by and between the Company
and the Initial Holder, a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercise Price" means a per share price of $1.81.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board, provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
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<PAGE> 9
"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
"Initial Holder" means R. Steven Hicks.
"IPO Offering Price" means the initial public offering price per share
of Class A Common Stock in a Qualified IPO, prior to deducting any
underwriters' discounts and commissions from such offering price.
"Market Price", with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of common stock of the Company, the Market Price is determined during a
period following the announcement by the Company of any subdivision,
combination or reclassification of common stock of the Company or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the Market Price shall be appropriately adjusted to reflect the
current market price per share equivalent of common stock of the Company.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Class A Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) $6.00 per share or (ii)
the greater of (A) a per share amount equal to $1.40 compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization. Upon the completion of a Common Stock Reorganization,
each of the per share amounts set forth in the foregoing sentence shall be
adjusted, effective immediately after the record date at which the holders of
shares of Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying such
9
<PAGE> 10
amount in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that (when added to any cash
consideration attributable to any prior Capital Reorganization) equals or
exceeds the Qualifying Cash Consideration, (ii) a majority of directors of the
purchaser or surviving entity in such Capital Reorganization consists of
persons who are not Continuing Directors, and (iii) such purchaser or surviving
entity is not a member of the HMC Group. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.2.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
10
<PAGE> 11
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
[Remainder of page intentionally left blank]
11
<PAGE> 12
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
-----------------------------------
William S. Banowsky, Jr.
Executive Vice President
ACCEPTED AND AGREED TO:
- -----------------------------------
Name: R. Steven Hicks
Address: 600 Congress Avenue
Suite 1400
Austin, TX 78701
<PAGE> 13
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder, in exercise of the [ ] A Warrant for _____
shares of Common Stock and/or [ ] B Warrant for _________ shares of Common
Stock in payment of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ,
------------- ----
-------------------------------------------
Note: The above signature should
correspond exactly with the name on
the face of the attached Warrant or
with the name of the assignee
appearing in the assignment form
below.
<PAGE> 14
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
<TABLE>
<S> <C>
For Individuals: For Entities:
- ----------------------------------------------- ----------------------------------------------------
Signature Printed Name of Entity
By:
- ----------------------------------------------- -----------------------------------------------
Printed Name Name:
-----------------------------------------------
Title:
-----------------------------------------------
</TABLE>
<PAGE> 15
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.29.2
AMENDMENT NO. 1
TO
AGREEMENT DATED FEBRUARY 20, 1998
This Amendment No. 1 (the "Amendment") to the Agreement, dated
February 20, 1998 (the "Agreement"), between Chancellor Media Corporation of
Los Angeles ("Chancellor") and Capstar Broadcasting Corporation ("Capstar"), is
entered into this 19th day of May, 1998. Capitalized terms used herein without
definition shall have the meanings given such terms in the Agreement.
1. Section 2 of the Agreement, Purchase and Sale of
KKPN(FM), is modified and amended by adding the following sentence to the end
of Section 2(c):
Any amount of the sale price for KKPN-FM in excess of
the KKPN Capstar Price (after deducting any brokerage
commission payable with respect to the sale of
KKPN-FM) shall be divided equally between Chancellor
and Capstar, with Chancellor's portion representing a
commission payable by Capstar to Chancellor.
2. Section 3 of the Agreement, Long Island, is modified
and amended by modifying the first sentence of Section 3 to read as follows:
Chancellor and Capstar agree that the Asset Exchange
Agreement between SFX and Chancellor dated July 1,
1996 (the "Chancellor-SFX AEA"), providing for the
exchange of SFX's Long Island radio stations
(WBLI-FM, WBAB-FM, WGBB(AM) and WHFM-FM) (the "SFX
Long Island Stations"), and the related Time
Brokerage Agreement between SFX and Chancellor, dated
July 1, 1996, as amended (the "Chancellor-SFX TBA"),
providing for the sale to Chancellor of substantially
all of the programming time available on the SFX Long
Island Stations, shall each be terminated at the
closing of the Capstar-SFX Merger.
3. Section 10 of the Agreement, Note, is modified and
amended in its entirety to read as follows:
In connection with the Transaction, Chancellor will,
upon the occurrence of the conditions set forth in
the term sheet attached hereto and by this reference
made a part hereof (the "Loan Term Sheet"), provide a
loan to Capstar of up to $250 million immediately
prior to the closing of the Capstar-SFX Merger (which
loan may be reduced to $200 million if certain
conditions specified in the Loan Term Sheet are
satisfied). The obligations of Capstar under such
loan will be evidenced by a note (the "Note"), which
will have the essential terms set forth in the Loan
Term Sheet.
<PAGE> 2
4. Section 1 of the Loan Term Sheet, Security, is
modified and amended in its entirety to read as follows:
12% Senior Secured Term Note (the "Note").
5. Section 4 of the Loan Term Sheet attached to the
Agreement, Interest, is modified and amended by adding the following new
paragraph immediately after the second paragraph in such Section and
immediately prior to the third paragraph in such Section:
If Capstar shall not have completed acquisitions
during the Exchange Period (excluding the
Jacksonville Exchange and the acquisition of the
Austin Stations) (x) with an aggregate purchase price
of $100 million by the first anniversary of the issue
date of the Note, (y) with an aggregate purchase
price of $200 million by the end of the second
anniversary of the issue date of the Note, and (z)
with an aggregate purchase price of $300 million by
the end of the third anniversary of the issue date of
the Note, in each case, that are subject to the
procedures described in Section 1 of this Letter
Agreement (each, an "Annual Acquisition Shortfall"),
the interest rate on the Note for the 365 day period
in which such Annual Acquisition Shortfall occurs
shall increase to the Increased Rate, of which 6/7
shall be payable in cash and 1/7 shall, at Capstar's
option, either be payable in cash or added to the
principal amount of the Note. To the extent that any
amount not paid in cash is so added to the principal
amount, such amount shall bear interest at the rate
otherwise applicable to the principal amount. The
Increased Rate shall apply from the beginning of the
365 day period in which such Annual Acquisition
Shortfall occurs through the end of such period.
6. Section 5 of the Loan Term Sheet attached to the
Agreement, Amount at Initial Issuance, is modified and amended in its entirety
to read as follows:
Aggregate commitment at initial issuance of $250
million; provided, that if (i) the actual initial
public offering price per share of Capstar's common
stock sold in Capstar's initial public offering (the
"Capstar IPO") is greater than or within the offering
price range specified in the final "red herring"
prospectus for the Capstar IPO and (ii) Capstar's
sales (with any contribution to a back-up trust not
being deemed to be a sale hereunder) of KKPN-FM and
the SFX Long Island Stations are consummated at or
prior to the consummation of the Capstar-SFX Merger
(together, the "Loan Decrease Conditions"), then the
aggregate commitment at initial issuance shall be up
to a maximum amount of $200 million (such commitment
to be determined at Capstar's discretion, provided,
that Capstar provide Chancellor two (2) business days
prior written notice of such commitment prior to the
consummation of the Capstar-SFX Merger). If the Loan
Decrease Conditions are satisfied, Capstar agrees
that it will use any and
2
<PAGE> 3
all net proceeds ("Green Shoe Proceeds") resulting
from the exercise of the overallotment option that is
granted by Capstar to the underwriters for the
Capstar IPO to prepay amounts outstanding under the
Note; provided, that Capstar shall only be required
to prepay amounts outstanding under the Note with
Green Shoe Proceeds so that, immediately following
such prepayment, $150 million principal amount of the
Note remains outstanding (it being understood that if
such Green Shoe Proceeds are not adequate to prepay
the Note so that $150 million principal amount of the
Note remains outstanding, Capstar shall use all Green
Shoe Proceeds to prepay the Note). Such prepayment
shall be made within thirty (30) days of the date
that the Capstar-SFX Merger is consummated.
7. Section 7 of the Loan Term Sheet attached to the
Agreement, Ranking, is modified and amended in its entirety to read as follows:
Pari passu with the guarantee to be issued by Capstar
of the obligations under the senior credit agreement
of Capstar Radio Broadcasting Partners, Inc. (the
"Capstar Senior Credit Agreement"), provided, that in
lieu of subordination of the Note to the guarantee by
Capstar of the obligations under the Capstar Senior
Credit Agreement, Chancellor shall agree to provide
reasonable prior written notice to Capstar and to the
administrative agent under the Capstar Senior Credit
Agreement if a default under the Note exists as a
result of which Chancellor intends to accelerate the
obligations under the Note.
8. Section 9 of the Loan Term Sheet attached to the
Agreement, Capstar Prepayment Obligations, is modified and amended in order to
add a new paragraph at the end of such section, to read as follows:
In the event that the Loan Decrease Conditions are
not satisfied, Capstar agrees that it will not, and
Capstar shall cause its subsidiaries not to, enter
into or consummate any transactions (other than
transactions pending as of May 4, 1998 and
transactions pursuant to Exchange Station Agreements)
until such time as Capstar has prepaid amounts
outstanding under the Note so that, following such
prepayments, $150 million principal amount of the
Note remains outstanding (such amount not to include
any prepayments that may be required to be made by
Capstar as a result of any other provision of the
Loan Term Sheet).
9. Section 10 of the Loan Term Sheet attached to the
Agreement, Security for Capstar's Prepayment Obligations; Guarantee, is
modified and amended in its entirety to read as follows:
Senior perfected pledge by Capstar of common stock of
Capstar Broadcasting Partners, Inc. (100%).
Chancellor acknowledges that
3
<PAGE> 4
Capstar will provide a subordinated pledge of common
stock of Capstar Broadcasting Partners, Inc. to the
lenders under the Capstar Senior Credit Agreement in
support of the obligations of Capstar Radio
Broadcasting Partners, Inc. thereunder.
10. The first paragraph of Section 11 of the Loan Term
Sheet attached to the Agreement, Covenants, is modified and amended to read as
follows:
Debt Incurrence. Capstar and its subsidiaries will
not be permitted, directly or indirectly, to incur
create, assume, guarantee, acquire or become liable
for indebtedness except in compliance with a 9.0:1
consolidated indebtedness to trailing four-quarter
EBITDA ratio. The aggregate liquidation preference
of all preferred stock of Capstar and its
consolidated subsidiaries shall be counted as
indebtedness. The debt incurrence calculations will
be made in a manner consistent with leverage ratio
calculations (including pro forma adjustments) under
the Capstar Senior Credit Agreement, provided, that
for purposes of calculating leverage ratios
hereunder, Capstar shall be entitled during 1998 to
include in its EBITDA calculations at least $10
million in net revenues from The AMFM Network
(whether or not such amounts are actually received),
or such higher amount if the net revenues actually
received by Capstar from The AMFM Network exceed such
amounts. Borrowings under working capital lines of
credit of Capstar and its subsidiaries shall not
count as debt, except to the extent that the
aggregate borrowings under such lines of credit
exceed $50 million.
11. As contemplated by the Letter Agreement, Capstar and
Chancellor will complete a series of asset exchanges and/or purchases in which
Capstar will exchange certain SFX broadcast properties to be acquired or paid
for by Chancellor. As purchaser of substantially all of the assets used by SFX
in its ownership and operation of radio stations in the Houston and Pittsburgh
markets (other than KKPN-FM in Houston and WTAE-AM in Pittsburgh), Chancellor
agrees to be bound by the provisions of the Final Judgment in United States of
America v. Hicks, Muse, Tate & Furst Incorporated, Capstar Broadcasting, Inc.
and SFX Broadcasting, Inc. (the "Final Judgment") as required by paragraph
III(B) of that Final Judgment. Chancellor also agrees to provide sufficient
prior notice to HMTF concerning any transactions that it may enter into
regarding radio stations in the Greenville Area, the Houston Area, the Jackson
Area, the Pittsburgh Area or the Nassau-Suffolk Area (as such terms are defined
in the Final Judgment) that are not presently owned, operated or controlled by
Chancellor, Capstar, SFX or HMTF, as will allow HMTF to satisfy its notice
obligations to the United States Department of Justice under paragraph X(E) of
the Final Judgment.
12. The amendments set forth in Sections 1, 2, 5 and 11
above shall become effective immediately upon execution by both parties hereto.
The amendments set forth in Sections 3, 4, 6, 7, 8, 9 and 10 above shall be
conditioned on the consummation of the Capstar IPO simultaneously with or prior
to the Capstar-SFX Merger. If the Capstar IPO is not
4
<PAGE> 5
consummated simultaneously with or prior to the consummation of the Capstar-SFX
Merger, then the amendments set forth in Sections 3, 4, 6, 7, 8, 9 and 10 above
shall be void and have no force and effect.
13. Except for the amendments set forth above, the text
of the Agreement shall remain unchanged.
14. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
5
<PAGE> 6
In witness whereof, the parties have duly executed and
delivered this Amendment as of the date first written above.
CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES
--------------------------------------
By: Matthew E. Devine
Its: Chief Financial Officer
CAPSTAR BROADCASTING CORPORATION
--------------------------------------
By: William Banowsky
Its: Vice President
6
<PAGE> 1
EXHIBIT 10.30
================================================================================
FORM OF
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
------------------------
AS LICENSEE
AND
[CMCLA SUBSIDIARY]
AS TIME BROKER
DATED AS OF MAY __, 1998
================================================================================
<PAGE> 2
TABLE OF SCHEDULES AND EXHIBITS
Schedule 1.1 Programming
Schedule 1.2 Compensation
Schedule 2.1 Programming Policy
Schedule 4.1 Excluded Contracts
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. SALE OF TIME...........................................................................................1
SECTION 1.1. BROADCAST OF PROGRAMMING....................................................................1
SECTION 1.2. PAYMENT.....................................................................................1
SECTION 1.3. TERM........................................................................................1
ARTICLE II. PROGRAMMING AND OPERATING STANDARDS AND PRACTICES.....................................................1
SECTION 2.1. COMPLIANCE WITH STANDARDS...................................................................1
SECTION 2.2. POLITICAL BROADCASTS........................................................................2
SECTION 2.3. HANDLING OF COMMUNICATIONS..................................................................2
SECTION 2.4. PREEMPTION..................................................................................2
SECTION 2.5. BROADCASTING OBLIGATIONS OF LICENSEE........................................................3
SECTION 2.6. LIMITATIONS ON CREDITS......................................................................3
SECTION 2.7. RIGHTS IN PROGRAMS..........................................................................3
SECTION 2.8. "PAYOLA" AND "PLUGOLA"......................................................................3
SECTION 2.9. ADVERTISING AND PROGRAMMING.................................................................4
SECTION 2.10. COMPLIANCE WITH LAWS.......................................................................4
SECTION 2.11. CERTIFICATIONS.............................................................................4
ARTICLE III. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES............................................................4
SECTION 3.1. TIME BROKER'S EMPLOYEES.....................................................................4
SECTION 3.2. LICENSEE'S EMPLOYEES........................................................................5
SECTION 3.3. TIME BROKER'S EXPENSES......................................................................5
SECTION 3.4. OPERATING EXPENSES..........................................................................5
ARTICLE IV. ASSIGNMENT OF CERTAIN AGREEMENTS AND RIGHTS...........................................................5
SECTION 4.1. ASSIGNMENT..................................................................................5
SECTION 4.2. PRORATION...................................................................................6
SECTION 4.3. ACCOUNTS RECEIVABLE.........................................................................7
ARTICLE V. OPERATION OF STATION...................................................................................7
ARTICLE VI. GRANT OF LICENSES.....................................................................................7
SECTION 6.1. LICENSE TO USE STATION FACILITIES...........................................................8
SECTION 6.2. LICENSE OF INTELLECTUAL PROPERTY............................................................8
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII. INDEMNIFICATION......................................................................................8
SECTION 7.1. INDEMNIFICATION RIGHTS......................................................................8
SECTION 7.2. PROCEDURES..................................................................................9
ARTICLE VIII. DEFAULT.............................................................................................9
SECTION 8.1. EVENTS OF DEFAULT..........................................................................10
SECTION 8.2. CURE PERIODS...............................................................................10
ARTICLE IX. TERMINATION..........................................................................................10
SECTION 9.1. TERMINATION OF AGREEMENT...................................................................10
SECTION 9.2. TERMINATION UPON DEFAULT...................................................................10
SECTION 9.3. CERTAIN MATTERS UPON TERMINATION...........................................................11
ARTICLE X. SPECIFIC PERFORMANCE..................................................................................12
ARTICLE XI. CERTAIN REPRESENTATIONS AND WARRANTIES OF THE PARTIES................................................12
SECTION 11.1. REPRESENTATIONS AND WARRANTIES OF TIME BROKER.............................................12
SECTION 11.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE.....................................13
ARTICLE XII. MISCELLANEOUS.......................................................................................14
SECTION 12.1. MODIFICATION AND WAIVER...................................................................14
SECTION 12.2. NO WAIVER; REMEDIES CUMULATIVE............................................................14
SECTION 12.3. CONSTRUCTION..............................................................................14
SECTION 12.4. ARBITRATION...............................................................................15
SECTION 12.5. HEADINGS..................................................................................15
SECTION 12.6. SUCCESSORS AND ASSIGNS....................................................................15
SECTION 12.7. FORCE MAJEURE.............................................................................15
SECTION 12.8. BROKER....................................................................................15
SECTION 12.9. COUNTERPART SIGNATURES....................................................................15
SECTION 12.10. NOTICES..................................................................................15
SECTION 12.11. ENTIRE AGREEMENT.........................................................................16
SECTION 12.12. SEVERABILITY.............................................................................17
SECTION 12.13. NO JOINT VENTURE.........................................................................17
SECTION 12.14. DAMAGE TO STATION........................................................................17
SECTION 12.15. NONINTERFERENCE..........................................................................17
SECTION 12.16. REGULATORY CHANGES.......................................................................17
</TABLE>
ii
<PAGE> 5
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (this "Agreement") is made as of the ____
day of May __, 1998, by and between ____________________________, a
__________________________, ("Licensee"), and [CMCLA Subsidiary], a
____________________, ("Time Broker"). Licensee is the licensee of Broadcast
Station _______________________________________ (the "Station"). Time Broker
and Licensee desire to enter into an agreement providing for the sale of
substantially all of the broadcast time of the Station to Time Broker, subject
to and in compliance with the rules and policies of the Federal Communications
Commission (the "FCC").
Accordingly, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties agree as
follows:
ARTICLE I.
SALE OF TIME
Section 1.1. Broadcast of Programming. Effective upon the date (the
"Commencement Date") that is the earlier of (a) the consummation of the merger
between SFX Broadcasting, Inc. and an affiliate of Capstar Broadcasting
Corporation, or (b) such earlier date as may be acceptable to Time Broker and
approved and agreed to by Licensee, Licensee shall broadcast on the Station, or
cause to be broadcast on the Station, programs which are presented to it by Time
Broker as described in greater detail on Schedule 1.1 (the "Programming").
Section 1.2. Payment. Time Broker shall pay Licensee for broadcast of
the Programming the amounts set forth in Schedule 1.2 (the "Monthly Payment"),
subject to adjustment as set forth in Sections 2.4, 2.5 and 2.6 below. All
payments shall be paid by wire transfer of immediately-available funds by the
last business day of each calendar month, in arrears, to which such fee
pertains.
Section 1.3. Term. This Agreement shall commence on the Commencement
Date and shall terminate at 12:01 a.m. on the earlier of (i) the date that Time
Broker consummates the acquisition of the Station from Licensee, (ii) the
Expiration Date (as defined below), or (iii) the date this Agreement is
terminated pursuant to Section 9.1 or 9.2 hereof. For purposes of this
Agreement, the term "Expiration Date" shall mean the date that is ten (10) years
after the Commencement Date, provided, that such date may be extended, at Time
Broker's sole option, for an additional five (5) years upon written notice given
at least ninety (90) days prior to the Expiration Date.
ARTICLE II.
PROGRAMMING AND OPERATING STANDARDS AND PRACTICES
Section 2.1. Compliance with Standards. All Programming delivered by
Time Broker and all programming supplied by Licensee during the term of this
Agreement shall be in accordance with applicable statutes, FCC requirements and
the programming policies set forth on
<PAGE> 6
Schedule 2.1. Licensee reserves the right to refuse to broadcast any Programming
which is not in accordance with applicable statutes, FCC requirements and the
programming policies set forth in Schedule 2.1.
Section 2.2. Political Broadcasts. Time Broker shall maintain and
deliver to Licensee all records and information required by the FCC to be placed
in the public inspection files of the Station pertaining to the broadcast of
political programming and advertisements, in accordance with the provisions of
Sections 73.1943 and 73.3526 of the FCC's rules, and agrees to broadcast
sponsored programming addressing political issues or controversial subjects of
public importance, in accordance with the provisions of Section 73.1212 of the
FCC's rules. Time Broker shall consult and cooperate with Licensee and adhere to
all applicable statutes and the rules, regulations and policies of the FCC, as
announced from time to time, with respect to the carriage of political
advertisements and programming and the charges permitted therefor. Time Broker
shall promptly provide to Licensee such documentation relating to such
programming as Licensee is required to maintain in its public inspection files
or as Licensee shall reasonably request. Licensee shall be responsible for the
maintenance of the public inspection files of the Station.
Section 2.3. Handling of Communications. Time Broker shall cooperate
with Licensee in promptly responding to all mail, cables, telegrams, electronic
mail or telephone calls directed to the Station in connection with the
Programming provided by Time Broker or any other matter relevant to Licensee's
responsibilities hereunder. Promptly upon receipt, Time Broker shall provide
copies of all such correspondence to Licensee. Time Broker shall promptly advise
Licensee of any public or FCC complaint or inquiry known to Time Broker
concerning such Programming, and shall provide Licensee with copies of any
letters to Time Broker from the public, including complaints concerning such
Programming. Upon Licensee's request, Time Broker shall provide Licensee with
such information as will allow Licensee to respond to such complaints and
inquiries. Notwithstanding the foregoing, Licensee shall handle all matters or
inquiries relating to FCC complaints and any other matters required to be
handled by Licensee under the rules and regulations of the FCC.
Section 2.4. Preemption. Consistent with its obligation as an FCC
licensee, Licensee shall retain the right to interrupt or preempt the
Programming in case of an emergency or to substitute programming which Licensee
in good faith deems to be of greater local or national importance. Time Broker
shall be notified at least one week in advance of any preemption of any of the
Programming unless such advance notice is impossible or impractical, in which
case Licensee shall notify Time Broker promptly upon making the determination to
preempt. In the event of any such preemption, subject to the provisions of
Section 2.6 below, Time Broker may be entitled to a credit against any other
amounts due Licensee under this Agreement pursuant to the provisions of Section
2.6 below. Licensee represents and covenants that preemption pursuant to this
Section 2.4 shall only occur to the extent Licensee deems necessary to carry out
its obligations as an FCC licensee, and expressly agrees that its right of
preemption shall not be exercised in an arbitrary manner or primarily for the
commercial advantage of Licensee or others.
2
<PAGE> 7
Section 2.5. Broadcasting Obligations of Licensee. During the term of
this Agreement, except as set forth in Sections 2.1 and 2.4 and this Section
2.5, Licensee will broadcast the Programming in its entirety (including
commercials), without interruption, deletion or addition of any kind, subject to
the following:
(a) Licensee may temporarily refrain from broadcasting the
Programming between the hours of 12:30 a.m. and 5:30 a.m. (or at such other time
in the event that weather conditions so require) in order to perform normal,
customary and routine maintenance on the Station's main transmitting facilities;
provided that Licensee shall provide written notice to Time Broker of its intent
to refrain from broadcasting the Programming from the main transmitter of the
Station at least forty-eight (48) hours in advance, except when an emergency
requires such suspension, and provided further that Licensee shall use its best
efforts to minimize the impact, frequency and duration of such interruptions,
including without limitation by way of use of any auxiliary transmitter that may
be available to the Station; and
(b) Licensee may temporarily cease broadcasting the Programming from
the main transmitter of the Station as a result of a natural disaster, act of
public enemy or act of God; provided that in any such case, Licensee will act
expediently and use its best efforts to resume the broadcast of the Programming
from the main transmitter of the Station as quickly as the applicable
circumstances will allow, and will use its best efforts to broadcast the
Programming from any auxiliary transmitter that may be available to the Station.
In the event of any interruption pursuant to this Section (other than
interruption pursuant to Section 2.5(a) occurring between the hours of 12:30
a.m. and 5:30 a.m.), whether or not Licensee is able to broadcast the
Programming from an available auxiliary transmitter, subject, Time Broker may be
entitled to a credit against the Monthly Payment or any other sums due hereunder
pursuant to the provisions of Section 2.6 below.
Section 2.6. Credits Against Monthly Payments. Notwithstanding anything
in Section 2.4 or 2.5 of this Agreement to the contrary, Time Broker shall not
be entitled to any credit against the Monthly Payment until the aggregate amount
of preemption or interruption resulting from or arising out of the matters
referred to in Section 2.4 and 2.5 exceeds One Hundred and Twenty (120) hours.
If the aggregate amount of preemption or interruption exceeds One Hundred and
Twenty hours, Time Broker shall be entitled to a credit against the Monthly
Payment or any other sums due hereunder, in an amount equal to the product of
(a) the Monthly Payment and (b) the result of dividing the number of hours so
affected in excess of One Hundred and Twenty by the aggregate number of hours
available for Programming during such month.
Section 2.7. Rights in Programs. All right, title and interest in and to
the Programming, and the right to authorize the use of the Programming in any
manner and in any media whatsoever, shall be and remain vested at all times
solely in Time Broker.
Section 2.8. "Payola" and "Plugola". Time Broker agrees that it will not
accept any gift, gratuity or other consideration, including, but not limited to,
a commission, discount, bonus, material supplies or other merchandise, services
or labor (collectively, the "Consideration"), directly or indirectly, from any
person or company for the playing of records,
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the presentation of any programming or the broadcast of any commercial
announcement over the Station unless the payor is identified in the program for
which Consideration was provided as having paid for or furnished such
Consideration, in accordance with the Communications Act of 1934, as amended
(the "Communications Act") and the FCC requirements. It is further understood
and agreed that no commercial message, plugs, or undue reference shall be made
in programming presented over the Station to any business venture, profit-making
activity or other interest (other than non-commercial announcements for bona
fide charities, church activities or other public service activities) unless the
payor is identified in the program for which Consideration was provided as
having paid for or furnished such Consideration, in accordance with the
Communications Act and the FCC requirements. In addition, Time Broker agrees
that it will take steps, including the continuation of Licensee's system for
periodic execution of affidavits, reasonably designed to assure that it, its
employees and agents comply with this Section 2.7.
Section 2.9. Advertising and Programming. Beginning on the Commencement
Date, Time Broker shall be solely responsible for any expenses incurred in
connection with and shall be entitled to all revenue from the sale of
advertising or program time on the Station. Except as otherwise provided herein,
Time Broker does not assume any obligation of Licensee under any contract or
advertising arrangement entered into by Licensee on or after the Commencement
Date. Licensee shall indemnify Time Broker for any sale of advertising time made
by Licensee after the Commencement Date that would lower Time Broker's lowest
unit charge for political advertising.
Section 2.10. Compliance with Laws. At all times during the term of this
Agreement, Time Broker and Licensee shall comply in all material respects with
all applicable federal, state and local laws, rules and regulations.
Section 2.11. Certifications. Pursuant to Section 73.3555(a)(3)(ii) of
the FCC's rules, Licensee certifies that it maintains ultimate control over the
Station's facilities, including specifically control over station finances,
personnel and programming, and Time Broker certifies that this Agreement
complies with the provisions of Section 73.3555(a)(1) of the FCC's rules.
ARTICLE III.
RESPONSIBILITY FOR EMPLOYEES AND EXPENSES
Section 3.1. Time Broker's Employees.
(a) Time Broker shall employ and be responsible for the payment of
salaries, taxes, insurance and all other costs related to all personnel used in
the production of the Programming. Time Broker will not incur any liability on
account of Licensee's employees arising and accruing prior to the Commencement
Date including, without limitation, any such liability on account of
unemployment insurance contributions, termination and severance payments,
accrued sick leave or accrued vacation.
(b) As of the Commencement Date, Licensee shall terminate all of its
employees at the Station except for those personnel necessary to fulfill its
obligations under the
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Communications Act, the rules of the FCC and other applicable laws. On the
Commencement Date, Time Broker may, but shall not be obligated to, offer
employment to each of those employees previously employed by Licensee at the
Station to be terminated on the Commencement Date. It is expressly understood
that Time Broker shall not be liable for any termination or severance
obligations of Licensee. Notwithstanding anything contained in this Section 3.1
to the contrary, Time Broker will assume all obligations of Licensee to
employees under the employment agreements listed in Schedule 4.1 hereof or as
further provided in Section 4.1 hereof, except for any obligations arising as a
consequence of Licensee ceasing to be the party to whom services are to be
provided under such employment agreements.
Section 3.2. Licensee's Employees. Licensee shall employ and be
responsible for the payment of salaries, taxes, insurance and all other costs
related to the personnel necessary to fulfill its obligations as Licensee and to
transmit the Programming. Time Broker shall have no authority and shall not
supervise persons in the employ of Licensee after the Commencement Date.
Licensee acknowledges that its employees may have access to certain confidential
information of Time Broker. Licensee shall, therefore, inform its employees of
the confidential nature of such information and require that each such employee
keep such information confidential.
Section 3.3. Time Broker's Expenses. Time Broker shall pay for all costs
associated with the production and delivery of the Programming, including but
not limited to (i) all ASCAP, BMI, SESAC and other copyright fees, (ii) any
expenses incurred in connection with its sale of advertising time hereunder
(including without limitation sales commissions) in connection with the
Programming and (iii) the salaries, taxes, insurance and related costs for all
of Time Broker's personnel used in the production of the Programming and all of
Time Broker's sales personnel (including salespeople, traffic personnel, and
programming staff).
Section 3.4. Operating Expenses. Licensee shall be responsible for the
payment when due of all fees and expenses relating to operation and maintenance
of the Station as necessary for Licensee to maintain the licensed transmitting
capability of the Station and to fulfill its obligations as an FCC Licensee,
including, without limitation, salaries, benefits and similar expenses for
Licensee's employees, federal, state and local taxes, maintenance and repairs at
the Station's transmitter and studio sites, rental payments for the Station's
transmitter and studio sites, utility expenses at the Station's transmitter
site, and insurance on the Station's equipment.
ARTICLE IV.
ASSIGNMENT OF CERTAIN AGREEMENTS AND RIGHTS
Section 4.1. Assignment. On the Commencement Date, Licensee shall assign
to Time Broker all contracts for the sale of time on the Station (the "Time
Sales Agreements") and all other contracts and agreements of the Station, other
than those contracts and agreements identified on Schedule 4.1 (the "Excluded
Contracts"). All such Time Sales Agreements, contracts and agreements to be
assigned to Time Broker hereunder are referred to collectively as the "Assigned
Contracts." Time Broker shall assume, pay, perform and discharge all liabilities
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and obligations to be performed on or after the Commencement Date under the
Assigned Contracts pursuant to their terms. Licensee has provided Time Broker
with true and complete copies, including amendments, of the written Assigned
Contracts (other than the Time Sales Agreements). The Assigned Contracts are
freely assignable, or, if consent of the other contracting party to the
assignment is required, Licensee shall use its commercially reasonable efforts
to obtain such consent prior to the Commencement Date. To the extent that any
such consents are not obtained prior to the Commencement Date, during the period
between the Commencement Date and the date that Licensee obtains such consent,
Licensee shall act as Time Broker's agent in connection with such Assigned
Contract and the parties shall cooperate to cause Time Broker to receive the
benefit of the Assigned Contract in exchange for performance by Time Broker of
all of Licensee's obligations under such Assigned Contract (including but not
limited to the payment to Licensee of all amounts due under the Assigned
Contract on or after the Commencement Date for services provided by Licensee).
Section 4.2. Proration. All expenses and income arising under the
Assigned Contracts shall be prorated between Licensee and Time Broker as of the
Commencement Date in a manner such that the costs and benefits thereunder
through and including the Commencement Date shall be for the account of Licensee
and, thereafter, during the term of this Agreement, for the account of Time
Broker. It is agreed and understood that such proration shall not include an
adjustment for any termination or severance payments or benefits obligations
that Licensee is required to pay as a result of the termination of its employees
pursuant to Section 3.1(b) or any accrued but unpaid vacation, sick leave or
other similar benefit, and that Time Broker shall not be responsible for any
such termination or severance payments or benefits obligations except for those
incurred on account of employees hired by Time Broker on or after the
Commencement Date pursuant to Time Broker's severance policy, if any, after the
Commencement Date. Licensee shall pay any amount due to its employees terminated
pursuant to Section 3.1(b) for any termination or severance payments or benefits
obligations or any accrued but unpaid vacation, sick leave or other similar
benefits on the Commencement Date. Such prorations shall include an adjustment
for the Time Sales Agreements for consideration other than cash ("Trade
Agreements") only to the extent of any Net Negative Trade Balance (as defined
below) and only to the extent that the Net Negative Trade Balance exceeds
$50,000. "Net Negative Trade Balance" means the extent, if any, to which the
value (at current rates for time on the Station as of the Commencement Date) of
unfulfilled obligations of the Station under Trade Agreements exceed the stated
value of any consideration yet to be received by the Station pursuant to such
Trade Agreements. Such prorations shall be completed and any necessary payments
on account of such prorations paid within sixty (60) days of the Commencement
Date. If any disagreement with respect to the proration of such income and
expenses cannot be resolved by the parties, Licensee and Time Broker will select
a certified public accountant knowledgeable in the broadcast industry to resolve
the dispute. The parties will use their best efforts in good faith to cause to
occur as expeditiously as possible the appointment of the certified public
accountant, and once appointed, the resolution of the dispute. The resolution of
such accountant shall be binding on the parties and subject to judicial
enforcement. Payment of the cost of the accountant shall be shared equally
between Time Broker and Licensee.
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Section 4.3. Accounts Receivable. Within ten (10) days after the
Commencement Date, Licensee shall provide Time Broker with a list of all
accounts receivable of Licensee arising from the business and operations of the
Station accrued as of the Commencement Date ("Receivables"). Time Broker agrees
to collect for Licensee all Receivables for a period of ninety (90) days after
the Commencement Date. Licensee shall provide Time Broker with a power of
attorney or other required authorization for the limited purpose of allowing
Time Broker to endorse and deposit checks and other instruments received in
payment of such Receivables. All payments received by Time Broker from any
customer whose name appears on the list of accounts receivable and who is also a
customer of Time Broker shall be credited as payment of the account or invoice
designated by such customer. In the absence of any such designation by the
customer, payments shall be first credited to the oldest invoice which is not
disputed by said customer. Time Broker shall keep accurate records of the
payment received by it on Receivables and Licensee shall have access at
reasonable times to Time Broker's records to verify such status of the
Receivables. Time Broker shall promptly deposit amounts collected with respect
to the Receivables into an account designated by Licensee. Within thirty (30)
days after the last business day of each calendar month, Time Broker shall remit
to Licensee a written accounting of amounts previously collected by Time Broker
on such Receivables and an accounts receivable aging report for those
Receivables still outstanding. Any Receivables that have not been collected
within such ninety (90) day period shall be returned to Licensee, together with
all records in connection therewith, including, but not limited to, a final
accounting of the Receivables still outstanding. Time Broker shall not have the
right to compromise, settle or adjust the amounts of any such Receivables
without Licensee's prior written consent. Except to remit collected Receivables
in accordance herewith, Time Broker shall have no liability or obligation to
Licensee with respect to the collection of Licensee's accounts and shall not be
obligated to take any action to collect such accounts.
ARTICLE V.
OPERATION OF STATION
Notwithstanding any provision of this Agreement to the contrary,
Licensee shall retain full authority and power with respect to the operation of
the Station during the term of this Agreement. The parties agree and acknowledge
that Licensee's continued control of the Station is an essential element of the
continuing validity and legality of this Agreement. Accordingly, Licensee shall
employ the General Manager of the Station and such other personnel as Licensee
determines may be necessary to fulfill its obligations as a licensee under the
Communications Act and its obligations in accordance with Section 3.2 hereof.
Licensee shall retain full authority and control over the policies, programming
and operations of the Station, including, without limitation, the decision
whether to preempt Programming in accordance with Section 2.4 hereof. Licensee
shall have ultimate responsibility to effectuate compliance with the
Communications Act and with FCC rules, regulations and policies. In no event
shall Time Broker or its employees represent, depict, describe or portray Time
Broker as the licensee of the Stations.
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ARTICLE VI.
GRANT OF LICENSES
Section 6.1. License to Use Station Facilities. Effective as of the
Commencement Date, Licensee grants Time Broker a license to access and use all
of the Station's studio and office space and other facilities ("Station
Facilities") and all equipment and furnishings contained therein ("Station
Equipment") in the production and broadcasting of the Programming and sales and
administration relating thereto, in accordance with the terms set forth in this
Article VI (the "Time Broker License"). The Time Broker License shall have a
term coterminous with this Agreement. Time Broker shall not remove from the
Station Facilities or modify any Station Equipment owned by or leased or
licensed to Licensee without Licensee's prior written consent, such consent not
to be unreasonably withheld. Licensee shall not license the use of the Station
Facilities to any other party during the term of the Time Broker License; and
Time Broker's use of the Station Facilities shall be exclusive except for
Licensee's right to use such facilities as it deems appropriate in connection
with the satisfaction of its obligations as the Licensee of the Station,
including the use of such facilities and adequate office space for the employees
of Licensee that are required for Licensee to comply with its obligations under
Sections 3.2 and 5 hereof. Time Broker shall use due care in the use of any
property of Licensee, and shall indemnify Licensee for any damage (normal wear
and tear excepted) to Licensee's property caused by Time Broker or any employee,
contractor, agent or guest of Time Broker. Time Broker shall have the right to
install any additional equipment at the Station Facilities deemed by Time Broker
to be necessary to deliver the Programming. If this Agreement shall terminate
other than pursuant to the Closing under the Acquisition Agreement, Time Broker
shall, promptly after such termination, remove all such equipment and make all
repairs necessitated by such removal.
Section 6.2. License of Intellectual Property. Effective as of the
Commencement Date, Licensee licenses to Time Broker the exclusive right to use
(or, to the extent Licensee does not hold exclusive rights, the non-exclusive
right to use) all intellectual property owned by or licensed to Licensee and
used in the operation of the Station (including, but not limited to, logos,
jingles, promotional materials, call signs and goodwill) (the "IP License"). In
the event of termination of this Agreement, the IP License shall terminate;
provided, however, that Time Broker shall retain all trademarks, service marks,
trade names, characters, formats, jingles, promotional materials, logos and
positioning statements which Time Broker develops for the Programming during the
term of this Agreement.
ARTICLE VII.
INDEMNIFICATION
Section 7.1. Indemnification Rights. Each party will indemnify and hold
harmless the other party, and the directors, officers, partners, employees,
agents and affiliates of such other party, from and against any and all
liability, including without limitation reasonable attorneys' fees and expenses
arising out of or incident to (i) any breach by such party of a representation,
warranty or covenant made herein, (ii) the programming produced or furnished by
such party hereunder, or (iii) the conduct of such party, its employees,
contractors or agents (including negligence) in performing its or their
obligations hereunder. Without limiting the generality of the foregoing, each
party will indemnify and hold harmless the other party, and the directors,
officers, partners, employees, agents and affiliates of such other party, from
and against
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any and all liability for libel, slander, infringement of trademarks, trade
names, or program titles, violation of rights of privacy, and infringement of
copyrights and proprietary rights resulting from the programming produced or
furnished by it hereunder. The parties' indemnification obligations hereunder
shall survive any termination or expiration of this Agreement.
Section 7.2. Procedures. The party seeking indemnification under this
Agreement ("Indemnitee") shall give the party from whom it seeks indemnification
("Indemnitor") prompt written notice, in accordance with Section 12.10, of the
assertion of any claim or the commencement of any action or proceeding for which
the Indemnitee may seek indemnification; provided, however, that the failure to
give such notice within a reasonable time shall only relieve the Indemnitor of
liability to the extent it is materially prejudiced thereby. Promptly after
receipt of written notice, as provided herein, of any claim or the commencement
of any action or proceeding, the Indemnitor shall assume the defense of such
claim, action or proceeding; provided, however, that (i) if the Indemnitor
fails, within a reasonable time after receipt of written notice of such claim,
action or proceeding, to assume the defense, compromise, and settlement of such
claim, action or proceeding on behalf of and for the account and risk of the
Indemnitor, subject to the right of the Indemnitor (upon notifying the
Indemnitee of its election to do so) to assume the defense of such claim, action
or proceeding at any time prior to the settlement, compromise, judgment, or
other final determination thereof, or if in the reasonable judgment of the
Indemnitee, based on the advice of its counsel, a direct or indirect conflict of
interest exists between the Indemnitee and the Indemnitor, the Indemnitee shall
(upon notifying the Indemnitor of its election to do so) have the right to
undertake the defense, compromise, and settlement of such claim, action or
proceeding on behalf of and for the account and risk of the Indemnitor (it being
understood and agreed that the Indemnitor shall not be entitled to assume the
defense of such claim), and (ii) if the Indemnitee in its sole discretion so
elects, it shall (upon notifying the Indemnitor of its election to do so) be
entitled to employ separate counsel and to participate in the defense of such
claim, action or proceeding, but the fees and expenses of counsel so employed
shall (except as contemplated by clause (i) above) be borne solely by the
Indemnitee. The Indemnitor shall not settle or compromise (x) any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the grant by the claimant or plaintiff to each Indemnitee of a
release from any and all liability in respect thereof, or (y) any claim in any
manner, or consent to the entry of any judgment, that could reasonably be
expected to have a material adverse effect on the Indemnitee. If upon
presentation of a claim for indemnity hereunder, the Indemnitor does not agree
that all, or part, of such claim is subject to the indemnification obligations
imposed upon it pursuant to this Agreement, it shall promptly notify the
Indemnitee. Thereupon, the parties shall attempt to resolve their dispute,
including where appropriate, reaching an agreement as to that portion of the
claim, if any, which both concede is subject to indemnification. To the extent
that the parties are unable to reach some compromise, either party may
unilaterally submit the matter for determination by a court of competent
jurisdiction.
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ARTICLE VIII.
DEFAULT
Section 8.1. Events of Default. The following, after the expiration of
the applicable cure periods specified in Section 8.2, shall constitute Events of
Default under this Agreement:
(a) Non-Payment. Time Broker's failure to timely pay the Monthly
Payment provided for in Section 1.2;
(b) Default in Covenants. Time Broker's or Licensee's default in the
observance or performance of any material covenant, condition or agreement
contained herein; or
(c) Breach of Representation. Time Broker's or Licensee's material
breach of any representation or warranty made by it herein, or in any
certificate or document furnished pursuant to the provisions hereof, which shall
prove to have been false or misleading in any material respect as of the time
made or furnished.
Section 8.2. Cure Periods. An Event of Default shall not be deemed to
have occurred until thirty (30) days (or in the event of a payment default,
fifteen (15) days) after the non-defaulting party has provided the defaulting
party with written notice specifying the event or events that if not cured would
constitute an Event of Default, and such event has not been cured within such
time period.
ARTICLE IX.
TERMINATION
This Agreement shall automatically terminate upon the expiration of the
term of this Agreement as set forth in Section 1.3. In addition, this Agreement
shall terminate as provided below.
Section 9.1. Termination of Agreement. (a) By Licensee or Time Broker.
In addition to other remedies available at law or equity, this Agreement may be
terminated by either Licensee or Time Broker if any agreement providing for the
acquisition of the Station by Time Broker from Licensee is terminated.
(b) By Licensee. In addition to other remedies available at law or
equity, this Agreement may be terminated by Licensee if the Letter Agreement by
and between Capstar Broadcasting Corporation and Chancellor Media Corporation of
Los Angeles, dated February 20, 1998 (as amended from time to time, the "Master
Agreement"), is terminated.
Section 9.2. Termination Upon Default. In addition to other remedies
available at law or equity, this Agreement may be terminated by either Licensee
or Time Broker by written notice to the other, specifying an effective date of
termination which is not less than seven (7) days nor more than ninety (90) days
from the date such notice is given, if the party seeking to terminate is not
then in material default or breach hereof, upon either:
(a) an uncured Event of Default, or
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(b) a change in FCC rules, policies or precedent that would cause
this Agreement to be in violation thereof and such change is final, in
effect and has not been stayed, and the parties are unable, after
negotiating in good faith for at least thirty (30) days, to modify this
Agreement to comply with the change in FCC rules, policies or precedent.
In the event that the non-defaulting party does not exercise such right
of termination by giving such written notice within sixty (60) days of the
occurrence of an uncured Event of Default, then the Event of Default giving rise
to such right of termination shall be deemed waived and the Agreement shall
continue in full force and effect.
Section 9.3. Certain Matters Upon Termination.
(a) Upon any termination of this Agreement, Licensee shall have no
further obligation to provide to Time Broker any broadcast time or broadcast
transmission facilities and Time Broker shall have no further obligations to
make any payments to Licensee under Section 1.2 hereof. Upon any termination,
Time Broker shall be responsible for all debts and obligations of Time Broker to
third parties based upon the purchase of air time and use of Licensee's
transmission facilities including, without limitation, accounts payable, barter
agreements and unaired advertisements, but not for Licensee's federal, state and
local income and business franchise tax liabilities or taxes levied upon
Licensee's personal property. Notwithstanding anything herein to the contrary,
to the extent that any invoice, bill or statement submitted to Licensee after
the termination of this Agreement or any payment made by Time Broker prior to
the termination of this Agreement relates to expenses incurred in operating the
Station, for periods both before and after the termination of this Agreement,
such expenses shall be prorated between Licensee and Time Broker in accordance
with the principle that Time Broker shall be responsible for expenses allocable
to the period prior to the termination of this Agreement and Licensee shall be
responsible for expenses allocable to the period on and after the termination of
this Agreement. Such proration shall include an adjustment for Time Broker's
Trade Agreements only to the extent that Time Broker's Net Negative Trade
Balance exceeds $50,000. Each party agrees to reimburse the other party for
expenses paid by the other party to the extent appropriate to implement the
proration of expenses pursuant to the preceding sentence.
(b) If this Agreement terminates other than as a result of the
Closing (as defined in the Acquisition Agreement), Time Broker shall (i) assign
to Licensee and Licensee shall assume all Assigned Contracts (including those
employment contracts assumed by Time Broker pursuant to this Agreement) and all
renewals, replacements or other contracts entered in the ordinary course of
business relating to the Station between the Commencement Date and the date of
termination of this Agreement ("Supplemental Contracts") in effect on the date
of such termination or expiration; (ii) be responsible for only those
obligations under the Assigned Contracts and Supplemental Contracts arising on
or after the Commencement Date and prior to the termination of this Agreement;
(iii) terminate, and Licensee shall hire, all employees at the Station (except
for those employees at the Station who also perform substantial services for
other stations in the Station's market operated by Time Broker, which may be
retained by Time Broker
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at its sole discretion); and (iv) provide to Licensee a list of Time Broker's
accounts receivable arising from Time Broker's operation of the Station after
the Commencement Date, which shall be collected by Licensee for the benefit of
Time Broker according to the procedures set forth in Section 4.3 of this
Agreement.
(c) Notwithstanding anything in Sections 9.1 and 9.2 to the
contrary, no expiration or termination of this Agreement shall terminate the
obligation of each party to indemnify the other for claims under Article VII
hereof or limit or impair any party's rights to receive payments due and owing
hereunder on or before the date of such termination.
ARTICLE X.
SPECIFIC PERFORMANCE
In addition to a party's rights of termination hereunder (and in
addition to any other remedies available to it or provided under law), in the
event of an uncured Event of Default with respect to either party, the other may
seek specific performance of this Agreement, in which case the defaulting party
shall waive the defense in any such suit that the other party has an adequate
remedy at law and interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy hereunder.
ARTICLE XI.
CERTAIN REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Section 11.1. Representations and Warranties of Time Broker. Time Broker
hereby represents and warrants to Licensee as follows:
11.1.1 Organization. Time Broker is a ___________ duly
organized, validly existing and in good standing under the laws of the State of
_____________________ and duly qualified to do business in the State of
_______________________ and has full power and authority to conduct its business
as currently conducted.
11.1.2 Authorization; Enforceability. This Agreement has
been duly executed and delivered by Time Broker, and is valid, binding and
enforceable against Time Broker in accordance with its terms. Time Broker has
full right, power, authority and legal capacity to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery and performance of this Agreement and the
consummation of the transactions provided for hereby have been duly authorized
by all necessary action on the part of Time Broker, and no other organizational
or other proceedings on the part of Time Broker are necessary to authorize the
execution or delivery of this Agreement or the transactions contemplated hereby.
11.1.3 No Consent. Except to the extent any of the Assigned
Contracts require consent to assignment, no consent of any other party and no
consent, license, approval or authorization of, or exemption by, or filing,
restriction or declaration with, any governmental authority, bureau, agency or
regulatory authority, other than the filing of this
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Agreement with the FCC is required in connection with the execution, delivery or
performance of this Agreement by Time Broker or will effect the validity or
performance of this Agreement.
11.1.4 No Breach. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
constitute or result in the breach of any term, condition or provision of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Time Broker pursuant to the
organizational documents of Time Broker, any material agreement or other
instrument to which Time Broker is a party or by which any part of its property
is bound, or violate any law, regulation, judgment or order binding upon Time
Broker.
11.1.5 Actions and Proceedings. There is no judgment
outstanding and no litigation, claim, investigation or proceeding pending
against Time Broker or, to the knowledge of Time Broker, threatened before any
court or governmental agency to restrain or prohibit, or to obtain damages, or
other relief in connection with, this Agreement, the Acquisition Agreement or
the consummation of the transactions contemplated hereby or thereby or that
might adversely affect Time Broker's performance under this Agreement.
11.1.6 Qualifications. Time Broker is qualified in
accordance with the Communications Act, and the rules and policies of the FCC to
enter into this Agreement and provide programming on the Station in accordance
with its terms. Between the date hereof and the termination of this Agreement,
Time Broker will not take any action that Time Broker knows, or has reason to
believe, would disqualify it from providing programming on the Station pursuant
to this Agreement.
Section 11.2. Representations, Warranties and Covenants of Licensee.
Licensee hereby represents, warrants and covenants to Time Broker as follows:
11.2.1 Organization. Licensee is a _______________, duly
organized, validly existing and in good standing under the laws of the State of
_______________, is duly authorized to conduct business in the State of
___________________ and has full power and authority to conduct its business as
currently conducted.
11.2.2 Authorization; Enforceability. This Agreement has
been duly executed and delivered by Licensee, and is valid, binding and
enforceable against Licensee in accordance with its terms. Licensee has full
right, power, authority and legal capacity to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions provided for hereby have been duly authorized by all necessary
action on the part of Licensee, and no other organizational or other proceedings
on the part of Licensee are necessary to authorize the execution or delivery of
this Agreement or the transactions contemplated hereby.
11.2.3 No Consent. Except to the extent any of the Assigned
Contracts require consent to assignment, no consent, license, approval or
authorization of or exemption by, or filing, restriction or declaration with,
any governmental authority, bureau,
13
<PAGE> 18
agency or regulatory authority, other than the filing of this Agreement with the
FCC is required in connection with the execution, delivery or performance of
this Agreement or will affect the validity or enforceability of this Agreement.
11.2.4 No Breach. Except to the extent any of the Assigned
Contracts require consent to assignment, neither the execution or delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
constitute or result in the breach of any term, condition or provision of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Licensee pursuant to the
organizational documents of Licensee, any material agreement or other instrument
to which Licensee is a party or by which any part of its property is bound, or
violate any law, regulation, judgment or order binding upon Licensee.
11.2.5 Actions and Proceedings. There is no judgment
outstanding and no litigation, claim, investigation or proceeding pending
against Licensee or, to the knowledge of Licensee, threatened before any court
or governmental agency to restrain or prohibit, or to obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
11.2.6 Maintenance of Current Operations. During the term
hereof, Licensee shall take no action which will have the effect of reducing the
effective radiated power and the current coverage of the Station.
11.2.7 Other Agreements. During the term hereof, Licensee
shall not enter into any other time brokerage, program provision, local
management or similar agreement with any third party with respect to the Station
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Modification and Waiver. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
Section 12.2. No Waiver; Remedies Cumulative. Except as otherwise
provided herein, no failure or delay on the part of Licensee or Time Broker in
exercising any right or power hereunder shall operate as a waiver thereof, nor
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, shall preclude any
other or further exercise thereof or the exercise of any other right or power.
The rights and remedies of Licensee and Time Broker herein provided are
cumulative and are not exclusive of any rights or remedies which they may
otherwise have.
Section 12.3. Construction. This Agreement shall be construed in
accordance with the laws of the State of Texas without reference to conflict of
laws principles thereunder, and the obligations of the parties hereto are
subject to all federal, state or municipal laws or
14
<PAGE> 19
regulations now or hereafter in force and to the regulations of the FCC and all
other governmental bodies or authorities presently or hereafter duly
constituted.
Section 12.4. Arbitration. Licensee and Time Broker agree that any
dispute arising out of or relating to this Agreement or the breach, termination,
validity hereof or thereof shall be finally settled by arbitration conducted
expeditiously in accordance with the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes. The Center for Public
Resources shall appoint a neutral advisor from its National CPR Panel. The
arbitration advisor 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 Dallas, Texas. Notwithstanding anything to the contrary
contained herein, the provisions of this Section 12.4 shall not apply with
regard to any equitable remedies to which any party may be entitled under this
Agreement.
Section 12.5. Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
Section 12.6. Successors and Assigns. Time Broker may assign all or any
part of this Agreement or the rights and obligations hereunder to a person or
entity controlling, controlled by or under common control with Time Broker,
provided that such entity assumes all of Time Broker's obligations under this
Agreement; provided, however, that no such assignment shall relieve Time Broker
of its obligations hereunder. Except as otherwise provided herein, this
Agreement and the rights and obligations hereunder may not be assigned by any
party hereto without the prior written consent of the other party hereto, which
consent shall not be unreasonably withheld. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns.
Section 12.7. Force Majeure. The parties acknowledge and agree that a
party will not be liable for any failure to timely perform any of its
obligations under this Agreement if such failure is due, in whole or in part,
directly or indirectly, to accidents, fires, floods, governmental actions, war,
civil disturbances, other causes beyond such party's control or any other
occurrence which would generally be considered an event of force majeure.
Section 12.8. Broker. The parties agree to indemnify and hold each other
harmless against any claims from any broker or finder based upon any agreement,
arrangement, or understanding alleged to have been made by the indemnifying
party.
Section 12.9. Counterpart Signatures. This Agreement may be signed in
one or more counterparts.
Section 12.10. Notices. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed duly given: (a) the day of delivery, if hand delivered or
delivered by overnight courier, (b) the day of delivery as indicated on the
return receipt if dispatched by mail, or (c) the date of telecopy transmission
as indicated on the telecopier transmission report, provided that any
15
<PAGE> 20
telecopy transmission shall not be effective unless a paper copy is sent by
overnight delivery on the date of the telecopy transmission, in each case,
addressed as follows:
If the notice is to Time Broker:
c/o Chancellor Media Corporation
Attention: Jeffrey A. Marcus, President and Chief Executive Officer
433 East Las Colinas Blvd.
Suite 1130
Irving, Texas 75039
Fax: (972) 869-3671
With a copy to:
Latham & Watkins
Attention: Eric L. Bernthal, Esq.
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
Fax: (202) 637-2201
If the notice is to Licensee:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
With a copy to:
Vinson & Elkins
Attention: Michael D. Wortley, Esq.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Fax: (214) 999-7732
Either party may change its address for the purposes of notice by giving notice
of such change in accordance with the provisions of this Section.
Section 12.11. Entire Agreement. This Agreement and the Master Agreement
(in each case, including all attachments, exhibits and schedules) embody the
entire agreement between the parties and supersede any and all prior written or
oral agreements, arrangements or understandings relating to the subject matter
hereof.
16
<PAGE> 21
Section 12.12. Severability. Except as expressly set forth in Section
12.16, if any provision contained in this Agreement is held to be invalid,
illegal or unenforceable in any respect by any court or other authority, then
such provision shall be deemed limited to the extent that such court or other
authority deems it reasonable and enforceable, and as so limited shall remain in
full force and effect. In the event that such court or other authority shall
deem any such provision wholly unenforceable, this shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had not been contained herein.
Section 12.13. No Joint Venture. The parties agree that nothing herein
shall constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other intellectual property shall at all times remain
the property of the respective parties and that neither party shall obtain any
ownership interest in the other party's intellectual property by virtue of this
Agreement (subject to the IP License set forth in Section 6.2).
Section 12.14. Damage to Station. In the event of damage or destruction
to the Station (other than damage or destruction caused by Time Broker),
Licensee shall proceed to repair, replace or restore the Station to its former
condition as promptly as is commercially reasonable.
Section 12.15. Noninterference. During the term of this Agreement,
neither Licensee nor any of its employees shall take any actions that might
impair the operations of Time Broker conducted hereunder, except to the extent
expressly contemplated by this Agreement or as otherwise required by law.
Section 12.16. Regulatory Changes. In the event of any order or decree
of an administrative agency or court of competent jurisdiction, including
without limitation any material change or clarification in FCC rules, policies,
or precedent, that would cause this Agreement to be invalid or violate any
applicable law, and such order or decree has become effective and has not been
stayed, the parties will use their respective best efforts and negotiate in good
faith to modify this Agreement to the minimum extent necessary so as to comply
with such order or decree without material economic detriment to either party,
and this Agreement, as so modified, shall then continue in full force and
effect. In the event that the parties are unable to agree upon a modification of
this Agreement so as to cause it to comply with such order or decree without
material economic detriment to either party, then this Agreement shall be
terminated.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
17
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Time Brokerage
Agreement as of the date first above written.
LICENSEE
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TIME BROKER
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
18
<PAGE> 23
SCHEDULE 1.1
PROGRAMMING
The Programming shall consist of one hundred sixty-five (165) hours per
week on the Station in an entertainment format to be chosen by Time Broker,
subject to Article II of this Agreement. The Programming shall include (a) news
and weather information; (b) public service announcements; (c) an announcement
in form sufficient to meet the station identification requirements of the FCC at
the beginning of each hour; (d) an announcement at the beginning of each segment
of Programming to indicate that program time has been purchased by Time Broker;
and (e) any other announcement that may be required by applicable law or
regulation. Time Broker shall maintain and deliver to Licensee copies of all
operating and programming information, including without limitation information
concerning portions of the Programming that are responsive to issues of public
importance identified to Time Broker by Licensee, EBS announcements, and station
operating logs, necessary for Licensee to maintain the Station's FCC public
inspection file, and all other records required to be kept by FCC rule or
policy. Time Broker shall have the sole and exclusive right to sell advertising
to be included in the Programming and shall be entitled to retain all the
revenues derived from the sale thereof, provided, however, that Licensee shall
be entitled to sell such time as it deems necessary to comply with the political
advertising rules of the FCC in the event the Programming does not comply with
such rules.
Time Broker shall produce under Licensee's supervision and present at
least three (3) hours a week on the Station such public affairs programming that
responds to the needs and interests of listeners in the Station's community of
license. Time Broker may present such public affairs programming between 5:00
A.M. and 8:00 A.M. on Saturdays and/or Sundays or at such other times as the
public interest may require.
<PAGE> 24
SCHEDULE 1.2
COMPENSATION
(A) Beginning on the Commencement Date, Time Broker shall pay a monthly
fee (the "Monthly Payment") in the amount of _______________ [10% of Assigned
Value for the Station, divided by twelve]. In the event that the Commencement
Date occurs on a day other than the first day of a month, the initial Monthly
Payment shall be an amount equal to the Monthly Payment multiplied by a ratio,
the numerator of which is the number of days between the Commencement Date and
the end of the month in which the Commencement Date occurs, and the denominator
of which is the number of days in the month in which the Commencement Date
occurs. In the event that the day in which the term of this Agreement ends is
not the last day of a month, the Monthly Payment for the month in which such day
occurs shall be similarly prorated.
(B) Time Broker shall reimburse Licensee for all of its customary and
ordinary expenses (excluding only Licensee's federal, state and local income
taxes, and severance pay or similar payments or obligations of Licensee with
respect to its employees terminated under Section 3.1(b) ) incurred in operating
the Station (the "Operating Expenses"), including, but not limited to, employee
expenses (including salary and benefits), rent, utilities, maintenance and
repairs at the Station's studio and transmitter sites, insurance on the
Station's equipment, and insurance deductibles on claims on the Station's
equipment. Licensee shall bill Time Broker for such Operating Expenses on a
monthly basis by delivery of a statement in reasonable detail with back-up
invoices, payment for which shall be due within thirty (30) days of such
billing.
(C) During the term of this Agreement, Licensee shall make all capital
expenditures required to maintain the Station consistent with past practice of
the Station including any repair, replacement or restoration costs incurred by
Licensee pursuant to Section 12.14 and as required to make the Station operate
in full compliance with all FCC rules and regulations. Time Broker shall
reimburse Licensee for all costs of such capital expenditures. Licensee shall
bill Time Broker for such capital expenditures on a monthly basis by delivery of
a statement in reasonable detail with back-up invoices, payment for which shall
be due within thirty (30) days of such billing. Licensee shall consult with and
seek the Time Broker's consent for each capital expenditure which involves more
than $10,000.
<PAGE> 25
SCHEDULE 2.1
PROGRAMMING POLICY
Time Broker and Licensee shall cooperate with each other in the
broadcasting of programs with the highest possible standard of excellence, and
for this purpose to observe the following regulations in the preparation,
writing and broadcasting of the Programming. Further, Time Broker agrees that
all material broadcast on the Station shall comply with all federal, state and
local applicable laws and regulations.
I. No Plugola or Payola. The broadcast of any material for which any
money, service or other valuable consideration is directly or
indirectly paid, or promised to or charged or accepted by, the
Time Broker, from any person, shall be prohibited, unless, at the
time the same is broadcast, it is announced as paid for or
furnished by such person.
II. Political Broadcasting. Within thirty (30) days of the
Commencement Date, Time Broker shall distribute to all parties
making requests for the purchase of political time on the Station,
and provide Licensee with, a written political advertising
disclosure statement which fully and accurately discloses how the
Time Broker sells programming and advertising time and which makes
parties purchasing political programming and advertising time
fully aware of the lowest unit charge provisions of Section 315 of
the Communications Act. In addition, at least thirty (30) days
before the start of any primary or election campaign, Time Broker
will clear with the Station's general manager the rate Time Broker
will charge for the time to be sold to candidates to make certain
that the rate charged is in conformance with the applicable law
and station policy.
III. Required Announcements. Time Broker shall broadcast (i)
announcements in a form satisfactory to Licensee at the beginning
of each hour to identify the Station and (ii) any other
announcements that may be required by law, regulation, or
Licensee's station policy.
IV. No Illegal Announcements. No announcements, broadcasts or
promotions prohibited by federal, state or local law shall be made
over the Station. This prohibition specifically includes, but is
not limited to, any and all unlawful programming or other
broadcast material concerning tobacco or alcohol related products.
The airing of any broadcast material concerning contests,
lotteries or games must be conducted in accordance with all
applicable law, including FCC rules and regulations. Any obscene,
indecent, or fraudulent programming is prohibited. All sponsored
programming or other broadcast material must be identified in
accordance with applicable law, including FCC rules and
regulations.
<PAGE> 26
V. Licensee Discretion Paramount. In accordance with the Licensee's
responsibility under the Communications Act and the rules and
regulations of the FCC, Licensee reserves the right to reject or
terminate any programming (including advertising) proposed to be
presented or being presented over the Station which is in conflict
with station policy or which in Licensee's or its general
manager's reasonable judgment would not serve the public interest.
In any case where questions of policy or interpretation arise, Time
Broker will attempt in good faith to submit the same to Licensee for decision
before making any commitments in connection therewith.
<PAGE> 27
SCHEDULE 4.1
EXCLUDED CONTRACTS
[TO BE PROVIDED BY LICENSEE PRIOR TO EXECUTION OF TBA]
<PAGE> 1
EXHIBIT 10.31.1
CAPSTAR BROADCASTING CORPORATION PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "AGREEMENT"), dated as of May 29, 1998, made by
CAPSTAR BROADCASTING CORPORATION, a Delaware corporation (the "PLEDGOR"), to
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation, as
collateral agent (in such capacity, the "PLEDGEE"), for the benefit of (a) on a
senior basis, Chancellor Media Corporation of Los Angeles (the "SENIOR
CREDITOR"), and (b) on a basis junior and fully subordinated to the Senior
Creditor (i) the Banks, the Agent (as hereinafter defined) and the Co-Agents
(as hereinafter defined) from time to time party to the Credit Agreement
hereinafter referred to (such Banks, the Agent and the Co-Agents, the
"SUBORDINATED NOTE CREDITORS"), and (ii) any Bank that enters into an interest
rate protection agreement (including, without limitation, interest rate swaps,
caps, floors, collars and similar agreements, collectively the "INTEREST RATE
PROTECTION AGREEMENTS") guaranteed by the Pledgor, even if such Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason and
for so long as any such Bank participates in the extension of any such Interest
Rate Protection Agreements, and any subsequent assignees (collectively, the
"INTEREST RATE PROTECTION CREDITORS" and, together with the Subordinated Note
Creditors, the "SUBORDINATED CREDITORS"), and, together with the Senior
Creditor, the "SECURED CREDITORS"). All capitalized terms used herein shall
have the meanings provided in Section 16 of this Agreement and, if not so
defined herein, capitalized terms used herein and defined in the Credit
Agreement shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, the Pledgor is indebted to the Senior Creditor pursuant to a
Capstar Broadcasting Corporation Senior Secured Term Note dated as of May 29,
1998, in the original principal amount of $____________, made payable by
Pledgor to Senior Creditor (as used herein, the term "SENIOR NOTE" means the
Note described above in this paragraph, as the same may be amended, modified,
extended, renewed, restated or supplemented from time to time, and including
any agreement extending the maturity of, or restructuring all or any portion of
the Indebtedness under such Note);
WHEREAS, the Pledgor, Capstar Broadcasting Partners, Inc. ("CAPSTAR
BROADCASTING"), Capstar Radio Broadcasting Partners, Inc. ("CAPSTAR RADIO"),
the various Banks from time to time party thereto, Bankers Trust Company, as a
Co- Arranger and as Administrative Agent (in its capacity as Administrative
Agent, the "AGENT"), NationsBank, N.A., as a Co- Arranger and as Syndication
Agent, and Solomon Brothers Holding Company Inc. and Goldman, Sachs Credit
Partners L.P., as Co-Arrangers and as Documentation Agents (Agent, Syndication
Agent, Co-Arrangers and Documentation Agents are collectively, the "CO-AGENTS")
entered into a Credit Agreement, dated as of May 29, 1998, providing for the
making of Loans and the issuance of, and participation in, Letters of Credit as
contemplated therein (as used herein, the term "CREDIT AGREEMENT" means the
Credit Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, restated or supplemented from time to time, and
including any agreement extending the maturity of, or restructuring all or any
portion of the Indebtedness under such agreement or any successor agreements);
<PAGE> 2
WHEREAS, the Pledgor (i) has guaranteed the obligations of Capstar
Radio under the Credit Agreement pursuant to Section 13 thereof (the "CREDIT
AGREEMENT GUARANTY"), and (ii) may at any time and from time to time guaranty
the obligations of Capstar Radio under one or more Interest Rate Protection
Agreements with one or more Interest Rate Protection Creditors (the "INTEREST
RATE PROTECTION GUARANTIES");
WHEREAS, the obligations of the Pledgor in respect of (a) its
guaranties referred to above and (b) the Senior Note, shall be secured
hereunder as provided herein;
WHEREAS, it is a condition precedent to each of the above-described
extensions of credit that the Pledgor shall have executed and delivered to the
Pledgee this Agreement;
WHEREAS, the Pledgor desires to execute and deliver this Agreement to
satisfy the conditions described in the preceding paragraph;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the above-described extensions of
credit made and to be made an other benefits accruing to the Pledgor, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
makes the following representations and warranties to the Pledgee for the
benefit of the Secured Creditors and hereby covenants and agrees with the
pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for (x) the senior benefit of the Senior Creditor, and (y) the benefit,
on a basis junior and fully subordinated to the Senior Creditor, of the
Subordinated Creditors to secure:
(a) the full and prompt payment of all obligations and
indebtedness of the Pledgor to the Senior Creditor under the Senior
Note due and owing as a result of the prepayment provisions of the
Senior Note or by acceleration (but specifically excluding any
obligations and indebtedness due and owing solely as a result of the
occurrence of the Stated Maturity Date (as defined in the Senior
Note)) and the due performance and compliance by the Pledgor with all
of the terms, conditions and agreements contained in the Senior Note
(all such obligations and liabilities described in this clause (a),
the "SENIOR OBLIGATIONS");
(b) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness of the Pledgor to the Subordinated Creditors under the
Credit Agreement Guaranty and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained
in the Credit Agreement Guaranty (all such obligations and liabilities
in this clause (b), the "CREDIT AGREEMENT OBLIGATIONS");
(c) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities owing by the Pledgor to the Interest Rate Protection
Creditors under, or with respect to, any Interest Rate Protection
Guaranty, whether such Interest Rate Protection Guaranty is now in
existence or hereafter
2
<PAGE> 3
arising, and the due performance and compliance by the Pledgor with
the terms, conditions and agreements contained therein (all such
obligations and liabilities described in this clause (c), the
"INTEREST RATE PROTECTION OBLIGATIONS") and, together with the Credit
Agreement Obligations, the "SUBORDINATED OBLIGATIONS");
(d) any and all sums advanced by the Pledgee in order to
preserve the Collateral or preserve its security interest in the
Collateral in a manner not in violation of the terms hereof; and
(e) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of the
Pledgor, Capstar Broadcasting and/or Capstar Radio referred to in
clauses (a) through (d), after an Event of Default shall have occurred
and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Pledgee of its
rights hereunder, together with reasonable attorneys' fees and court
costs.
All such obligations, liabilities, sums and expenses set forth in clauses (a)
through (e) of this Section 1 being herein collectively called the
"OBLIGATIONS," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK. As used herein, the term "STOCK" shall
mean all of the issued and outstanding shares of common stock of Capstar
Broadcasting at any time owned by the Pledgor. The Pledgor represents and
warrants to the Senior Creditors and the Subordinated Creditors that on the
date hereof (a) the Stock consists of the number and type of shares of the
stock of Capstar Broadcasting as described in Annex A hereof; (b) the Stock
constitutes that percentage of the issued and outstanding common stock of
Capstar Broadcasting as is set forth in Annex A hereto; (c) the Pledgor is the
holder of record and sole beneficial owner of the Stock and there exist no
options or preemption rights in respect of any of the Stock; and (d) the Stock
constitutes all of the issued and outstanding shares of common stock of Capstar
Broadcasting.
3. PLEDGE OF STOCK, ETC.
3.1 PLEDGE. (a) To secure the Obligations and for the
purposes set forth in Section 1, the Pledgor hereby: (i) grants to the Pledgee
for the benefit of (A) the Senior Creditor, a senior security interest in all
of the Collateral, and (B) the Subordinated Creditors, a security interest,
junior and fully subordinated to the security interest granted for the benefit
of the Senior Creditor above, in all of the Collateral; (ii) pledges and
deposits as security with the Pledgee all Stock owned by the Pledgor on the
date hereof and delivers to the Pledgee certificates therefor, accompanied by
undated stock powers duly executed in blank by the Pledgor; and (iii) assigns,
transfers, hypothecates, mortgages, charges and sets over to the Pledgee all of
the Pledgor's right, title and interest in and to the Stock (and in and to the
certificates evidencing the Stock), to be held by the Pledgee, upon the terms
and conditions set forth in this Agreement.
3
<PAGE> 4
(b) The security interest granted to the Pledgee for the
benefit of each Subordinated Creditor shall be junior and fully subordinated to
the security interest in the Collateral granted to the Pledgee for the benefit
of the Senior Creditor, it being understood that each Subordinated Creditor
agrees that no distribution or payment arising from the enforcement or other
realization of, and no distribution or payment in any bankruptcy, insolvency,
reorganization or similar proceeding of the Pledgor or any Subsidiary of the
Pledgor made in respect of or in recognition of, the security interest created
hereunder in respect of the Collateral shall be applied to the Obligations of
such Subordinated Creditor, or shall be for the benefit of such Subordinated
Creditor, until such time as all Senior Obligations (including, without
limitation, all interest accruing after the commencement of any such proceeding
at the contractual rate provided in the respective documentation, whether or
not permitted as an allowable claim) shall have been irrevocably paid in full
in cash or cash equivalents. It is further understood and agreed by each
Secured Creditor that the Pledgee shall take all actions to enforce, realize
upon and protect the security interests created hereunder in respect of the
Collateral, and shall assert all claims, and make all filings, in respect of
the Collateral or any portion thereof, under or in respect of any bankruptcy,
insolvency, reorganization or similar proceeding, only if and to the extent
directed by the Required Secured Creditors and no Secured Creditor acting
individually or together shall have the right to take any such action or assert
any such claim.
3.2 SUBSEQUENTLY ACQUIRED STOCK. (a) If the Pledgor
shall acquire (by purchase, stock split, stock dividend, reclassification or
otherwise) any new, substituted or additional Stock at any time or from time to
time after the date hereof, the Pledgor will promptly thereafter pledge and
deposit such Stock (or certificates representing such Stock) as security with
the Pledgee and deliver to the Pledgee certificates therefor, accompanied by
undated stock powers duly executed in blank by the Pledgor, or such other
instruments of transfer as are acceptable to the Pledgee, and will promptly
thereafter deliver to the Pledgee a certificate executed by the president or
any vice president of the Pledgor describing such Stock and certifying that the
same has been duly pledged with the Pledgee hereunder.
(b) If the Pledgor acquires any subscriptions, warrants
or any other rights or options in connection with the Stock, all new stock or
other securities acquired through such subscriptions, warrants, rights or
options by the Pledgor shall be promptly pledged and delivered to the Pledgee,
accompanied by undated stock powers duly executed in blank by the Pledgor, or
such other instruments of transfer as are reasonably acceptable to the Pledgee,
and will promptly thereafter deliver to the Pledgee a certificate executed by
the president or any vice president of the Pledgor describing such Stock and
certifying that the same has been duly pledged with the Pledgor hereunder.
3.3 UNCERTIFICATED STOCK. Notwithstanding anything to
the contrary contained in Sections 3.1 and 3.2, if any Stock (whether now owned
or hereafter acquired) are uncertificated securities, the Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York
Uniform Commercial Code if applicable). The Pledgor further agrees to take
such actions as the Pledgee deems necessary or desirable to effect the
foregoing and to permit the Pledgee to exercise any of its rights and remedies
hereunder, and agrees to provide an opinion of counsel reasonably satisfactory
to the Pledgee with respect to any such pledge of uncertificated Stock promptly
upon request of the Pledgee.
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3.4 DEFINITIONS OF PLEDGED STOCK AND COLLATERAL. All
Stock at any time pledged or required to be pledged hereunder is hereinafter
called the "PLEDGED STOCK"; and the Pledged Stock, together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, are hereinafter called the "COLLATERAL."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Stock which may be held (in the
discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an
Event of Default shall have occurred and be continuing and the Pledgee, acting
at the direction of the Required Secured Creditors, shall have notified the
Pledgor that the Pledgor may no longer exercise the rights referred to below
(except that no such notice shall be required in the case of a Bankruptcy
Default with respect to the Pledgor), the Pledgor shall be entitled to exercise
all voting rights attaching to any and all Pledged Stock, and to give consents,
waivers or ratifications in respect thereof; provided, that no vote shall be
cast or any consent, waiver or ratification given or any action taken which
would violate or be inconsistent with any of the terms of this Agreement, the
Senior Note or, after the Senior Lien Termination Date, any of the terms of the
Credit Agreement, or which would have the effect of impairing the position or
interests of the Pledgee or the Senior Creditor or, after the Senior Lien
Termination Date, any other Secured Creditor. All such rights of the Pledgor
to vote and to give consents, waiver and ratifications shall cease in case an
Event of Default shall occur and be continuing and, except in the case of a
Bankruptcy Default with respect to the Pledgor, the Pledgee, acting at the
direction of the Required Secured Creditors, shall have notified the Pledgor of
such cessation, and Section 7 shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there
shall have occurred and be continuing (x) a Bankruptcy Default or Notified
Acceleration Event, or (y) any other Event of Default or Acceleration Event,
but in the case of this clause (y) only to the extent the Pledgee (acting at
the direction of the Required Secured Creditors) has so notified the Pledgor,
all dividends and distributions payable in respect of the Pledged Stock and all
payments in respect of the Pledged Notes shall be paid to the Pledgor, provided
that the Pledgee shall be entitled to receive directly, and to retain as part
of the Collateral:
(a) all other or additional common stock (other than cash
or assets) paid or distributed by way of dividend or otherwise, as the
case may be, in respect of the Pledged Stock;
(b) all other or additional common stock paid or
distributed in respect of the Pledged Stock by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement;
(c) all other or additional common stock which may be
paid in respect of the Collateral by reason of any consolidation,
merger, exchange of stock, conveyance of assets, liquidation or
similar corporate reorganization; and
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(d) unless the payment or any such cash dividend shall
have been consented to by the Pledgee (acting at the direction of the
Required Secured Creditors), any cash dividends or distributions
declared or paid in violation of the provisions of the Credit
Agreement.
Nothing contained in this Section 6 shall limit or restrict in any way
the Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by the Pledgor contrary to the provisions of
this Section 6 or Section 7 shall be received in trust for the benefit of the
Pledgee, shall be segregated from other property or funds of the Pledgor and
shall be forthwith paid over to the Pledgee as Collateral in the same form as
so received (with any necessary endorsement).
7. REMEDIES IN CASE OF SPECIFIED EVENTS. If there shall have
occurred and be continuing (x) a Bankruptcy Default or Notified Acceleration
Event or (y) any other Event of Default or Acceleration Event, but in the case
of this clause (y) only to the extent the Required Secured Creditors have so
directed, then and in every such case, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by law) for the protection and enforcement of its rights in
respect of the Collateral, and the Pledgee shall be entitled to exercise all
the rights and remedies of a secured party under the Uniform Commercial Code as
in effect in any applicable jurisdiction and also shall be entitled, without
limitation, to exercise the following rights, which the Pledgor hereby agrees
to be commercially reasonable:
(a) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6 to the Pledgor;
(b) to transfer all or any part of the Collateral into
the Pledgee's name or the name of its nominee or nominees;
(c) to vote all or any part of the Pledged Stock (whether
or not transferred into the name of the Pledgee) and give all
consents, waivers and ratifications in respect of the Collateral and
otherwise act with respect thereto as though it were the outright
owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Pledgee the irrevocable proxy and true and lawful
attorney-in-fact of the Pledgor, with full power of substitution to do
so), it being agreed and understood that the Pledgee is under no
circumstances obligated by the terms of this Agreement to exercise
such rights; and
(d) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale of adjournment thereof or to
redeem or otherwise (all of which are hereby waived by the Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least 10 days' notice of the time and
place of any such sale shall be given to the Pledgor. The Pledgee
shall not be obligated to make any such sale of Collateral regardless
of whether any such notice of sale has theretofore been given. The
Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Collateral,
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whether before or after sale hereunder, and all rights, if any, of
marshaling the Collateral and any other security for the Obligations
or otherwise. At any such sale, unless prohibited by applicable law,
the Pledgee on behalf of a Class (or, to the extent agreed to by the
Required Creditors of each such Class, two or more Classes acting
together) may bid for and purchase all or any part of the Collateral
so sold free from any such right or equity of redemption. Neither the
Pledgee nor any Secured Creditor shall be liable for failure to
collect or realize upon any or all of the Collateral or for any delay
in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and
remedy of the Pledgee provided for in this Agreement, or now or hereafter
existing at law or in equity or by statute shall be cumulative and concurrent
and shall be in addition to every other such right, power or remedy. The
exercise or beginning of the exercise by the Pledgee or any Secured Creditor of
any one or more of the rights, powers or remedies provided for in this
Agreement, or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the Pledgee
or any Secured Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any Secured Creditor to exercise
any such right, power or remedy shall operate as a waiver thereof. No notice
to or demand on the Pledgor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Pledgee or any Secured Creditor to any other
or further action in any circumstances without notice or demand.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral through
enforcement, realization hereunder or otherwise, together with all other moneys
received by the Pledgee hereunder in respect of any Collateral, shall first be
applied to the payment of all costs and expenses incurred by the Pledgee in
connection with such sale or disposition, the delivery of the Collateral or the
collection of any such moneys (including, without limitation, reasonable
attorneys' fees and expenses) and the balance of such moneys (the "REMAINING
PROCEEDS") shall be applied by the Pledgee as required below.
(b) Before the Senior Lien Termination Date and so long
as any Senior Obligations remain unpaid, the Remaining Proceeds shall be
applied to satisfy the Senior Obligations.
(c) After the Senior Lien Termination Date and after the
payment in full of all Senior Obligations, and so long as any Subordinated
Obligations remain unpaid, any Remaining Proceeds not theretofore distributed
pursuant to the foregoing provisions of this Section 9 shall be applied to
satisfy the Subordinated Obligations, with each Subordinated Creditor to
receive an amount equal to its outstanding Subordinated Obligations or, if
insufficient proceeds are available for the payment in full of all outstanding
Subordinated Obligations, its Pro Rata Share of the amount required to be
distributed pursuant to this clause.
(d) As used in clause (c) above, "Pro Rata Share" shall
mean, when calculating a Subordinated Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction, the
numerator of which is the outstanding principal amount of the Subordinated
Obligations owing to it (or if there is no outstanding principal amount of
Subordinated
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Obligations , the remaining Subordinated Obligations owed it) and the
denominator of which is the outstanding principal amount of all Subordinated
Obligations (or if there is no outstanding principal amount of Subordinated
Notes, the remaining Subordinated Obligations owned to the Subordinated
Creditors). If a payment to any Subordinated Creditor of its Pro Rata Share of
any distribution would result in an overpayment of the Subordinated Obligations
of such Subordinated Creditor, such excess amount shall instead be distributed
to the unpaid Subordinated Obligations of the other Subordinated Creditors,
which each Subordinated Creditor whose Subordinated Obligations have not been
paid in full to receive an amount equal to such excess amount multiplied by a
fraction the numerator of which is the unpaid Subordinated Obligations of such
Subordinated Creditor and the denominator of which is the unpaid Subordinated
Obligations of all Subordinated Creditors.
(e) All payments required to be made to Subordinated Note
Creditors hereunder shall be made to the Agent under the Credit Agreement for
the account of the respective Subordinated Note Creditors. All payments
required to be made to Interest Rate Protection Agreement Creditors hereunder
shall be made to the paying agent under the applicable Interest Rate Protection
Agreement, or in the case of Interest Rate Protection Agreements without a
paying agent, directly to the applicable Interest Rate Protection Agreement
Creditor.
(f) For purposes of applying payments received in
accordance with this Section 9, the Pledgee shall be entitled to rely (i) upon
the Agent, for a determination (which the Agent agrees to provide upon request
of the Pledgee) of the unpaid Credit Agreement Obligations and, (ii) upon any
Interest Rate Protection Agreement Creditor, for a determination (which each
Interest Rate Protection Agreement Creditor agrees to provide upon request of
the Pledgee) of the unpaid Interest Rate Protection Obligations owed to such
Interest Rate Protection Agreement Creditor. Unless it has actual knowledge
(including by way of written notice from a Secured Creditor) to the contrary,
the Agent, in furnishing information pursuant to the preceding sentence, and
the Pledgee in acting hereunder, shall be entitled to assume that no
obligations other than principal, interest and regularly accruing fees are
owing to any Secured Creditor.
(g) Any Remaining Proceeds not otherwise applicable or
applied pursuant to this Section 9 shall be paid over the Pledgor pursuant to
the terms of Section 19.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. The Pledgor agrees to indemnify and hold harmless
the Pledgee and each Secured Creditor and their respective successors, assigns,
employees, agents and servants (individually an "INDEMNITEE," and collectively
the "INDEMNITEES") from and against any and all claims, demands, losses,
judgments and liabilities (including liabilities for penalties) of whatsoever
kind or nature, and to reimburse each Indemnitee for all costs and expenses,
including reasonable attorneys' fees, growing out of or resulting from this
Agreement or the exercise by any Indemnitee of any right or remedy granted to
it hereunder or under the other Financing Documents, provided that
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the Pledgor shall not be required to indemnify any Indemnitee in respect of any
claims, demands, losses, judgments, liabilities, costs or expenses arising from
the gross negligence or willful misconduct of such Indemnitee. In no event
shall any Indemnitee be liable, in the absence of gross negligence or willful
misconduct on its part, for any matter or thing in connection with this
Agreement other than to account for moneys actually received by it in
accordance with the terms hereof. If and to the extent that the obligations of
the Pledgor under this Section 11 are unenforceable for any reason, the Pledgor
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law. The Pledgor
agrees that upon written notice by any Indemnitee of the assertion of any
liability, obligation, damage, injury, penalty, claim, demand, action, suit or
judgment, the Pledgor shall assume full responsibility for the defense thereof.
Each Indemnitee agrees to use its best efforts to promptly notify the Pledgor
of any such assertion of which such Indemnitee has knowledge.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor agrees
that it will join with the Pledgee in executing and, at its own expense, file
and refile under the Uniform Commercial Code or other applicable law such
financing statements, continuation statements and other documents in such
offices as the Pledgee may reasonably deem necessary or appropriate and
wherever required by law in order to perfect and preserve the Pledgee's
security interest in the Collateral and hereby authorizes the Pledgee to file
financing statements and amendments thereto relative to all or any part of the
Collateral without the signature of the Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments
(including, without limitation, proxies and dividend payment orders) as the
Pledgee may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee
its rights, powers and remedies hereunder.
(b) The Pledgor hereby appoints the Pledgee the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's discretion
to take any action and to execute any instrument which the Pledgee may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the
obligations of the Pledgee as holder of the Collateral and interests therein
and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement. The Pledgee
shall act hereunder on the terms and conditions set forth herein and in Annex B
hereto.
14. TRANSFER BY THE PLEDGOR. Except for sales of Collateral
permitted (a) after the Senior Lien Termination Date, pursuant to the Credit
Agreement, or (b) at any time with the written consent of the Required Secured
Creditors, the Pledgor will not sell or otherwise dispose of, grant any option
with respect to, or mortgage, pledge or otherwise encumber any of the
Collateral or any interest therein except in accordance with the terms of this
Agreement.
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15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The
Pledgor represents and warrants that (a) it is, or at the time when pledged
hereunder will be, the legal, record and beneficial owner of, and has (or will
have) good and merchantable title to, all the Pledged Stock, subject to no Lien
(except the Lien created by this Agreement); (b) it has full corporate power,
authority and legal right to pledge all the Pledged Stock pursuant to this
Agreement; and (c) all the shares of the Pledged Stock have been duly and
validly issued, are fully paid and non- assessable and are subject to no option
to purchase or similar rights. The Pledgor covenants and agrees that it will
defend the Pledgee's right, title and security interest in and to the Pledged
Stock and the proceeds thereof against the claims and demands of all Persons
whomsoever; and the Pledgor covenants and agrees that it will have like title
to and right to pledge any other property at any time hereafter pledged to the
Pledgee as collateral hereunder and will likewise defend the rights thereto and
security interest therein of the Pledgee and the Secured Creditors.
16. DEFINITIONS. The following terms shall have the meanings
herein specified unless the context otherwise requires. Such definitions shall
be equally applicable to the singular and plural forms of the terms defined.
"ACCELERATION EVENT" shall mean the acceleration prior to the
stated final maturity, or the failure to pay at stated final maturity, of
Obligations representing borrowed money or extensions of credit (including,
without limitation, all Letters of Credit Outstanding) pursuant to the Senior
Note, the Credit Agreement, or any Interest Rate Protection Agreement,
provided, that in each case, any such Acceleration Event shall cease to exist
upon payment of full of the Obligations so accelerated or not paid.
"AGREEMENT" shall have the meaning provided in the first
paragraph hereof.
"BANKRUPTCY DEFAULT" shall mean any Event of Default with
respect to the Pledgor pursuant to Section 9.05 of the Credit Agreement or
under any analogous provision of any of the Financing Documents.
"CAPSTAR BROADCASTING" shall have the meaning provided in the second WHEREAS
clause.
"CAPSTAR RADIO" shall have the meaning provided in the second
WHEREAS clause.
"CLASS" shall mean each class of Secured Creditors, i.e., (a)
the Senior Creditor as holder of the Senior Obligations, (b) the Subordinated
Note Creditors as holders of the Credit Agreement Obligations, and (c) the
Interest Rate Protection Creditors as holders of the Interest Rate Protection
Obligations.
"COLLATERAL" shall have the meaning provided in Section 3.4.
"CREDIT AGREEMENT" shall have the meaning provided in the
second WHEREAS clause.
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"CREDIT AGREEMENT GUARANTY" shall have the meaning provided in
the third WHEREAS clause.
"CREDIT AGREEMENT OBLIGATIONS" shall have the meaning provided
in Section 1(b).
"EVENT OF DEFAULT" shall mean (a) before the Senior Lien
Termination Date, each Event of Default under, and as defined in, the Senior
Note, and (b) after the Senior Lien Termination Date, each Event of Default
under, and as defined in, the Credit Agreement.
"FINANCING DOCUMENTS" shall mean the Senior Note, the Credit
Agreement, the other Credit Documents (as defined in the Credit Agreement) and
each Interest Rate Protection Agreement.
"INTEREST RATE PROTECTION AGREEMENT" shall have the meaning
provided in the first paragraph hereof.
"INTEREST RATE PROTECTION AGREEMENT CREDITOR" shall have the
meaning provided in the first paragraph hereof.
"INTEREST RATE PROTECTION OBLIGATIONS" shall have the meaning
provided in Section 1(c).
"LETTER OF CREDIT OUTSTANDING" shall have the meaning provided
in the Credit Agreement.
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the Uniform Commercial Code, as in effect in any applicable jurisdiction, or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"NOTIFIED ACCELERATION EVENT" shall mean any Acceleration
Event with respect to which the Required Secured Creditors have given written
notice to the Pledgee that a "Notified Acceleration Event" exists, provided
that such written notice may only be given if such Acceleration Event is
continuing and, provided further that any such Notified Acceleration Event
shall cease to exist once there is no longer any Acceleration Event with
respect thereto in existence.
"OBLIGATIONS" shall have the meaning provided in the last
clause of Section 1.
"PERSON"shall mean any individual, partnership, joint venture,
limited liability company, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
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"PLEDGEE" shall have the meaning provided in the first
paragraph hereof; provided that each reference to "Pledgee" contained herein
(including in Annex B attached hereto) shall include any successor thereto.
"PLEDGOR" shall have the meaning provided in the first
paragraph hereof.
"PRINCIPAL SUBORDINATED OBLIGATIONS" shall mean (a) for each
Subordinated Note Creditor, the sum of (1) the outstanding principal amount of
Loans (as defined in the Credit Agreement) made by it plus (2) its Adjusted RL
Percentage (as defined in the Credit Agreement) of all Letters of Credit
Outstanding, and (b) for each Interest Rate Protection Creditor, the unpaid
amount of any termination or similar fee payable to such creditor pursuant to
its respective Interest Rate Protection Agreement.
"REMAINING PROCEEDS" shall have the meaning provided in
Section 9(a).
"REQUIRED BANKS" shall have the meaning provided in the Credit
Agreement.
"REQUIRED CREDITORS" of any Class shall mean (a) with respect
to the Senior Obligations, the Senior Creditor, (b) with respect to the Credit
Agreement Obligations, the Required Banks, and (c) with respect to the Interest
Rate Protection Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements.
"REQUIRED SECURED CREDITORS" shall have the meaning provided
in Section 4 of Annex B hereto.
"SECURED CREDITORS" shall have the meaning provided in the
first paragraph hereof.
"SENIOR CREDITOR" shall have the meaning provided in the first
paragraph hereof.
"SENIOR LIEN TERMINATION DATE" shall have the meaning provided
in Section 19(a)(1).
"SENIOR OBLIGATIONS" shall have the meaning provided in
Section 1(b).
"SENIOR NOTE" shall have the meaning provided in the first
WHEREAS clause.
"SUBORDINATED CREDITORS" shall have the meaning provided in
the first paragraph hereof.
"SUBORDINATED NOTE CREDITORS" shall have the meaning provided
in the first paragraph hereof.
"SUBORDINATED OBLIGATIONS" shall have the meaning provided in
Section 1(c).
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17. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any renewal,
extension, amendment or modification of or addition or supplement to or
deletion from any of the Financing Documents or any other instrument or
agreement referred to therein, or any assignment or transfer of any thereof;
(b) any waiver, consent, extension, indulgence or other action or inaction
under or in respect to any such agreement or instrument including, without
limitation, this Agreement; (c) any furnishing of any additional security to
the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (d) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor or any subsidiary of the Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not the Pledgor shall have notice
or knowledge of any of the foregoing. The Pledgor hereby waives any right to
require that an action be brought against any other Person prior to the
exercise of the remedies hereunder.
18. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing (i) a Bankruptcy Default or Notified Acceleration Event or (ii) any
other Event of Default or Acceleration Event, but in the case of this clause
(ii) only to the extent the Required Secured Creditors have so directed them,
then in either such case, upon receipt by the Pledgor from the Pledgee of a
written request or requests that the Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws
to be effected with respect to all or any part of the Pledged Stock (it being
understood that the Pledgee shall not under any circumstances be required to
make such request), the Pledgor as soon as practicable and at its expense will
use its best efforts to cause such registration to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale
and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any
similar statute then in effect), appropriate qualifications under applicable
blue sky or other state securities laws and appropriate compliance with any
other governmental requirements, provided that the Pledgee shall furnish to the
Pledgor such information regarding the Pledgee as the Pledgor may reasonably
request in writing and as shall be required in connection with any such
registration, qualification or compliance. The Pledgor will cause the Pledgee
to be kept reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
will furnish to the Pledgee such number of prospectuses, offering circulars or
other documents incident thereto as the Pledgee from time to time may
reasonably request, and will indemnify the Pledgee and all others participating
in the distribution of such Pledged Stock against all claims, losses, damages
and liabilities caused by any untrue statement (or alleged untrue statement) of
a material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to the
Pledgor by the Pledgee expressly for use therein.
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(b) If any an time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Stock pursuant to
Section 7, and such Pledged Stock or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Stock or part thereof by private sale in such manner and
under such circumstances as Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Stock or part thereof shall have been filed under such Securities
Act, (ii) may approach and negotiate with a single possible purchaser to effect
such sale, and (iii) may restrict such sale to a purchaser who will represent
and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Stock or part thereof. In the event of any such sale, the Pledgee shall incur
no responsibility or liability for selling all or any part of the Pledged Stock
at a price which the Pledgee, in its sole and absolute discretion, may in good
faith deem reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might be realized if the sale were deferred
until after registration as aforesaid.
19. TERMINATION; RELEASE. (a) it is expressly acknowledged and
agreed that the Liens and security interests granted under this Agreement for
the benefit of the Senior Creditor (i) with respect to all or any portion of
the Collateral, may be released in writing at any time by the Senior Creditor
hereunder, and (ii) with respect to all or any portion of the Collateral, shall
be released on the date on which Senior Note has terminated and all Senior
Obligations have been paid in full (the "SENIOR LIEN TERMINATION DATE"). Upon
any release of the type described in the immediately preceding sentence, the
Pledgee shall, at the request and expense of the Pledgor, release the
Collateral being released and execute and deliver to the Pledgor a proper
instrument or instruments acknowledging the release of such Collateral from
this Agreement, and will duly assign, transfer and deliver to the Pledgor
(without recourse and without any representation or warranty) the Collateral
being released as described above.
(b) Following the date on which all Obligations have been
paid in full and all Financing Documents shall have terminated, this Agreement
shall terminate, and the Pledgee, at the request and expense of the Pledgor,
will execute and deliver to the Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to the Pledgor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Pledgee and has not theretofore been sold or otherwise applied or
released pursuant to this Agreement, together with any moneys at the time held
by the Pledgee hereunder.
20. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed as follows:
(a) if to the Pledgor, at:
Capstar Broadcasting Corporation
600 Congress Avenue, Suite 1400
Dallas, Texas 78705
Attention: Mr. William S. Banowsky
Facsimile No.: (512) 404-6850
14
<PAGE> 15
(b) if to the Pledgee, at:
Chancellor Media Corporation of Los Angeles
433 East Las Colinas Boulevard, Suite 1130
Irving, Texas 75039
Attention: Mr. Jeffrey A. Marcus
Mr. Matthew E. Devine
Facsimile No.: (972) 869-3671
with a copy to:
Latham & Watkins
1001 Pennsylvania Ave., N.W.
Suite 1300
Washington, D.C. 2004
Attention: Mr. Eric L. Bernthal, Esq.
Facsimile No.: (202) 637-2201
(c) if to any Subordinated Note Creditor, either (i) to
the Agent, at the address of the Agent specified in the Credit Agreement or
(ii) at such address as such Subordinated Note Creditor shall have specified in
the Credit Agreement;
(d) if to any Interest Rate Protection Creditor, either
(i) to the paying agent or other representative for the Interest Rate
Protection Creditors, at such address as such representative may have provided
to the Pledgor and the Pledgee from time to time, or (ii) directly to the
Interest Rate Protection Creditors at such address as the Interest Rate
Protection Creditors shall have specified in writing to the Pledgor and the
Pledgee;
21. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Pledgor and the Pledgee (with the written
consent of the Required Secured Creditors), provided, however, that no
modifications shall be made to Section 9 of this Agreement without the consent
of each Secured Creditor adversely affected thereby; and provided further, that
any change, waiver, modification or variance affecting the rights and benefits
of a single Class of Secured Creditors (and not Secured Creditors in a like or
similar manner) shall require the written consent of the Required Creditors or
such Class of Secured Creditors.
22. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. This Agreement
shall be construed and enforced in accordance with and governed by the law of
the State of New York. The headings in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof. This
Agreement may be executed in any number
15
<PAGE> 16
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to
be severable from the other provisions of this Agreement which shall remain
binding on all parties hereto.
23. WAIVER OF JURY TRIAL. THE PLEDGOR HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
24. PLEDGEE AS SECURED PARTY. It is hereby agreed by Pledgor that
the Pledgee may, with the consent of the Required Secured Creditors and at the
request of the Required Secured Creditors of a specific Class or Classes
comprised of Subordinated Creditors, act to foreclose upon the Collateral as a
"secured party" under the Uniform Commercial Code as in effect in any
applicable jurisdiction acting solely upon behalf of such Class or Classes, and
in connection with such foreclosure, to bid on Obligations held by such Class
or Classes. In any event, the Pledgee would not be acting as, and would not
constitute, a "secured party" in respect of the Classes holding superior
obligations to those held by the Class or Classes for which the Pledgee would
be acting, and in such event the Liens and security interests created by this
Agreement would remain in full force and effect with respect to such superior
obligations. It is agreed and acknowledged that the Required Secured Creditors
shall have no obligation to, and shall incur no liability to any Person in
refusing to consent to the Pledgee acting as contemplated by this Section 24.
25. SEVERABILITY. If any Section of this Agreement or any part
thereof shall for any reason be held or adjudged to be invalid, illegal or
unenforceable by any court of competent jurisdiction, such Section or part
thereof so adjudicated invalid, illegal or unenforceable shall be deemed
separate, distinct and independent, and the remainder of this Agreement shall
remain in full force and effect and shall not be affected by such holding or
adjudication.
26. FCC COMPLIANCE. Notwithstanding anything contained herein
which may be construed to the contrary, no action shall be taken by the Pledgee
which may require the consent or approval of the Federal Communications
Commission (the "FCC") unless and until all requirements of the Communications
Act of 1934, as amended (the "COMMUNICATIONS ACT"), requiring the consent or
approval of such action by the FCC have been satisfied. The Pledgor covenants
that, upon the request of the Pledgee, the Pledgor shall cause to be filed such
applications and such other actions as may be requested by the Pledgee to
obtain the consent or approval of the FCC to any action contemplated by this
Agreement and to give effect to the security interest of the Pledgee hereunder,
including, without limitation, the execution of an application for the consent
of the FCC to an assignment or transfer involving a change in ownership or
control pursuant to the provisions of the Communications Act. The Pledgor
hereby irrevocably appoints the Pledgee its true and lawful attorney- in-fact,
from time to time after the occurrence and during the continuance of an Event
of Default, in its name and stead, to execute and file all necessary
applications with the FCC. The power of attorney granted hereby is coupled
with an interest and shall be irrevocable.
[remainder of page is intentionally left blank]
16
<PAGE> 17
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
CAPSTAR BROADCASTING CORPORATION,
as Pledgor
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES, as Collateral Agent, as Pledgee
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
17
<PAGE> 18
ANNEX A
<TABLE>
<S> <C> <C>
No. of Shares Certificate No. % of Outstanding Common Stock
- ------------- --------------- -----------------------------
</TABLE>
Annex A-1
<PAGE> 19
ANNEX B
TO
CAPSTAR PLEDGE AGREEMENT
1. APPOINTMENT. The Secured Creditors (all capitalized terms
used herein and not otherwise defined shall have the respective meanings
provided in the Pledge Agreement to which this Annex B is attached (the "PLEDGE
AGREEMENT")), by their acceptance of the benefits of the Pledge Agreement,
hereby irrevocably designate Chancellor Media Corporation of Los Angeles as
Pledgee to act as specified herein and in the Pledge Agreement. Each Secured
Creditor hereby irrevocably authorizes, and each holder of any promissory note
which is secured pursuant to the Pledge Agreement (each a "NOTE" and
collectively the "NOTES") by the acceptance of such Note shall be deemed
irrevocably to authorize, the Pledgee to take such action on its behalf under
the provisions of the Pledge Agreement and any other instruments and agreements
referred to herein or therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Pledgee by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Pledgee may perform any of its duties
hereunder by or through its agents or employees.
2. NATURE OF DUTIES. The Pledgee shall have no duties or
responsibilities except those expressly set forth in the Pledge Agreement.
Neither the Pledgee nor any of its officers, directors, employees, consultants
or agents shall be liable for any action taken or omitted by it as such under
the Pledge Agreement or hereunder or in connection herewith or therewith,
unless caused by its or their gross negligence or willful misconduct. The
duties of the Pledgee shall be mechanical and administrative in nature; the
Pledgee shall not have by reason of the Pledge Agreement or any other Financing
Document a fiduciary relationship in respect of any Secured Creditor; and
nothing in the Pledge Agreement, express or implied, is intended to or shall be
so construed as to impose upon the Pledgee any obligations in respect of the
Pledge Agreement except as expressly set forth herein.
3. LACK OF RELIANCE ON THE PLEDGEE. Independently and without
reliance upon the Pledgee, each Secured Creditor, to the extent it deems
appropriate, has made and shall continue to make (a) its own independent
investigation of the financial condition and affairs of the Pledgor and its
subsidiaries in connection with the making and the continuance of the
Obligations and the taking or not taking of any action in connection therewith,
and (b) its own appraisal of the creditworthiness of the Pledgor and its
subsidiaries, and the Pledgee shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Secured Creditor with any
credit or other information with respect thereto, whether coming into its
possession before the extension of obligations or the purchase of any Notes, or
at any time or times thereafter. The Pledgee shall not be responsible to any
Secured Creditor for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectability, priority or sufficiency of the
Pledge Agreement or the financial condition of the Pledgor or any Subsidiary of
the Pledgor or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of the
Pledge Agreement, or the financial
Annex B-1
<PAGE> 20
condition of the Pledgor or any Subsidiary of the Pledgor, or the existence or
possible existence of any Event of Default.
4. CERTAIN RIGHTS OF THE PLEDGEE. No Secured Creditor shall have
the right to cause the Pledgee to take any action with respect to the
Collateral, with only the Required Secured Creditors (as hereinafter defined)
having the right to direct the Pledgee to take any such action. If the Pledgee
shall request instructions from the Required Secured Creditors with respect to
any act or action (including failure to act) in connection with the Pledge
Agreement, the Pledgee shall be entitled to refrain from such act or taking
such action unless and until it shall have received instructions from the
Required Secured Creditors, and to the extent requested, appropriate
indemnification in respect of actions to be taken; and the Pledgee shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Secured Creditor shall have any right of action whatsoever
against the Pledgee as a result of the Pledgee acting or refraining from acting
hereunder in accordance with the instructions of the Required Secured Creditor.
As used herein, the term "REQUIRED SECURED CREDITORS" shall mean (a) prior to
the Senior Lien Termination Date, the Senior Creditor, and (b) thereafter, the
Required Banks.
5. RELIANCE. The Pledgee shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or facsimile message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
the proper Person, and, with respect to all legal matters pertaining to the
Pledge Agreement and its duties thereunder, upon advice of counsel selected by
it.
6. INDEMNIFICATION.
(a) To the extent the Pledgee is not reimbursed and
indemnified by the Pledgor and/or its subsidiaries, the Subordinated Creditors
will reimburse and indemnify the Pledgee, in proportion to their respective
principal amounts or accredited value, as the case may be, of obligations, for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Pledgee in performing its duties hereunder or under the Pledge Agreement, or in
any way relating to or arising out of the Pledge Agreement except for those
resulting solely from the Pledgee's own gross negligence or willful misconduct.
(b) Notwithstanding the foregoing, the obligations of the
Subordinated Creditors with respect to the indemnities referred to above shall
be without recourse to such Subordinated Creditors, with all liabilities for
such indemnity obligations to be satisfied from the proceeds of the foreclosure
on, the other disposition of, or any other realization upon the Collateral.
7. HOLDERS. The Pledgee may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment, transfer or endorsement thereof, as the case may be, shall
have been filed with the Pledgee. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or endorsee, as the case may be, of
such Note or any Note(s) issued in exchange therefor.
Annex B-2
<PAGE> 21
8. RESIGNATION BY THE PLEDGEE.
(a) The Pledgee may resign from the performance of all
its functions and duties under the Pledge Agreement at any time by giving 20
Business Days prior written notice (as provided in the Pledge Agreement) to the
Pledgor and the Secured Creditors. Such resignation shall take effect upon the
appointment of a successor Pledgee pursuant to clauses (b), (c) and (d) below.
(b) Upon any such notice of resignation, the Required
Secured Creditors shall appoint a successor Pledgee hereunder who shall be a
commercial bank organized under the laws of the United States of America or any
State thereof and having combined capital and surplus of at least $500,000,000.
(c) If a successor Pledgee shall not have been so
appointed within said 20 Business Day period, the Pledgor shall then appoint a
successor Pledgee who shall serve as Pledgee hereunder or thereunder until such
time, if any, as the Required Secured Creditors appoint a successor Pledgee as
provided above.
(d) If no successor Pledgee is appointed pursuant to
clauses (b)and (c) above within said 20 business Day period the resignation of
the Pledgee shall become effective and the duties of the Pledgee shall be
performed by the Required Secured Creditors.
Annex B-3
<PAGE> 1
EXHIBIT 10.31.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED BY THE HOLDER HEREOF UNLESS SUCH HOLDER FIRST
SHALL HAVE FURNISHED INFORMATION REASONABLY SATISFACTORY TO THE COMPANY (WHICH
MAY INCLUDE, IN THE COMPANY'S SOLE DISCRETION, AN OPINION OF COUNSEL) THAT SUCH
SALE, PLEDGE, OR OTHER TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OR ANY
APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
CAPSTAR BROADCASTING CORPORATION
Senior Secured Term Note
[$250,000,000.00] May 29, 1998
FOR VALUE RECEIVED, the undersigned, Capstar Broadcasting Corporation,
a Delaware corporation (herein called the "Company"), promises to pay to the
order of Chancellor Media Corporation of Los Angeles, or its legal successors
or assigns, without setoff, counterclaim or deduction, by wire transfer
directly into such account as the holder hereof may in writing designate to the
Company, in lawful money of the United States of America, on the Maturity Date
(as defined below), the principal sum of [TWO HUNDRED AND FIFTY MILLION AND
NO/100 DOLLARS] ([$250,000,000.00]), or, if different from such amount, the
aggregate unpaid principal amount outstanding hereunder, together with accrued
interest at the rate or rates of interest and on the dates specified herein.
1. Defined Terms. Terms used and not otherwise defined herein
shall have the meanings given such terms in the Letter Agreement (as defined
below). The following terms shall have the following definitions:
"Applicable Law" shall mean the law in effect from time to
time and applicable to the transactions between the holder hereof and
the Company pursuant to this Note which lawfully permits the charging
and collection of the highest permissible lawful, nonusurious rate of
interest on such transactions, including laws of any State of
competent jurisdiction, and to the extent providing for a higher
lawful rate of interest, applicable laws of the United States of
America.
"Business Day" shall mean any day other than a Saturday or
Sunday on which national banking institutions are open for the
transaction of commercial business in Dallas, Texas.
"Capstar Senior Credit Facility" shall mean that certain
Credit Agreement dated as of May 29, 1998, among the Company, Capstar
Broadcasting Partners, Inc., Capstar Radio Broadcasting Partners,
Inc., Bankers Trust Company, as a Co-Arranger and as Administrative
Agent, NationsBank, N.A., as a Co-Arranger and as Syndication Agent,
Solomon Brothers Holding Company Inc. and Goldman, Sachs Credit
Partners L.P., as Co-
Page 1 of 12
<PAGE> 2
Arrangers and as Documentation Agents, and the financial institutions
party thereto, as amended, modified or restated from time to time.
"Event of Default" shall mean any of the following events: (a)
default in the payment of any principal or any other amount (other
than interest) on this Note when the same becomes due and payable
(whether on the Maturity Date, any date upon which a voluntary or
mandatory prepayment is required hereunder or otherwise); (b) default
in the payment of any interest on this Note when the same becomes due
and payable and the continuance of such default for a period of five
days; (c) the Company shall fail to observe or perform any covenant or
agreement contained in this Note or in any document securing this Note
(other than as provided in the foregoing subparagraphs (a) and (b)),
or any representation or warranty made herein shall fail to be true,
and such default shall continue unremedied for a period of 30 days
after written notice to the Company by the holder hereof; or (d) the
Company shall admit in writing its inability to pay its debts when due
or shall not be paying its debts generally, or shall make a general
assignment for the benefit of creditors, or any case shall be
instituted by or against the Company, seeking an order for relief
under the bankruptcy laws, or seeking reorganization, arrangement,
adjustment or compromise of its debts or under any law related to
bankruptcy, insolvency, or reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, or other similar official
for any substantial part of its property and, in the case of any case
instituted against the Company, such case shall not have been
dismissed within 60 days after the institution of the same; or the
Company shall take any corporate action or authorize any of the
actions set forth above in this subparagraph (d).
"Exchange Hurdle" shall mean the closing of the purchase by
the Company and its Subsidiaries, in accordance with the procedures
described in Section 1 of the Letter Agreement, of radio stations
(excluding the Jacksonville Exchange and the purchase of the Austin
Stations) during the Exchange Period having an aggregate purchase
price (in each case determined in accordance with Section 1 of the
Letter Agreement) of (a) $100,000,000 by the last Business Day of the
first Loan Year, (b) $200,000,000 by the last Business Day of the
second Loan Year, and (c) $300,000,000 by the last Business Day of the
third Loan Year. The aggregate purchase price for radio stations
purchased in any Loan Year shall apply to the minimum amount of
purchases to be closed in any subsequent Loan Year.
"Fiscal Quarter" shall mean each fiscal quarter of the
Company.
"Highest Lawful Rate" shall mean the greater of (a) the
maximum rate of interest permitted at such time under any federal law
applicable to the indebtedness evidenced by this Note, or (b) the
"weekly ceiling" in effect at such time as that term is defined in
Article 5069-1D.003, Title 79, Revised Civil Statutes of Texas, 1925,
as amended (said Article hereinafter called the "Act"), and which
would be applicable to the indebtedness evidenced by this Note
pursuant to the Act.
"Letter Agreement" shall mean that certain Letter Agreement
dated as of February 20, 1998, between the Company and the Lender, as
amended or modified from time to time.
Page 2 of 12
<PAGE> 3
"Loan Year" shall mean the period (a) commencing on and
including the date hereof and ending on but excluding the first
anniversary of the date hereof, and (b) each one year period
thereafter.
"Maturity Date" shall mean the earliest of (a) the date which
is three years from the date on which the Company terminates the
Letter Agreement or any Definitive Agreement pursuant to Section
8(a)(iii)(A) of the Letter Agreement, (b) the date on which the
Company terminates the Letter Agreement or any Definitive Agreement
pursuant to Section 8(a)(iii)(B) of the Letter Agreement, or (c) the
Stated Maturity Date.
"Stated Maturity Date" shall mean May 29, 2018.
"Subsidiary" shall have the meaning given such term in the
Capstar Senior Credit Facility.
2. Voluntary Prepayments. This Note is subject to optional
prepayment, in whole or in part, upon two Business Days prior written notice,
in minimum principal amounts of $1,000, together with the Cash Portion (as
defined and as calculated below) of all interest then due and owing. In the
event any voluntary principal payment hereunder is not accompanied by the Cash
Portion of all interest then due and owing, such prepayment shall be applied
first to such accrued and unpaid interest and then to principal. Any
prepayments made under this Section 2 shall not affect the Lender's prepayment
rights described in Section 3 below.
3. Mandatory Prepayments. The Lender, in its sole discretion,
shall have the option to to cause the Company to make prepayments with respect
to this Note in the following amounts and on the following terms and
conditions:
(a) If the Company elects to acquire an Exchange Station pursuant
to an Exchange Station Agreement which is an asset purchase agreement
in accordance with Section 1(a)(1) of the Letter Agreement, the Lender
may require, upon 5 Business Days prior written notice, the Company to
prepay this Note in an amount equal to 50% of the cash purchase price
payable by the Lender under an asset purchase agreement for an SFX
Station(s) entered into in connection with the Exchange Station
Agreement, such prepayment to be made concurrently with the closing of
the purchase by the Lender from the Company of an SFX Station(s) in
connection therewith, as provided in Section 1(a)(1) of the Letter
Agreement. If, at any time during the Loan Year in which any such
closing takes place, the Company elected to defer the payment of
interest in accordance with Section 4(b) below, the prepayment amount
under this Section 3(a) shall be equal to the sum of (i) 50% of the
cash purchase price referred to in this subsection (a) plus (ii) the
product of (A) 50% of the cash purchase price referred to in this
subsection (a) times (B) a fraction, the numerator of which is the
number of days during such Loan Year interest accrued at the Deferral
Rate (as hereinafter defined) and the denominator of which is 360.
Any additional amounts owing to the Lender pursuant to the foregoing
sentence shall be paid within 10 Business Days following the end of
the applicable Loan Year.
Page 3 of 12
<PAGE> 4
(b) If the Company causes the Lender to acquire an Exchange
Station pursuant to an Exchange Station Agreement which is a stock
purchase agreement in accordance with Section 1(a)(2) of the Letter
Agreement, the Lender may require, upon 5 Business Days prior written
notice, the Company to prepay this Note in an amount equal to 50% of
the cash purchase price payable under such Exchange Station Agreement
(after adjustments for working capital as provided for in the Letter
Agreement and in the applicable Asset Exchange Agreement, if any),
such prepayment to be made concurrently with the closing of the
purchase by the Lender of stock under such Exchange Station Agreement,
as provided in Sections 1(a)(2) and (3) of the Letter Agreement. If,
at any time during the Loan Year in which any such closing takes
place, the Company elected to defer the payment of interest in
accordance with Section 4(b) below, the prepayment amount under this
Section 3(b) shall be equal to the sum of (i) 50% of the cash purchase
price referred to in this subsection (b) plus (ii) the product of (A)
50% of the cash purchase price referred to in this subsection (b)
times (B) a fraction, the numerator of which is the number of days
during such Loan Year interest accrued at the Deferral Rate and the
denominator of which is 360. Any additional amounts owing to the
Lender pursuant to the foregoing sentence shall be paid within 10
Business Days following the end of the applicable Loan Year.
(c) Provided that the Company shall have received written notice
from the Lender at least 30 days prior to closing of the purchase by
the Lender of the final SFX Station pursuant to an Asset Purchase
Agreement or an Asset Exchange Agreement that the Lender intends to
cause the Company to prepay the outstanding principal balance hereof
on the closing of such purchase, the Company shall prepay the entire
outstanding principal balance hereof together with all accrued and
unpaid interest concurrently with the closing of such purchase.
(d) If the Lender elects to purchase all of the remaining SFX
Station(s) pursuant to Section 1(i) of the Letter Agreement and
provided that the Company shall have received written notice from the
Lender at the time of such election that the Lender intends to cause
the Company to prepay the outstanding principal balance hereof
concurrently with the closing of such purchase, the Company shall
prepay the entire outstanding principal balance hereof together with
all accrued and unpaid interest concurrently with the closing of such
purchase.
(e) If the Company or any of its Subsidiaries purchases any radio
stations during the Exchange Period and does not comply with the
procedures set forth in Section 1 of the Letter Agreement, the Lender
may, upon 10 Business Days prior written notice, require the Company
to prepay this Note in an amount equal to 100% of the cash purchase
price paid by the Company or any of its Subsidiaries for any such
radio station, such prepayment to be made concurrently with the
closing of the purchase of such radio station. The Company shall
provide 30 days prior written notice to the Lender of the Company's
intention to purchase radio stations during the Exchange Period that
do not comply with the procedures set forth in Section 1 of the Letter
Agreement (such notice to be 30 days prior to the closing of any such
acquisition). This Section 3(e) shall not apply to (i) purchases by
the Company and its Subsidiaries pursuant to binding agreements
pending as of March 13, 1998, a complete list of which, including the
call signs of radio stations to be purchased thereunder, is attached
Page 4 of 12
<PAGE> 5
hereto as Exhibit A, (ii) the investment of proceeds received from the
sale of radio stations WFAS-FM, WZZN-FM, WRKI-FM, WAXB-FM, WPUT-AM,
WTAE-AM, WJDX-FM and the SFX Long Island Stations, (iii) the
investment of proceeds received by the Company and its Subsidiaries
from the sale of radio stations that are closed prior to March 13,
1998, (iv) the investment of proceeds received by the Company and its
Subsidiaries from the sale of radio stations that are closed on or
after March 13, 1998, where such radio station sales are made pursuant
to binding agreements pending as of such date, (v) the investment of
proceeds received by the Company and its Subsidiaries from the sale of
radio stations that are closed between March 13, 1998, and the date
that the Capstar-SFX Merger is consummated, in SBI Holding Corporation
or its Subsidiaries, (vi) other purchases of radio stations during the
Exchange Period having a maximum aggregate purchase price of
$20,000,000 (it being understood that the Company shall provide prompt
written notice to the Lender of consummation of all such acquisitions,
indicating the purchase price paid by the Company or its Subsidiaries
for such radio stations), and (vii) purchases of radio stations by SFX
and its Subsidiaries from the Company and its Subsidiaries or by the
Company and its Subsidiaries from SFX and its Subsidiaries.
(f) If the Loan Decrease Conditions are satisfied, the Company
shall, without requirement of any notice from the Lender, use any and
all net proceeds resulting from the exercise of the overallotment
option granted by the Company to the underwriters for the Company's
initial public offering to prepay this Note so that, immediately
following such prepayment, no more than $150,000,000 in principal
amount of this Note remains outstanding (it being understood that if
such net proceeds are not adequate to prepay this Note so that no more
than $150,000,000 in principal amount of this Note remains
outstanding, the Company shall use all net proceeds to prepay this
Note). Any additional amounts that may be owing to the Lender
pursuant to the foregoing sentence shall be paid simultaneously upon
the Company's receipt of any such net proceeds.
Any prepayments made under this Section 3 shall be applied first to accrued and
unpaid interest and then to unpaid principal.
4. Interest. Interest on this Note shall be calculated on the
basis of a 360-day year consisting of twelve 30-day months. Interest on this
Note shall accrue on the outstanding principal balance hereof from time to time
at the following per annum rates and shall be payable as follows:
(a) Subject to subsections (b) and (c) below, interest on this
Note shall accrue at a rate per annum of twelve percent (12%)(the
"Contract Rate") and shall be payable on the last Business Day of each
Fiscal Quarter (each, an "Interest Payment Date"). Such payment shall
be made at the Company's option, (i) entirely in cash, or (ii) 5/6 in
cash (the "Cash Portion") and 1/6 in the form of principal
automatically added to the outstanding principal balance hereof (the
"Capitalized Portion"). The Company shall provide the Lender 10
Business Days prior written notice of its intent to make any interest
payment in the manner provided in clause (ii) above. The Capitalized
Portion shall accrue interest at the rate otherwise applicable to the
outstanding principal balance of this Note.
Page 5 of 12
<PAGE> 6
(b) The Company shall have the option, on each Interest Payment
Date, to defer payment of the Cash Portion in which event interest on
the outstanding principal balance of this Note shall accrue at a rate
per annum of fourteen percent (14%)(the "Deferral Rate") for the
period commencing on the first day of the Fiscal Quarter in which such
Interest Payment Date occurred through and including the day on which
the Cash Portion of the deferred payment is paid in full in cash;
provided, that in the event of such deferral, as of the Interest
Payment Date on which such deferral occurred and on each Interest
Payment Date thereafter until the earlier to occur of the date that
the Cash Portion (as increased hereby) shall be paid in full and the
date that the Company is required to prepay all amounts, the Cash
Portion shall be increased to 6/7 of the interest then due and owing
and the Capitalized Portion shall be increased to 1/7 of the interest
then due and owing.
(c) If the Company does not achieve the applicable Exchange Hurdle
during any Loan Year, the interest rates applicable to the outstanding
principal balance hereof during such Loan Year shall be increased
retroactively by a rate per annum of two percent (2%). If the Company
does not achieve the applicable Exchange Hurdle during any Loan Year
and, as a result, the per annum interest rate applicable to this Note
during any period ending on an Interest Payment Date during such Loan
Year was (i) 14%, the Cash Portion and the Capitalized Portion shall
be retroactively adjusted as of each such Interest Payment Date to
equal 6/7 and 1/7, respectively, or (ii) 16%, the Cash Portion and the
Capitalized Portion shall be retroactively adjusted as of each such
Interest Payment Date to equal 7/8 and 1/8, respectively. Within 30
days following the end of each such Loan Year, the Company shall pay
to the holder hereof an amount necessary to cause the aggregate Cash
Portion paid during such Loan Year to equal the aggregate Cash Portion
that would have been payable during such Loan Year if the adjustments
provided for pursuant to the foregoing sentence were in effect during
such Loan Year.
Notwithstanding anything herein to the contrary, (i) all accrued and unpaid
interest shall be payable in full in immediately available funds on the
Maturity Date, and (ii) in no event shall the rate of interest applicable to
this Note exceed the Highest Lawful Rate.
5. Covenants. So long as any principal or interest shall remain
due and owing hereunder:
(a) The Company shall not, and shall not permit any of its
Subsidiaries to create, incur, assume, acquire, guarantee or otherwise
become liable for any Indebtedness (as defined in the Capstar Senior
Credit Facility) after the date hereof if, on the date of, and after
giving effect to, the creation, incurrence, assumption, guarantee or
other acquisition of such additional Indebtedness, the Leverage Ratio
(as defined in the Capstar Senior Credit Facility), calculated on a
Pro Forma Basis (as defined in the Capstar Senior Credit Facility),
would exceed 9.0 to 1. For purposes of calculating the Leverage Ratio
hereunder, (i) during the calendar year 1998, there shall be included
in Consolidated EBITDA (as defined in the Capstar Senior Credit
Facility) the greater of (x) the amount of net revenues actually
received by the Company and its Subsidiaries from the AMFM Radio
Network and (y) $10,000,000 regardless if such amount is actually
received as net revenues from the AMFM Radio
Page 6 of 12
<PAGE> 7
Network, (ii) there shall be excluded from Consolidated Indebtedness
(as defined in the Capstar Senior Credit Facility) $50,000,000 of
borrowings by the Company and its Subsidiaries under working capital
lines of credit, and (iii) there shall be included in Consolidated
Indebtedness the aggregate liquidation preference of all outstanding
preferred stock of the Company and its Subsidiaries as of any date of
determination. The parties hereto acknowledge and agree that the test
set forth in this Section 5(a) is an incurrence test and not a
maintenance test and that no Event of Default will occur hereunder as
a result of the Company's failure to maintain a Leverage Ratio of 9.0
to 1.
(b) The Company will not, directly or indirectly, (i) authorize,
declare or pay any dividend or make any distribution on shares of the
Company's capital stock, (ii) purchase, redeem or otherwise acquire or
retire for value any capital stock of the Company or any warrants,
rights or options to acquire shares of any class of such capital
stock, or (iii) make any principal payment on, purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value,
prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, any indebtedness of the Company that
is subordinate to or junior in right of payment to this Note (each, a
"Restricted Payment"); provided, that so long as no Event of Default
exists or would be caused by such Restricted Payment, the Company may
make Restricted Payments in an aggregate amount not to exceed
$10,000,000.
(c) Within 45 days after the last day of each Fiscal Quarter, the
Company will furnish to the holder of this Note a certificate of the
president, chief financial officer or vice president of finance of the
Company, in form and substance reasonably satisfactory to the holder
of this Note:
(i) setting forth, as at the time the Company created,
incurred, assumed, guaranteed or became liable for any Indebtedness
during such Fiscal Quarter, the arithmetical calculation required to
establish compliance with the requirements of Section 5(a) of this
Note at such time;
(ii) setting forth a list of any Restricted Payments made
during such Fiscal Quarter and specifying the amount of such
Restricted Payments; and
(iii) stating that, to the best of his or her knowledge, no
Event of Default has occurred as at the end of such Fiscal Quarter or,
if an Event of Default has occurred, disclosing such Event of Default
and its nature, when it occurred, whether it is continuing and the
steps being taken by the Company with respect to such Event of
Default.
(d) In the event that the Loan Decrease Conditions are not
satisfied, the Company agrees that it will not, and the Company shall
cause its Subsidiaries not to, enter into or consummate any
acquisitions of radio station assets or stock of entities owning radio
station assets (other than transactions pending as of May 4, 1998 and
transactions pursuant to Exchange Station Agreements) until such time
as the Company has made prepayments with respect to this Note so that,
following such prepayments, no more than $150,000,000 in principal
amount of this Note remains outstanding.
Page 7 of 12
<PAGE> 8
6. Representations and Warranties. The Company hereby represents
and warrants to the Lender that, as of the date hereof:
(a) The Company has the corporate power and has taken all
necessary corporate action to authorize it to borrow hereunder, to
execute, deliver and perform the obligations under this Note, and to
execute, deliver and perform the obligations under the Stock Pledge
Agreement delivered concurrently herewith (the "Pledge Agreement").
This Note and the Pledge Agreement have been duly executed and
delivered by the Company, and this Note and the Pledge Agreement are
legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights
generally.
(b) No provision contained in the Company's material debt
instruments expressly prohibits interest payments on the Note (it
being understood that financial covenants contained in such
instruments may prevent, directly or indirectly, such interest
payments after the date hereof).
(c) No provision contained in the Company's material debt
instruments expressly prohibits the satisfaction of Capstar's
prepayment obligations under the Note (it being understood that
financial covenants contained in such instruments may prevent,
directly or indirectly, the satisfaction of such prepayment
obligations after the date hereof).
7. Remedies. If an Event of Default occurs and is continuing,
then, the holder of this Note may declare the principal of and interest accrued
on this Note to be immediately due and payable, by notice in writing to the
Company, and upon and such declaration, such principal and accrued interest
shall become immediately due and payable; provided, that if an Event of Default
specified in clause (d) of the definition thereof shall occur, the principal of
and accrued interest on this Note shall immediately become due and payable
without notice. Notwithstanding the foregoing, the Company hereby acknowledges
and agrees that in collecting this Note, the holder hereof shall have all
rights, remedies and recourses (a) granted in this Note and any and all
documents evidencing, securing, guaranteeing or pertaining to this Note, and
(b) available at law or in equity, and all such rights, remedies and recourses
(i) shall be cumulative and concurrent, (ii) may be pursued separately,
successfully or concurrently against the Company and/or any other persons
obligated for this Note or any part thereof, or against any one or more of
them, all at the sole and absolute discretion of the holder hereof, (iii) may
be exercised as often as occasion therefor shall arise, it being agreed by the
undersigned that the exercise of or failure to exercise any of same shall in no
event be construed as a waiver or release thereof or of any other right, remedy
or recourse, and (iv) are intended to be, and shall be, nonexclusive. The
holder hereof shall give 5 Business Days prior written notice to the
administrative agent under the Capstar Senior Credit Facility of the holder's
intent to accelerate the principal and accrued interest hereunder as a result
of an Event of Default.
8. Certain Expenses. If any Event of Default occurs, and if this
Note is placed in the hands of an attorney for collection or enforcement, or if
suit is filed hereon, or if proceedings are had in bankruptcy, receivership,
reorganization or other legal or judicial proceedings for the collection
Page 8 of 12
<PAGE> 9
hereof, the Company agrees to pay, in addition to the principal and interest
due and payable hereon, all costs of collecting this Note, including without
limitation reasonable attorneys' fees and expenses (whether or not legal
proceedings are instituted), incurred by the holder hereof.
9. Waiver. The Company and all sureties, endorsers and
guarantors of this Note waive demand, presentment for payment, notice of
non-payment, protest, notice of protest, notice of intent to accelerate, notice
of acceleration, and all other notice, filing of suit and diligence in
collecting this Note or enforcing any of the security herefor, and agree to any
substitution, exchange or release of any of such security or the release of any
party primarily or secondarily liable hereon and further agree that it will not
be necessary for any holder hereof, in order to enforce payment by the Company
of this Note, to first institute suit or exhaust its remedies against any
others liable herefor, or to enforce its rights against any security herefor,
and consent to any extensions or postponements of time of payment of this Note
or any other indulgences with respect hereto, without notice thereof to the
Company.
10. Liability. The Company agrees that the liability of the
Company shall not be in any manner affected by any forbearance, partial action
or delay on the part of the holder hereof in regard to the exercise of any
right, power or remedy under this Note.
11. Usury. It is the intent of the holder hereof and the Company
in the execution and performance of this Note to remain in strict compliance
with Applicable Law from time to time in effect. In furtherance thereof, the
holder hereof and the Company stipulate and agree that none of the terms and
provisions contained in this Note or any document securing or otherwise
relating to this Note shall be construed to create a contract to pay for the
use, forbearance or detention of money with interest at a rate or in an amount
in excess of the maximum rate or amount of interest permitted to be charged
under Applicable Law. For purposes of this Note, "interest" shall include the
aggregate of all charges which constitute interest under Applicable Law that
are contracted for, taken, charged, reserved, received or paid under this Note.
The Company shall not be required to pay unearned interest and shall not be
required to pay interest at a rate or in an amount in excess of the maximum
rate or amount of interest that may be lawfully charged under Applicable Law,
and the provisions of this paragraph shall control over all other provisions of
this Note, and of any other instrument pertaining to or securing this Note,
which may be in actual or apparent conflict herewith. If this Note is prepaid,
or if the maturity of this Note is accelerated for any reason, or if under any
other contingency the effective rate or amount of interest which would
otherwise be payable under this Note would exceed the maximum rate or amount of
interest any holder of this Note is allowed by Applicable Law to change,
contract for, reserve or receive, or in the event any holder of this Note shall
charge, contract for, take, reserve or receive monies that are deemed to
constitute interest which would, in the absence of this provision, increase the
effective rate or amount of interest payable under this Note to a rate or
amount in excess of that permitted to be charged, contracted for, taken,
reserved or received under Applicable Law then in effect, then the amount of
interest which would otherwise be payable under this Note shall be reduced to
the amount allowed under Applicable Law as now or hereinafter construed by the
courts having jurisdiction, and all such monies so charged, contracted for,
taken, reserved or received that are deemed to constitute interest in excess of
the maximum rate or amount of interest permitted by Applicable Law shall
immediately be returned to or credited to the account of the Company upon such
determination. The holder hereof and the
Page 9 of 12
<PAGE> 10
Company further stipulate and agree that, without limitation of the foregoing,
all calculations of the rate or amount of interest contracted for, charged,
taken, reserved or received under this Note which are made for the purpose of
determining whether such rate or amount exceeds the maximum rate, shall be
made, to the extent not prohibited by Applicable Law, by amortizing, prorating,
allocating and spreading during the period of the full stated term of this
Note, all interest at any time contracted for, charged, taken, reserved or
received from the Company or otherwise by any holder of this Note.
12. Collateral. This Note is secured by a first priority,
perfected security interest in 100% of the common stock of Capstar Broadcasting
Partners, Inc. owned by the Company.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and, unless otherwise specified,
shall be personally delivered, or shall be sent by overnight delivery, or shall
be sent by telecopy or other similar electronic device (with a copy sent by
certified or registered mail, return receipt requested, postage prepaid), and
shall be addressed as follows:
(a) If to the Company at:
Capstar Broadcasting Corporation
600 Congress Avenue, Suite 1400
Dallas, Texas 78705
Attention: William S. Banowsky, Jr.
Facsimile No.: (512) 404-6850
With a copy to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attention: Mr. Michael Wortley
Facsimile No.: (214) 999-7732
(b) If to the holder hereof:
Chancellor Media Corporation of Los Angeles
433 East Las Colinas Blvd., Suite 1130
Irving, Texas 75039
Attention: Mr. Jeffrey A. Marcus
Mr. Matthew E. Devine
Facsimile No.: (972) 869-3671
Page 10 of 12
<PAGE> 11
With a copy to:
Latham & Watkins
1001 Pennsylvania Ave., N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal
Facsimile No.: (202) 637-2201
All notices and other communications shall be deemed to have been given either
at the time of actual delivery thereof to any officer or employee of the person
(or to such person if an individual) entitled to receive such notice at the
address of that person for purposes of this Section 12 or, if sent by telecopy
or other similar electronic devices, upon confirmation of receipt of such
transmission. Any person may change its address for notice by sending notice
of the new address to the other party hereto at least two (2) Business Days
prior to the effective date of the change of address.
14. Amendments. This Note may not be changed orally, but only by
an agreement in writing signed by each party hereto.
15. Governing Law. This Note shall be construed in accordance
with and governed by the laws of the State of Texas, without giving effect to
any conflicts of law rules thereunder.
16. Arbitration. The parties agree that any dispute arising out
of or relating to this Note or the Pledge Agreement or the breach, termination,
validity hereof or thereof shall be finally settled by arbitration conducted
expeditiously in accordance with the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes. The Center for Public
Resources shall appoint a neutral advisor from its National CPR Panel. The
arbitration advisor 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 Dallas, Texas. Notwithstanding anything to the contrary
contained herein, the provisions of this Section 16 shall not apply with regard
to any equitable remedies to which any party may be entitled under this Note or
the Pledge Agreement.
17. Jurisdiction for Venue. Each of the Company and the holder
hereof irrevocably agrees that in the event of any dispute involving this Note
or any other documents executed in connection herewith, venue for such dispute
shall lie in any court of competent jurisdiction in Dallas County, Texas.
18. Assignment. This Note and all the covenants, promises and
agreements contained herein shall be binding upon and inure to the benefit of
the respective successors, legal representatives and assigns of the holder
hereof and the Company; provided, that except in connection with a merger,
consolidation or sale of all or substantially all of the assets of any party
hereto, this Note may not be sold, assigned, pledged or otherwise transferred
or encumbered by any party hereto hereof without the prior written consent of
the other party hereto.
[remainder of page intentionally left blank]
Page 11 of 12
<PAGE> 12
THIS NOTE REPRESENTS THE FINAL AGREEMENT REGARDING THE SUBJECT MATTER
HEREOF BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES REGARDING THE
SUBJECT MATTER HEREOF. AS OF THE DATE HEREOF, THERE ARE NO UNWRITTEN ORAL
AGREEMENTS REGARDING THE SUBJECT MATTER HEREOF BETWEEN THE PARTIES.
CAPSTAR BROADCASTING CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Page 12 of 12
<PAGE> 13
EXHIBIT A
Acquisition Agreements of the Company
pending as of March 13, 1998
<TABLE>
<CAPTION>
Agreement Radio Station Call Sign
--------- -----------------------
<S> <C>
</TABLE>
A-1
<PAGE> 1
EXHIBIT 10.32
Draft Date: May 17, 1998
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL IN REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO
THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN
REVIEWED OR APPROVED BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND
THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A
STOCKHOLDERS AGREEMENT, AS AMENDED, DATED AS OF OCTOBER 16, 1996, BY AND AMONG
THE COMPANY AND THE OTHER PARTIES LISTED THEREIN, COPIES OF WHICH ARE ON FILE
WITH THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 1,879,699 Shares of Class C Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING APRIL 1, 2008.
THIS IS TO CERTIFY THAT, for value received, R. Steven Hicks, or
registered assigns as a holder of this Warrant (the "Holder") is entitled to
purchase from the Company (as hereinafter defined) at any time or from time to
time prior to 5:00 p.m., Dallas, Texas time, April 1, 2008 at the place where
the Warrant Agency (as hereinafter defined) is located, at the Exercise Price
(as hereinafter defined) 1,879,699 shares of Class C Common Stock, par value
$.01 per share (the "Common Stock"), of the Company (the "Warrant"), all
subject to adjustment and upon the terms and conditions as hereinafter
provided; provided, however, that, except as provided in Section 3.1, in no
event may this Warrant be exercised by the Holder until the earlier to occur of
June 30, 2001 or immediately preceding the consummation of a Sale of the
Company (as hereinafter defined); and provided further, however, that this
Warrant shall terminate and not be exercisable pursuant to the provisions of
Section 3.1 or 3.2.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) the number of shares of Common Stock to
be purchased under this Warrant, (ii) the denominations of the share
certificate or certificates desired, and (iii) the name or names in which such
certificates are to the registered, (c) if the Common Stock to be received
upon the exercise of this Warrant has not been registered under the Securities
Act, a written certification in substantially the form of the
<PAGE> 2
Certification attached hereto as Annex B, and (d) payment of the Exercise Price
with respect to such shares. Such payment may be made, at the option of the
Holder, by cash, money order, certified or bank cashier's check or wire
transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement
2
<PAGE> 3
under the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of assignment, and this Warrant shall promptly be canceled. The
Warrant Agency shall not be required to register any transfers if the Holder
fails to furnish to the Company, after a request therefor, an opinion of
counsel (who may be an employee of such Holder) reasonably satisfactory to the
Company that such transfer is exempt from the registration requirements of the
Securities Act and applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which the new Warrants are to be
issued, signed by the Holder. Subject to compliance with Section 2.3 as to any
transfer which may be involved in the division, the Company shall execute and
deliver new Warrants in exchange for the Warrant or Warrants to be divided in
accordance with such notice.
3
<PAGE> 4
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Termination of Employment.
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, this Warrant shall become exercisable on the Date of Termination, and
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise this Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the Date of Termination, exercise this Warrant with respect to
all or any part of the shares of Common Stock purchasable under this Warrant;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise this Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days after the Date of Termination to
exercise this Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, this Warrant shall become exercisable on the Date of Termination,
and the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, 2003 or the first anniversary of the Date of Termination,
exercise this Warrant with respect to all or any part of the shares of Common
Stock purchasable under this Warrant; provided, however, that in no event will
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days after the Date of Termination to
exercise this Warrant.
(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial Holder's resignation for
other than Good Reason, the Holder shall forfeit all of the Holder's rights
under this Warrant, except as to those shares of Common Stock already purchased
under this Warrant, and this Warrant shall automatically, and without notice,
terminate and become null and void at 5:00 p.m., Dallas, Texas time, on the
Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, this Warrant
shall become
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<PAGE> 5
exercisable on the Date of Termination, and the Holder may, until the earlier
to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the 90th day
after the Date of Termination, exercise this Warrant with respect to all or any
part of the shares of Common Stock purchasable under this Warrant; provided,
however, that in no event will the Holder have less than 90 days after the Date
of Termination to exercise this Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, if this Warrant
has become exercisable on or before the Date of Termination, then the Holder
may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31,
2003 or the 30th day after the Date of Termination, exercise this Warrant with
respect to all or any part of the shares of Common Stock purchasable under this
Warrant; provided, however, that in no event will the Holder have less than 30
days after the Date of Termination to exercise this Warrant. If this Warrant
has not become exercisable on or before the Date of Termination, this Warrant
shall automatically, and without notice, terminate and become null and void at
5:00 p.m., Dallas, Texas time, on the Date of Termination.
(f) If, pursuant to Section 3.2, this Warrant shall
terminate earlier than provided for in this Section 3.1, then the provisions of
Section 3.2 shall prevail.
3.2 Termination of Warrant. Notwithstanding any provision of this
Warrant to the contrary, this Warrant shall expire and no longer be exercisable
upon either (a) the consummation of a Sale of the Company or (b) the
consummation of a Capital Reorganization in which (i) the stockholders of the
Company receive only cash consideration for each share of common stock of the
Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the HMC Group. The Company shall give the Holder reasonable prior
notice of the consummation of a Capital Reorganization. Appropriate per share
adjustments shall be made to take into account, on a comparable per share
basis, any cash consideration attributable to any prior Capital Reorganization.
3.3 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement,
dated as of October 16, 1996, as amended, by and among the Company and the
other parties listed therein (the "Stockholders Agreement"). The Company shall
keep a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
3.4 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
5
<PAGE> 6
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall each be adjusted,
effective at such time, to a number determined by multiplying the number of
shares of Common Stock subject to purchase immediately before such Common Stock
Reorganization by a fraction, the numerator of which shall be the number of
shares outstanding after giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related persons for the purposes of Section 13(d) of the
Exchange Act (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to the Holder an agreement as to the
Holder's rights in accordance with this Section 4.3, providing for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article IV. The provisions of this Section 4.3 shall
similarly apply to successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board of Directors of the Company (the "Board"),
fairly protect the purchase rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine
the holders of shares of Common Stock for purposes of a Common Stock
Reorganization or Capital Reorganization, and shall legally abandon
6
<PAGE> 7
such action prior to effecting such action, then no adjustment shall be made
pursuant to this Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable
upon exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made
hereunder if such adjustment would reduce the exercise price to an amount below
par value of the Common Stock, which par value shall initially be $.01 per
share of Common Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock is listed or admitted to trading is open for business or (b) if no
class of common stock of the Company is so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company, and any capital stock into which such Class A Common
Stock thereafter may be changed.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
7
<PAGE> 8
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation or merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
"Employment Agreement" means that certain Executive Employment
Agreement dated as of February 14, 1997, as amended, by and between the Company
and the Initial Holder, a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercise Price" means a per share price of $1.71.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board, provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
8
<PAGE> 9
"Initial Holder" means R. Steven Hicks.
"IPO Offering Price" means the initial public offering price per share
of Class A Common Stock in a Qualified IPO, prior to deducting any
underwriters' discounts and commissions from such offering price.
"Market Price", with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of common stock of the Company, the Market Price is determined during a
period following the announcement by the Company of any subdivision,
combination or reclassification of common stock of the Company or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the Market Price shall be appropriately adjusted to reflect the
current market price per share equivalent of common stock of the Company.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Class A Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) $6.00 per share or (ii)
the greater of (A) a per share amount equal to $1.40 compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization. Upon the completion of a Common Stock Reorganization,
each of the per share amounts set forth in the foregoing sentence shall be
adjusted, effective immediately after the record date at which the holders of
shares of Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying such amount in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such record
date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that
9
<PAGE> 10
(when added to any cash consideration attributable to any prior Capital
Reorganization) equals or exceeds the Qualifying Cash Consideration, (ii) a
majority of directors of the purchaser or surviving entity in such Capital
Reorganization consists of persons who are not Continuing Directors, and (iii)
such purchaser or surviving entity is not a member of the HMC Group.
Appropriate per share adjustments shall be made to take into account, on a
comparable per share basis, any cash consideration attributable to any prior
Capital Reorganization.
"Securities Act,, shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.2.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
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<PAGE> 11
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
[Remainder of page intentionally left blank]
11
<PAGE> 12
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
---------------------------------------
William S. Banowsky, Jr.
Executive Vice President
ACCEPTED AND AGREED TO:
- --------------------------------
Name: R. Steven Hicks
Address: 600 Congress Avenue
Suite 1400
Austin, TX 78701
<PAGE> 13
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder _________ shares of Common Stock in payment
of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ,
------------------- ------
------------------------------------
Note: The above signature should
correspond exactly with the
name on the face of the
attached Warrant or with the
name of the assignee appearing
in the assignment form below.
<PAGE> 14
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
For Individuals: For Entities:
- --------------------------------- ------------------------------------
Signature Printed Name of Entity
By:
- --------------------------------- ---------------------------------
Printed Name Name:
-------------------------------
Title:
------------------------------
<PAGE> 15
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.33
Draft Date: May 17, 1998
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL IN
REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY
THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER
ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN REVIEWED OR APPROVED
BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED
AS OF OCTOBER 16, 1996, AS AMENDED, BY AND AMONG THE COMPANY AND THE OTHER
PARTIES LISTED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE COMPANY AND WILL
BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 5,000,000 Shares of Class C Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING MAY 31, 2003
THIS IS TO CERTIFY THAT, for value received, R. Steven Hicks, or
registered assigns as a holder (the "Holder") of this Warrant (the "Warrant")
is entitled to purchase from the Company (as hereinafter defined) at the place
where the Warrant Agency (as hereinafter defined) is located, at the Exercise
Price (as hereinafter defined), 5,000,000 shares (the "Warrant Shares") of
Class C Common Stock, par value $.01 per share (the "Common Stock"), of the
Company, subject to adjustment and upon the terms and conditions as hereinafter
provided.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) the number of shares of Common Stock to
be purchased under the Warrant, (ii) the denominations of the share certificate
or certificates desired, and (iii) the name or names in which such certificates
are to the registered, (c) if the Common Stock to be received upon the exercise
of this Warrant has not been registered under the Securities Act, a written
certification in substantially the form of the Certification attached hereto as
Annex B, and
<PAGE> 2
(d) payment of the Exercise Price with respect to such shares. Such payment
may be made, at the option of the Holder, by cash, money order, certified or
bank cashier's check or wire transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator.
2
<PAGE> 3
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved
and will keep available for issuance upon exercise of this Warrant the total
number of shares of Common Stock deliverable upon exercise of this Warrant from
time to time outstanding. The issuance of such shares has been duly and
validly authorized and, when issued and sold in accordance with this Warrant,
such shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of assignment, and this Warrant shall promptly be canceled. The
Warrant Agency shall not be required to register any transfers if the Holder
fails to furnish to the Company, after a request therefor, an opinion of
counsel (who may be an employee of such Holder) reasonably satisfactory to the
Company that such transfer is exempt from the registration requirements of the
Securities Act and applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which
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the new Warrants are to be issued, signed by the Holder. Subject to compliance
with Section 2.3 as to any transfer which may be involved in the division, the
Company shall execute and deliver new Warrants in exchange for the Warrant or
Warrants to be divided in accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Exercise.
(a) Except as otherwise provided in Sections 3.2 and 3.3,
the Warrant Shares shall become "Vested Warrant Shares" with respect to 20% of
the Warrant Shares on the first anniversary of the date of this Warrant, and
1/60th of the Warrant Shares shall vest and become Vested Warrant Shares on the
last day of each calendar month thereafter, so that all of the Warrant Shares
shall be vested and become Vested Warrant Shares 60 months after the date of
this Warrant.
(b) Except as otherwise provided in Sections 3.2 and 3.3,
this Warrant shall become exercisable to acquire Vested Warrant Shares at any
time or from time to time after the date on which the average Fair Market Value
of the Class A Common Stock, calculated on a daily basis (when added to any
cash consideration attributable to any prior Capital Reorganization), equals or
exceeds $6.00 per share (the "Exercisability Value") for a period of 180
consecutive days (excluding non-Business Days for purposes of calculating the
average Fair Market Value during such 180-day period) during the period from
(and including) April 1, 1998 through (and including) May 31, 2003. Upon the
completion of a Common Stock Reorganization, the Exercisability Value shall be
adjusted, effective immediately after the record date at which the holders of
shares of Class A Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying the Exercisability
Value in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Class A Common Stock
outstanding on such record date before giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Class A Common Stock outstanding after giving effect to such Common Stock
Reorganization.
(c) Notwithstanding clauses (a) and (b), the Warrant
Shares shall become Vested Warrant Shares, and this Warrant shall become
exercisable, immediately preceding the consummation of a Sale of the Company.
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(d) Except as otherwise provided in Section 3.2, the
unexercised portion of this Warrant, if any, will automatically, and without
notice, terminate and become null and void at 5:00 p.m., Dallas, Texas time, on
the later to occur of May 31, 2003 or the 90th day after this Warrant becomes
exercisable.
3.2 Termination of Employment. Notwithstanding Section 3.1:
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, the Warrant Shares shall become Vested Warrant Shares on the Date of
Termination. If this Warrant has become exercisable on or before the Date of
Termination, then the Holder (or, in the case of the Initial Holder, the
Holder's estate or any person who acquired the right to exercise this Warrant
by bequest or inheritance or otherwise by reason of the Holder's death) may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or
the first anniversary of the Date of Termination, exercise this Warrant with
respect to all or any part of the Vested Warrant Shares; provided, however,
that in no event will the Holder (or, in the case of the Initial Holder, the
Holder's estate or any person who acquired the right to exercise this Warrant
by bequest or inheritance or otherwise by reason of the Holder's death) have
less than 90 days after the Date of Termination to exercise this Warrant. If
this Warrant has not become exercisable on or before the Date of Termination,
then (i) this Warrant shall remain in full force and effect until May 31, 2003
and (ii) if this Warrant becomes exercisable on or before May 31, 2003, then
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise this Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the date on which this Warrant becomes exercisable, exercise
this Warrant with respect to all or any part of the Vested Warrant Shares;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise this Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days to exercise this Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, the Warrant Shares shall become Vested Warrant Shares on the Date
of Termination. If this Warrant has become exercisable on or before the Date
of Termination, then the Holder (or, in the case of the Initial Holder, the
Holder's legal representatives) may, until the earlier to occur of 5:00 p.m.,
Dallas, Texas time, on May 31, 2003 or the first anniversary of the Date of
Termination, exercise this Warrant with respect to all or any part of the
Vested Warrant Shares; provided, however, that in no event will the Holder (or,
in the case of the Initial Holder, the Holder's legal representatives) have
less than 90 days after the Date of Termination to exercise this Warrant. If
this Warrant has not become exercisable on or before the Date of Termination,
then (i) this Warrant shall remain in full force and effect until May 31, 2003
and (ii) if this Warrant becomes exercisable on or before May 31, 2003, then
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, 2003 or the first anniversary of the date on which this
Warrant becomes exercisable, exercise this Warrant with respect to all or any
part of the Vested Warrant Shares; provided, however, that in no event will the
Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days to exercise this Warrant.
(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial
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Holder's resignation for other than Good Reason, the Holder shall forfeit all
of the Holder's rights under this Warrant, except as to those Warrant Shares
already purchased, and this Warrant shall automatically, and without notice,
terminate and become null and void at 5:00 p.m., Dallas, Texas time, on the
Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, the Warrant
Shares shall become Vested Warrant Shares on the Date of Termination. If this
Warrant has become exercisable on or before the Date of Termination, then the
Holder may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May
31, 2003 or the 90th day after the Date of Termination, exercise this Warrant
with respect to all or any part of the Vested Warrant Shares; provided,
however, that in no event will the Holder have less than 90 days after the Date
of Termination to exercise this Warrant. If this Warrant has not become
exercisable on or before the Date of Termination, then (i) this Warrant shall
remain in full force and effect until May 31, 2003 and (ii) if this Warrant
becomes exercisable on or before May 31, 2003, then the Holder may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the 90th
day after the date on which this Warrant becomes exercisable, exercise this
Warrant with respect to all or any part of the Vested Warrant Shares; provided,
however, that in no event will the Holder have less than 90 days to exercise
this Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, no additional
Warrant Shares shall vest after the Date of Termination. If this Warrant has
become exercisable on or before the Date of Termination, then the Holder may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or
the 30th day after the Date of Termination, exercise this Warrant with respect
to all or any part of the Vested Warrant Shares; provided, however, that in no
event will the Holder have less than 30 days after the Date of Termination to
exercise this Warrant. If this Warrant has not become exercisable on or before
the Date of Termination, then (i) this Warrant shall remain in full force and
effect until May 31, 2003 and (ii) if this Warrant becomes exercisable on or
before May 31, 2003, then the Holder may, until the earlier to occur of 5:00
p.m., Dallas, Texas time, on May 31, 2003 or the 30th day after the date on
which this Warrant becomes exercisable, exercise this Warrant with respect to
all or any part of the Vested Warrant Shares; provided, however, that in no
event will the Holder have less than 30 days to exercise this Warrant.
(f) If, pursuant to Section 3.3, this Warrant shall
terminate earlier than provided for in this Section 3.2, then the provisions of
Section 3.3 shall prevail.
3.3 Termination of Warrant. Notwithstanding any provision of this
Warrant to the contrary, this Warrant shall expire and no longer be exercisable
upon either (a) the consummation of a Sale of the Company or (b) the
consummation of a Capital Reorganization in which (i) the stockholders of the
Company receive only cash consideration for each share of common stock of the
Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the
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HMC Group. The Company shall give the Holder reasonable prior notice of the
consummation of a Capital Reorganization. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
3.4 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement
dated as of October 16, 1996, as amended, by and among the Company and the
other parties listed therein (the "Stockholders Agreement"). The Company shall
keep a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
3.5 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be adjusted, effective
at such time, to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Common Stock
Reorganization by a fraction, the numerator of which shall be the number of
shares outstanding after giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related
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persons for the purposes of Section 13(d) of the Exchange Act (any such event
being called a "Capital Reorganization"), then, effective upon the effective
date of such Capital Reorganization, the Holder shall have the right to
purchase, upon exercise of this Warrant, the kind and amount of shares of stock
and other securities and property (including cash) which the Holder would have
owned or have been entitled to receive after such Capital Reorganization if
this Warrant had been exercised immediately prior to such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall
execute and deliver to the Holder an agreement as to the Holder's rights in
accordance with this Section 4.3, providing for subsequent adjustments as
nearly equivalent as may be practicable to the adjustments provided for in this
Article IV. The provisions of this Section 4.3 shall similarly apply to
successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board of Directors of the Company (the "Board"),
fairly protect the purchase rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this
Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable upon
exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made hereunder if
such adjustment would reduce the exercise price to an amount below par value of
the Common Stock, which par value shall initially be $.01 per share of Common
Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
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ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock is listed or admitted to trading is open for business or (b) if no
class of common stock of the Company is so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation or merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
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"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
"Employment Agreement" means that certain Executive Employment
Agreement dated as of February 14, 1997, as amended, by and between the Company
and the Initial Holder, a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercisability Value" shall have the meaning set forth in Section
3.1(b).
"Exercise Price" means a per share price of $1.40.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board; provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
"Initial Holder" means R. Steven Hicks.
"IPO Offering Price" means the initial public offering price per share
of Class A Common Stock in a Qualified IPO, prior to deducting any
underwriters' discounts and commissions from such offering price.
"Market Price", with respect to any security on any day, means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that for purposes of determining
Fair Market Value as used in Section 3.1(b), "Market Price" means the daily
Closing Price of a share of Class A Common Stock on the date of determination;
provided further, however, that in the event that, in the case of common stock
of the Company, the Market Price is determined following the announcement by
the Company of any subdivision, combination or reclassification of common stock
of the Company or the record date for such subdivision,
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combination or reclassification, then, and in each such case, the Market Price
shall be appropriately adjusted to reflect the current market price per share
equivalent of common stock of the Company.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Class A Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) the Exercisability
Value or (ii) the greater of (A) the Exercise Price compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that (when added to any cash
consideration attributable to any prior Capital Reorganization) equals or
exceeds the Qualifying Cash Consideration, (ii) a majority of directors of the
purchaser or surviving entity in such Capital Reorganization consists of
persons who are not Continuing Directors, and (iii) such purchaser or surviving
entity is not a member of the HMC Group. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
"Securities Act" shall mean the Securities Act of 1933 and any similar
or successor federal statute, and the rules and regulations of the Securities
and Exchange Commission (or its successor) thereunder, all as the same shall be
in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.4.
"Vested Warrant Shares" shall have the meaning set forth in Section
3.1 (a).
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"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
"Warrant Shares" shall have the meaning set forth in the first
paragraph of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
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6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
[Remainder of page intentionally left blank]
13
<PAGE> 14
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
---------------------------------------
William S. Banowsky, Jr.
Executive Vice President
Address: 600 Congress Avenue
Suite 1400
Austin, Texas 78701
ACCEPTED AND AGREED TO:
_____________________________________________________
Name: R. Steven Hicks
Address: 600 Congress Avenue
Suite 1400
Austin, Texas 78701
<PAGE> 15
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION:
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder _________ shares of Common Stock in payment
of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated:
-------------------, ------
------------------------------------
Note: The above signature should
correspond exactly with the
name on the face of the
attached Warrant or with the
name of the assignee
appearing in the assignment
form below.
<PAGE> 16
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
For Individuals: For Entities:
- --------------------------------- -----------------------------------
Signature Printed Name of Entity
By:
- --------------------------------- -------------------------------
Printed Name Name:
-----------------------
Title:
----------------------
<PAGE> 17
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.35
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL IN
REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY
THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER
ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN REVIEWED OR APPROVED
BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED
AS OF JULY 8, 1997, AS AMENDED, BY AND AMONG THE COMPANY AND THE OTHER PARTIES
LISTED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 1,500,000 Shares of Class A Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING MAY 31, 2003
THIS IS TO CERTIFY THAT, for value received, Paul D. Stone, or
registered assigns as a holder (the "Holder") of this Warrant (the "Warrant")
is entitled to purchase from the Company (as hereinafter defined) at the place
where the Warrant Agency (as hereinafter defined) is located, at the Exercise
Price (as hereinafter defined), 1,500,000 shares (the "Warrant Shares") of
Class A Common Stock, par value $.01 per share (the "Common Stock"), of the
Company, subject to adjustment and upon the terms and conditions as hereinafter
provided.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) the number of shares of Common Stock to
be purchased under the Warrant, (ii) the denominations of the share certificate
or certificates desired, and (iii) the name or names in which such certificates
are to the registered, (c) if the Common Stock to be received upon the exercise
of this Warrant has not been registered under the Securities Act, a written
certification in substantially the form of the Certification attached hereto as
Annex B, and
<PAGE> 2
(d) payment of the Exercise Price with respect to such shares. Such payment
may be made, at the option of the Holder, by cash, money order, certified or
bank cashier's check or wire transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator.
2
<PAGE> 3
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of assignment, and this Warrant shall promptly be canceled. The
Warrant Agency shall not be required to register any transfers if the Holder
fails to furnish to the Company, after a request therefor, an opinion of
counsel (who may be an employee of such Holder) reasonably satisfactory to the
Company that such transfer is exempt from the registration requirements of the
Securities Act and applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which
3
<PAGE> 4
the new Warrants are to be issued, signed by the Holder. Subject to compliance
with Section 2.3 as to any transfer which may be involved in the division, the
Company shall execute and deliver new Warrants in exchange for the Warrant or
Warrants to be divided in accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Exercise.
(a) Except as otherwise provided in Sections 3.2 and 3.3,
the Warrant Shares shall become "Vested Warrant Shares" with respect to 20% of
the Warrant Shares on the first anniversary of the date of this Warrant, and
1/60th of the Warrant Shares shall vest and become Vested Warrant Shares on the
last day of each calendar month thereafter, so that all of the Warrant Shares
shall be vested and become Vested Warrant Shares 60 months after the date of
this Warrant.
(b) Except as otherwise provided in Sections 3.2 and 3.3,
this Warrant shall become exercisable to acquire Vested Warrant Shares at any
time or from time to time after the date on which the average Fair Market Value
of the Common Stock, calculated on a daily basis (when added to any cash
consideration attributable to any prior Capital Reorganization), equals or
exceeds $6.00 per share (the "Exercisability Value") for a period of 180
consecutive days (excluding non-Business Days for purposes of calculating the
average Fair Market Value during such 180-day period) during the period from
(and including) April 1, 1998 through (and including) May 31, 2003. Upon the
completion of a Common Stock Reorganization, the Exercisability Value shall be
adjusted, effective immediately after the record date at which the holders of
shares of Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying the Exercisability
Value in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization.
(c) Notwithstanding clauses (a) and (b), the Warrant
Shares shall become Vested Warrant Shares, and this Warrant shall become
exercisable, immediately preceding the consummation of a Sale of the Company.
4
<PAGE> 5
(d) Except as otherwise provided in Section 3.2, the
unexercised portion of this Warrant, if any, will automatically, and without
notice, terminate and become null and void at 5:00 p.m., Dallas, Texas time, on
the later to occur of May 31, 2003 or the 90th day after this Warrant becomes
exercisable.
3.2 Termination of Employment. Notwithstanding Section 3.1:
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, the Warrant Shares shall become Vested Warrant Shares on the Date of
Termination. If this Warrant has become exercisable on or before the Date of
Termination, then the Holder (or, in the case of the Initial Holder, the
Holder's estate or any person who acquired the right to exercise this Warrant
by bequest or inheritance or otherwise by reason of the Holder's death) may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or
the first anniversary of the Date of Termination, exercise this Warrant with
respect to all or any part of the Vested Warrant Shares; provided, however,
that in no event will the Holder (or, in the case of the Initial Holder, the
Holder's estate or any person who acquired the right to exercise this Warrant
by bequest or inheritance or otherwise by reason of the Holder's death) have
less than 90 days after the Date of Termination to exercise this Warrant. If
this Warrant has not become exercisable on or before the Date of Termination,
then (i) this Warrant shall remain in full force and effect until May 31, 2003
and (ii) if this Warrant becomes exercisable on or before May 31, 2003, then
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise this Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the date on which this Warrant becomes exercisable, exercise
this Warrant with respect to all or any part of the Vested Warrant Shares;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise this Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days to exercise this Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, the Warrant Shares shall become Vested Warrant Shares on the Date
of Termination. If this Warrant has become exercisable on or before the Date
of Termination, then the Holder (or, in the case of the Initial Holder, the
Holder's legal representatives) may, until the earlier to occur of 5:00 p.m.,
Dallas, Texas time, on May 31, 2003 or the first anniversary of the Date of
Termination, exercise this Warrant with respect to all or any part of the
Vested Warrant Shares; provided, however, that in no event will the Holder (or,
in the case of the Initial Holder, the Holder's legal representatives) have
less than 90 days after the Date of Termination to exercise this Warrant. If
this Warrant has not become exercisable on or before the Date of Termination,
then (i) this Warrant shall remain in full force and effect until May 31, 2003
and (ii) if this Warrant becomes exercisable on or before May 31, 2003, then
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, 2003 or the first anniversary of the date on which this
Warrant becomes exercisable, exercise this Warrant with respect to all or any
part of the Vested Warrant Shares; provided, however, that in no event will the
Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days to exercise this Warrant.
(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial
5
<PAGE> 6
Holder's resignation for other than Good Reason, the Holder shall forfeit all
of the Holder's rights under this Warrant, except as to those Warrant Shares
already purchased, and this Warrant shall automatically, and without notice,
terminate and become null and void at 5:00 p.m., Dallas, Texas time, on the
Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, the Warrant
Shares shall become Vested Warrant Shares on the Date of Termination. If this
Warrant has become exercisable on or before the Date of Termination, then the
Holder may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May
31, 2003 or the 90th day after the Date of Termination, exercise this Warrant
with respect to all or any part of the Vested Warrant Shares; provided,
however, that in no event will the Holder have less than 90 days after the Date
of Termination to exercise this Warrant. If this Warrant has not become
exercisable on or before the Date of Termination, then (i) this Warrant shall
remain in full force and effect until May 31, 2003 and (ii) if this Warrant
becomes exercisable on or before May 31, 2003, then the Holder may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the 90th
day after the date on which this Warrant becomes exercisable, exercise this
Warrant with respect to all or any part of the Vested Warrant Shares; provided,
however, that in no event will the Holder have less than 90 days to exercise
this Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, no additional
Warrant Shares shall vest after the Date of Termination. If this Warrant has
become exercisable on or before the Date of Termination, then the Holder may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or
the 30th day after the Date of Termination, exercise this Warrant with respect
to all or any part of the Vested Warrant Shares; provided, however, that in no
event will the Holder have less than 30 days after the Date of Termination to
exercise this Warrant. If this Warrant has not become exercisable on or before
the Date of Termination, then (i) this Warrant shall remain in full force and
effect until May 31, 2003, and (ii) if this Warrant becomes exercisable on or
before May 31, 2003, then the Holder may, until the earlier to occur of 5:00
p.m., Dallas, Texas time, on May 31, 2003 or the 30th day after the date on
which this Warrant becomes exercisable, exercise this Warrant with respect to
all or any part of the Vested Warrant Shares; provided, however, that in no
event will the Holder have less than 30 days to exercise this Warrant.
(f) If, pursuant to Section 3.3, this Warrant shall
terminate earlier than provided for in this Section 3.2, then the provisions of
Section 3.3 shall prevail.
3.3 Termination of Warrant. Notwithstanding any provision of this
Warrant to the contrary, this Warrant shall expire and no longer be exercisable
upon either (a) the consummation of a Sale of the Company or (b) the
consummation of a Capital Reorganization in which (i) the stockholders of the
Company receive only cash consideration for each share of common stock of the
Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the
6
<PAGE> 7
HMC Group. The Company shall give the Holder reasonable prior notice of the
consummation of a Capital Reorganization. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
3.4 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement
dated as of July 8, 1997, as amended, by and among the Company and the other
parties listed therein (the "Stockholders Agreement"). The Company shall keep
a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
3.5 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be adjusted, effective
at such time, to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Common Stock
Reorganization by a fraction, the numerator of which shall be the number of
shares outstanding after giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related
7
<PAGE> 8
persons for the purposes of Section 13(d) of the Exchange Act (any such event
being called a "Capital Reorganization"), then, effective upon the effective
date of such Capital Reorganization, the Holder shall have the right to
purchase, upon exercise of this Warrant, the kind and amount of shares of stock
and other securities and property (including cash) which the Holder would have
owned or have been entitled to receive after such Capital Reorganization if
this Warrant had been exercised immediately prior to such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall
execute and deliver to the Holder an agreement as to the Holder's rights in
accordance with this Section 4.3, providing for subsequent adjustments as
nearly equivalent as may be practicable to the adjustments provided for in this
Article IV. The provisions of this Section 4.3 shall similarly apply to
successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board of Directors of the Company (the "Board"),
fairly protect the purchase rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this
Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable upon
exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made hereunder if
such adjustment would reduce the exercise price to an amount below par value of
the Common Stock, which par value shall initially be $.01 per share of Common
Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
8
<PAGE> 9
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock of the Company is listed or admitted to trading is open for
business or (b) if no class of common stock of the Company is so listed or
admitted to trading, a day on which the New York Stock Exchange is open for
business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation of merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
9
<PAGE> 10
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
"Employment Agreement" means that certain Executive Employment
Agreement dated as of July 1, 1997, as amended, by and between the Company and
the Initial Holder and for certain limited purposes, Capstar Broadcasting
Partners, Inc., a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercisability Value" shall have the meaning set forth in Section
3.1(b).
"Exercise Price" means a per share price of $1.40.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board; provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
"Initial Holder" means Paul D. Stone.
"IPO Offering Price" means the initial public offering price per share
of Common Stock in a Qualified IPO, prior to deducting any underwriters'
discounts and commissions from such offering price.
"Market Price", with respect to any security on any day, means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that for purposes of determining
Fair Market Value as used in Section 3.1(b), "Market Price" means the daily
Closing Price of a share of Common Stock on the date of determination; provided
further, however, that in the event that, in the case of Common Stock, the
Market Price is determined following the announcement by the Company of any
subdivision, combination or reclassification of Common Stock or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the Market Price shall be appropriately adjusted to reflect the current
market price per share equivalent of Common Stock.
10
<PAGE> 11
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO"means a firm commitment underwritten public offering of
Common Stock for cash pursuant to a registration statement under the Securities
Act where the aggregate proceeds to the Company prior to deducting any
underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) the Exercisability
Value or (ii) the greater of (A) the Exercise Price compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that (when added to any cash
consideration attributable to any prior Capital Reorganization) equals or
exceeds the Qualifying Cash Consideration, (ii) a majority of directors of the
purchaser or surviving entity in such Capital Reorganization consists of
persons who are not Continuing Directors, and (iii) such purchaser or surviving
entity is not a member of the HMC Group. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
"Securities Act" shall mean the Securities Act of 1933 and any similar
or successor federal statute, and the rules and regulations of the Securities
and Exchange Commission (or its successor) thereunder, all as the same shall be
in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.4.
"Vested Warrant Shares" shall have the meaning set forth in Section
3.1 (a).
"Warrant Agency" shall have the meaning set forth in Section 2.1.
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<PAGE> 12
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
"Warrant Shares" shall have the meaning set forth in the first
paragraph of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
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<PAGE> 13
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
13
<PAGE> 14
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
-------------------------------------------
William S. Banowsky, Jr.
Executive Vice President
Address: 600 Congress Avenue
Suite 1400
Austin, Texas 78701
ACCEPTED AND AGREED TO:
- -------------------------------------------
Name: Paul D. Stone
Address: 600 Congress Avenue
Suite 1400
Austin, Texas 78701
<PAGE> 15
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION:
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder _________ shares of Common Stock in payment
of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ,
------------ ----
----------------------------------------
Note: The above signature should
correspond exactly with the name
on the face of the attached
Warrant or with the name of the
assignee appearing in the
assignment form below.
<PAGE> 16
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
For Individuals: For Entities:
<TABLE>
<S> <C>
- -------------------------------------------- --------------------------------------------
Signature Printed Name of Entity
By:
- -------------------------------------------- --------------------------------------------
Printed Name Name:
--------------------------------------
Title:
--------------------------------------
</TABLE>
<PAGE> 17
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.36
Draft Date: May 17, 1998
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL IN
REASONABLY ACCEPTABLE FORM AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY
THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER
ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN REVIEWED OR APPROVED
BY ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED
AS OF NOVEMBER 26, 1996, AS AMENDED, BY AND AMONG THE COMPANY AND THE OTHER
PARTIES LISTED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE COMPANY AND WILL
BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: April 1, 1998
WARRANT
To Purchase 1,500,000 Shares of Class A Common Stock
CAPSTAR BROADCASTING CORPORATION
EXPIRING MAY 31, 2003
THIS IS TO CERTIFY THAT, for value received, William S. Banowsky, Jr.,
or registered assigns as a holder (the "Holder") of this Warrant (the
"Warrant") is entitled to purchase from the Company (as hereinafter defined) at
the place where the Warrant Agency (as hereinafter defined) is located, at the
Exercise Price (as hereinafter defined), 1,500,000 shares (the "Warrant
Shares") of Class A Common Stock, par value $.01 per share (the "Common
Stock"), of the Company, subject to adjustment and upon the terms and
conditions as hereinafter provided.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) the number of shares of Common Stock to
be purchased under the Warrant, (ii) the denominations of the share certificate
or certificates desired, and (iii) the name or names in which such certificates
are to the registered, (c) if the Common Stock to be received upon the exercise
of this Warrant has not been registered under the Securities Act, a written
certification in substantially the form of the Certification attached hereto as
Annex B, and
<PAGE> 2
(d) payment of the Exercise Price with respect to such shares. Such payment
may be made, at the option of the Holder, by cash, money order, certified or
bank cashier's check or wire transfer.
The Company shall, as promptly as practicable and in any event within
five Business Days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of shares of Common
Stock for which the Warrant is being exercised, and shall be issued in the name
of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of such shares, as of
the date the aforementioned notice is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes (if any) and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and a new Warrant, except that, if share certificates or a new
Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in reasonably acceptable form and scope reasonably
satisfactory to the Company that registration, qualification or other
such actions are not required under any such laws. The offering of
this security has not been reviewed or approved by any state
securities administrator.
2
<PAGE> 3
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered, in whole
or in part, on such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly executed by the
Holder or his duly authorized agent or attorney, with (unless the Holder is the
original Holder or another institutional investor) signatures guaranteed by a
bank or trust company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon
surrender the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in the
instrument of assignment, and this Warrant shall promptly be canceled. The
Warrant Agency shall not be required to register any transfers if the Holder
fails to furnish to the Company, after a request therefor, an opinion of
counsel (who may be an employee of such Holder) reasonably satisfactory to the
Company that such transfer is exempt from the registration requirements of the
Securities Act and applicable blue sky laws.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which
3
<PAGE> 4
the new Warrants are to be issued, signed by the Holder. Subject to compliance
with Section 2.3 as to any transfer which may be involved in the division, the
Company shall execute and deliver new Warrants in exchange for the Warrant or
Warrants to be divided in accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Exercise.
(a) Except as otherwise provided in Sections 3.2 and 3.3,
the Warrant Shares shall become "Vested Warrant Shares" with respect to 20% of
the Warrant Shares on the first anniversary of the date of this Warrant, and
1/60th of the Warrant Shares shall vest and become Vested Warrant Shares on the
last day of each calendar month thereafter, so that all of the Warrant Shares
shall be vested and become Vested Warrant Shares 60 months after the date of
this Warrant.
(b) Except as otherwise provided in Sections 3.2 and 3.3,
this Warrant shall become exercisable to acquire Vested Warrant Shares at any
time or from time to time after the date on which the average Fair Market Value
of the Common Stock, calculated on a daily basis (when added to any cash
consideration attributable to any prior Capital Reorganization), equals or
exceeds $6.00 per share (the "Exercisability Value") for a period of 180
consecutive days (excluding non-Business Days for purposes of calculating the
average Fair Market Value during such 180-day period) during the period from
(and including) April 1, 1998 through (and including) May 31, 2003. Upon the
completion of a Common Stock Reorganization, the Exercisability Value shall be
adjusted, effective immediately after the record date at which the holders of
shares of Common Stock are determined for purposes of such Common Stock
Reorganization, to a dollar amount determined by multiplying the Exercisability
Value in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization.
(c) Notwithstanding clauses (a) and (b), the Warrant
Shares shall become Vested Warrant Shares, and this Warrant shall become
exercisable, immediately preceding the consummation of a Sale of the Company.
4
<PAGE> 5
(d) Except as otherwise provided in Section 3.2, the
unexercised portion of this Warrant, if any, will automatically, and without
notice, terminate and become null and void at 5:00 p.m., Dallas, Texas time, on
the later to occur of May 31, 2003 or the 90th day after this Warrant becomes
exercisable.
3.2 Termination of Employment. Notwithstanding Section 3.1:
(a) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
death, the Warrant Shares shall become Vested Warrant Shares on the Date of
Termination. If this Warrant has become exercisable on or before the Date of
Termination, then the Holder (or, in the case of the Initial Holder, the
Holder's estate or any person who acquired the right to exercise this Warrant
by bequest or inheritance or otherwise by reason of the Holder's death) may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or
the first anniversary of the Date of Termination, exercise this Warrant with
respect to all or any part of the Vested Warrant Shares; provided, however,
that in no event will the Holder (or, in the case of the Initial Holder, the
Holder's estate or any person who acquired the right to exercise this Warrant
by bequest or inheritance or otherwise by reason of the Holder's death) have
less than 90 days after the Date of Termination to exercise this Warrant. If
this Warrant has not become exercisable on or before the Date of Termination,
then (i) this Warrant shall remain in full force and effect until May 31, 2003
and (ii) if this Warrant becomes exercisable on or before May 31, 2003, then
the Holder (or, in the case of the Initial Holder, the Holder's estate or any
person who acquired the right to exercise this Warrant by bequest or
inheritance or otherwise by reason of the Holder's death) may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the first
anniversary of the date on which this Warrant becomes exercisable, exercise
this Warrant with respect to all or any part of the Vested Warrant Shares;
provided, however, that in no event will the Holder (or, in the case of the
Initial Holder, the Holder's estate or any person who acquired the right to
exercise this Warrant by bequest or inheritance or otherwise by reason of the
Holder's death) have less than 90 days to exercise this Warrant.
(b) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
Disability, the Warrant Shares shall become Vested Warrant Shares on the Date
of Termination. If this Warrant has become exercisable on or before the Date
of Termination, then the Holder (or, in the case of the Initial Holder, the
Holder's legal representatives) may, until the earlier to occur of 5:00 p.m.,
Dallas, Texas time, on May 31, 2003 or the first anniversary of the Date of
Termination, exercise this Warrant with respect to all or any part of the
Vested Warrant Shares; provided, however, that in no event will the Holder (or,
in the case of the Initial Holder, the Holder's legal representatives) have
less than 90 days after the Date of Termination to exercise this Warrant. If
this Warrant has not become exercisable on or before the Date of Termination,
then (i) this Warrant shall remain in full force and effect until May 31, 2003
and (ii) if this Warrant becomes exercisable on or before May 31, 2003, then
the Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) may, until the earlier to occur of 5:00 p.m., Dallas, Texas
time, on May 31, 2003 or the first anniversary of the date on which this
Warrant becomes exercisable, exercise this Warrant with respect to all or any
part of the Vested Warrant Shares; provided, however, that in no event will the
Holder (or, in the case of the Initial Holder, the Holder's legal
representatives) have less than 90 days to exercise this Warrant.
(c) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment for Cause or the Initial
5
<PAGE> 6
Holder's resignation for other than Good Reason, the Holder shall forfeit all
of the Holder's rights under this Warrant, except as to those Warrant Shares
already purchased, and this Warrant shall automatically, and without notice,
terminate and become null and void at 5:00 p.m., Dallas, Texas time, on the
Date of Termination.
(d) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, without a Board Determination, the Warrant
Shares shall become Vested Warrant Shares on the Date of Termination. If this
Warrant has become exercisable on or before the Date of Termination, then the
Holder may, until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May
31, 2003 or the 90th day after the Date of Termination, exercise this Warrant
with respect to all or any part of the Vested Warrant Shares; provided,
however, that in no event will the Holder have less than 90 days after the Date
of Termination to exercise this Warrant. If this Warrant has not become
exercisable on or before the Date of Termination, then (i) this Warrant shall
remain in full force and effect until May 31, 2003 and (ii) if this Warrant
becomes exercisable on or before May 31, 2003, then the Holder may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or the 90th
day after the date on which this Warrant becomes exercisable, exercise this
Warrant with respect to all or any part of the Vested Warrant Shares; provided,
however, that in no event will the Holder have less than 90 days to exercise
this Warrant.
(e) Upon the termination of the Initial Holder's
employment with the Company or any Related Entity due to the Initial Holder's
termination of employment without Cause or the Initial Holder's resignation for
Good Reason and, in either case, with a Board Determination, no additional
Warrant Shares shall vest after the Date of Termination. If this Warrant has
become exercisable on or before the Date of Termination, then the Holder may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on May 31, 2003 or
the 30th day after the Date of Termination, exercise this Warrant with respect
to all or any part of the Vested Warrant Shares; provided, however, that in no
event will the Holder have less than 30 days after the Date of Termination to
exercise this Warrant. If this Warrant has not become exercisable on or before
the Date of Termination, then (i) this Warrant shall remain in full force and
effect until May 31, 2003, and (ii) if this Warrant becomes exercisable on or
before May 31, 2003, then the Holder may, until the earlier to occur of 5:00
p.m., Dallas, Texas time, on May 31, 2003 or the 30th day after the date on
which this Warrant becomes exercisable, exercise this Warrant with respect to
all or any part of the Vested Warrant Shares; provided, however, that in no
event will the Holder have less than 30 days to exercise this Warrant.
(f) If, pursuant to Section 3.3, this Warrant shall
terminate earlier than provided for in this Section 3.2, then the provisions of
Section 3.3 shall prevail.
3.3 Termination of Warrant. Notwithstanding any provision of this
Warrant to the contrary, this Warrant shall expire and no longer be exercisable
upon either (a) the consummation of a Sale of the Company or (b) the
consummation of a Capital Reorganization in which (i) the stockholders of the
Company receive only cash consideration for each share of common stock of the
Company held by such stockholder that is less (when added to any cash
consideration attributable to any prior Capital Reorganization) than the
Qualifying Cash Consideration, (ii) a majority of directors of the purchaser or
surviving entity in such Capital Reorganization consists of persons who are not
Continuing Directors, and (iii) such purchaser or surviving entity is not a
member of the
6
<PAGE> 7
HMC Group. The Company shall give the Holder reasonable prior notice of the
consummation of a Capital Reorganization. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
3.4 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant is subject to a Stockholders Agreement
dated as of November 26, 1996, as amended, by and among the Company and the
other parties listed therein (the "Stockholders Agreement"). The Company shall
keep a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
3.5 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be adjusted, effective
at such time, to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Common Stock
Reorganization by a fraction, the numerator of which shall be the number of
shares outstanding after giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
substantially all of the outstanding equity securities of the Company to any
person or group of related
7
<PAGE> 8
persons for the purposes of Section 13(d) of the Exchange Act (any such event
being called a "Capital Reorganization"), then, effective upon the effective
date of such Capital Reorganization, the Holder shall have the right to
purchase, upon exercise of this Warrant, the kind and amount of shares of stock
and other securities and property (including cash) which the Holder would have
owned or have been entitled to receive after such Capital Reorganization if
this Warrant had been exercised immediately prior to such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall
execute and deliver to the Holder an agreement as to the Holder's rights in
accordance with this Section 4.3, providing for subsequent adjustments as
nearly equivalent as may be practicable to the adjustments provided for in this
Article IV. The provisions of this Section 4.3 shall similarly apply to
successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board of Directors of the Company (the "Board"),
fairly protect the purchase rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules. (a) Any adjustments pursuant to this
Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this
Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable upon
exercise of this Warrant or in the Exercise Price shall be made hereunder
unless such adjustment increases or decreases such amount or price by one
percent or more, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made hereunder if
such adjustment would reduce the exercise price to an amount below par value of
the Common Stock, which par value shall initially be $.01 per share of Common
Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
8
<PAGE> 9
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Affiliate", means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
"Board Determination" shall have the meaning set forth in Section 3(b)
of the Employment Agreement.
"Business Day" shall mean (a) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock of the Company is listed or admitted to trading is open for
business or (b) if no class of common stock of the Company is so listed or
admitted to trading, a day on which the New York Stock Exchange is open for
business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Cause" shall have the meaning set fort in Section 3(b) of the
Employment Agreement.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall mean Capstar Broadcasting Corporation, a Delaware
corporation, or any entity which is the continuing corporation of a
consolidation or merger to which the Company is a party or to which the Company
sells or conveys the property of the Company as an entirety or substantially as
an entirety or substantially as an entirety.
"Continuing Director" means, as of the date of determination, any
person who (i) was a member of the Board immediately prior to the date of
determination or (ii) is a designee or member of the HMC Group.
"Date of Termination" shall have the meaning set forth in Section 3(e)
of the Employment Agreement.
"Disability" shall have the meaning set forth in Section 3(a) of the
Employment Agreement.
9
<PAGE> 10
"Employment Agreement" means that certain Executive Employment
Agreement dated as of July 1, 1997, as amended, by and between the Company and
the Initial Holder and for certain limited purposes, Capstar Broadcasting
Partners, Inc., a copy of which is attached as Annex C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercisability Value" shall have the meaning set forth in Section
3.1(b).
"Exercise Price" means a per share price of $1.40.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board; provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
"Good Reason" shall have the meaning set forth in Section 3(c) of the
Employment Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"HMC Group" means HMTF and its Affiliates and its and their respective
officers, directors, and employees (and members of their respective families
(other than R. Steven Hicks) and trusts for the primary benefit of such family
members).
"HMTF" means Hicks, Muse, Tate & Furst Incorporated.
"Initial Holder" means William S. Banowsky, Jr.
"IPO Offering Price" means the initial public offering price per share
of Common Stock in a Qualified IPO, prior to deducting any underwriters'
discounts and commissions from such offering price.
"Market Price", with respect to any security on any day, means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that for purposes of determining
Fair Market Value as used in Section 3.1(b), "Market Price" means the daily
Closing Price of a share of Common Stock on the date of determination; provided
further, however, that in the event that, in the case of Common Stock, the
Market Price is determined following the announcement by the Company of any
subdivision, combination or reclassification of Common Stock or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the Market Price shall be appropriately adjusted to reflect the current
market price per share equivalent of Common Stock.
"NASD" means The National Association of Securities Dealers, Inc.
10
<PAGE> 11
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Qualified IPO" means a firm commitment underwritten public offering
of Common Stock for cash pursuant to a registration statement under the
Securities Act where the aggregate proceeds to the Company prior to deducting
any underwriters' discounts and commissions from such offering and any similar
prior public offerings exceed $200 million.
"Qualifying Cash Consideration" means cash consideration for each
share of common stock of the Company received pursuant to a Capital
Reorganization that equals or exceeds the lesser of (i) the Exercisability
Value or (ii) the greater of (A) the Exercise Price compounded at an annual
rate of 30% for the period from April 3, 1998 to the end of the calendar month
immediately preceding the consummation of such Capital Reorganization or (B) a
per share amount equal to the IPO Offering Price compounded at an annual rate
of 20% for the period from the date on which a Qualified IPO is consummated to
the end of the calendar month immediately preceding the consummation of such
Capital Reorganization.
"Related Entity" means any direct or indirect subsidiary of the
Company now existing or hereafter formed or acquired, any entity that directly
or indirectly owns the outstanding capital stock of the Company, and any entity
that issues equity securities to or at the direction of the Holder upon
exercise of this Warrant.
"Sale of the Company" means a Capital Reorganization in which (i) the
stockholders of the Company receive cash consideration for each share of common
stock of the Company held by such stockholder that (when added to any cash
consideration attributable to any prior Capital Reorganization) equals or
exceeds the Qualifying Cash Consideration, (ii) a majority of directors of the
purchaser or surviving entity in such Capital Reorganization consists of
persons who are not Continuing Directors, and (iii) such purchaser or surviving
entity is not a member of the HMC Group. Appropriate per share adjustments
shall be made to take into account, on a comparable per share basis, any cash
consideration attributable to any prior Capital Reorganization.
"Securities Act" shall mean the Securities Act of 1933 and any similar
or successor federal statute, and the rules and regulations of the Securities
and Exchange Commission (or its successor) thereunder, all as the same shall be
in effect at the time.
"Stockholders Agreement" shall have the meaning set forth in Section
3.4.
"Vested Warrant Shares" shall have the meaning set forth in Section
3.1 (a).
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term Warrants shall refer to the Warrants resulting in any
subdivision of this Warrant.
11
<PAGE> 12
"Warrant Shares" shall have the meaning set forth in the first
paragraph of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders, upon each future Holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
12
<PAGE> 13
6.7 Employment Agreement. In the event of any conflict or
inconsistency between the terms and conditions of this Warrant and the terms
and conditions of the Employment Agreement, the terms and conditions of this
Warrant shall be controlling.
[Remainder of page intentionally left blank]
13
<PAGE> 14
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized,
effective as of the day and year first above written.
CAPSTAR BROADCASTING CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address: 600 Congress Avenue
Suite 1400
Austin, Texas 78701
ACCEPTED AND AGREED TO:
- -----------------------------
Name: William S. Banowsky, Jr.
Address: 600 Congress Avenue
Suite 1400
Austin, Texas 78701
<PAGE> 15
ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO CAPSTAR BROADCASTING CORPORATION:
The undersigned hereby irrevocably elects to exercise the attached
Warrant and to purchase thereunder _________ shares of Common Stock in payment
of an Exercise Price in an amount equal to $__________.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ,
------------------- ------
--------------------------------------
Note: The above signature should
correspond exactly with the
name on the face of the
attached Warrant or with the
name of the assignee appearing
in the assignment form below.
<PAGE> 16
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Capstar Broadcasting Corporation
that he, she or it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, _____.
For Individuals: For Entities:
- --------------------------------- ---------------------------------
Signature Printed Name of Entity
By:
- --------------------------------- ------------------------------
Printed Name Name:
----------------------
Title:
---------------------
<PAGE> 17
ANNEX C
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.37
================================================================================
ASSET EXCHANGE AGREEMENT
AMONG
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES,
CHANCELLOR MEDIA LICENSEE COMPANY
AND
SFXTX LIMITED PARTNERSHIP
DATED AS OF MAY __, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. EXCHANGE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Exchange of Personal Property, Records and Owned Real Property. . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Exchange of Real Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3. Exchange of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4. Exchange of Station Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5. Exchange of Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6. Cash Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7. Allocation of Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9. Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SFX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1. Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2. Authorization of Agreement; No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3. Qualification as Assignor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4. Absence of Conflicting Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.5. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.7. Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF CHANCELLOR AND CHANCELLOR LICENSEE . . . . . . . . . . . . . . . . . . 17
4.1. Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Post-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI. CONDITIONS TO THE PARTIES' OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. Long Island/Jacksonville Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Capstar/SFX Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4. Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3. Documents to be Delivered by Chancellor and Chancellor Licensee. . . . . . . . . . . . . . . . . . . . . . . 22
7.4. Documents to be Delivered by SFX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII. TRANSFER TAXES; FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1. Transfer Taxes and Similar Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1. Indemnification by Chancellor and Chancellor Licensee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2. Indemnification by SFX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
9.3. Survival of Covenants, Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4. Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X. OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2. Benefit and Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3. No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4. Nature of Representations and Warranties: Entire Agreement, Amendments, etc. . . . . . . . . . . . . . . . . 29
10.5. Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.7. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.8. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
iii
<PAGE> 5
SCHEDULES
<TABLE>
<S> <C>
1.1 Houston Contracts
1.2 Houston Intellectual Property
1.3 Houston Personal Property
1.4 Houston Real Property Leases
1.5 Houston Station Licenses
1.6 Jacksonville Contracts
1.7 Jacksonville Intellectual Property
1.8 Jacksonville Owned Real Property
1.9 Jacksonville Personal Property
1.10 Jacksonville Real Property Leases
1.11 Jacksonville Station Licenses
</TABLE>
vi
<PAGE> 6
ASSET EXCHANGE AGREEMENT
ASSET EXCHANGE AGREEMENT, dated as of May ___, 1998, among
Chancellor Media Corporation of Los Angeles, a Delaware corporation
("Chancellor"), Chancellor Media Licensee Company, a Delaware corporation
("Chancellor Licensee") and SFXTX Limited Partnership, a Delaware limited
partnership ("SFX").
WHEREAS, Chancellor and Capstar Broadcasting Corporation, a
Delaware corporation ("Capstar") are parties to an agreement, dated February
20, 1998 (as such agreement may be amended from time to time, the "Master
Agreement"), under which Chancellor and Capstar agreed to exchange, or to cause
their subsidiaries to exchange, certain radio stations pursuant to the terms
and conditions contained in the Master Agreement;
WHEREAS, as part of the Master Agreement, the parties have
agreed to exchange the Jacksonville Stations (as defined below) plus cash in
the amount of Ninety Million Two Hundred and Fifty Thousand Dollars
($90,250,000), for the Houston Station (as defined below);
WHEREAS, Chancellor owns all of the assets used in, held for
use in connection with or necessary for the conduct of the business or
operations of radio stations WAPE-FM and WFYV(FM) (the "Jacksonville
Stations");
WHEREAS, Chancellor Licensee holds the licenses, permits and
authorizations issued by the Federal Communications Commission (the "FCC") for
the operation of the Jacksonville Stations;
WHEREAS, SFX owns all of the assets used in, held for use in
connection with or necessary for the conduct of the business or operations, and
holds the licenses, permits and authorization issued by the FCC for the
operation, of radio station KODA(FM), Houston (the "Houston Station");
WHEREAS, Chancellor and Chancellor Licensee, on the one hand,
and SFX on the other, desire to contemporaneously exchange certain property and
assets used in, held for use in connection with or necessary for the conduct of
the business or operations of the Jacksonville Stations and the Houston Station
(collectively, the "Stations"); and
WHEREAS, Chancellor and Chancellor Licensee, on the one hand,
and SFX on the other, intend to transfer the Stations in a transaction that
will qualify to the maximum extent permissible as a multiple asset "like-kind
exchange" under Section 1031 of the Code (as defined below), and each of
Chancellor, Chancellor Licensee and SFX are willing to take such steps as are
necessary to enable the transactions contemplated hereby to so qualify.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
<PAGE> 7
ARTICLE I.
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms
when used herein shall have the meanings assigned to them below.
1.1. "Accounts Receivable" shall mean the rights to cash
payments for the sale of advertising time by the Stations prior to the Cut-Off
Time.
1.2. "Affiliate" shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Person specified.
1.3. "Agreement" shall mean this Asset Exchange Agreement.
1.4. "Business Day" shall mean every day of the week
excluding Saturdays, Sundays and Federal holidays.
1.5. "Closing Date" shall mean the date of this Agreement.
1.6. "Code" shall mean the Internal Revenue Code of 1986,
as amended, together with all regulations and rulings issued thereunder by any
governmental authority.
2
<PAGE> 8
1.7. "Contracts" shall mean the Jacksonville Contracts and
the Houston Contracts.
1.8. "Cut-Off Time" shall mean 12:01 a.m., local time, on
the Closing Date.
1.9. "FCC Applications" shall mean the Jacksonville FCC
Applications and the Houston FCC Application.
1.10. "FCC Consents" shall mean the action by the FCC
granting each of the FCC Applications.
1.11. "Houston Assets" shall mean the Houston Contracts,
the Houston Intellectual Property, the Houston Personal Property, the Houston
Real Property Leases, the Houston Records and the Houston Station Licenses.
1.12. "Houston Contracts" shall mean all contracts,
agreements, purchase orders and leases of whatever nature, whether written or
oral, of SFX, used in, held for use in connection with or necessary for the
conduct of the business or operations of the Houston Station or the Houston
Assets, including, without limitation, employment contracts and other
contracts, agreements, purchase orders and leases identified on Schedule 1.1,
but excluding the Houston Real Property Leases.
3
<PAGE> 9
1.13. "Houston FCC Application" shall mean the application
or applications that SFX and Chancellor have filed with the FCC requesting its
consent to the assignment of the Houston Station Licenses from SFX to
Chancellor.
1.14. "Houston Intellectual Property" shall mean all SFX's
right, title and interest in and to the United States and foreign trademarks,
service marks, trade names, trade dress, copyrights, and similar rights,
including registrations and applications to register or renew the registration
of any of the foregoing, United States and foreign letters patent and patent
applications, and inventions, processes, designs, formulas, trade secrets,
jingles, know-how, confidential business and technical information, computer
software, data and documentation, and all similar intangible property rights,
tangible embodiments of any of the foregoing (in any medium including
electronic media), and licenses or permits to use any of the foregoing, used
in, held for use in connection with or necessary for the conduct of the
business or operations of the Houston Station or the Houston Assets, including,
without limitation, all intellectual property identified on Schedule 1.2.
1.15. "Houston Personal Property" shall mean all equipment,
office furniture and fixtures, office materials and supplies, inventory, spare
parts and other tangible personal property owned or leased by SFX used in, held
for use in connection with or necessary for the conduct of the business or
operations of the Houston Station or the Houston Assets including, without
limitation, all of those items identified on Schedule 1.3.
1.16. "Houston Real Property Leases" shall mean all of
SFX's leases, subleases, licenses and occupancy agreements, including any
amendments thereto, relating to real property used in, held for use in
connection with or necessary for the conduct of the business or operations of
the Houston Station or the Houston Assets, including, without limitation, those
items identified on Schedule 1.4, together with all easements and other
appurtenances for the benefit thereof.
1.17. "Houston Records" shall mean all files, records
(including but not limited to copies of the general ledger and accounts
4
<PAGE> 10
receivable records), logs, program materials, programs, lists, music libraries,
public inspection files that relate to the Houston Station and all proprietary
information and data, maps, plans, diagrams, blueprints, schematics and
technical drawings, engineering records, and FCC applications and filings
maintained with respect to the Houston Station pursuant to the rules and
regulations of the FCC.
1.18. "Houston Required Consents" shall mean any rights,
privileges and obligations under any Houston Contract identified as "Material"
on the Schedules to this Agreement, to be assigned pursuant to this Agreement,
that are not capable of being assigned without the consent, approval or waiver
of a third person or entity.
1.19. "Houston Station Licenses" shall mean the licenses,
permits and other authorizations issued by the FCC, the Federal Aviation
Administration (the "FAA") and any other federal, state or local governmental
or regulatory authorities in connection with the business or operations of the
Houston Station or the Houston Assets including, without limitation, the
licenses, permits and other authorizations identified on Schedule 1.5.
1.20. "HSRA" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations adopted thereunder.
1.21. "Jacksonville Assets" shall mean the Jacksonville
Contracts, the Jacksonville Intellectual Property, the Jacksonville Personal
Property, the Jacksonville Owned Real Property, the Jacksonville Real Property
Leases, the Jacksonville Records and the Jacksonville Station Licenses.
1.22. "Jacksonville Contracts" shall mean all contracts,
agreements, purchase orders and leases of whatever nature, whether written or
oral, of Chancellor, used in, held for use in connection with or necessary for
the conduct of the
5
<PAGE> 11
business or operations of the Jacksonville Stations or the Jacksonville Assets,
including, without limitation, employment contracts and other contracts,
agreements, purchase orders and leases identified on Schedule 1.6, but
excluding the Jacksonville Real Property Leases.
1.23. "Jacksonville FCC Applications" shall mean the
application or applications that Chancellor and SFX have filed with the FCC
requesting its consent to the assignment of the Jacksonville Stations Licenses
from Chancellor to SFX.
1.24. "Jacksonville Intellectual Property" shall mean all
of Chancellor's right, title and interest in and to the United States and
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, including registrations and applications to register or renew
the registration of any of the foregoing, United States and foreign letters
patent and patent applications, and inventions, processes, designs, formulas,
trade secrets, jingles, know-how, confidential business and technical
information, computer software, data and documentation, and all similar
intangible property rights, tangible embodiments of any of the foregoing (in
any medium including electronic media), and licenses or permits to use any of
the foregoing, used in, held for use in connection with or necessary for the
conduct of the business or operations of the Jacksonville Stations or the
Jacksonville Assets including, without limitation, all intellectual property
identified on Schedule 1.7.
1.25. "Jacksonville LMA" shall mean the Local Marketing
Agreement, dated July 1, 1996, as amended, between Chancellor Radio
Broadcasting Company ("CRBC") and SFX Broadcasting, Inc. ("SFX Broadcasting"),
providing for the sale of substantially all of the programming time on the
Jacksonville Stations from CRBC to SFX Broadcasting.
1.26. "Jacksonville Owned Real Property" shall mean all
real property and interests in real property owned by Chancellor and used in,
held for use in connection with, necessary for the conduct of or otherwise
material to, the business or operations of the Jacksonville Stations or the
Jacksonville Assets, together with all easements and other appurtenances for
the benefit thereof, all of which is identified on Schedule 1.8.
6
<PAGE> 12
1.27. "Jacksonville Personal Property" shall mean all
equipment, office furniture and fixtures, office materials and supplies,
inventory, spare parts and other tangible personal property owned or leased by
Chancellor used in, held for use in connection with or necessary for the
conduct of the business or operations of the Jacksonville Stations or the
Jacksonville Assets, including, without limitation, all of those items
identified on Schedule 1.9.
1.28. "Jacksonville Real Property Leases" shall mean all of
Chancellor's leases, subleases, licenses and occupancy agreements, including
any amendments thereto, relating to real property used in, held for use in
connection with or necessary for the conduct of the business or operations of
the Jacksonville Stations or the Jacksonville Assets, including, without
limitation, those items identified on Schedule 1.10, together with all
easements and other appurtenances for the benefit thereof.
1.29. "Jacksonville Records" shall mean all files, records
(including but not limited to copies of the general ledger and accounts
receivable records), logs, program materials, programs, lists, music libraries,
public inspection files that relate solely to the Jacksonville Stations and all
proprietary information and data, maps, plans, diagrams, blueprints, schematics
and technical drawings, engineering records, and FCC applications and filings
maintained solely with respect to the Jacksonville Stations pursuant to the
rules and regulations of the FCC.
1.30. "Jacksonville Required Consents" shall mean any
rights, privileges and obligations under any Jacksonville Contract identified
as "Material" on the Schedules to this Agreement, to be assigned pursuant to
this Agreement, that are not capable of being assigned without the consent,
approval or waiver of a third person or entity.
7
<PAGE> 13
1.31. "Jacksonville Station Licenses" shall mean the
licenses, permits and other authorizations issued by the FCC, the FAA and any
other federal, state or local governmental or regulatory authorities in
connection with the business or operations of the Jacksonville Stations or the
Jacksonville Assets including without limitation, the licenses, permits and
other authorizations identified on Schedule 1.11.
1.32. "Liens" shall mean all debts, liens, charges,
security interests, mortgages, pledges, judgments, trusts, adverse claims,
liabilities, encumbrances and other impairments of title.
1.33. "Permitted Liens" shall mean (i) statutory Liens for
current Taxes not yet due and payable, or being contested in good faith by
appropriate proceedings, (ii) mechanics', carriers', workers', repairers', and
other similar Liens imposed by law arising or incurred in the ordinary course
of business for obligations which are not overdue for a period of more than 90
days or which are being contested in good faith by appropriate proceedings,
(iii) in the case of leases of vehicles, rolling stock, and other personal
property, encumbrances, which do not, individually or in the aggregate,
materially impair the operation of the business at the facility at which such
leased equipment or other personal property is located, (iv) liens on leases of
real property arising from the provisions of such leases, including, in
relation to leased real property, any agreements and/or conditions imposed on
the issuance of land use permits, zoning, business licenses, use permits, or
other entitlements of various types issued by any governmental entity,
necessary or beneficial to the continued use and occupancy of the Houston
Assets or the Jacksonville Assets, as applicable, or the continuation of the
operation of any Station, (v) pledges or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance
and other social security legislation, (vi) unviolated zoning regulations and
restrictive covenants and easements of record which do not detract from the
value of the Houston Real Property or the Jacksonville Real Property, as
applicable, and do not materially and adversely affect, impair or interfere
with the use of any property affected thereby, and (vii) public utility
easements of record, in customary form, to serve the Houston Real Property or
the Jacksonville Real Property, as applicable.
1.34. "Person" shall mean an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
8
<PAGE> 14
1.35. "Proration Items" shall mean all revenues, refunds,
deposits and prepaid expenses of the Stations and any power and utility
charges, business and license fees (including retroactive adjustments thereof),
sales and service charges, commissions, special assessments, prepaid rental
payments, real estate and other property taxes and assessments with respect to
real property, prepaid cash time sales agreements, program license fees,
broadcast rights fees, accrued vacation, unused sick leave and other similar
prepaid and deferred items and any other operating expenses incurred in the
ordinary course of business.
1.36. "Real Property Leases" shall mean the Jacksonville
Real Property Leases and the Houston Real Property Leases.
1.37. "Station Licenses" shall mean the Jacksonville
Station Licenses and the Houston Station Licenses.
1.38. "Tax" shall mean any federal, state, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, unincorporated business, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp,
premium, excise, customs duties, severance, environmental (including taxes
under Section 59A of the Code), real property, personal property, ad valorem,
occupancy, license, occupation, employment, payroll, social security,
disability, unemployment, workers' compensation, withholding, estimated or
similar tax, duty, fee, assessment or other governmental charge or deficiencies
thereof (including all interest and penalties thereon and additions thereto).
1.39. Additional Defined Terms. As used herein, the
following terms shall have the meanings defined in the introduction, recitals
or section indicated below:
9
<PAGE> 15
<TABLE>
<S> <C>
Appraisals Section 2.7(a)
Capstar/SFX Merger Section 6.2
Cash Consideration Section 2.6
Chancellor Indemnitees Section 9.2(a)
Closing Section 7.1
FCC Recitals
Final Proration Amount Section 7.2(b)
Houston Accounts Receivable Section 5.2(b)
Houston Schedule of Accounts Receivable Section 5.2(b)
Houston Station Recitals
Indemnified Party Section 9.4
Indemnifying Party Section 9.4
Jacksonville Stations Recitals
Long Island/Jacksonville Exchange Agreement Section 6.1(a)
Losses Section 9.1(a)
Master Agreement Recitals
Proration Amount Section 7.2(a)
Section 1031 Schedule Section 2.7(b)
SFX Indemnitees Section 9.1(a)
Stations Recitals
</TABLE>
ARTICLE II.
EXCHANGE OF ASSETS
2.1. Exchange of Personal Property, Records and Owned Real
Property. Concurrently with the execution of this Agreement, (i) Chancellor
shall assign, transfer, convey and deliver or cause to be assigned,
transferred, conveyed or delivered to SFX the Jacksonville Personal Property,
the Jacksonville Records and the Jacksonville Owned Real Property and (ii) SFX
shall assign, transfer, convey and deliver or cause to be assigned,
transferred, conveyed or delivered to Chancellor the Houston Personal Property,
the Houston Records and the Houston Owned Real Property.
2.2. Exchange of Real Property Leases. Concurrently with
the execution of this Agreement, (a) Chancellor shall assign or cause to be
assigned to SFX all of its rights, privileges and obligations under the
Jacksonville Real Property Leases and (b) SFX shall assign or cause to be
assigned to Chancellor all of its rights, privileges and obligations under the
Houston Real Property Leases.
10
<PAGE> 16
2.3. Exchange of Contracts. (a) Subject to (b) and (c)
below, concurrently with the execution of this Agreement, (i) Chancellor shall
assign or cause to be assigned to SFX all of its rights, privileges and
obligations under the Jacksonville Contracts and (ii) SFX shall assign or cause
to be assigned to Chancellor all of its rights, privileges and obligations
under the Houston Contracts.
(b) With respect to any consents, approvals and
waivers required for the assignment of the rights, privileges and obligations
under the Houston Contracts which have not been received prior to the date
hereof, SFX shall use commercially reasonable efforts to obtain such consents,
approvals and waivers after the Closing Date. During the period between the
Closing Date and the date that SFX obtains such consent, SFX shall act as
Chancellor's agent in connection with such contract and the parties shall
cooperate to cause Chancellor to receive the benefit of the rights and
privileges under such contract in exchange for performance by Chancellor of all
of SFX's obligations under such contract (including but not limited to the
payment to SFX of all amounts due under the contract on and after the Cut-Off
Time for services provided by SFX).
(c) With respect to any consents, approvals and
waivers required for the assignment of the rights, privileges and obligations
under the Jacksonville Contracts which have not been received prior to the date
hereof, Chancellor shall use commercially reasonable efforts to obtain such
consents, approvals and waivers after the Closing Date. During the period
between the Closing Date and the date that Chancellor obtains such consent,
Chancellor shall act as SFX's agent in connection with such contract and the
parties shall cooperate to cause SFX to receive the benefit of the rights and
privileges under such contract in exchange for performance by SFX of all of
Chancellor's obligations under such contract (including but not limited to the
payment to Chancellor of all amounts due under the contract on and after the
Cut-Off Time for services provided by Chancellor).
2.4. Exchange of Station Licenses. Concurrently with the
execution of this Agreement, (a) Chancellor and Chancellor Licensee shall
assign or cause to be assigned to SFX all of their right, title and interest in
and to the Jacksonville Station Licenses, and (b) SFX shall assign or cause to
be assigned to Chancellor and Chancellor Licensee all of SFX's right, title and
interest in and to the Houston Station Licenses.
11
<PAGE> 17
2.5. Exchange of Intellectual Property. Concurrently with
the execution of this Agreement, (a) Chancellor shall assign or cause to be
assigned to SFX the Jacksonville Intellectual Property and (b) SFX shall assign
or cause to be assigned to Chancellor the Houston Intellectual Property.
2.6. Cash Payment. As additional consideration for the
exchange of the Houston Assets for the Jacksonville Assets, Chancellor is
paying an aggregate amount of Ninety Million Two Hundred and Fifty Thousand
Dollars ($90,250,000) to SFX at Closing (the "Cash Consideration") by wire
transfer of immediately available funds to a Qualified Intermediary as defined
in Treas. Reg. Section 1.1031(k)-1(g)(4).
2.7. Allocation of Values. (a) Chancellor, Chancellor
Licensee and SFX agree that the fair market value of all the assets included in
the Houston Assets is One Hundred and Forty-Three Million Two Hundred and Fifty
Thousand Dollars ($143,250,000) and that the fair market value of all of the
assets included in the Jacksonville Assets is Fifty-Three Million Dollars
($53,000,000). The fair market value of the Houston Assets and the
Jacksonville Assets shall be allocated on the basis of appraisals (the
"Appraisals") to be prepared by Broadcast Investment Analysts, whose fees and
expenses shall be borne equally by Chancellor and SFX. The parties shall
direct Broadcast Investment Analysts to deliver the Appraisals promptly after
the execution hereof and to set forth in the Appraisals the fair market value
of each asset included in the Houston Assets and Jacksonville Assets.
(b) Within 30 days of the receipt of the
Appraisals, Chancellor and SFX shall prepare a schedule (the "Section 1031
Schedule") that sets forth the "exchange groups" and "residual groups" (as each
quoted term is defined by Treas. Reg. 1.1031(j)), together with each asset
included in the Houston and Jacksonville Assets that belongs to the relevant
exchange group or residual group. Chancellor and SFX shall cooperate in good
faith to resolve any issues relating to the Section 1031 Schedule in order to
agree on a single final Section 1031 Schedule.
(c) Chancellor and Chancellor Licensee, as
necessary, shall prepare IRS Form 8594 and IRS Form 8824 reflecting the fair
market value of the Assets they transferred and received as determined in
accordance with the above provisions and shall forward such forms to SFX within
thirty (30) days after receipt of the Appraisals. SFX shall prepare IRS Form
8594 and IRS Form 8824 reflecting the fair market value of the Assets it
transferred and received as determined in accordance with the above provisions
and shall forward such forms to Chancellor and Chancellor Licensee within
thirty (30) days after receipt of the Appraisals. Each of Chancellor,
Chancellor Licensee and SFX, as necessary, shall file with their respective
federal income tax returns, for the tax year in which the Closing occurs, IRS
Form 8594 and IRS Form 8824 as prepared in accordance
12
<PAGE> 18
with the foregoing. Each of Chancellor, Chancellor Licensee and SFX, as
necessary, shall deliver to the other parties hereto a copy of the IRS Form
8594 and IRS Form 8824 as filed with their respective federal income tax return
within thirty days of the filing of such return. Chancellor, Chancellor
Licensee and SFX hereto hereby covenant and agree with each other that they
will not take a position on any income tax return that is in any way
inconsistent with the terms of this Section 2.7.
(d) Notwithstanding any other provision of this
Agreement, the provisions of this Section 2.7 shall survive the Closing without
limitation.
2.8. Excluded Assets. (a) Notwithstanding anything to
the contrary set forth herein, the Jacksonville Assets shall not include the
following:
(i) all books and records related solely
to internal corporate/partnership matters and any
other books and records not related to the business
or operations of the Jacksonville Stations and any
books and records that Chancellor is required by law
to retain, all general ledger and accounts receivable
records, and all payables records and invoices,
provided that, at SFX's request, Chancellor shall
provide SFX, at SFX's expense, with copies of such
records covering the period that Chancellor Licensee
was licensee of the Jacksonville Stations;
(ii) all books, records, and other
intangible assets related solely to Chancellor's and
Chancellor Licensee's internal corporate matters and
not related to the operation of the Jacksonville
Stations;
(iii) all claims, rights, and interest in
and to any refunds for federal, state, or local
franchise, income, or other Taxes or fees of any
nature whatsoever relating to Taxes and fees for
which Chancellor or Chancellor Licensee is the
responsible party;
(iv) Chancellor's cash on hand as of the
Cut-Off Time and all other cash in any bank account
of Chancellor; any and all cash equivalents,
certificates of deposit, bonds, repurchase
agreements, letters of credit, marketable securities,
or other similar items;
(v) all insurance policies;
13
<PAGE> 19
(vi) all employee plans of Chancellor
related to the Jacksonville Stations, including all
trusts and other funding arrangements and the assets
and liabilities;
(vii) the rights of Chancellor under this
Agreement or any other agreement executed in
connection herewith; and
(viii) the capital stock of any subsidiary
of Chancellor.
(b) Notwithstanding anything to the contrary set
forth herein, the Houston Assets shall not include the following:
(i) all Accounts Receivable;
(ii) all books and records related solely
to internal corporate/partnership matters and any
other books and records not related to the business
or operations of the Houston Stations and any books
and records that SFX is required by law to retain,
all general ledger and accounts receivable records
and all payables records and invoices, provided that,
at Chancellor's request, SFX shall provide
Chancellor, at Chancellor's expense, with copies of
such records covering the period that SFX was
licensee of the Houston Station;
(iii) all books, records, and other
intangible assets related solely to SFX's internal
corporate matters and not related to the operation of
the Houston Station;
(iv) all claims, rights, and interest in
and to any refunds for federal, state, or local
franchise, income, or other Taxes or fees of any
nature whatsoever relating to Taxes and fees for
which SFX is the responsible party;
(v) SFX's cash on hand as of the Cut-Off
Time and all other cash in any bank account of SFX,
any and all cash equivalents, certificates of
deposit, bonds, repurchase agreements, letters of
credit, marketable securities, or other similar
items;
(vi) all insurance policies;
(vii) all employee plans of SFX related to
the Houston Station, including all trusts and other
funding arrangements and the assets and liabilities
thereof;
14
<PAGE> 20
(viii) the rights of SFX under this
Agreement or any other agreement executed in
connection herewith; and
(ix) the capital stock of any subsidiary
of SFX.
2.9. Assumption of Liabilities. (a) Chancellor shall
not assume or undertake to pay, satisfy or discharge any liabilities,
obligations, commitments or responsibilities of SFX except for those arising
under Houston Contracts and Houston Real Property Leases assumed by Chancellor
under this Agreement and then, with respect to liabilities, obligations,
commitments or responsibilities under any such Houston Contract or Houston Real
Property Lease, only those liabilities, obligations, commitments and
responsibilities accruing after and relating exclusively to the operation of
the Houston Station after the date on which such Houston Contract or Houston
Real Property Lease was assumed by Chancellor.
(b) SFX shall not assume or undertake to pay,
satisfy or discharge any liabilities, obligations, commitments or
responsibilities of Chancellor except for those arising under Jacksonville
Contracts or Jacksonville Real Property Leases assumed by SFX under this
Agreement and then, with respect to liabilities, obligations, commitments or
responsibilities under any such Jacksonville Contract or Jacksonville Real
Property Lease, only those liabilities, obligations, commitments and
responsibilities accruing after and relating exclusively to the operation of
the Jacksonville Stations after the date on which such Jacksonville Contract or
Jacksonville Real Property Lease was assumed by SFX.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SFX
SFX represents and warrants to Chancellor and Chancellor
Licensee as follows:
3.1. Organization and Standing. SFX is a limited
partnership duly formed, validly existing and in good standing under the laws
of the State of Delaware, is duly qualified to do business in, and is in good
standing in each jurisdiction where such qualification is necessary except for
those jurisdictions where the failure to be so qualified could not,
individually or in the aggregate, have a material adverse effect. SFX has all
necessary organizational power and authority to own, lease and operate the
Houston Assets and to carry on the business and operations of the Houston
Station as now conducted and as proposed to be conducted by it between the date
hereof and the Closing Date.
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3.2. Authorization of Agreement; No Breach. SFX has all
necessary organizational power and authority to execute, deliver and perform
this Agreement and such other agreements as are necessary to consummate the
transactions contemplated hereby. Subject to the receipt of the consents and
approvals required elsewhere herein, this Agreement constitutes the legally
valid and binding obligation of SFX, enforceable against SFX in accordance with
its terms, except as such enforceability may be limited by bankruptcy and laws
affecting the enforcement of creditors' rights generally or equitable
principles. Assuming that said consents and approvals are obtained, neither
such execution, delivery and performance nor compliance by SFX with the terms
and provisions hereof will conflict with or result in a breach of any of the
terms, conditions or provisions of the organizational documents of SFX or any
material judgment, order injunction, decree, regulation or ruling of any court
or any other governmental authority to which SFX is subject or any material
agreement or contract to which SFX is a party or to which SFX is subject, or
constitute a material default thereunder.
3.3. Qualification as Assignor. No facts exist which,
under the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify SFX as an assignor of the FCC Licenses
to be assigned to Chancellor Licensee hereunder.
3.4. Absence of Conflicting Orders. SFX is not subject to
any judgment, award, order, writ, injunction, arbitration decision or decree
which prohibits or prevents the performance of this Agreement or the
consummation of any transaction contemplated under this Agreement, and there is
no litigation, administrative action, arbitration, proceeding or investigation
pending, or to SFX's knowledge, threatened, against SFX or its Affiliates, or
affecting SFX or its Affiliates in any federal, state or local court or before
any administrative agency or arbitrator that would adversely affect SFX's
ability to perform its obligations under this Agreement or would prohibit the
consummation of the transactions contemplated hereunder.
3.5. Absence of Litigation. There is no material action,
suit, investigation, claim, arbitration, litigation or similar proceeding,
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nor any order, decree or judgment pending or, to SFX's knowledge, threatened,
against SFX, the Houston Assets or the Houston Station before any governmental
authority.
3.6. Taxes. No event has occurred that could impose on
Chancellor any liability for any taxes, penalties or interest due or to become
due from SFX from any taxing authority.
3.7. Title. SFX is the valid and legal holder of the
Houston Station Licenses. SFX has a valid leasehold interest in all Houston
Leased Property. SFX has good and marketable title to the Houston Personal
Property and the Houston Intellectual Property, free and clear of any Liens,
except for Permitted Liens and Liens that will be removed at or prior to
Closing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
CHANCELLOR AND CHANCELLOR LICENSEE
Chancellor and Chancellor Licensee represent and warrant to
SFX, as follows:
4.1. Title. Chancellor Licensee is the valid and legal
holder of the Jacksonville Station Licenses. Chancellor has good and
marketable fee simple title to all fee estates included in the Jacksonville
Real Property and good title to all other owned Jacksonville Real Property, in
each case free and clear of all Liens, except for Permitted Liens and Liens
that will be removed at or prior to Closing. Chancellor has a valid leasehold
interest in the Jacksonville Leased Property. Chancellor has good and
marketable title to Jacksonville Personal Property and the Jacksonville
Intellectual Property, free and clear of any Liens, except for Permitted Liens
and Liens that will be removed at or prior to Closing.
ARTICLE V.
COVENANTS
SFX, Chancellor and Chancellor Licensee covenant and agree
that for the applicable periods set forth below, they shall act in accordance
with the following:
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5.1. Employees. (a) As of the Closing Date, SFX is
terminating all of its employees at the Houston Station (other than those
employees that are employed pursuant to written employment contracts, which
employment contracts shall be assigned to Chancellor). SFX shall be liable for
all severance and other similar benefits to which such employees are entitled
as a result of their employment by SFX prior to the Closing Date under all
employee plans, applicable law or otherwise. Chancellor or Chancellor Licensee
may, but shall not be obligated to, offer employment to each of those employees
previously employed by SFX to be terminated as of the Closing Date. Such offer
of employment shall be under any terms and conditions that Chancellor or
Chancellor Licensee deems appropriate.
(b) As of the Closing Date, Chancellor is
terminating all of its employees at the Jacksonville Stations (other than those
employees that are employed pursuant to written employment contracts, which
employment contracts shall be assigned to SFX). Chancellor shall be liable for
all severance and other similar benefits to which such employees are entitled
as a result of their employment by Chancellor prior to the Closing Date under
all employee plans, applicable law or otherwise. SFX may, but shall not be
obligated to, offer employment to each of those employees previously employed
by Chancellor to be terminated as of the Closing Date. Such offer of
employment shall be under any terms and conditions that SFX deems appropriate.
5.2. Post-Closing Covenants. (a) For a period of six
years after the Closing Date, each party agrees to make available to the other
party after Closing, upon request, any records, files, documents and
correspondence of the Stations, the Jacksonville Assets or the Houston Assets
that are reasonably determined by such party to be necessary or appropriate in
connection with the filing of any report with a governmental agency or the
prosecution or defense of any claim, legal action, counterclaim, suit,
arbitration, governmental investigation, or other legal, administrative, or tax
proceeding, to which the requesting party is a party. The requesting party
shall reimburse the other party for any expenses incurred pursuant to this
Section 5.2, including reimbursement for the time of any of such party's
employees, including any employee of the Station that is the subject of such
request. Each party shall exercise its rights under this Section 5.2 so as not
to unreasonably interfere with or disrupt the operations of the other party.
For a period of six years after the Closing Date, at least 30 days prior to
discarding or destroying any books or records relating to the Jacksonville
Assets or the Houston Assets that are being exchanged hereunder, each party
shall give the other party notice of its intended action and an opportunity for
such other party to retain any of the books or records proposed to be discarded
or destroyed by such party.
(b) Within ten (10) days following the Closing,
SFX shall deliver to Chancellor a schedule of accounts receivable of the
Houston Station as of the Cut-Off Time (the "Houston Schedule of Accounts
Receivable"). Chancellor agrees to collect for SFX all accounts
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receivable for broadcasts on the Houston Station which occur prior to the
Cut-Off Time (the "Houston Accounts Receivable") as shown on the Houston
Schedule of Accounts Receivable for a period of ninety (90) days following the
Closing. SFX will, at the Closing, provide Chancellor a power of attorney or
other required authorization for the limited purpose of allowing Chancellor to
endorse and deposit checks and other instruments received in payment of such
Houston Accounts Receivable. All payments received by Chancellor from any
customer whose name appears in the Houston Schedule of Accounts Receivable and
who is also a customer of Chancellor shall be credited as payment of the
account or invoice designated by such customer. In the absence of any such
designation by the customer, payments shall be first credited to the oldest
invoice which is not disputed by said customer. Chancellor shall keep accurate
records of the payment received by it on such Houston Accounts Receivable and
SFX shall have access at reasonable times to Chancellor's records to verify
such status of the Houston Accounts Receivable. Chancellor shall promptly
deposit amounts collected with respect to the Houston Accounts Receivables into
an account designated by SFX. Within thirty (30) days after the last business
day of each calendar month, Chancellor shall remit to SFX a written accounting
of amounts previously collected by Chancellor on such Houston Accounts
Receivable and an accounts receivable aging report for those Houston Accounts
Receivable still outstanding. Any Houston Accounts Receivable that have not
been collected within such ninety (90) day period shall be returned to SFX,
together with all records in connection therewith including, but not limited to
a final accounting of the Houston Accounts Receivable still outstanding.
Chancellor shall not have the right to compromise, settle or adjust the amounts
of any such Houston Accounts Receivable without SFX's prior written consent.
Except to remit collected Houston Accounts Receivable in accordance herewith,
Chancellor shall have no liability or obligation to SFX with respect to the
collection of SFX's accounts and shall not be obligated to take any action to
collect such accounts.
ARTICLE VI.
CONDITIONS TO THE PARTIES' OBLIGATION TO CLOSE
Concurrently with, or prior to the execution and delivery of
this Agreement, the following actions shall have occurred:
6.1. Long Island/Jacksonville Exchange Agreement. The
Asset Exchange Agreement between SFX Broadcasting and Chancellor dated July 1,
1996, as amended, providing for the exchange of SFX Broadcasting's Long Island
radio stations for the Jacksonville Stations (the "Long Island/Jacksonville
Exchange Agreement"), shall have been terminated without legal challenge by any
party.
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6.2. Capstar/SFX Merger. The merger between SFX
Broadcasting and an affiliate of Capstar (the "Capstar/SFX Merger") shall have
closed, either prior to, or contemporaneous with, the closing of this
Agreement.
6.3. Litigation. No action, suit, proceeding, litigation
or investigation shall be pending or threatened by any governmental authority
which questions the validity or legality of this Agreement or any action taken
or to be taken in connection herewith or the consummation of the transactions
contemplated hereby. No injunction or other order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
6.4. Deliveries. Chancellor, Chancellor Licensee and SFX
shall have made all the deliveries set forth in Section 7.3 and Section 7.4,
respectively.
ARTICLE VII.
CLOSING
7.1. Closing. Subject to the terms and conditions of this
Agreement, the closing of this transaction (the "Closing") shall take place on
the date hereof. The Closing shall be held at 10:00 a.m. in the offices of
Weil, Gotshal, & Manges LLP, 767 Fifth Avenue, New York, New York 10153, or at
such other place or time as the parties may agree.
7.2. Adjustments. (a) Within thirty (30) days after the
Closing Date, Chancellor and SFX shall make a good faith estimate of the
adjustment to the Cash Consideration customary in radio broadcast station
transactions for Proration Items (the "Proration Amount") to reflect that all
Proration Items of the Stations shall be apportioned between Chancellor and SFX
in accordance with the principles that (i) Chancellor, in the case of the
Jacksonville Stations, and SFX, in the case of the Houston Station shall
receive the benefit of all revenues, refunds, deposits and prepaid expenses,
and shall be responsible for all expenses, costs and liabilities allocable to
the conduct of the businesses or operations of such Stations, for the period
prior to the Cut-Off Time, and (ii) Chancellor, in the case of the Houston
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Station, and SFX, in the case of the Jacksonville Stations, shall receive the
benefit of all revenues, refunds, deposits and prepaid expenses, and shall be
responsible for all expenses, costs and liabilities allocable to the conduct of
the businesses or operations of such Stations, from and after the Closing Date.
In determining such adjustments, adjustments shall be made for contracts for
the sale of advertising time for consideration other than cash ("Trade
Agreements") only to the extent of any Net Negative Trade Balance (as defined
below) and only to the extent that the Net Negative Trade Balance exceeds
$50,000 on the Houston Station, in the case of SFX, or $50,000 on the
Jacksonville Stations, in the case of Chancellor. "Net Negative Trade Balance"
means the extent, if any, to which the value (at current rates for time on the
applicable Station as of the Cut-Off Time) of unfulfilled obligations of the
applicable Station under Trade Agreements exceed the stated value of any
consideration yet to be received by such Station pursuant to such Trade
Agreements. Determinations pursuant to this Section 7.2 shall be made in
accordance with generally accepted accounting principles consistently applied
for the period prior to the Closing Date.
(b) Within ninety (90) days after the Closing
Date, Chancellor and SFX shall deliver to each other in writing and in
reasonable detail a good faith final determination of the Proration Amount
determined as of the Closing Date under Section 7.2(a) (the "Final Proration
Amount"). Each of Chancellor and SFX shall provide the other with reasonable
access to the properties, books and records relating to the Stations for the
purpose of determining the Final Proration Amount. If Chancellor or SFX
disagree with the amounts of the Final Proration Amount, they shall so notify
each other in writing within thirty (30) days after the date of receipt of the
Final Proration Amount, specifying in detail any point of disagreement;
provided however, that if either Chancellor or SFX fails to notify the other
party of such disagreement within such thirty (30) day period, the
determination of the Final Proration Amounts shall be final, conclusive and
binding on each of Chancellor and SFX. After the receipt of any notice of
disagreement, each party shall negotiate in good faith to resolve any
disagreements regarding the Final Proration Amount. If any such disagreement
cannot be resolved by the parties within thirty (30) days after notice has been
received of the existence of such disagreement, the parties shall jointly
select a nationally recognized independent public accounting firm (which has
not performed any services for either Chancellor or SFX or any of their
respective subsidiaries at any time during the two (2) year period prior to the
date such firm is selected (the "Accounting Firm")), to review the
determination of the Final Proration Amount and to resolve as soon as possible
all points of disagreement raised by either party. All determinations made by
the Accounting Firm with respect to the Final Proration Amount shall be final,
conclusive and binding on the parties. The fees and expenses of the Accounting
Firm incurred in connection with any such determination shall be shared
one-half by Chancellor and one-half by SFX.
Upon determination of the Final Proration Amount, the
appropriate party shall pay such amounts in cash, within two (2) business days
following the final determination of the Final Proration Amount. Any amounts
paid pursuant to this Section 7.2(b) shall be by wire transfer of immediately
available funds for credit to the recipient at a bank account identified by
such recipient in writing.
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Chancellor and SFX agree that prior to the date of the final
determination of the Final Proration Amount pursuant to this Section 7.2(b) (by
the Accounting Firm or otherwise), neither party will destroy any records
pertaining to, or necessary for, the final determination of the Final Proration
Amount.
7.3. Documents to be Delivered by Chancellor and
Chancellor Licensee. Concurrently with the execution and delivery of this
Agreement, Chancellor has delivered to SFX the following:
(a) instruments of conveyance and transfer, in
form and substance reasonably satisfactory to counsel to SFX, effecting the
assignment, transfer, conveyance and delivery of the Jacksonville Assets to
SFX, including, but not limited to, the following:
(i) assignments of the Jacksonville
Station Licenses,
(ii) bills of sale for the Jacksonville
Personal Property;
(iii) assignments of Jacksonville Real
Property Leases and Jacksonville Contracts (including
copies of all Jacksonville Required Consents); and
(iv) assignment of the Jacksonville
Intellectual Property.
(b) certified resolutions of the board of
directors and shareholders (if required by law) of Chancellor and Chancellor
Licensee authorizing the execution, delivery and performance of this Agreement;
(c) a special warranty deed, in a form recordable
in the State of Florida, for each parcel of the Jacksonville Owned Real
Property, which deed shall convey insurable, fee simple title for that parcel
free and clear of all Liens, subject to standard title exceptions and survey
exceptions, none of which will impair or interfere with the continued use of
such parcel as such is currently used; and
(d) such other documents as may reasonably be
requested by SFX's counsel.
7.4. Documents to be Delivered by SFX. At the Closing,
SFX shall deliver or cause to be delivered to Chancellor and Chancellor
Licensee the following:
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(a) instruments of conveyance and transfer, in
form and substance reasonably satisfactory to counsel to Chancellor, effecting
the assignment, transfer, conveyance and delivery of the Houston Assets to
Chancellor and Chancellor Licensee including, but not limited to, the
following:
(i) assignments of the Houston Station
Licenses;
(ii) bills of sale for the Houston
Personal Property;
(iii) assignments of Houston Real Property
Leases and Houston Contracts (including copies of all
Houston Required Consents); and
(iv) assignment of the Houston
Intellectual Property.
(b) certified resolutions of the board of
directors and shareholders (if required by law) of SFX authorizing the
execution, delivery and performance of this Agreement;
(c) an affidavit to the effect that SFX is not a
"foreign person" within the meaning of Section 1445 of the Code;
(d) such other documents as may reasonably be
requested by counsel to Chancellor and Chancellor Licensee.
ARTICLE VIII.
TRANSFER TAXES; FEES AND EXPENSES
8.1. Transfer Taxes and Similar Charges. All costs of
transferring the Jacksonville Assets and the Houston Assets in accordance with
this Agreement shall be allocated among the parties as follows:
(a) Chancellor shall pay any and all Taxes that
may be imposed by any taxing authority in the nature of sales or use Taxes as a
result of the transfer of the Jacksonville Assets from Chancellor to SFX. SFX
shall pay any and all Taxes that may be imposed by any taxing authority in the
nature of sales or use Taxes as a result of the transfer of the Houston Assets
from SFX to Chancellor; and
(b) all other costs and expenses of transferring
the Jacksonville Assets and the Houston Assets, including, without limitation,
fees related to the governmental consents referred to in Article III, shall be
divided equally between Chancellor and SFX.
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(c) As between Chancellor and SFX, the party that
has the primary responsibility under applicable law for filing any return in
respect of Taxes described in this Section 8.1 shall prepare such return,
subject to the other party's approval, which approval shall not be unreasonably
withheld, and timely file such return.
8.2. Expenses. Except as set forth in Section 8.1, each
party hereto shall be solely responsible for all costs and expenses incurred by
it in connection with the negotiation, preparation and performance of and
compliance with the terms of this Agreement.
ARTICLE IX.
INDEMNIFICATION
9.1. Indemnification by Chancellor and Chancellor
Licensee. (a) Chancellor and Chancellor Licensee agree to indemnify and hold
harmless SFX, its Affiliates and the officers, directors, partners, employees,
agents, advisers and representatives of SFX and its Affiliates ("SFX
Indemnitees") from and against, and pay or reimburse each SFX Indemnitee for,
any and all claims, liabilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute, accrued, conditional or
otherwise and whether or not resulting from third party claims), including
out-of-pocket expenses and reasonable attorneys' and accountants' fees incurred
in connection with the investigation or defense thereof or in asserting any of
their respective rights hereunder (collectively, "Losses"), resulting from or
arising out of:
(i) any inaccuracy of any representation
or warranty made by Chancellor or Chancellor Licensee
herein or in any certificate, document or instrument
delivered to SFX pursuant to Section 7.3;
(ii) any failure of Chancellor or
Chancellor Licensee to perform any covenant or
agreement hereunder;
(iii) any claims of third parties with
respect to the business and operations of the
Jacksonville Stations or the ownership of the
Jacksonville Assets prior to the commencement of the
Jacksonville LMA not expressly assumed by SFX under
Section 2.9 hereof or under the Jacksonville LMA;
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(iv) any liabilities, obligations,
commitments or responsibilities of Chancellor or
Chancellor Licensee not expressly assumed by SFX
under Section 2.9;
(v) any failure of Chancellor or
Chancellor Licensee to comply with applicable bulk
sales laws (in consideration of which indemnification
obligation SFX hereby waives compliance by Chancellor
or Chancellor Licensee with any applicable bulk sales
laws);
(vi) any liabilities, obligations,
commitments or responsibilities of SFX expressly
assumed by Chancellor or Chancellor Licensee pursuant
to Section 2.9; and
(vii) the ownership of the Houston Assets
or the operation of the Houston Station subsequent to
the Closing, except to the extent such Loss results
from any inaccuracy of any representation or warranty
made by SFX herein or in any certificate, document or
instrument delivered to Chancellor or Chancellor
Licensee pursuant to Section 7.4 or any failure of
SFX to perform any covenant or agreement hereunder.
(b) Limitations on Indemnification.
(i) Notwithstanding anything in Section
9.1(a) of this Agreement to the contrary, neither
Chancellor nor Chancellor Licensee shall be required
to make any indemnification payments until the
aggregate amount of Losses resulting from or arising
out of the matters referred to in Section 9.1(a)
exceeds One Hundred Thousand Dollars ($100,000) in
the aggregate; provided that if the aggregate amount
of such Losses exceeds such amount, Chancellor and
Chancellor Licensee shall be required to indemnify
SFX Indemnitees for all Losses indemnifiable under
Section 9.1(a) without regard to such One Hundred
Thousand Dollar ($100,000) limitation.
(ii) Chancellor's and Chancellor
Licensee's obligations to make any indemnification
payments of any kind under Section 9.l(a) shall be
limited to Two Million Six Hundred Fifty Thousand
Dollars ($2,650,000) in the aggregate.
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9.2. Indemnification by SFX. (a) General. SFX agrees to
indemnify and hold harmless Chancellor, Chancellor Licensee and their
Affiliates and the officers, directors, partners, employees, agents, advisers
and representatives of Chancellor, Chancellor Licensee and their Affiliates
("Chancellor Indemnitees") from and against, and pay or reimburse each
Chancellor Indemnitee for, any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation
or warranty made by SFX herein or in any certificate,
document or instrument delivered to Chancellor or
Chancellor Licensee pursuant to Section 7.4;
(ii) any failure of SFX to perform any
covenant or agreement hereunder;
(iii) any claims of third parties with
respect to the business and operations of the Houston
Station or the ownership of the Houston Assets prior
to the Closing not expressly assumed by Chancellor or
Chancellor Licensee under Section 2.9;
(iv) any liabilities, obligations,
commitments or responsibilities of SFX not expressly
assumed by Chancellor or Chancellor Licensee under
Section 2.9;
(v) any failure of SFX to comply with
applicable bulk sales laws (in consideration of which
indemnification obligation Chancellor and Chancellor
Licensee hereby waives compliance by SFX with any
applicable bulk sales laws);
(vi) any liabilities, obligations,
commitments or responsibilities of Chancellor or
Chancellor Licensee expressly assumed by SFX pursuant
to Section 2.9; and
(vii) the ownership of the Jacksonville
Assets or the operation of the Jacksonville Stations
subsequent to the Closing, except to the extent such
Loss results from any inaccuracy of any
representation or warranty made by Chancellor or
Chancellor Licensee herein or in any certificate,
document or instrument delivered to SFX pursuant to
Section 7.3 or any failure of Chancellor or
Chancellor Licensee to perform any covenant or
agreement hereunder.
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(b) Limitations on Indemnification.
(i) Notwithstanding anything in Section
9.2(a) of this Agreement to the contrary, SFX shall
not be required to make any indemnification payments
until the aggregate amount of Losses resulting from
or arising out of the matters referred to in Section
9.2(a) exceeds One Hundred Thousand Dollars
($100,000); provided that if the aggregate amount of
such Losses exceeds such amount, SFX shall be
required to indemnify Chancellor Indemnitees for all
Losses indemnifiable under Section 9.2(a) without
regard to such One Hundred Thousand Dollar ($100,000)
limitation.
(ii) SFX's obligation to make any
indemnification payments of any kind under Section
9.2(a) shall be limited to Seven Million One Hundred
Sixty Two Thousand Five Hundred Dollars ($7,162,500)
in the aggregate.
9.3. Survival of Covenants, Representations and
Warranties. The provisions hereof, which by their terms are to be performed
and observed after the Closing Date, and the several representations,
warranties, indemnities and agreements of Chancellor, Chancellor Licensee and
SFX herein contained shall survive the Closing Date hereunder for eighteen
months following the Closing Date, provided, that notwithstanding the
foregoing, the representations and warranties set forth in (i) Section 3.7 and
4.1, to the extent relating to title to the applicable assets, shall survive
the Closing Date forever and (ii) Section 3.6 shall survive the Closing Date
for the applicable statutes of limitation period plus sixty (60) days. No
claim for indemnification may be made pursuant to this Article IX after the
applicable survival periods set forth in this Section 9.3 (except that all
claims which are properly asserted prior to the expiration of the applicable
survival periods set forth in this Section 9.3 shall survive with respect to
such claims until the final resolution thereof).
9.4. Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under
this Agreement (the "Indemnified Party"), notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any claim or any litigation resulting
therefrom, provided that (a) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably
satisfactory to the Indemnified Party, (b) the Indemnified Party may
participate in such defense at such Indemnified Party's expense, and (c) the
omission by any Indemnified Party to give notice as
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provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such claim or litigation, shall consent to entry of any
judgment or order, interim or otherwise, or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense
of any claim subject to indemnification hereunder or any proposed settlement of
any such claim by the Indemnifying Party might be expected to affect adversely
the Indemnified Party's tax liability or the ability of the Indemnified Party
to conduct the business of the Station or Stations acquired by such Indemnified
Party hereunder or that the Indemnified Party may have available to it one or
more defenses or counterclaims that are inconsistent with one or more of those
that may be available to the Indemnifying Party in respect of such claim or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the sole cost of the
Indemnifying Party, provided that if the Indemnified Party does so take over
and assume control, the Indemnified Party shall not settle such claim or
litigation without the written consent of the Indemnifying Party, such consent
not to be unreasonably withheld. In the event that the Indemnifying Party does
not accept the defense of any matter as above provided, the Indemnified Party
shall have the full right to defend against any such claim or demand and shall
be entitled to settle or agree to pay in full such claim or demand.
Notwithstanding the foregoing, the Indemnifying Party shall still provide
indemnification to the Indemnified Party. In any event, the Indemnifying Party
and the Indemnified Party shall cooperate in the defense of any claim or
litigation subject to this Section 9.3 and the records of each shall be
available to the other with respect to such defense.
ARTICLE X.
OTHER PROVISIONS
10.1. Publicity. Except as required by applicable law or
with the other parties' express written consent, no party to this Agreement nor
any Affiliate of any party shall issue any press release or make any public
statement (oral or written) regarding the transactions contemplated by this
Agreement.
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10.2. Benefit and Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. None of SFX, Chancellor or Chancellor
Licensee may assign this Agreement without the prior written consent of SFX, in
the case of any such assignment by Chancellor and Chancellor Licensee, or
Chancellor, in the case of any such assignment by SFX, except that:
(a) SFX may assign its rights and obligations
under this Agreement to one or more Affiliates of SFX, provided that any such
assignment shall not relieve SFX from any of its obligations under this
Agreement and provided that any such assignment does not delay the Closing
Date. Furthermore, SFX may assign its rights to receive the Cash Consideration
under this Agreement to a "qualified intermediary" as defined in Treas. Reg.
Section 1.1031(k)-1(g)(4), subject to all of Chancellor's and Chancellor
Licensee's rights and obligations hereunder, and shall promptly provide written
notice of such assignment to all parties hereto. Chancellor and Chancellor
Licensee shall cooperate with all reasonable requests of SFX and the "qualified
intermediary" in arranging and effecting the deferred like-kind exchange as one
which qualifies under Section 1031 of the Code. Without limiting the generality
of the foregoing, Chancellor and Chancellor Licensee shall acknowledge in
writing the notification by SFX of the assignment to the "qualified
intermediary" of its rights to receive the Cash Consideration and other rights
hereunder and Chancellor and Chancellor Licensee hereby agree to pay the Cash
Consideration to the "qualified intermediary" rather than to SFX.
(b) Chancellor and Chancellor Licensee may assign
their rights and obligations under this Agreement to one or more Affiliates of
Chancellor or Chancellor Licensee, provided that any such assignment shall not
relieve Chancellor or Chancellor Licensee from any of their obligations under
this Agreement and provided that any such assignment does not delay the Closing
Date.
10.3. No Third-Party Beneficiaries. Nothing in this
Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective permitted successors and assigns.
10.4. Nature of Representations and Warranties: Entire
Agreement, Amendments, etc. (a) It is the explicit intent and understanding
of each of the parties hereto that neither party, nor any of its Affiliates,
representatives or agents, is making any representation or warranty whatsoever,
oral or written, express or implied, other than those set forth in Articles IV
and V.
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<PAGE> 35
(b) The Master Agreement (and the agreements
contemplated thereby), the Jacksonville LMA, this Agreement and the exhibits
and schedules hereto constitute the entire agreement and understanding of the
parties hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein or therein.
(c) No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any amendment, waiver or consent is sought.
10.5. Choice of Law. The construction and performance of
this Agreement shall be governed by the laws of the State of Texas without
regard to its principles of conflict of laws.
10.6. Notices. All notices, requests, demands, letters,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
(a) delivered personally, (b) mailed, certified or registered mail with postage
prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent by fax,
as follows:
To Chancellor and Chancellor Licensee:
c/o Chancellor Media Corporation
433 East Las Colinas Blvd.
Suite 1130
Irving, Texas 75039
Attention: Jeffrey A. Marcus, President and Chief
Executive Officer
Fax: (972) 869-3671
Copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
Attention: Eric L. Bernthal, Esq.
Fax: (202) 637-2201
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<PAGE> 36
To SFX:
c/o Capstar Broadcasting Corporation
600 Congress Avenue
Suite 1400
Austin, Texas 78705
Attention: R. Steven Hicks, President and Chief
Executive Officer
Fax: (512) 340-7890
Copies to:
c/o Capstar Broadcasting Corporation
600 Congress Avenue
Suite 1400
Austin, Texas 78705
Attention: William Banowsky, General Counsel
Fax: (512) 340-7863
and
Vinson & Elkins
2001 Ross Avenue
Suite 3700
Dallas, Texas 75201
Attention: Michael D. Wortley, Esq.
Fax: (214) 220-7716
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery, on the day such delivery, (x) if by certified or
registered mail, on the third Business Day after the mailing thereof, (y) if by
next-day or overnight mail or delivery, on the first Business day after the
mailing thereof or (z) if by fax, on the day on which such fax was sent,
provided that the sender receive confirmation of such delivery.
10.7. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
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10.8. Further Assurances. SFX shall at any time and from
time to time after the Closing execute and deliver to Chancellor and Chancellor
Licensee such further assignments, conveyances and other written assurances as
Chancellor and Chancellor Licensee may reasonably request in order to vest and
confirm in Chancellor and Chancellor Licensee (or their permitted assignees)
the title and rights to and in all of the Houston Assets to be and intended to
be assigned, transferred, conveyed and delivered hereunder. Chancellor and
Chancellor Licensee shall at any time and from time to time after the Closing
execute and deliver to SFX such further assignments, conveyances and other
written assurances as SFX may reasonably request in order to vest and confirm
in SFX (or its permitted assignees) the title and rights to and in all of the
Jacksonville Assets to be and intended to be assigned, transferred, conveyed
and delivered hereunder.
10.9. Arbitration. Chancellor, Chancellor Licensee and SFX
agree that any dispute arising out of or relating to this Agreement or the
breach, termination, validity hereof or thereof shall be finally settled by
arbitration conducted expeditiously in accordance with the Center for Public
Resources Rules for Nonadministered Arbitration of Business Disputes. The
Center for Public Resources shall appoint a neutral advisor from its National
CPR Panel. The arbitration advisor 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 Dallas, Texas. Notwithstanding anything to
the contrary contained herein, the provisions of this Section 10.9 shall not
apply with regard to any equitable remedies to which any party may be entitled
under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES
By:
-----------------------------------
Name:
Title:
CHANCELLOR MEDIA LICENSEE COMPANY
By:
-----------------------------------
Name:
Title:
SFXTX LIMITED PARTNERSHIP
By: SFX GP, Inc.
By:
-----------------------------------
Name:
Title:
33
