<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 1996
REGISTRATION NO. 333-04581
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
CLEAR CHANNEL COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
TEXAS 74-1787539
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
CLEAR CHANNEL COMMUNICATIONS, INC.
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
L. LOWRY MAYS
CLEAR CHANNEL COMMUNICATIONS, INC.
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
STEPHEN C. MOUNT NORMAN R. MILLER
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. WOLIN, FULLER, RIDLEY & MILLER LLP
1500 NATIONSBANK PLAZA 3100 BANK ONE CENTER
300 CONVENT STREET 1717 MAIN STREET
SAN ANTONIO, TEXAS 78205 DALLAS, TEXAS 75201
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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, check the following box and
list the Securities Act registration statement number of 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. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(3)
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Common Stock................ 550,000 Shares $80.00 $44,000,000 $15,172
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</TABLE>
(1) Includes 50,000 shares that the Underwriters have the option to purchase to
cover over-allotments, if any.
(2) Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Common Stock, as reported by the New York Stock Exchange on June 3, 1996.
(3) The Registrant has previously registered 2,750,000 shares of Common Stock
for which it paid a registration fee of $70,466.
------------------------
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION
JUNE 6, 1996
3,000,000 SHARES
LOGO CLEAR CHANNEL COMMUNICATIONS, INC.
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby are being sold by Clear
Channel Communications, Inc. (the "Company"). The Common Stock of the Company is
traded on the New York Stock Exchange under the symbol "CCU". On June 4, 1996,
the last reported sale price of the Common Stock was $80.50 per share. See
"Price Range of Common Stock."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share...................... $ $ $
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Total(3)....................... $ $ $
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</TABLE>
(1) See "Underwriting" for information relating to the indemnification of the
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 300,000 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the Common Stock will be made at the offices of Alex.
Brown & Sons, Incorporated, Baltimore, Maryland, on or about , 1996.
ALEX. BROWN & SONS
INCORPORATED
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE> 3
[ARTWORK]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing in the
documents incorporated by reference into this Prospectus. All information set
forth herein has been adjusted to reflect five-for-four stock splits in February
1992, February 1993, and February 1994, and a two-for-one stock split in
November 1995. Unless otherwise indicated, the information in this Prospectus
assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."
THE COMPANY
Clear Channel Communications, Inc. (the "Company"), which began operations
in 1972, is a diversified broadcasting company that currently owns or operates
72 radio stations and 16 television stations in 27 domestic markets. In
addition, the Company owns a 50% equity interest in the Australian Radio Network
Pty. Ltd. ("ARN"), which operates eight radio stations in Australia, and a 21.3%
equity interest in Heftel Broadcasting Corporation (NASDAQ:HBCCA) ("Heftel"), a
leading domestic Spanish-language broadcaster which operates 11 AM and six FM
radio stations in six domestic markets. The Company currently has acquisitions
pending for 33 radio stations, including nine stations which the Company
currently operates under Local Marketing Agreements ("LMA") or Joint Sales
Agreements ("JSA"), and one television station in 14 domestic markets. The
Company has also commenced a stock purchase and tender offer for the remaining
shares of Heftel. After completing the pending acquisitions, the stock purchase
and tender offer for Heftel and the divestiture of one station, the Company will
own or operate 44 AM and 68 FM radio stations and 17 television stations in 37
domestic markets.
The 28 AM and 44 FM radio stations currently owned or operated by the
Company are principally located in the South, Southwest, Northeast and Midwest.
These radio stations employ a wide variety of programming formats, such as
News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The 16
television stations currently owned or operated by the Company are located in
the South, Southwest, New York, Pennsylvania and Minnesota. Six of these
television stations are affiliated with the FOX television network; seven are
affiliated with the UPN television network; one is affiliated with the ABC
television network; one is affiliated with the NBC television network; and one
is affiliated with the CBS television network. Additionally, the Company
operates five radio networks serving Oklahoma, Texas, Iowa, Kentucky, Virginia
and New Mexico. In 1995, the Company derived approximately 58% of its net
broadcasting revenue from radio operations and approximately 42% from television
operations.
The diversity of the Company's radio and television stations and markets,
combined with the Company's successful acquisition and operating strategies,
have enabled the Company to achieve consistent growth in revenue and cash flow.
Since 1991, the Company has achieved compounded annual growth rates of
approximately 39% in net broadcasting revenue, approximately 55% in broadcast
cash flow (defined as station operating income before depreciation, amortization
and corporate expenses) and approximately 66% in after-tax cash flow (defined as
net income plus depreciation, amortization of intangibles (including
non-consolidated affiliates) and deferred taxes).
On February 8, 1996, the Telecommunications Act of 1996 (the "1996 Act")
was signed into law. The 1996 Act represents the most sweeping overhaul of the
country's telecommunications laws since the Communications Act of 1934. The 1996
Act relaxes the broadcast ownership rules and simplifies the process for renewal
of broadcast station licenses. Accordingly, the Company has acted to capitalize
on the opportunities provided by the 1996 Act. Since the 1996 Act became
effective, the Company has closed or entered into agreements to acquire
approximately $580,970,000 of broadcast properties.
3
<PAGE> 5
The Company's strategy is to identify and acquire under-performing stations
on favorable terms and to utilize management's extensive operating experience to
improve the performance of such stations as well as its existing stations
through effective programming, reduction of costs and aggressive promotion,
marketing and sales. In addition, the Company employs a marketing strategy that
emphasizes direct sales to local customers rather than through advertising
agencies and other intermediaries. The Company believes that this focus has
enabled its stations to achieve market revenue shares exceeding their audience
shares.
The Company's radio strategy is to continue to capitalize on the 1996 Act
by attempting to assemble and operate a cluster of radio stations in each of its
principal markets. The Company believes that by controlling a larger share of
the total advertising inventory in a particular market, it can offer advertisers
attractive packages of advertising options while maintaining rate integrity. The
Company also believes that its cluster approach will allow it to operate its
stations with more highly skilled local management teams and eliminate
duplicative operating and overhead expenses. The Company's television strategy
is to own and operate one station in each of its markets and to operate an
additional station under an LMA in each such market. In six of its television
markets, the Company operates an additional television station under an LMA. The
1996 Act should allow the continuation or renewal of these television LMAs. See
"Business -- Federal Regulation of Television and Radio Broadcasting."
RECENT DEVELOPMENTS
Since the enactment of the 1996 Act, the Company has completed the
acquisition of 23 radio stations for $202,550,000, for properties in three
existing markets and six new markets. In addition, the Company has entered into
definitive agreements to acquire 33 radio stations and one television station in
ten existing and five new markets for approximately $378,420,000. There can be
no assurances that such pending acquisitions will be consummated. All such
domestic acquisitions are subject to Federal Communications Commission ("FCC")
approval, which the Company does not have at this time. Certain of such pending
acquisitions may also be subject to other regulatory approvals and other
conditions.
COMPLETED ACQUISITIONS
- In May 1996, the Company acquired all of the common stock of US Radio,
Inc. ("US Radio"), for approximately $142,500,000. US Radio owns or
operates 13 FM and five AM stations in eight domestic markets.
- In May 1996, the Company acquired radio stations WTVR-AM/FM in Richmond,
Virginia, from Park Broadcasting of Virginia, Inc., for approximately
$18,000,000.
- In February 1996, the Company acquired substantially all of the operating
assets of WOOD-AM/FM and WBCT-FM in Grand Rapids, Michigan; the remaining
assets, including the FCC license, were acquired in May 1996 from WOOD
Radio Limited Partnership. The total amount of the acquisition was
approximately $42,050,000.
PENDING ACQUISITIONS
- In May 1996, the Company entered into a definitive agreement to purchase
15 FM and four AM radio stations in eight U.S. markets from a group of
general partnerships referred to herein collectively as Radio Equity
Partners ("REP") for approximately $240,000,000. The Company's
acquisition of the various REP stations will enhance the Company's
broadcasting presence in New Orleans, Louisiana; Memphis, Tennessee;
Oklahoma City, Oklahoma; and Providence, Rhode Island and it will
introduce the Company into new markets in Greensboro, North Carolina;
Springfield, Massachusetts; Columbia, South Carolina; and Ft.
Myers/Naples, Florida.
4
<PAGE> 6
- In May 1996, US Radio entered into definitive agreements to acquire radio
stations KJMS-FM and KWAM-AM in Memphis, Tennessee, and WTCD-FM in
Raleigh, North Carolina, for approximately $20,000,000.
- In May 1996, the Company entered into a definitive agreement to acquire
radio stations WCUZ-AM/FM in Grand Rapids, Michigan, and KQLL-AM/FM and
KOAS-FM in Tulsa, Oklahoma, from Federated Media for approximately
$15,400,000.
- In May 1996, the Company entered into a definitive agreement to acquire
radio stations WTFX-FM and WWKY-AM in Louisville, Kentucky, from SFX
Broadcasting for approximately $6,882,000.
- In May 1996, the Company entered into a definitive agreement to acquire
all of the intellectual property and intangible assets, excluding the FCC
license, of WHKW-FM and all of the assets of WHKW-AM (now WKJK-AM) in
Louisville, Kentucky for $2,000,000.
- In April 1996, the Company entered into a definitive agreement to acquire
WPRI-TV in Providence, Rhode Island, from CBS, Inc. for approximately
$68,000,000.
- In April 1996, the Company formed New Zealand Radio Network ("NZRN") as a
joint venture with two equal partners. NZRN acquired all of the stock of
Radio New Zealand Commercial from the Government of New Zealand. The
Company's one-third share of the total NZ$89,000,000 investment in NZRN
will be approximately $20,372,000 (based on an exchange rate of NZ
$0.6867/U.S.$1.00). NZRN owns 41 radio stations in 26 New Zealand markets
and is the leading radio broadcaster in New Zealand. However, the
transaction is subject to the New Zealand Government's successful
resolution of an appeal by the native inhabitants of New Zealand, the
Maori, challenging a lower court's ruling that the transaction is
permissible under New Zealand law.
- In April 1996, the Company entered into an agreement to acquire radio
stations KEYI-FM and KFON-AM in Austin, Texas, from Mercury Broadcasting
Co., Inc., for approximately $3,166,000.
- In April 1996, US Radio entered into an agreement to swap the assets of
WSVY-AM (now WGPL-AM) plus $2,600,000 for all the assets of WMYK-FM, both
of which serve Norfolk, Virginia.
THE HEFTEL TRANSACTION
The Company has entered into a tender offer agreement with Heftel dated
June 1, 1996, as amended, and a purchase agreement with certain stockholders of
Heftel. Pursuant to such agreements (the "Heftel Agreements"), the Company has
agreed to purchase 3,516,529 shares of common stock of Heftel and commence a
tender offer for 5,879,403 shares of common stock (together, the "Heftel
Transaction"). The purchase price and the tender price is $23.00 per share or up
to approximately $206,000,000 in the aggregate (net of approximately $9,800,000
in proceeds from the exercise of warrants and options). Consummation of the
Heftel Transaction is subject to FCC and other regulatory approvals, as well as
certain other conditions. The other parties to the Heftel Agreements have the
right to terminate such agreements under certain circumstances in the event that
Heftel receives a higher offer. As of March 31, 1996, Heftel had approximately
$136,633,000 of total liabilities. In connection with this transaction, two
officers of Heftel will receive approximately $25,700,000 pursuant to settlement
and noncompetition agreements. The Company presently owns 2,156,000 shares of
Heftel common stock (approximately a 21.3% equity interest).
5
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Common Stock to be offered by the Company................... 3,000,000 shares
Common Stock to be outstanding after the Offering........... 37,614,826 shares(1)
Use of proceeds............................................. To repay indebtedness under the
Credit Facility
New York Stock Exchange symbol.............................. CCU
</TABLE>
- ---------------
(1) Excludes 582,159 shares of Common Stock currently issuable upon exercise of
options to purchase shares of the Company's Common Stock at prices ranging
from $3.87 to $46.25 per share.
6
<PAGE> 8
SUMMARY FINANCIAL INFORMATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
PRO FORMA
PRO FORMA US RADIO
US RADIO AND REP
1991 1992 1993 1994 1995 1995(2) 1995(3)
------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net broadcasting revenue............... $64,384 $ 82,205 $118,183 $173,109 $243,813 $271,305 $317,803
Station operating expenses............. 44,981 53,532 75,990 100,437 131,258 146,814 171,198
Depreciation and amortization.......... 7,641 12,253 17,447 24,668 33,770 44,881 56,849
------- -------- -------- -------- -------- -------- --------
Station operating income.............. 11,762 16,420 24,746 48,004 78,785 79,610 89,756
Corporate expenses..................... 2,403 2,890 3,464 5,100 7,414 7,414 7,414
------- -------- -------- -------- -------- -------- --------
Operating income...................... 9,359 13,530 21,282 42,904 71,371 72,196 82,342
Interest expense....................... (5,371) (4,739) (5,390) (7,669) (20,751) (30,442 ) 46,763
Other income (expense)................. (1,483) (1,217) (196) 1,161 (803) (752 ) (762 )
Equity in net income of, and other
income from, nonconsolidated
affiliates............................ -- -- -- -- 2,927 2,927 2,927
------- -------- -------- -------- -------- -------- --------
Income before income taxes............. 2,505 7,574 15,696 36,396 52,744 43,929 37,744
Income taxes.......................... 1,379 3,281 6,573 14,387 20,730 18,786 (16,622 )
------- -------- -------- -------- -------- -------- --------
Net income............................ $ 1,126 $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 25,143 $ 21,122
======= ======== ======== ======== ======== ======== ========
Net income per common share........... $ .04 $ .14 $ .29 $ .63 $ .91 $ .72 $ .60
======= ======== ======== ======== ======== ======== ========
Weighted average common shares and
common share equivalents
outstanding......................... 25,976 29,660 31,101 34,663 35,100 35,100 35,100
======= ======== ======== ======== ======== ======== ========
After-tax cash flow(4)................ $ 9,300 $ 17,147 $ 26,638 $ 46,866 $ 71,140 $ 75,382 83,329
======= ======== ======== ======== ======== ======== ========
After-tax cash flow per share(5)...... $ .36 $ .58 $ .86 $ 1.35 $ 2.03 $ 2.15 $ 2.37
======= ======== ======== ======== ======== ======== ========
<CAPTION> THREE MONTHS ENDED MARCH 31,
------------------------------------------
PRO FORMA
PRO FORMA US RADIO
US RADIO AND REP
1995 1996 1996(2) 1996(3)
-------- ------- --------- ---------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net broadcasting revenue............... $ 51,858 $62,209 $69,128 $79,933
Station operating expenses............. 33,182 38,230 42,797 49,465
Depreciation and amortization.......... 8,399 8,755 10,965 13,956
-------- -------- ------- -------
Station operating income.............. 10,277 15,224 15,366 16,512
Corporate expenses..................... 1,531 1,674 1,674 1,674
-------- -------- ------- -------
Operating income...................... 8,746 13,550 13,692 14,838
Interest expense....................... (4,448) (5,424) (7,597) 11,257
Other income (expense)................. 259 205 205 220
Equity in net income of, and other
income from, nonconsolidated
affiliates............................ -- 875 875 875
-------- -------- ------- -------
Income before income taxes............. 4,557 9,206 7,175 4,676
Income taxes.......................... 1,878 2,968 2,524 (1,649)
-------- -------- ------- -------
Net income............................ $ 2,679 $ 6,238 $ 4,651 $ 3,027
======== ======== ======= =======
Net income per common share........... $ .08 $ .18 $ .13 $ .09
======== ======== ======= =======
Weighted average common shares and
common share equivalents
outstanding......................... 35,039 35,205 35,205 35,205
======== ======== ======= =======
After-tax cash flow(4)................ $ 11,079 $16,079 $16,702 $18,069
======== ======== ======= =======
After-tax cash flow per share(5)...... $ .32 $ .46 $ .47 $ .51
======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
DECEMBER 31, ---------------------
--------------------------------------------------- AS
1991 1992 1993 1994 1995 ACTUAL ADJUSTED(6)
------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 3,765 $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 12,006 $ 12,245
Total assets........................... 92,450 146,993 227,577 411,594 563,011 594,979 979,901
Long-term debt, net of current
maturities............................ 48,110 97,000 87,815 238,204 334,164 366,569 517,125
Shareholders' equity................... 24,787 31,055 98,343 130,533 163,713 170,272 402,216
</TABLE>
- ---------------
(1) The comparability of results of operations is affected by acquisitions
consummated in certain of the periods presented. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" included herein and as incorporated by
reference herein.
(2) Gives effect to the acquisition of US Radio as if such acquisition had been
consummated on January 1, 1995 and 1996 for the periods ended December 31,
1995 and March 31, 1996, respectively. The pro forma information is based on
a preliminary purchase price allocation.
(3) Gives effect to the acquisitions of US Radio and REP as if such acquisitions
had been consummated on January 1, 1995 and 1996 for the periods ended
December 31, 1995 and March 31, 1996, respectively. The pro forma
information is based on preliminary purchase price allocations. The Company
has presented pro forma financial information for REP, because it believes
that the pending acquisition of REP is material to the Company's results of
operations and financial position.
(4) Defined as net income plus depreciation, amortization of intangibles
(including non-consolidated affiliates) and deferred taxes. After-tax cash
flow is presented here not as a measure of operating results and does not
purport to represent cash provided by operating activities. After-tax cash
flow should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles.
(5) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(6) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $231,944,000 and the acquisitions of US
Radio and REP as if such acquisitions had been consummated on March 31,
1996. The effect of the acquisitions of US Radio and REP are based on
preliminary purchase price allocations.
7
<PAGE> 9
RISK FACTORS
Prospective purchasers of the Common Stock should consider carefully the
factors set forth below, as well as the other information contained in this
Prospectus.
SIGNIFICANT SHAREHOLDERS
Upon completion of this offering (the "Offering"), the two principal
shareholders of the Company, L. Lowry Mays, President, Chief Executive Officer
and a Director of the Company, and B. J. McCombs, a Director of the Company,
collectively will own beneficially approximately 35.31% of the outstanding
shares of Common Stock (or approximately 35.03% if the Underwriters' over-
allotment option is exercised in full). As a result, Messrs. Mays and McCombs
will be able to exert significant influence over the outcome of elections of the
Company's directors and other matters requiring the vote or consent of the
shareholders of the Company. The Company, L. Lowry Mays and B.J. McCombs are
parties to a Buy-Sell Agreement (the "Repurchase Agreement") restricting the
disposition of shares of Common Stock owned by Messrs. Mays and McCombs. See
"Description of Capital Stock -- Repurchase Agreement."
DEPENDENCE ON KEY PERSONNEL
The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers and other personnel,
including its President and Chief Executive Officer, L. Lowry Mays. The Company
has entered into an employment agreement expiring in 2001 with Mr. Mays and
other employment agreements expiring at various times with key programming and
station personnel. The Company does not maintain a key man life insurance policy
on Mr. Mays.
FINANCIAL LEVERAGE
After giving effect to the sale of the Common Stock offered hereby and the
application of the estimated net proceeds therefrom (assuming a public offering
price of $80.50 per share) and the acquisition of US Radio and REP, the Company
would have had at March 31, 1996, borrowings under its credit facility of
approximately $508,056,000, shareholders' equity of $402,216,000 and
approximately $52,400,000 in unused borrowing capacity under its existing
revolving credit facility (the "Credit Facility"), under which it may borrow up
to $600,000,000 at floating rates (currently LIBOR plus 0.43%). The Company has
borrowed and expects to continue borrowing to finance acquisitions of
broadcasting and other media-related properties and for other corporate
purposes. In connection with pending acquisitions, the Company may incur
$378,420,000 of additional indebtedness prior to the application of the proceeds
of the Offering if all such acquisitions are consummated. Additionally, the
Company may incur up to $206,000,000 of indebtedness upon completion of the
Heftel Transaction. The total liabilities of Heftel ($136,633,000 at March 31,
1996) and the payment of approximately $25,700,000 to two Heftel officers
pursuant to settlement and noncompetition agreements would further reduce the
Company's available credit under the Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources." The Company will use the proceeds from the
Offering to pay debt under its Credit Facility. After consummation of the
Offering and increasing the Credit Facility to $1,000,000,000, the Company will
have sufficient funds under the Credit Facility to consummate all of the pending
acquisitions contemplated herein. While the Company has not formally amended the
commitment under the Credit Facility, the Company has been advised by its
Administrative Lender, NationsBank of Texas, N.A., that the Administrative
Lender agrees with expanding the existing Credit Facility to $1,000,000,000 on
terms that will not be substantially less favorable than the terms of the
existing Credit Facility. However, there can be no assurance that the Company
will be successful in increasing the size of the existing Credit Facility on
such terms or that it will be able to obtain alternative financing on comparable
terms. Future acquisitions of radio and television stations effected in
connection with the implementation of the Company's acquisition strategy are
expected to be financed from increased borrowings under the Credit Facility,
other debt or equity financings
8
<PAGE> 10
and cash flow from operations. Because of the amount of the Company's
indebtedness, a significant portion of the Company's operating income is
required for debt service. The Company's leverage could make it vulnerable to an
increase in interest rates or a downturn in the operating performance of its
radio and television stations or in general economic conditions. Substantially
all of the Company's assets are pledged to secure the payment by the Company of
its indebtedness under the Credit Facility. The Credit Facility contains certain
financial and operational covenants and other restrictions with which the
Company must comply, including limitations on capital expenditures, the
incurrence of additional indebtedness, payment of cash dividends, and
requirements to maintain certain financial ratios. See "Dividend Policy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
GOVERNMENT REGULATION
The domestic broadcasting industry is subject to extensive federal
regulation which, among other things, requires approval by the FCC for the
issuance, renewal, transfer and assignment of broadcasting station operating
licenses and limits the number of broadcasting properties the Company may
acquire. The 1996 Act, which became law on February 8, 1996, creates significant
new opportunities for broadcasting companies but also creates uncertainties as
to how the FCC and the courts will enforce and interpret the 1996 Act.
The Company's business will continue to be dependent upon acquiring and
maintaining broadcasting licenses issued by the FCC, which are issued for a
maximum term of eight years. Although it is rare for the FCC to deny a renewal
application, there can be no assurance that future renewal applications will be
approved, or that renewals will not include conditions or qualifications that
could adversely affect the Company's operations. Moreover, governmental
regulations and policies may change over time and there can be no assurance that
such changes would not have a material adverse impact upon the Company's
business, financial condition and results of operations. See
"Business -- Federal Regulation of Television and Radio Broadcasting."
RISK OF ACQUISITION STRATEGY
The Company intends to pursue growth through the opportunistic acquisition
of broadcasting companies, radio and television station groups and individual
radio and television stations. The Company routinely reviews potential
acquisitions. Although no agreements have been reached regarding any such
potential acquisitions, except as described in this Prospectus, it is likely
that the Company will continue to experience significant expansion in the
future. As a result, the Company's management will be required to manage
effectively a rapidly expanding and significantly larger portfolio of
broadcasting properties. The Company's acquisition strategy involves numerous
other risks, including difficulties in the integration of operations and
systems, the diversion of management's attention from other business concerns
and the potential loss of key employees of acquired stations. There can be no
assurance such acquisitions will benefit the Company.
The consummation of domestic broadcasting acquisitions, including all
pending acquisitions and the Heftel Transaction, requires FCC approval with
respect to the transfer of the broadcast license of the acquired station. The
consummation of acquisitions, including certain pending acquisitions and the
Heftel Transaction, may also be subject to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. Finally, the consummation of certain
acquisitions may also depend upon the Company's ability to expand its Credit
Facility. There can be no assurance that the FCC will approve pending or future
acquisitions, including the Heftel Transaction, that the Company will be able to
consummate such acquisitions or that the Company will be able to expand its
ability to borrow funds on acceptable terms to fund pending or future
acquisitions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources" and
"Business -- Federal Regulation of Television and Radio Broadcasting."
9
<PAGE> 11
COMPETITION; BUSINESS RISKS
Broadcasting is a highly competitive business. The Company's radio and
television stations compete for audiences and advertising revenues with other
radio and television stations, as well as with other media, such as newspapers,
magazines, cable television, outdoor advertising and direct mail, within their
respective markets. Audience ratings and market shares are subject to change and
any adverse change in a particular market could have a material adverse effect
on the revenue of stations located in that market. Future operations are further
subject to many variables which could have an adverse effect upon the Company's
financial performance. These variables include economic conditions, both general
and relative to the broadcasting industry; shifts in population and other
demographics; the level of competition for advertising dollars with other radio
stations, television stations and other entertainment and communications media;
fluctuations in operating costs; technological changes and innovations; changes
in labor conditions; and changes in governmental regulations and policies and
actions of federal regulatory bodies, including the FCC. Although the Company
believes that each of its stations are able to compete effectively in their
respective markets, there can be no assurance that any such station will be able
to maintain or increase its current audience ratings and advertising revenues.
10
<PAGE> 12
CAPITALIZATION
The following table sets forth the current portion of long-term debt and
capitalization of the Company as of March 31, 1996, and as adjusted to give
effect to the acquisitions of US Radio and REP and the consummation of the
Offering at an assumed price of $80.50 per share.
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------------------
ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2)
-------- ------------ -----------------
(In thousands)
<S> <C> <C> <C>
Current portion of long-term debt.............. $ 3,405 $ 3,405 $ 3,405
Credit Facility(3)............................. 357,500 740,000 508,056
Other long-term debt........................... 9,069 9,069 9,069
Shareholders' equity:
Preferred Stock, $1.00 par value, 2,000,000
shares authorized, no shares issued and
outstanding............................... -- -- --
Common Stock, $.10 par value, 100,000,000
shares authorized, 34,605,451 shares
issued and outstanding, (37,605,451 shares
as adjusted).............................. 3,461 3,461 3,761
Additional paid-in capital................... 91,489 91,489 323,133
Retained earnings............................ 74,597 74,597 74,597
Other equity................................. 896 896 896
Cost of shares held in treasury.............. (171) (171) (171)
-------- -------- --------
Total shareholders' equity................ 170,272 170,272 402,216
-------- -------- --------
Total capitalization................. $540,246 $922,746 $ 922,746
======== ======== ========
</TABLE>
- ---------------
(1) Pro forma to give effect to the acquisitions of US Radio and REP as if such
acquisitions had been consummated on March 31, 1996 for $382,500,000 in
borrowings under the Credit Facility.
(2) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $231,944,000.
(3) The Company may incur additional indebtedness of up to $138,420,000 in
connection with various pending acquisitions, and additional indebtedness of
$206,000,000 in connection with the Heftel Transaction. The total
liabilities of Heftel ($136,633,000 at March 31, 1996) and the payment of
approximately $25,700,000 to two Heftel officers pursuant to settlement and
noncompetition agreements would further reduce the Company's available
credit under the Credit Facility.
11
<PAGE> 13
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby, after deducting underwriting discounts and commissions and the
estimated expenses of the Offering, are estimated to be $231,944,000 (at an
assumed price of $80.50 per share). All of such net proceeds received by the
Company will be used to repay borrowings outstanding under the Credit Facility.
As of May 15, 1996, a total of approximately $498,000,000 in borrowings was
outstanding under the Credit Facility and the effective interest rate thereon
was approximately 6.1%. Borrowings under the Credit Facility have been used to
finance the US Radio acquisition and other acquisitions discussed in this
Prospectus. Borrowings under the Credit Facility, which must be paid in full by
September 2003, currently bear interest at a floating rate based on the LIBOR
plus 0.43%. Upon repayment of such borrowings, the amount repaid will become
immediately available to the Company for re-borrowing under the Credit Facility,
subject to the satisfaction of certain conditions. The Company expects that
amounts available for re-borrowing under the Credit Facility as a result of the
application of the net proceeds of the Offering, together with additional
amounts that become available for borrowing under the Credit Facility, will be
used to finance the REP acquisition, the Heftel Transaction and other pending
acquisitions discussed in this Prospectus. Future acquisitions of radio and
television stations effected in connection with the implementation of the
Company's acquisition strategy are expected to be financed from increased
borrowings under the Credit Facility, other debt or equity financings and cash
flow from operations.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "CCU." The following table sets forth, for the periods
indicated, the high and low closing sale prices per share (as adjusted for all
stock splits to date) as reported on the NYSE or, prior to November 1994, the
American Stock Exchange.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
First Quarter...................................................... $20.19 $15.85
Second Quarter..................................................... 19.56 16.19
Third Quarter...................................................... 26.00 18.06
Fourth Quarter..................................................... 25.88 20.63
YEAR ENDED DECEMBER 31, 1995:
First Quarter...................................................... $30.25 $25.06
Second Quarter..................................................... 34.75 26.88
Third Quarter...................................................... 40.88 30.81
Fourth Quarter..................................................... 44.13 36.25
YEAR ENDED DECEMBER 31, 1996:
First Quarter...................................................... $58.25 $41.00
Second Quarter (through June 5, 1996).............................. 82.75 54.00
</TABLE>
On May 15, 1996, there were approximately 4,000 shareholders of record of
the Company's Common Stock.
DIVIDEND POLICY
The Company currently expects to retain its earnings for the development
and expansion of its business. Any future decision by the Board of Directors to
pay cash dividends will depend upon, among other factors, the Company's
earnings, financial position and capital requirements. The Company's Credit
Facility restricts the Company's ability to pay dividends, other than dividends
payable wholly in capital stock of the Company.
12
<PAGE> 14
SELECTED FINANCIAL INFORMATION
The selected financial information presented below for the five years ended
December 31, 1995 has been derived from the consolidated financial statements of
the Company, which have been audited by Ernst & Young LLP, independent auditors.
The selected financial information as of March 31, 1996 and for the three months
ended March 31, 1996 and 1995 has been derived from unaudited consolidated
financial statements of the Company. In the opinion of management of the
Company, the unaudited financial statements from which such information is
derived contain all adjustments (consisting only of normal recurring
adjustments) necessary for the fair presentation of the results of operations
for such periods. Results for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The pro forma financial information presents results of operations of the
Company as if US Radio and as if both US Radio and REP had been acquired on
January 1, 1995 and 1996 for the periods ended December 31, 1995 and March 31,
1996, respectively. The pro forma information is unaudited and is not
necessarily indicative of the results of operations of the Company had such
acquisitions occurred at the beginning of such period or of the Company's
results of operations for any future periods. The following selected financial
information should be read in conjunction with the consolidated financial
statements and notes thereto of the Company, which are incorporated by reference
herein.
SELECTED FINANCIAL INFORMATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
--------------------------------------------------------------------------- -----------
PRO FORMA
PRO FORMA US RADIO
US RADIO AND REP
STATEMENT OF OPERATIONS DATA(1): 1991 1992 1993 1994 1995 1995(2) 1995(3) 1995
------- -------- -------- -------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net broadcasting revenue............. $64,384 $ 82,205 $118,183 $173,109 $243,813 $271,305 $317,803 $ 51,858
Station operating expenses........... 44,981 53,532 75,990 100,437 131,258 146,814 171,198 33,182
Depreciation and amortization........ 7,641 12,253 17,447 24,668 33,770 44,881 56,849 8,399
------- -------- -------- -------- -------- -------- -------- --------
Station operating income............ 11,762 16,420 24,746 48,004 78,785 79,610 89,756 10,277
Corporate expenses................... 2,403 2,890 3,464 5,100 7,414 7,414 7,414 1,531
------- -------- -------- -------- -------- -------- -------- --------
Operating income.................... 9,359 13,530 21,282 42,904 71,371 72,196 82,342 8,746
Interest expense..................... (5,371) (4,739) (5,390) (7,669) (20,751) (30,442) 46,763 (4,448)
Other income (expense)............... (1,483) (1,217) (196) 1,161 (803) (752) (762) 259
Equity in net income of, and other
income from, nonconsolidated
affiliates.......................... -- -- -- -- 2,927 2,927 2,927 --
------- -------- -------- -------- -------- -------- -------- --------
Income before income taxes........... 2,505 7,574 15,696 36,396 52,744 43,929 37,744 4,557
Income taxes........................ 1,379 3,281 6,573 14,387 20,730 18,786 (16,622) 1,878
------- -------- -------- -------- -------- -------- -------- --------
Net income........................... $ 1,126 $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 25,143 $ 21,122 $ 2,679
======= ======== ======== ======== ======== ======== ======== ========
Net income per common share.......... $ .04 $ .14 $ .29 $ .63 $ .91 $ .72 $ .60 $ .08
======= ======== ======== ======== ======== ======== ======== ========
Weighted average common shares and
common share equivalents
outstanding......................... 25,976 29,660 31,101 34,663 35,100 35,100 35,100 35,039
======= ======== ======== ======== ======== ======== ======== ========
After-tax cash flow(4)............... $ 9,300 $ 17,147 $ 26,638 $ 46,866 $ 71,140 $ 75,382 $ 83,329 $ 11,079
======= ======== ======== ======== ======== ======== ======== ========
After-tax cash flow per share(5)..... $ .36 $ .58 $ .86 $ 1.35 $ 2.03 $ 2.15 $ 2.37 $ .32
======= ======== ======== ======== ======== ======== ======== ========
<CAPTION>
PRO FORMA
PRO FORMA US RADIO
US RADIO AND REP
STATEMENT OF OPERATIONS DATA(1): 1996 1996(2) 1996(3)
------- --------- ---------
<S> <<C> <C> <C>
Net broadcasting revenue............. $62,209 $69,128 $79,933
Station operating expenses........... 38,230 42,797 49,465
Depreciation and amortization........ 8,755 10,965 13,956
------- ------- -------
Station operating income............ 15,224 15,366 16,512
Corporate expenses................... 1,674 1,674 1,674
------- ------- -------
Operating income.................... 13,550 13,692 14,838
Interest expense..................... (5,424) (7,597) 11,257
Other income (expense)............... 205 205 220
Equity in net income of, and other
income from, nonconsolidated
affiliates.......................... 875 875 875
------- ------- -------
Income before income taxes........... 9,206 7,175 4,676
Income taxes........................ 2,968 2,524 (1,649)
------- ------- -------
Net income........................... $ 6,238 $ 4,651 $ 3,027
======= ======= =======
Net income per common share.......... $ .18 $ .13 $ .09
======= ======= =======
Weighted average common shares and
common share equivalents
outstanding......................... 35,205 35,205 35,205
======= ======= =======
After-tax cash flow(4)............... $16,079 $16,702 $18,069
======= ======= =======
After-tax cash flow per share(5)..... $ .46 $ .47 $ .51
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
DECEMBER 31, ---------------------
--------------------------------------------------- AS
BALANCE SHEET DATA: 1991 1992 1993 1994 1995 ACTUAL ADJUSTED(6)
------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents............ $ 3,765 $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 12,006 $ 12,245
Current assets....................... 20,521 24,844 38,191 53,945 70,485 68,671 83,101
Property, plant and
equipment -- net.................... 27,169 48,017 67,750 85,318 99,885 102,987 136,970
Total assets......................... 92,450 146,993 227,577 411,594 563,011 594,979 979,901
Current liabilities.................. 9,960 10,073 26,125 27,679 36,005 31,048 33,470
Long-term debt, net of current
maturities.......................... 48,110 97,000 87,815 238,204 334,164 366,569 517,125
Shareholders' equity................. 24,787 31,055 98,343 130,533 163,713 170,272 402,216
</TABLE>
13
<PAGE> 15
- ---------------
(1) The comparability of results of operations is affected by acquisitions
consummated in certain of the periods presented. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" included herein and as incorporated by
reference herein.
(2) Gives effect to the acquisition of US Radio as if such acquisition had been
consummated on January 1, 1995 and 1996 for the periods ended December 31,
1995 and March 31, 1996, respectively. The pro forma information is based on
a preliminary purchase price allocation.
(3) Gives effect to the acquisitions of US Radio and REP as if such acquisitions
had been consummated on January 1, 1995 and 1996 for the periods ended
December 31, 1995 and March 31, 1996, respectively. The pro forma
information is based on preliminary purchase price allocations. The Company
has presented pro forma financial information for REP, because it believes
that the pending acquisition of REP is material to the Company's results of
operations and financial position.
(4) Defined as net income plus depreciation, amortization of intangibles
(including non-consolidated affiliates) and deferred taxes. After-tax cash
flow is presented here not as a measure of operating results and does not
purport to represent cash provided by operating activities. After-tax cash
flow should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles.
(5) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(6) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $231,944,000 and the acquisitions of US
Radio and REP as if such acquisitions had been consummated on March 31,
1996. The effect of the acquisitions of US Radio and REP are based on
preliminary purchase price allocations.
14
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 TO THREE MONTHS ENDED MARCH
31, 1995
Net broadcasting revenue for the three months ended March 31, 1996
increased 20% to $62,209,000 from $51,858,000 for the same quarter of 1995.
Station operating expenses increased 15% to $38,230,000 from $33,182,000.
Depreciation and amortization increased 4% from $8,399,000 to $8,755,000 in the
first quarter of 1996. Station operating income increased $4,947,000 or 48% to
$15,224,000, compared to $10,277,000 for the first quarter of 1995. Interest
expense increased 22% from $4,448,000 to $5,424,000 in the first quarter of
1996. Net income increased 133% from $2,679,000, or $.08 per share to
$6,238,000, or $.18 per share.
The majority of the growth in net broadcasting revenue and station
operating income was due to the improved operating results of the Company's
radio stations in Houston and television stations in Memphis and Little Rock,
the acquisitions of the broadcasting assets of WOOD-AM/FM and WBCT-FM in Grand
Rapids, Michigan on February 14, 1996, the purchase of the broadcasting assets,
except the FCC license, of WLYH-TV in Lancaster/Lebanon, Pennsylvania, the
purchase of the broadcasting assets and the license of the Harrisburg,
Pennsylvania CBS-affiliate, WHP-TV, on October 31, 1995 and the purchase of the
broadcasting assets, except the FCC license, of WNFT-TV in Jacksonville,
Florida. The majority of the increase in depreciation and amortization was due
to the above-mentioned acquisitions. Interest expense increased primarily due to
an increase in the average amount of debt outstanding -- which resulted from the
above-mentioned acquisitions, the purchase in May 1995 of a 50% interest in ARN
and the purchase in May 1995 of a 21.4% interest in Heftel.
The investments in ARN and Heftel are accounted for under the equity
method; together they contributed $875,000 to net earnings in the first quarter
of 1996. The majority of the increase in net income also was primarily due to
the factors stated above, but was partially offset by an increase of $143,000 in
corporate-related expenses.
LIQUIDITY AND CAPITAL RESOURCES
The major sources of capital for the Company have historically been cash
flow from operations, advances on its credit facility and funds supplied by the
Company's stock offerings. As of May 15, 1996, the Company had approximately
$498,000,000 outstanding under the $600,000,000 Credit Facility, a total of
$11,500,000 in guarantees to third parties, a $7,000,000 letter of credit and a
$3,000,000 note payable to a third party, leaving approximately $80,500,000
available for future borrowings under the Credit Facility.
In addition, the Company has entered into agreements to acquire radio and
television stations from various parties for an aggregate consideration of
$378,420,000, including approximately $240,000,000 for REP, approximately
$68,000,000 for WPRI-TV in Providence, Rhode Island and approximately
$20,372,000 for a one-third interest in New Zealand Radio Network.
The Heftel Transaction will require up to approximately $206,000,000 to
fund its completion. The total liabilities of Heftel ($136,633,000 at March 31,
1996) and the payment of approximately $25,700,000 to two Heftel officers
pursuant to settlement and noncompetition agreements would further reduce the
Company's available credit under the Credit Facility.
The Company will use the proceeds from the Offering to pay down debt under
the Credit Facility. After consummation of the Offering and increasing the
Credit Facility to $1,000,000,000, the Company will have sufficient funds under
the Credit Facility to consummate all pending acquisitions and the Heftel
Transaction. While the Company has not formally amended the commitment under the
Credit Facility, the Company has been advised by its Administrative Lender,
NationsBank of Texas, N.A. that the Administrative Lender agrees with expanding
the existing Credit
15
<PAGE> 17
Facility to $1,000,000,000 on terms that will not be substantially less
favorable than the terms of the existing Credit Facility. However, there can be
no assurance that the Company will be successful in increasing the size of the
existing Credit Facility on such terms or that it could obtain alternative
financing on comparable terms.
The Company believes that cash flow from operations, together with amounts
available to it under its anticipated expanded Credit Facility, will be
sufficient to finance the operating requirements of the Company, anticipated
debt service requirements and anticipated capital expenditures for the Company
through the current fiscal year.
BUSINESS
The Company consists of two principal business segments -- radio
broadcasting and television broadcasting. Currently, the radio segment includes
57 stations for which the Company is the licensee and 15 stations operated under
LMAs or JSAs. These 72 stations operate in 20 different markets. The radio
segment also operates five networks. Assuming all pending acquisitions and one
divestiture are consummated (which include nine stations which the Company
currently operates under LMAs or JSAs), the Company will own 95 radio stations
in 25 markets.
Currently, the television segment includes ten television stations for
which the Company is the licensee and six stations operated under LMAs. These 16
stations operate in ten different markets. The Company has entered into a
definitive agreement to acquire one additional television station, WPRI-TV, the
CBS affiliate in Providence, Rhode Island.
INDUSTRY SEGMENTS
Selected information relating to the Company's two principal business
segments for 1993, 1994 and 1995 is presented in the following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
RADIO
Net broadcasting revenue.................... $ 71,605,141 $ 94,097,668 $ 141,737,053
Station operating expenses.................. 52,254,074 62,383,246 85,023,929
Depreciation................................ 4,605,256 5,664,700 6,973,801
Amortization of intangibles................. 4,508,583 6,659,726 13,007,026
------------ ------------ ------------
Station operating income.................... $ 10,237,228 $ 19,389,996 $ 36,732,297
============ ============ ============
TELEVISION
Net broadcasting revenue.................... $ 46,577,498 $ 79,011,706 $ 102,076,064
Station operating expenses.................. 23,735,957 38,053,612 46,234,281
Depreciation................................ 4,611,726 6,974,404 8,406,025
Amortization of intangibles................. 3,721,697 5,369,710 5,382,030
------------ ------------ ------------
Station operating income.................... $ 14,508,118 $ 28,613,980 $ 42,053,728
============ ============ ============
CONSOLIDATED
Net broadcasting revenue.................... $ 118,182,639 $ 173,109,374 $ 243,813,117
Station operating expenses.................. 75,990,031 100,436,858 131,258,210
Depreciation................................ 9,216,982 12,639,104 15,379,826
Amortization of intangibles................. 8,230,280 12,029,436 18,389,056
------------ ------------ ------------
Station operating income.................... $ 24,745,346 $ 48,003,976 $ 78,786,025
============ ============ ============
</TABLE>
16
<PAGE> 18
RADIO BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 27 AM and 43 FM radio stations and five radio networks
which it owned or operated as of May 15, 1996, and those stations for which an
acquisition is pending, but not those stations that the Company would acquire
through the Heftel Transaction.
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY
- ----------------------------------- ------------- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
HOUSTON, TX(9)
KPRC-AM(3) Adults 25-54 News/Talk/Sports Jan. 1995 950 AM
KSEV-AM(3) Adults 25-54 News/Talk/Sports Jan. 1995 700 AM
KMJQ-FM Adults 24-54 Adult Urban Jan. 1995 102.1 FM
KBXX-FM Adults 18-49 Urban Contemporary Aug. 1994 97.9 FM
KHYS-FM(4) Adults 25-54 Jazz LMA 98.5 FM
KJOJ-AM Adults 25-54 Religious LMA 880 AM
KJOJ-FM Adults 25-54 Jazz May 1996 103.3 FM
MIAMI/FT. LAUDERDALE, FL(11)
WHYI-FM(5) Adults 18-49 Contemporary Hits Oct. 1994 100.7 FM
WBGG-FM(5) Adults 18-49 Classic Hits Mar. 1994 105.9 FM
TAMPA/ST. PETERSBURG, FL(21)
WMTX-AM(5) Adults 25-54 Adult Contemporary Oct. 1994 1040 AM
WMTX-FM(5) Adults 25-54 Adult Contemporary Oct. 1994 95.7 FM
WRBQ-AM(5) Adults 18-49 Adult Urban July 1992 1380 AM
WRBQ-FM(5) Adults 25-54 Country July 1992 104.7 FM
CLEVELAND, OH(22)
WNCX-FM(5) Adults 25-54 Classic Rock Oct. 1994 98.5 FM
WERE-AM(5) Adults 25-54 News/Talk Oct. 1994 1300 AM
WENZ-FM(5) Adults 18-49 Modern Rock May 1996 107.9 FM
MILWAUKEE, WI(28)
WKKV-FM Adults 18-49 Urban Contemporary May 1996 100.7 FM
PROVIDENCE, RI(31)
WWBB-FM Adults 25-54 Oldies Pending 101.5 FM
WWRX-FM Adults 25-54 Classic Rock Pending 103.7 FM
NORFOLK, VA(33)
WOWI-FM Adults 18-49 Urban Contemporary May 1996 102.9 FM
WJCD-FM Adults 25-54 Jazz May 1996 105.3 FM
WGPL-AM(7) Adults 25-54 Adult Urban May 1996 1350 AM
WMYK-FM(7) Adults 25-54 Adult Urban Pending 92.1 FM
WSVY-FM Adults 25-54 Adult Urban LMA 107.7 FM
SAN ANTONIO, TX(34)
WOAI-AM Adults 25-54 News/Talk/Sports June 1975 1200 AM
KQXT-FM Adults 25-54 Adult Contemporary Feb. 1993 101.9 FM
KTKR-AM Adults 25-54 News/Talk/Sports July 1993 760 AM
KAJA-FM Adults 25-54 Country Mar. 1972 97.3 FM
KSJL-FM(6) Adults 25-54 Adult Urban JSA 96.1 FM
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY
- ----------------------------------- ------------- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
NEW ORLEANS, LA(38)
WODT-AM(5) Adults 25-54 News/Talk/Sports Oct. 1984 1280 AM
WQUE-FM(5) Adults 18-49 Urban Contemporary Oct. 1984 93.3 FM
WYLD-AM(5) Adults 25-54 Gospel Aug. 1995 940 AM
WYLD-FM(5) Adults 25-54 Adult Urban Jan. 1995 98.5 FM
WNOE-FM(5) Adults 25-54 Country Pending 101.1 FM
KLJZ-FM(5) Adults 25-54 Jazz Pending 106.7 FM
GREENSBORO, NC(42)
WXRA-FM Adults 18-49 Rock Pending 94.5 FM
WTQR-FM Adults 25-54 Country Pending 104.1 FM
WSJS-AM Adults 25-54 News/Talk Pending 600 AM
MEMPHIS, TN(43)
WHRK-FM(5) Adults 18-49 Urban Contemporary May 1996 97.1 FM
WDIA-AM(5) Adults 25-54 Adult Urban May 1996 1070 AM
WEGR-FM(5) Adults 25-54 Album Oriented Rock Pending 107.7 FM
WREC-AM(5) Adults 35-64 News/Talk Pending 600 AM
WRXQ-FM(5) Adults 18-49 Modern Rock Pending 95.7 FM
KJMS-FM(5) Adults 18-49 Urban Contemporary Pending 101.1 FM
KWAM-AM(5) Adults 25-54 Religious Pending 990 AM
LOUISVILLE, KY(49)
WHAS-AM(5) Adults 25-54 News/Adult Contemporary Sept. 1986 840 AM
WAMZ-FM(5) Adults 25-54 Country Sept. 1986 97.5 FM
WHKW-FM(5)(4) Adults 25-54 Country LMA 98.9 FM
WTFX-FM(5) Adults 25-54 Album Oriented Rock Pending 100.5 FM
WWKY-AM(5) Adults 25-54 News/Talk Pending 790 AM
WKJK-AM(5) Adults 35-54 Traditional Country LMA/Pending 1080 AM
RALEIGH, NC(50)
WQOK-FM Adults 18-49 Urban Contemporary May 1996 97.5 FM
WTCD-FM(4) Adults 25-54 Jazz LMA/Pending 103.9 FM
OKLAHOMA CITY, OK(51)
KTOK-AM Adults 25-54 News/Talk/Sports Oct. 1984 1000 AM
KEBC-FM Adults 18-49 Country Jan. 1994 94.7 FM
KJYO-FM Adults 18-34 Contemporary Hits Oct. 1984 102.7 FM
WKY-AM(6) Adults 25-54 News/Talk LMA 930 AM
KTST-FM Adults 18-34 Country Pending 101.9 FM
KXXY-FM Adults 25-54 Country Pending 96.1 FM
KXXY-AM Adults 25-54 Sports/Talk Pending 1340 AM
AUSTIN, TX(54)
KPEZ-FM Adults 25-54 Classic Rock July 1982 102.3 FM
KHFI-FM Adults 18-49 Contemporary Hits Mar. 1993 96.7 FM
KEYI-FM(6) Adults 25-54 Oldies JSA/Pending 103.5 FM
KFON-AM(6) Adults 25-54 News/Talk JSA/Pending 1490 AM
RICHMOND, VA(56)
WRVA-AM(5) Adults 25-54 News/Talk/Sports July 1992 1140 AM
WRVH-AM(5) Adults 25-54 News/Talk/Sports Sept. 1993 910 AM
WRVQ-FM(5) Adults 18-49 Contemporary Hits July 1992 94.5 FM
WRXL-FM(5) Adults 18-49 Album Oriented Rock Sept. 1993 102.1 FM
WTVR-FM(5) Adults 25-54 Adult Contemporary May 1996 98.1 FM
WTVR-AM(5) Adults 35-64 Nostalgia May 1996 1380 AM
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY
- ----------------------------------- ------------- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
TULSA, OK(60)
KAKC-AM Adults 25-54 News/Sports/Oldies Oct. 1973 1300 AM
KMOD-FM Adults 25-54 Album Oriented Rock Oct. 1973 97.5 FM
KQLL-AM(6) Adults 25-54 Sports/Talk JSA/Pending 1430 AM
KQLL-FM(6) Adults 25-54 Oldies JSA/Pending 106.1 FM
KOAS-FM(6) Adults 25-54 Jazz JSA/Pending 92.1 FM
GRAND RAPIDS, MI(66)
WOOD-AM(5) Adults 35-64 News/Talk/Sports May 1996 1300 AM
WOOD-FM(5) Adults 25-54 Adult Contemporary May 1996 105.7 FM
WBCT-FM(5) Adults 18-49 Country May 1996 93.7 FM
WCUZ-AM(4)(5) Adults 25-54 Sports/Talk/News LMA/Pending 1230 AM
WCUZ-FM(4)(5) Adults 25-54 Country LMA/Pending 101.3 FM
EL PASO, TX(70)
KPRR-FM Adults 18-49 Contemporary Hits May 1996 102.1 FM
KHEY-FM Adults 25-54 Country May 1996 96.3 FM
KHEY-AM Adults 25-54 Oldies May 1996 690 AM
SPRINGFIELD, MA(76)
WHYN-AM Adults 25-54 News/Talk Pending 560 AM
WHYN-FM Adults 25-54 Adult Contemporary Pending 93.1 FM
FT. MYERS/NAPLES, FL(77)
WCKT-FM Adults 25-54 Country Pending 107.1 FM
WXRM-FM Adults 25-54 Soft Adult Pending 105.5 FM
LITTLE ROCK, AR(82)
KDDK-FM(5) Adults 25-54 Country May 1996 103.3 FM
KMJX-FM(5) Adults 25-54 Classic Rock May 1996 105.1 FM
COLUMBIA, SC(88)
WWDM-FM Adults 25-54 Urban Contemporary Pending 101.3 FM
WARQ-FM Adults 18-49 Modern Rock Pending 93.5 FM
NEW HAVEN, CT(95)
WKCI-FM Adults 18-49 Contemporary Hits May 1992 101.3 FM
WAVZ-AM Adults 25-54 Nostalgia May. 1992 1300 AM
WELI-AM Adults 25-54 News/Talk Oct. 1984 960 AM
READING, PA(129)
WRAW-AM Adults 35-64 Nostalgia May 1996 1340 AM
WRFY-FM Adults 18-49 Contemporary Hits May 1996 102.5 FM
RADIO NETWORKS
LOUISVILLE, KY
Kentucky News Network Adults 25-54 News/Agriculture Jan. 1992 N/A
RICHMOND, VA
Virginia News Network Adults 25-54 News/Agriculture Sept. 1993 N/A
OKLAHOMA CITY, OK
Oklahoma News Network Adults 25-54 News/Agriculture Oct. 1984 N/A
SAN ANGELO, TX
Voice of Southwest Agriculture Adults 25-54 News/Agriculture Oct. 1995 N/A
COLLEGE STATION, TX/DES MOINES, IA
Clear Channel Sports Adults 18-49 College Sports Networks Various N/A
</TABLE>
19
<PAGE> 21
- ---------------
(1) Number in parenthesis next to each market indicates that market's national
rank according to BIA Publications, Inc.'s "Investing in Radio 1996 Market
Report, 2nd Edition."
(2) Due to variations that may exist within the same station programming
format(such as variations in the tempo of the music or the age of the songs
broadcast), the primary demographic may be different even though the station
programming format is the same.
(3) 80% owned by the Company.
(4) LMA(FCC license not owned by the Company).
(5) Application for renewal of license pending with the FCC.
(6) JSA(FCC license not owned and station not programmed by the Company).
(7) The Company has entered into a definitive agreement to swap WGPL-AM plus
$2,600,000 for WMYK-FM in Norfolk, Virginia.
TELEVISION BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 16 television stations which it owned or operated as of
May 15, 1996, and one pending station acquisition.
<TABLE>
<CAPTION>
NETWORK DATE OF
MARKET (RANK)/STATION(1) AFFILIATION CHANNEL ACQUISITION
- ------------------------------------------------ ----------- -------- ------------
<S> <C> <C> <C>
MINNEAPOLIS, MN(14)
WFTC-TV FOX TV-29 Oct. 1993
MEMPHIS, TN(42)
WPTY-TV ABC TV-24 Apr. 1992
WLMT-TV(2) UPN TV-30 LMA
HARRISBURG/LEBANON/LANCASTER, PA(44)
WHP-TV CBS TV-21 Oct. 1995
WLYH-TV(2) UPN TV-15 LMA
PROVIDENCE/NEW BEDFORD, RI(46)
WPRI-TV CBS TV-13 Pending
ALBANY/SCHENECTADY/TROY, NY(52)
WXXA-TV FOX TV-23 Dec. 1994
JACKSONVILLE, FL(55)
WAWS-TV FOX TV-30 Sept. 1989
WTEV-TV(2) UPN TV-47 LMA
LITTLE ROCK, AR(58)
KLRT-TV FOX TV-16 Feb. 1994
KASN-TV(2) UPN TV-38 LMA
TULSA, OK(59)
KOKI-TV FOX TV-23 Dec. 1989
KTFO-TV(2) UPN TV-41 LMA
MOBILE, AL/PENSACOLA, FL(61)
WPMI-TV NBC TV-15 Dec. 1988
WJTC-TV(2) UPN TV-44 LMA
WICHITA, KS(63)
KSAS-TV FOX TV-24 Aug. 1990
TUCSON, AZ(80)
KTTU-TV(3) UPN TV-18 Feb. 1989
</TABLE>
- ---------------
(1) Number in parenthesis next to each market indicates that market's national
rank according to BIA Publications, Inc.'s "Investing in Television 1996
Market Report, 2nd Edition."
20
<PAGE> 22
(2) LMA (FCC license not owned by the Company).
(3) On April 1, 1995, the Commission renewed the license of KTTU-TV for a period
of two years due to a finding of violations of the Commission's rules
limiting the amount of commercial matter that may be aired during children's
programming. The Commission also imposed quarterly reporting requirements
during the license term to show continued compliance with the children's
television rules. The Company owns the FCC license for KTTU-TV but entered
into an LMA under which substantially all of the station's programming is
supplied by another party.
Sources of programming for the Company's affiliated stations include the
FOX, ABC, NBC, CBS and UPN television networks, which produce and distribute
programming in exchange for each station's commitment to air the programming at
specified times and for commercial announcement time during the programming.
Each FOX contract currently runs for a five-year term expiring in 1998 except
for the FOX contract for WXXA-TV Albany, New York, which expires in 1999, and
may be renewed by FOX or the Company. Based on the performance of its
FOX-affiliated stations to date, the Company expects it will continue to be able
to renew its FOX contracts, although no assurances in this regard can be given.
The network affiliation agreements with ABC (for WPTY-TV in Memphis, Tennessee,
effective December 1, 1995), CBS (for WHP-TV in Harrisburg, Pennsylvania,
renewed and effective December 18, 1995) and NBC (for WPMI-TV in Mobile,
Alabama, effective January 1, 1996) run for ten-year terms. The Company's
network affiliation agreement with UPN for KTTU-TV in Tucson, Arizona, was
entered into in March 1995 and runs for three years.
The Company purchases the broadcast rights for the majority of its
television programming for its FOX and UPN affiliates from various syndicators.
The Company competes with other television stations within each market for these
broadcast rights. The affiliation changes to NBC in Mobile, Alabama/Pensacola,
Florida and to ABC in Memphis, Tennessee have reduced the Company's need to
obtain outside programming in these markets.
Another source of programming is the production of local news programming
on the FOX, CBS, ABC and NBC affiliate stations in Jacksonville, Florida;
Harrisburg, Pennsylvania; Memphis, Tennessee; and Mobile, Alabama/Pensacola,
Florida, respectively. Local news programming traditionally has appealed to a
target audience of adults 25 to 54 years of age. Because these viewers generally
have increased buying power relative to viewers in other demographic groups,
they are one of the most sought-after target audiences for advertisers. With
such programming, these stations are able to attract advertisers to which they
otherwise would not have access.
Revenue is generated primarily from the sale of local and national
advertising, as well as from fees received from the affiliate television
networks. Advertising rates depend primarily on the quantitative and qualitative
characteristics of the audience the Company can deliver to the advertiser. Local
advertising is sold by the Company's sales personnel, while national advertising
is sold by independent national sales representatives. The Company's revenue is
seasonal, with the fourth quarter generating the highest level of revenue and
the first quarter generating the lowest. The fourth quarter generally reflects
higher advertising in preparation for the holiday season and, in the case of
television, the effect of political advertising in election years.
The Company's broadcasting results are dependent on a number of factors,
including the general strength of the economy, population growth, ability to
provide popular programming, relative efficiency of radio and television
broadcasting compared to other advertising media, signal strength, technological
capabilities and developments and governmental regulations and policies.
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<PAGE> 23
DIVERSIFICATION
The following table sets forth the percentage of net broadcasting revenue
of the Company generated from radio and television operations for stations owned
or operated as of December 31, 1995, in each market in 1995.
<TABLE>
<CAPTION>
PERCENTAGE OF 1995
NET BROADCASTING
MARKET REVENUE
- -------------------------------------------------------------------------- ------------------
<S> <C>
Albany/Schenectady/Troy, NY............................................... 3.6%
Austin, TX................................................................ 3.2
Cleveland, OH............................................................. 3.6
Harrisburg/Lebanon/Lancaster, PA.......................................... 0.7
Houston, TX............................................................... 11.1
Jacksonville, FL.......................................................... 5.2
Little Rock, AR........................................................... 3.9
Louisville, KY............................................................ 6.2
Memphis, TN............................................................... 7.7
Miami/Ft. Lauderdale, FL.................................................. 5.2
Minneapolis, MN........................................................... 9.8
Mobile, AL / Pensacola, FL................................................ 3.9
New Haven, CT............................................................. 2.4
New Orleans, LA........................................................... 3.3
Oklahoma City, OK......................................................... 4.1
Richmond, VA.............................................................. 5.1
San Antonio, TX........................................................... 5.9
Tampa, FL................................................................. 6.0
Tulsa, OK................................................................. 6.0
Tucson, AZ................................................................ 0.2
Wichita, KS............................................................... 2.9
-----
100.0%
=====
</TABLE>
The Company believes that the geographic diversity of its operations helps
to protect it from economic downturns in any particular market.
FEDERAL REGULATION OF TELEVISION AND RADIO BROADCASTING
Existing Regulation and Legislation. Television and radio broadcasting are
subject to the jurisdiction of the FCC under the Communications Act of 1934, as
amended (the "Communications Act"). The Communications Act prohibits the
operation of a television or radio broadcasting station except under a license
issued by the FCC and empowers the FCC, among other things, to issue, renew,
revoke and modify broadcasting licenses; assign frequency bands; determine
stations' frequencies, locations and power; regulate the equipment used by
stations; adopt other regulations to carry out the provisions of the
Communications Act; impose penalties for violation of such regulations; and
impose fees for processing applications and other administrative functions. The
Communications Act prohibits the assignment of a license or the transfer of
control of a licensee without prior approval of the FCC. Under the
Communications Act, the FCC also regulates certain aspects of the operation of
cable television systems and other electronic media that compete with broadcast
stations.
The recently enacted the 1996 Act represents the most comprehensive
overhaul of the country's telecommunications laws in more than 60 years. The
1996 Act significantly changes both the broadcast ownership rules and the
process for renewal of broadcast station licenses. The 1996 Act relaxes local
radio ownership restrictions, but leaves local TV restrictions in place pending
further
22
<PAGE> 24
FCC review. The FCC has already implemented some of these changes through
Commission Orders. Additionally, the 1996 Act substantially liberalizes the
national broadcast ownership rules, eliminating the national radio limits and
easing the national restrictions of TV ownership. The 1996 Act establishes a
"two-step" renewal process that limits the FCC's discretion to consider
applications filed in competition with an incumbent's renewal application.
This new regulatory flexibility is likely to engender aggressive local,
regional, and/or national acquisition campaigns. Removal of previous station
ownership limitations on leading incumbents (i.e., existing networks and major
station groups) can be expected to increase sharply the competition for and the
prices of attractive stations.
Multiple Ownership Restrictions. The FCC has promulgated rules that, among
other things, limit the ability of individuals and entities to own or have an
official position or ownership interest above a certain level (an "attributable"
interest, as defined more fully below) in broadcast stations, as well as other
specified mass media entities. Prior to the passage of the 1996 Act, these rules
included limits on the number of radio and television stations that could be
owned on both a national and local basis. On a national basis, the rules
generally precluded any individual or entity from having an attributable
interest in more than 20 AM radio stations, 20 FM radio stations and 12
television stations. Moreover, the aggregate audience reach of the co-owned
television stations could not exceed 25% of all U.S. television households.
The 1996 Act substantially relaxed the television and radio ownership
limitations. The FCC began its implementation of the 1996 Act with several
orders issued on March 8, 1996. With respect to television, the 1996 Act and the
FCC's subsequently issued orders eliminated the 12-station limit for station
ownership and increased the national audience reach limitation from 25% to 35%.
On a local basis, however, the 1996 Act did not alter current FCC rules limiting
an individual entity to maintaining an attributable interest in only one
television station in a market. The 1996 Act did require the FCC to conduct a
rulemaking proceeding, however, to determine whether to narrow the geographic
scope of the local television cross-ownership rule to permit some two-station
combinations in certain large markets (the "TV duopoly rule"). At the time of
the passage of the Act, the FCC had already initiated a rulemaking to consider
whether the TV duopoly rule should be retained, modified or eliminated.
With respect to radio licensees, the 1996 Act and the FCC's subsequently
issued rule changes eliminated the national ownership restriction, allowing a
single entity to own nationally any number of AM or FM broadcast stations. The
1996 Act and the FCC's new rules also greatly eased local radio ownership
restrictions. As with the old rules, the maximum allowable varies depending on
the number of radio stations within a market. In markets with more than 45
stations, one company may own, operate or control eight stations, with no more
than five in any one service (AM or FM). In markets of 30-44 stations, one
company may own seven stations, with no more than four in any one service; in
markets with 15-29 stations, one entity may own six stations, with no more than
four in any one service. In markets with 14 commercial stations or less, one
company may own up to five stations or 50% of all of the stations, whichever is
less, with no more than three in any one service.
In 1992, the FCC placed limitations on LMAs through which the licensee of
one radio station provides the programming for another licensee's station in the
same market. Stations operating in the same service (e.g., where both stations
are AM) and in the same market are prohibited from simulcasting more than 25% of
their programming. Moreover, in determining the number of stations that a single
entity may control, an entity programming a station pursuant to a LMA is
required, under certain circumstances, to count that station toward its maximum
even though it does not own the station. In a pending rulemaking, the FCC is
seeking comment on issues of control and attribution with respect to time
brokerage or LMAs entered into by television stations. The 1996 Act explicitly
stated that none of its provisions should be construed to prohibit the
origination, continuation, or renewal of any television local marketing
agreement that is in compliance with FCC rules. The Conference Committee Report
accompanying the 1996 Act indicated that the purpose of
23
<PAGE> 25
the provision was to grandfather existing LMAs and allow LMAs in the future,
consistent with FCC rules.
A number of cross-ownership rules pertain to licensees of television and
radio stations. FCC
rules, the Communications Act or both generally prohibit an individual or entity
from having an attributable interest in both a television station and a radio
station, daily newspaper or cable television system that is located in the same
local market area served by the television station. The FCC has employed a
liberal waiver policy with respect to the TV/radio cross-ownership restriction
(the so-called "one-to-a-market" rule), generally permitting common ownership of
one AM, one FM and one TV station in any of the 25 largest markets, provided
there are at least 30 separately owned stations. The 1996 Act directed the
Commission to extend its one-to-a-market waiver policy to the top 50 markets,
consistent with the public interest, convenience and necessity. Moreover, in a
pending 1995 rulemaking the FCC has proposed eliminating the one-to-a-market
rule entirely.
The 1996 Act eliminates a statutory prohibition against common ownership of
television broadcast stations and cable systems serving the same area, but
leaves the current FCC rule in place. The 1996 Act stipulates that the FCC
should not consider the repeal of the statutory ban in any review of its
applicable rules. The recent legislation also eliminates the FCC's former
network/cable cross-ownership limitations, but allows the FCC to adopt
regulations if necessary to ensure carriage, appropriate channel positioning and
nondiscriminatory treatment of non-affiliated broadcast stations on
network-owned cable systems. The FCC has already issued an order dated March 15,
1996 eliminating the network/cable cross-ownership ban, and is expected to
commence proceedings on the local television/cable crossownership limitation
during the second quarter of 1996.
The 1996 Act does not alter the FCC's newspaper/broadcast cross-ownership
restrictions. The 1996 Act does direct the FCC, however, to revise its
long-standing "dual network" rule to permit television broadcast stations to
affiliate with an entity that maintains two or more networks, unless the
combination is composed of (a) two of the four existing networks (ABC, CBS, NBC
or FOX) or (b) any of the four existing networks and one of the two emerging
networks (WBN or UPN). The Commission issued an order implementing this change
on March 8, 1996.
Expansion of the Company's broadcast operations in particular areas and
nationwide will continue to be subject to the FCC's ownership rules and any
further changes the FCC or Congress may adopt. Significantly, the 1996 Act
requires the Commission to review its remaining ownership rules biennially -- as
part of its regulatory reform obligations -- to determine whether its various
rules are still necessary. The Company cannot predict the impact of the biennial
review process or any other agency or legislative initiatives upon the FCC's
broadcast rules. Further, the 1996 Act's relaxation of the FCC's ownership rules
may increase the level of competition in one or more of the markets in which the
Company's stations are located, particularly to the extent that any of the
Company's competitors may have greater resources and thereby be in a better
position to capitalize on such changes.
Under the FCC's ownership rules, a direct or indirect purchaser of certain
types of securities of the Company could violate FCC regulations if that
purchaser owned or acquired an "attributable" or "meaningful" interest in other
media properties in the same areas as stations owned by the Company or in a
manner otherwise prohibited by the FCC. All officers and directors of a
licensee, as well as general partners, limited partners who are not properly
"insulated" from management activities, and stockholders who own five percent or
more of the outstanding voting stock of a licensee (either directly or
indirectly), generally will be deemed to have an attributable interest in the
license. Certain institutional investors who exert no control or influence over
a licensee may own up to ten percent of such outstanding voting stock before
attribution occurs. Under current FCC regulations, debt instruments, non-voting
stock, properly insulated limited partnership interests (as to which the
licensee certifies that the limited partners are not "materially involved" in
the management and operation of the subject media property) and voting stock
held by minority stockholders in cases in which there is a single majority
stockholder generally are not subject to attribution. The FCC's
24
<PAGE> 26
"crossinterest" policy, which precludes an individual or entity from having a
"meaningful" (even though not attributable) interest in one media property and
an attributable interest in a broadcast, cable or newspaper property in the same
area, may be invoked in certain circumstances to reach interests not expressly
covered by the multiple ownership rules.
In January 1995, the FCC initiated a rulemaking proceeding designed to
permit a "thorough review of [its] broadcast media attribution rules." Among the
issues on which comment was sought were (i) whether to change the voting stock
attribution benchmarks from five percent to ten percent and, for passive
investors, from ten percent to twenty percent; (ii) whether there are any
circumstances in which non-voting stock interests, which are currently
considered non-attributable, should be considered attributable; (iii) whether
the FCC should eliminate its single majority shareholder exception (pursuant to
which voting interests in excess of five percent are not considered cognizable
if a single shareholder owns more than fifty percent of the voting power); (iv)
whether to relax insulation standards for business development companies and
other widely-held limited partnerships; (v) how to treat limited liability
companies and other new business forms for attribution purposes; (vi) whether to
eliminate or codify the cross-interest policy; and (vii) whether to adopt a new
policy which would consider whether multiple cross interests or other
significant business relationships (such as time brokerage agreements, debt
relationships or holdings of nonattributable interests), which individually do
not raise concerns, raise issues with respect to diversity and competition. The
Company cannot predict with certainty when this proceeding will be concluded or
whether any of these standards will be changed. Should the attribution rules be
changed, the Company is unable to predict what effect, if any, such changes
would have on the Company or its activities. To the best of the Company's
knowledge at present, no officer, director or five percent stockholder of the
Company holds an interest in another television station, radio station, cable
television system or daily newspaper that is inconsistent with the FCC's
ownership rules and policies or the Company's continued ownership of its
television stations.
License Grant and Renewal. Prior to the passage of the 1996 Act, television
and radio broadcasting licenses generally were granted or renewed for a period
of five and seven years, respectively, upon a finding by the FCC that the
"public interest, convenience, and necessity" would be served thereby. At the
time an application is made for renewal of a television or radio license,
parties in interest may file petitions to deny the application, and such
parties, including members of the public, may comment upon the service the
station has provided during the preceding license term. In addition, prior to
passage of the 1996 Act, any person was permitted to file a competing
application for authority to operate on the station's channel and replace the
incumbent licensee. Renewal applications were granted without a hearing if there
were no competing applications or if issues raised by petitioners to deny such
applications were not serious enough to cause the FCC to order a hearing. If
competing applications were filed, a full comparative hearing was required.
Under the 1996 Act, the statutory restriction on the length of broadcast
licenses has been amended to allow the FCC to grant broadcast licenses for terms
of up to eight years. The 1996 Act also requires renewal of a broadcast license
if the FCC finds that (1) the station has served the public interest,
convenience, and necessity; (2) there have been no serious violations of either
the Communications Act or the FCC's rules and regulations by the licensee; and
(3) there have been no other serious violations which taken together constitute
a pattern of abuse. In making its determination, the FCC may still consider
petitions to deny but cannot consider whether the public interest would be
better served by a person other than the renewal applicant. Instead, under the
1996 Act, competing applications for the same frequency may be accepted only
after the Commission has denied an incumbent's application for renewal of
license.
By order dated April 12, 1996, the FCC modified its rules to implement the
new two-step renewal procedure and to eliminate the right to file an application
that is mutually exclusive with a renewal. Also on April 12, 1996, the FCC
issued a notice of Proposed Rulemaking to consider how to implement the new,
longer license term provision of the 1996 Act.
25
<PAGE> 27
Although in the vast majority of cases broadcast licenses are granted by
the FCC even when petitions to deny are filed against them, there can be no
assurance that any of the Company's stations' licenses will be renewed.
Alien Ownership Restrictions. The Communications Act restricts the ability
of foreign entities or individuals to own or hold certain interests in broadcast
licenses. Foreign governments, representatives of foreign governments, non-U.S.
citizens, representatives of non-U.S. citizens, and corporations or partnerships
organized under the laws of a foreign nation are barred from holding broadcast
licenses. Non-U.S. citizens, collectively, may directly or indirectly own or
vote up to twenty percent of the capital stock of a licensee. In addition, a
broadcast license may not be granted to or held by any corporation that is
controlled, directly or indirectly, by any other corporation more than one-
fourth of whose capital stock is owned or voted by non-U.S. citizens or their
representatives, by foreign governments or their representatives, or by non-U.S.
corporations, if the FCC finds that the public interest will be served by the
refusal or revocation of such license. The FCC has interpreted this provision of
the Communications Act to require an affirmative public interest finding before
a broadcast license may be granted to or held by any such corporation, and the
FCC has made such an affirmative finding only in limited circumstances. The
Company, which serves as a holding company for subsidiaries that serve as
licensees for the stations, therefore may be restricted from having more than
one-fourth of its stock owned or voted directly or indirectly by non-U.S.
citizens, foreign governments, representatives of non-U.S. citizens or foreign
governments, or foreign corporations. The Communications Act previously also
prohibited grant of a broadcast station license (i) to any corporation with an
alien officer or director, or (ii) to any corporation controlled by another
corporation with any alien officers or more than one-fourth alien directors. The
restrictions on non-U.S. citizens serving as officers or directors of licensees
and their parent corporations have been eliminated, however, by the 1996 Act.
Other Regulations Affecting Broadcast Stations. The FCC has significantly
reduced its past regulation of broadcast stations, including elimination of
formal ascertainment requirements and guidelines concerning amounts of certain
types of programming and commercial matter that may be broadcast. In 1990, the
U.S. Supreme Court refused to review a lower court decision that upheld the
FCC's 1987 action invalidating most aspects of the Fairness Doctrine, which had
required broadcasters to present contrasting views on controversial issues of
public importance. The FCC may, however, continue to regulate other aspects of
fairness obligations in connection with certain types of broadcasts. In
addition, there are FCC rules and policies, and rules and policies of other
federal agencies, that regulate matters such as network-affiliate relations, the
ability of stations to obtain exclusive rights to air syndicated programming,
cable systems' carriage of syndicated and network programming on distant
stations, political advertising practices, equal employment opportunity,
application procedures and other areas affecting the business or operations of
broadcast stations. The FCC has adopted rules to implement the Children's
Television Act of 1990 ("Children's Television Act"), which, among other
provisions, limits the permissible amount of commercial matter in children's
programs and requires each television station to present "educational and
informational" children's programming.
Recent Developments, Proposed Legislation and Regulation. The FCC recently
decided to eliminate the prime time access rule ("PTAR"), effective August 30,
1996. The PTAR currently limits the ability of television stations within the
fifty largest markets that are affiliated with ABC, CBS, or NBC to broadcast
network programming (including syndicated programming previously broadcast over
any of these networks) during certain prime time hours. The elimination of the
PTAR could increase the amount of network programming broadcast over a station
affiliated with ABC, CBS or NBC. Such elimination also could result in (i) an
increase in the compensation paid by the network (due to the additional prime
time hours during which network programming could be aired by a
network-affiliated station) and (ii) increased competition for syndicated
network programming that previously was unavailable for broadcast by network
affiliates during prime time. The FCC also recently announced the elimination of
its remaining financial interest and syndication
26
<PAGE> 28
("Fin/syn") rules. The original rules, first adopted in 1970, severely
restricted the ability of ABC, CBS and NBC to obtain financial interests in, or
participate in syndication of, prime-time entertainment programming created by
independent producers for airing during the networks' evening schedules. The FCC
previously lifted the financial interest rules and restraints on foreign
syndication. In January 1996, the Supreme Court refused to review lower court
decisions that upheld the FCC's restrictions on the broadcast of indecent
material and also upheld the agency's policy of imposing substantial monetary
sanctions on repeat offenders of the indecency rules. The rules require stations
to limit the airing of indecent programming to a 10 p.m.-6 a.m. "safe harbor"
period.
The FCC presently is seeking comment on its policies designed to increase
minority ownership of mass media facilities. Congress, however, recently enacted
legislation that eliminated the minority tax certificate program of the FCC,
which gave favorable tax treatment to entities selling broadcast stations to
entities controlled by an ethnic minority. In addition, a recent Supreme Court
decision has cast into doubt the continued validity of other FCC programs
designed to increase minority ownership of mass media facilities.
Congress and the FCC currently have under consideration, and may in the
future adopt, new laws, regulations and policies regarding a wide variety of
matters that could affect, directly or indirectly, the operation and ownership
of the Company's broadcast properties. In addition to the changes and proposed
changes noted above, such matters include, for example, the license renewal
process, spectrum use fees, political advertising rates, potential restrictions
on the advertising of certain products (beer and wine, for example), the rules
and policies to be applied in enforcing the FCC's equal employment opportunity
regulations, standards to more strictly define the type and quantify the amount
of educational and informational programming required under the Children's
Television Act, and regulatory schemes to control the amount of violent
television programming accessible to children (including implementation, as
required under the 1996 Act, of the so-called "V-chip technology," which would
permit parents to program television sets so that certain programming would be
inaccessible to children). Other matters that could affect the Company's
broadcast properties include technological innovations and developments
generally affecting competition in the mass communications industry, such as the
recent initiation of direct broadcast satellite service, the continued
establishment of wireless cable systems and low power television stations, and
the advent of telephone company participation in the provision of video
programming service.
The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act, or the 1996 Act, nor of the regulations
and policies of the FCC thereunder. The 1996 Act and the rules and regulations
thereunder also apply to the distribution of video services by telephone
companies and revisions to the subject matter of the Cable Television Consumer
Protection and Competition Act of 1992. The FCC has under consideration the
initiation of advanced television service, digital audio radio service, and the
expansion of direct broadcast satellite service. Proposals for additional or
revised regulations and requirements are pending before and are being considered
by Congress and federal regulatory agencies from time to time. Also, various of
the foregoing matters are now, or may become, the subject of court litigation,
and the Company cannot predict the outcome of any such litigation or the impact
on its broadcast business. For additional information relating to regulatory
matters, see "Business -- Federal Regulation of Television and Radio
Broadcasting" set forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, as amended, incorporated by reference herein.
MANAGEMENT
The Company believes that one of its most important assets is its
experienced management team. General managers are responsible for the day-to-day
operation of their respective stations. The Company believes that the autonomy
of its station management enables it to attract top quality managers capable of
implementing the Company's aggressive marketing strategy and reacting to
competition in the local markets. Most general managers have stock options in
the Company. As an
27
<PAGE> 29
additional incentive, a portion of each manager's compensation is related to the
performance of the station or stations for which he or she is responsible. In an
effort to monitor expenses, corporate management routinely reviews staffing
levels and programming costs. Combined with the centralized accounting
functions, this monitoring enables the Company to control expenses effectively.
Corporate management also advises local station managers on programming and
other broad policy matters and is responsible for long-range planning,
allocating resources, and financial reporting and controls.
The Company, which began operations in 1972, has its principal executive
offices at 200 Concord Plaza, Suite 600, San Antonio, Texas 78216 (telephone:
210-822-2828).
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 2,000,000 shares of
preferred stock, $1.00 par value per share ("Preferred Stock"), and 100,000,000
shares of Common Stock, $.10 par value per share, of which no shares of
Preferred Stock and 34,614,826 shares of Common Stock were issued and
outstanding at May 15, 1996.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 2,000,000 shares of
Preferred Stock, in one or more series, and to fix the rights, preferences,
privileges and qualifications thereof without any further vote or action by the
shareholders. The issuance of Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of Common Stock, and
adversely affect the rights and powers, including voting rights, of such holders
and may have the effect of delaying, deferring or preventing a change in control
of the Company. No shares of Preferred Stock have ever been issued, and the
Company does not presently contemplate the issuance of Preferred Stock.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of shareholders of the Company and to ratably receive
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor, subject to the payment of any
preferential dividends declared with respect to any Preferred Stock that from
time to time may be outstanding. Upon liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in any assets
available for distribution to shareholders after payment of all obligations of
the Company, subject to the rights to receive preferential distributions of the
holders of any Preferred Stock then outstanding.
Shareholders do not have cumulative voting rights or preemptive or other
rights to acquire or subscribe to additional, unissued or treasury shares. The
shares of Common Stock currently outstanding are, and the shares of Common Stock
offered hereby will be, upon issuance thereof, validly issued, fully paid and
nonassessable.
REPURCHASE AGREEMENT
In May 1977, the Company and its then shareholders, including L. Lowry Mays
and B.J. McCombs, entered into a Buy-Sell Agreement (the "Repurchase Agreement")
restricting the disposition of the outstanding shares of Common Stock owned by
L. Lowry Mays and B.J. McCombs and their heirs, legal representatives,
successors and assigns (collectively, the "Restricted Parties"). The Repurchase
Agreement provides that in the event that a Restricted Party desires to dispose
of his shares, other than by disposition by will or intestacy or through gifts
to such Restricted Party's spouse or children, such shares must be offered for a
period of 30 days to the Company. Any shares not purchased by the Company must
then be offered for a period of 30 days to the other Restricted
28
<PAGE> 30
Parties. If all of the offered shares are not purchased by the Company or the
other Restricted Parties, the Restricted Party offering his shares may sell them
to a third party during a period of 90 days thereafter at a price and on terms
not more favorable than those offered to the Company and the other Restricted
Parties. In addition, a Restricted Party may not individually or in concert with
others sell any shares so as to deliver voting control to a third party without
providing in any such sale that all Restricted Parties will be offered the same
price and terms for their shares. The Repurchase Agreement will continue in
effect following the Offering and may preserve the control of the present
principal shareholders.
FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act on
ownership of Common Stock by aliens, the Company's bylaws were amended effective
December 31, 1983 to provide that (i) not more than one-fifth of the shares
outstanding shall at any time be owned of record, or voted, by or for the
account of aliens, their representatives, a foreign government or a corporation
organized under the laws of a foreign country, (ii) the Company shall not be
owned or controlled directly or indirectly by any other corporation of which any
officer or more than one-fourth of the directors are aliens or of which more
than one-fourth of the shares are owned of record or voted by aliens, (iii) no
person who is an alien may be elected or serve as an officer or director of the
Company, and (iv) if the stock records of the Company shall at any time reflect
one-fifth ownership, no transfers of additional shares to aliens shall be made
and, if it shall thereafter be found that any such additional shares are in fact
held by or for the account of an alien, such shares shall not be entitled to
vote, to receive dividends or to have any other rights. The holder of such
shares will be required to transfer them to a United States citizen or to the
Company. This restriction will be applicable to the shares of Common Stock
offered hereby and to the issuance or transfer of such shares after the date of
this Prospectus. The Company's stock certificates will bear a legend setting
forth this restriction.
29
<PAGE> 31
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters") have severally agreed to purchase
from the Company the following respective number of shares of Common Stock at
the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- -------------------------------------------------------------------------------- ---------
<S> <C>
Alex. Brown & Sons Incorporated.................................................
CS First Boston Corporation.....................................................
Goldman, Sachs & Co. ...........................................................
Lehman Brothers Inc. ...........................................................
---------
Total................................................................. 3,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of Common Stock offered hereby if any of
such shares are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus, and to certain dealers at
such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the Offering, the
offering price and other selling terms may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 300,000
additional shares of Common Stock at the public offering price less the
underwriting discounts and commission set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 300,000, and the Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those in
which the 3,000,000 shares are being offered.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company and Messrs. L. Lowry Mays and B.J. McCombs have agreed that
they will not, directly or indirectly, offer, sell or otherwise dispose of any
equity securities of the Company or any securities convertible into, or
exchangeable for, or any rights to purchase or acquire, equity securities of the
Company (other than employee stock options granted by the Company in the
ordinary course of business) for a period of 90 days after the date of this
Prospectus, without the prior written consent of Alex. Brown & Sons
Incorporated.
30
<PAGE> 32
LEGAL OPINIONS
Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company by its special counsel, Akin, Gump,
Strauss, Hauer & Feld, L.L.P. (a partnership including professional
corporations), San Antonio, Texas, and for the Underwriters by their special
counsel, Wolin, Fuller, Ridley & Miller LLP, Dallas, Texas. Alan D. Feld, the
sole shareholder of a professional corporation which is a partner of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., is a director of the Company and owns 34,615
shares of Common Stock (including presently exercisable nonqualified options to
acquire 14,375 shares).
EXPERTS
The consolidated financial statements (including schedules) of the Company
included or incorporated by reference in the Company's Annual Report (Form 10-K)
for the year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included or
incorporated by reference therein and incorporated herein by reference which, as
to the year 1995, is based in part on the report of KPMG, independent auditors.
The financial statements referred to above are incorporated herein by reference
in reliance upon such reports given upon the authority of such firms as experts
in accounting and auditing.
The consolidated financial statements of Australian Radio Network Pty Ltd
incorporated by reference in the Company's Current Report (Form 8-K) dated May
26, 1995, as amended by Form 8-K/A dated July 27, 1995, have been audited by
KPMG, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. The financial statements referred
to above are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Wesgo Limited and controlled
entities at June 30, 1994 for the year ended June 30, 1994 and at December 31,
1994 for the six month period ended December 31, 1994, and the combined
financial statements of Albert's radio stations, acquired by the Australian
Radio Network Pty Limited, at June 30, 1994 for the year ended June 30, 1994 and
at December 31, 1994 for the six month period ended December 31, 1994, included
in the Company's Current Report (Form 8-K/A) dated July 27, 1995, have been
incorporated by reference herein in reliance upon the reports of KPMG,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
The consolidated financial statements of US Radio, Inc. for the years ended
December 31, 1995 and 1994, included in the Company's Current Report (Form 8-K)
dated May 24, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The combined financial statements of Ragan Henry Communications Group,
L.P., US Radio, L.P. and US Radio Stations, L.P. for the year ended December 31,
1994, included in the Company's Current Report (Form 8-K) dated May 24, 1996
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated herein by reference. Such combined financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Radio Equity Partners, L.P. and
its subsidiary as of December 31, 1995 and 1994, and for the years then ended
have been incorporated herein by reference in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, appearing in the
Form 8-K of Clear Channel Communications, Inc. dated June 5, 1996, and upon the
authority of said firm as experts in accounting and auditing.
31
<PAGE> 33
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements filed by the Company with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, 14th Floor, New
York, New York, 10048, Los Angeles Regional Office, Suite 500 East, Tishman
Building, 5757 Wilshire Boulevard, Los Angeles, California, 90036, and Chicago
Regional Office, 500 W. Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, reports, proxy statements and other information concerning
the Company can be inspected and copied at the offices of the New York Stock
Exchange ("NYSE"), 20 Broad Street, New York, New York 10005, on which the
Common Stock of the Company (symbol: "CCU") is listed.
This Prospectus, which constitutes a part of a Registration Statement filed
by the Company with the Commission under the Securities Act, omits certain
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Company and the Common Stock offered hereby.
Statements contained herein concerning provisions of any document are not
necessarily complete, and each statement is qualified in its entirety by
reference to the copy of such document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
into this Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, dated March 29, 1996, as amended by Form 10-K/A, dated
April 19, 1996.
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1995, dated May 15, 1996.
3. The Company's Current Report on Form 8-K dated May 24, 1996.
4. The Company's Current Report on Form 8-K dated May 26, 1995, as
amended by Form 8-K/A dated July 27,1995.
5. The Company's Current Report on Form 8-K dated June 5, 1996.
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. To the extent that any
proxy statement is incorporated by reference herein, such incorporation shall
not include any information contained in
32
<PAGE> 34
such proxy statement which is not, pursuant to the Commission's rules, deemed to
be "filed" with the Commission or subject to the liabilities of Section 18 of
the Exchange Act.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits, unless such exhibits are specifically incorporated
by reference). Requests for such copies should be directed, to Randall Mays,
Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600, San Antonio,
Texas 78216 (telephone: (210) 822-2828).
33
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
Capitalization........................ 11
Use of Proceeds....................... 12
Price Range of Common Stock........... 12
Dividend Policy....................... 12
Selected Financial Information........ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Business.............................. 16
Description of Capital Stock.......... 28
Underwriting.......................... 30
Legal Opinions........................ 31
Experts............................... 31
Available Information................. 32
Incorporation of Certain Documents by
Reference........................... 32
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,000,000 SHARES
LOGO
CLEAR CHANNEL COMMUNICATIONS, INC.
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
ALEX. BROWN & SONS
INCORPORATED
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 36
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses (other than underwriting discounts and commissions)
in connection with the issuance and distribution of the Common Stock registered
hereby are as follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $85,638
NASD filing fee................................................... 25,335
NYSE listing fee.................................................. *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Blue Sky fees and expenses........................................ *
Printing and engraving expenses Miscellaneous..................... *
-------
Total................................................... *
</TABLE>
- ---------------
* Estimated.
The foregoing expenses will be paid by the registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides for
indemnification of directors and officers in certain circumstances. In addition,
the Texas Miscellaneous Corporation Law provides that a corporation may amend
its Articles of Incorporation to provide that no director shall be liable to the
registrant or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, provided that the liability of a director
is not eliminated or limited (i) for any breach of the director's duty of
loyalty to the registrant or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
(iii) any transaction from which such director derived an improper personal
benefit, or (iv) an act or omission for which the liability of a director is
expressly provided by an applicable statute. The registrant has amended its
Articles of Incorporation and added Article Eleven adopting such limitations on
a director's liability. The registrant's Articles of Incorporation also provide
in Article Nine, for indemnification of directors or officers in connection with
the defense or settlement of suits brought against them in their capacities as
directors or officers of the Company, except in respect of liabilities arising
from gross negligence or willful misconduct in the performance of their duties.
Article IX(8) of the registrant's bylaws provides for indemnification of
any person made a party to a proceeding by reason of such person's status as a
director, officer, employee, partner or trustee of the Company, except in
respect of liabilities arising from negligence or misconduct in the performance
of their duties.
The Underwriting Agreement provides for indemnification by the Underwriters
of the registrant, its directors and officers, and by the registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Securities Act.
An insurance policy obtained by the registrant provides for indemnification
of officers and directors of the registrant and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
II-1
<PAGE> 37
ITEM 16. EXHIBITS
EXHIBITS.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement.
2.1 Stock Purchase Agreement dated March 4, 1996, by and between US Radio
Station, L.P., Blackstone USR Capital Partners L.P., Blackstone USR Offshore
Capital Partners L.P., Blackstone Family Investment Partnership II L.P., BCP
Radio L.P., BCP Offshore Radio L.P., US Radio, Inc., Clear Channel
Communications of Memphis, Inc. and Clear Channel Communications, Inc.
(Incorporated by reference to the exhibits of the Company's Form 8-K dated
May 24, 1996).
2.2 Asset Purchase Agreement dated May 9, 1996, by and between REP New England.
G.P., REP Southeast G.P., REP Ft. Myers G.P., REP Rhode Island G.P., REP
Florida G.P., REP WHYN G.P., REP WWBB G.P., S.E. Licensee G.P., REP WCKT
G.P., RI Licensee G.P., Radio Station Management, Inc., Clear Channel Radio,
Inc. and Clear Channel Radio Licenses, Inc. (Incorporated by reference to
the exhibits of the Company's Form 8-K dated June 5, 1996.)
2.3 Tender Offer Agreement dated June 1, 1996, by and between Clear Channel
Radio, Inc. and Heftel Broadcasting Corporation.
2.4 Stockholder Purchase Agreement dated June 1, 1996, by and between Clear
Channel Radio, Inc. and certain stockholders of Heftel Broadcasting
Corporation.
5* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of KPMG.
23.5 Consent of KPMG Peat Marwick LLP.
23.6* Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in opinion
filed as Exhibit 5).
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, 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 of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new
II-2
<PAGE> 38
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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions set forth or described in Item 15 of
the Registration Statement, or otherwise, the registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Exchange Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
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 Exchange
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this First Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Antonio, State of Texas, on June
5, 1996.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ L. LOWRY MAYS
------------------------------------
L. Lowry Mays
President
POWER OF ATTORNEY
The undersigned directors and officers of Clear Channel Communications,
Inc. hereby constitute and appoint L. Lowry Mays and Herbert Hill, Jr., or
either of them, our true and lawful attorneys-in-fact with full power to execute
in our name and behalf in the capacities indicated below any and all amendments
to this First Amendment to the Registration Statement to be filed with the
Securities and Exchange Commission and hereby ratify and confirm that such
attorneys-in-fact shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this First
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- ------------------------------- -------------
<S> <C> <C>
/s/ L. LOWRY MAYS President, Chief Executive June 6, 1996
- --------------------------------------------- Officer and Director
L. Lowry Mays
/s/ HERBERT W. HILL, JR. Vice President/Controller June 6, 1996
- --------------------------------------------- (Principal Financial and
Herbert W. Hill, Jr. Accounting Officer)
/s/ ALAN D. FELD Director June 6, 1996
- ---------------------------------------------
Alan D. Feld
/s/ B.J. McCOMBS Director June 6, 1996
- ---------------------------------------------
B.J. McCombs
/s/ THEODORE H. STRAUSS Director June 6, 1996
- ---------------------------------------------
Theodore H. Strauss
/s/ JOHN H. WILLIAMS Director June 6, 1996
- ---------------------------------------------
John H. Williams
</TABLE>
II-4
<PAGE> 40
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ---------------------------------------------------------------------- ------------
<C> <S> <C>
1 Form of Underwriting Agreement........................................
2.1 Stock Purchase Agreement dated March 4, 1996, by and between US Radio
Station, L.P., Blackstone USR Capital Partners L.P., Blackstone USR
Offshore Capital Partners L.P., Blackstone Family Investment
Partnership II L.P., BCP Radio L.P., BCP Offshore Radio L.P., US
Radio, Inc., Clear Channel Communications of Memphis, Inc. and Clear
Channel Communications, Inc. (Incorporated by reference to the
exhibits of the Company's Form 8-K dated May 24, 1996)................
2.2 Asset Purchase Agreement dated May 9, 1996, by and between REP New
England. G.P., REP Southeast G.P., REP Ft. Myers G.P., REP Rhode
Island G.P., REP Florida G.P., REP WHYN G.P., REP WWBB G.P., S.E.
Licensee G.P., REP WCKT G.P., RI Licensee G.P., Radio Station
Management, Inc., Clear Channel Radio, Inc. and Clear Channel Radio
Licenses, Inc. (Incorporated by reference to the exhibits of the
Company's Form 8-K dated June 5, 1996.) ..............................
2.3 Tender Offer Agreement dated June 1, 1996, by and between Clear
Channel Radio, Inc. and Heftel Broadcasting Corporation...............
2.4 Stockholder Purchase Agreement dated June 1, 1996, by and between
Clear Channel Radio, Inc. and certain stockholders of Heftel
Broadcasting Corporation..............................................
5* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. .................
23.1 Consent of Ernst & Young LLP..........................................
23.2 Consent of Ernst & Young LLP..........................................
23.3 Consent of Ernst & Young LLP..........................................
23.4 Consent of KPMG.......................................................
23.5 Consent of KPMG Peat Marwick LLP......................................
23.6* Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in
opinion filed as Exhibit 5)...........................................
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
3,000,000 Shares
Clear Channel Communications, Inc.
Common Stock
[FORM OF UNDERWRITING AGREEMENT]
___________, 1996
Alex. Brown & Sons Incorporated
CS First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Gentlemen:
Clear Channel Communications, Inc. a Texas corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 3,000,000 shares of the Company's Common
Stock, $.10 par value (the "Firm Shares"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to sell at the
Underwriters' option an aggregate of up to 300,000 additional shares of the
Company's Common Stock (the "Option Shares") as set forth below.
As to the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option
Shares if you elect to exercise the over-allotment option in whole or in part
for the accounts of the several Underwriters. The Firm Shares and the Option
Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
<PAGE> 2
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters as follows:
(a) A registration statement of Form S-3 (File No.
33-04581) with respect to the Shares has been carefully prepared by
the Company in conformity with the requirements of the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder and has been filed with the Commission
under the Act. The Company has complied with the conditions for the
use of Form S-3 or obtained a waiver thereof. Copies of such
registration statement, including any amendments thereto, and the
preliminary prospectuses (meeting the requirements of Rule 430A of the
Rules and Regulations), exhibits, financial statements and schedules
contained therein, as finally amended and revised, have heretofore
been delivered by the Company to you. Such registration statement,
together with any registration statement filed by the Company pursuant
to Rule 462(b) of the Act, herein referred to as the "Registration
Statement," which shall be deemed to include all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has been declared effective by the Commission under
the Act and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. "Prospectus" means
the form of prospectus first filed by the Company with the Commission
pursuant to its Rule 424(b) and Rule 430A, or the last preliminary
prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the
Act that is delivered by the Company to the Underwriters for delivery
to purchasers of the Shares, together with the term sheet or
abbreviated term sheet filed with the Commission pursuant to Rule
424(b)(7) under the Act. Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective as
contemplated by Rule 430A is herein referred to as a "Preliminary
Prospectus." Any reference herein to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein, as of the
date of such Preliminary Prospectus or Prospectus, as the case may be,
and, in the case of any reference herein to any Prospectus, also shall
be deemed to include any documents or portions thereof incorporated by
reference therein, and any supplements or amendments thereto, filed
with the Commission after the date of filing of the Prospectus under
Rules 424(b) and 430A, and prior to the termination of the offering of
the Shares by the Underwriters.
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Texas, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement
and to issue, sell and deliver the Firm Shares and the Option Shares
as herein contemplated.
<PAGE> 3
(c) Each of the subsidiaries of the Company as
contemplated pursuant to Item 601(b)(22) of Regulation S-K of the
Rules and Regulations (collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with
corporate power and corporate authority to own or lease its properties
and conduct its business as described in the Registration Statement.
The Subsidiaries are the only subsidiaries, direct or indirect, of the
Company.
(d) Except as indicated in Schedule II hereto, all of the
issued and outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by the Company or another
Subsidiary, free and clear of any outstanding liens, encumbrances and
adverse claims, and, except as indicated on Schedule II hereto, no
options, warrants or other rights to purchase, agreements, or other
obligations to sell, transfer, dispose of or issue or other rights to
convert any obligations or interests of capital stock of any
Subsidiary are outstanding.
(e) The Company and each of the Subsidiaries are duly
qualified or licensed to transact business in all jurisdictions
(domestic and foreign) in which the conduct of their respective
businesses requires such qualification or licensing and in which the
failure, individually or in the aggregate, to be so qualified or
licensed could have a material adverse effect on the business,
operations or condition of the Company and the Subsidiaries taken as a
whole; and the Company and each of the Subsidiaries are in compliance
in all material respects with the laws, orders, rules, regulations and
directives issued or administered by such jurisdictions.
(f) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. The capital
stock of the Company, including the Shares, conforms to the
description thereof contained in the Registration Statement and
Prospectus, and the certificates for the Shares are in proper form.
(g) The Board of Directors of the Company has duly
adopted resolutions authorizing the issuance and sale of the Firm
Shares and the Option Shares by the Company; the Company has
authorized capitalization as set forth in the Registration Statement
and the Prospectus; all of the issued and outstanding shares of
capital stock, including Common Stock, of the Company have been duly
and validly authorized and issued and are fully paid and
nonassessable; and the Firm Shares and the Option Shares, when issued
and delivered to the Underwriters as contemplated hereby, will be duly
and validly authorized, fully paid, nonassessable and free and clear
of any lien, encumbrance, preemptive right or other adverse claim.
Neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement
of the Company, enforceable against
3
<PAGE> 4
the Company in accordance with its terms except as rights to indemnity
and contribution hereunder may be limited by federal or state
securities laws and except as the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of
equity.
(i) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus relating to the
offering of the Shares nor instituted proceedings for that purpose.
The Registration Statement contains and the Prospectus and any
amendments or supplements thereto will contain all statements which
are required to be stated therein by, and in all respects conform or
will conform, as the case may be, to, the requirements of the Act and
the Rules and Regulations. The documents incorporated by reference in
the Registration Statement and the Prospectus pursuant to Item 12 of
Form S-3 under the Act, at the time they were filed with the
Commission, complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the rules and regulations of the Commission thereunder, and any
additional documents deemed to be incorporated by reference in the
Registration Statement and the Prospectus pursuant to Item 12 of Form
S-3 under the Act will, when they are filed with the Commission,
comply in all material respects with the requirements of the Exchange
Act, and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the
Registration Statement nor any amendment thereto, and neither the
Prospectus nor any supplement thereto, including any documents
incorporated by reference therein, contains or will contain, as the
case may be, 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, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, or any documents
incorporated by reference therein, in reliance upon, and in conformity
with, written information furnished to the Company by or on behalf of
any Underwriter, specifically for use in the preparation thereof.
(j) The consolidated financial statements of the Company
and the Subsidiaries, together with related notes and schedules as set
forth or incorporated by reference in the Registration Statement,
present fairly the consolidated financial position and results of
operations and cash flow of the Company and Subsidiaries, at the
indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with
generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of results for such periods have been made;
provided, however, as to unaudited financial information, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of the Company,
necessary for a fair statement of results. The summary financial and
statistical data included or incorporated by reference in the
Registration Statement presents fairly the information shown therein
and have been compiled on a basis consistent with the financial
statements presented therein and the books and
4
<PAGE> 5
records of the Company. The pro forma financial statements and other
pro forma financial information included in the Registration Statement
and the Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion
of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(k) Except for those license renewal applications of the
Company currently pending before the Federal Communications Commission
(the "FCC"), a description of which is set forth on Schedule II
hereto, there is no action or proceeding pending or, to the knowledge
of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency which might
result in any material adverse change in the business or condition of
the Company and the Subsidiaries taken as a whole.
(l) The Company and each of the Subsidiaries, as the case
may be, have good and marketable title to all of the properties and
assets reflected in the financial statements (or as described in the
Registration Statement) hereinabove described, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those (i)
reflected in such financial statements, (ii) described in the
Registration Statement, (iii) disclosed on Schedule II hereto or (iv)
which are not material in amount. The Company and the Subsidiaries
occupy their leased properties under valid and binding leases
conforming to the description thereof set forth in the Registration
Statement with such exceptions as are not material to the Company and
the Subsidiaries taken as a whole and do not materially interfere with
the use made and proposed to be made of such properties by the Company
and the Subsidiaries.
(m) The Company and the Subsidiaries have filed all
federal, state and foreign income and franchise tax returns which have
been required to be filed and have paid all taxes indicated by said
returns and all assessments received by them or any of them to the
extent that such taxes have become due. The Company has no knowledge
of any tax deficiency that has been or might be asserted against the
Company.
(n) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or any
development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and
the Subsidiaries taken as a whole, or the earnings, business affairs,
management or business prospects of the Company and the Subsidiaries
taken as a whole, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into
by the Company or the Subsidiaries, other than transactions in the
ordinary course of business and changes and transactions described or
contemplated by the Registration Statement, as it may be amended or
supplemented. The Company and the Subsidiaries have no material
contingent obligations which are not disclosed in the Registration
Statement, as it may be amended or supplemented.
5
<PAGE> 6
(o) Complete and accurate copies of all contracts and
other documents of the Company or any Subsidiary that are required,
under the Rules and Regulations, to be filed as exhibits to the
Registration Statement have been so filed or incorporated by
reference. Neither the Company nor any of the Subsidiaries is in
default under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it or any
of its properties is bound and which default is of material
significance in respect of the business or financial condition of the
Company and the Subsidiaries taken as a whole. The consummation of
the transactions herein contemplated and the fulfillment of the terms
hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party, or of the articles of
incorporation or bylaws of the Company or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or
of any regulatory body or administrative agency or other governmental
body having jurisdiction.
(p) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body, including, without
limitation, the FCC, in connection with the execution and delivery by
the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required
by the National Association of Securities Dealers, Inc. ("NASD") or
the New York Stock Exchange ("NYSE") or may be necessary to qualify
the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
(q) The Company and each of the Subsidiaries holds all
licenses, certificates and permits from governmental authorities,
including, without limitation, the FCC, which are necessary to the
conduct of their respective businesses, and the Company and each of
the Subsidiaries are in compliance therewith. Except as indicated on
Schedule II, there are no license renewal applications of the Company
or any of the Subsidiaries currently pending before the FCC which have
been contested.
(r) Neither the Company nor any Subsidiary is aware of or
has received any notice of infringement of, or conflict or claimed
conflict with, asserted rights of others with respect to any licenses,
patents, patent rights, patent applications, inventions, trade
secrets, know-how, proprietary information or techniques, including
processes, trademarks, service marks, trade names, computer software
or copyrights, which infringement, conflict or claimed conflict is
material to the business of the Company and the Subsidiaries taken as
a whole.
(s) Ernst & Young LLP, KPMG Peat Marwick LLP and KPMG,
each of which have certified certain of the financial statements
filed with the Commission as part of, and/or incorporated by reference
in, the Registration Statement, are independent public accountants as
required by the Act and the Rules and Regulations.
6
<PAGE> 7
(t) No person has the right, contractual or otherwise, to
cause the Company to issue to it, or register pursuant to the Act, any
securities of the Company upon the issue and sale of the Shares to the
Underwriters hereunder (or, if any person holds such a right, such
person has fully and irrevocably waived such right), nor does any
person have preemptive rights, rights of first refusal or other rights
to purchase any of the Shares.
(u) The Company has not taken and will not take, directly
or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the
Exchange Act, or otherwise, in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(v) Other than as discussed in the Registration Statement
and the Prospectus, neither the Company nor any Subsidiary is involved
or engaged in any material negotiations or discussions, or has any
agreement or understanding, with any other person or entity for the
acquisition of any stock, other securities, assets or operations of
such person or entity, which acquisition would be material to the
Company and its Subsidiaries taken as a whole.
(w) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or any
development involving a prospective material adverse change in or
affecting the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise), or prospects
of the Company and the Subsidiaries taken as a whole, whether or not
occurring in the ordinary course of business, and there has not been
any material transaction entered into or any material transaction that
is probable of being entered into by the Company or the Subsidiaries,
other than transactions in the ordinary course of business and changes
and transactions described in the Registration Statement, as it may be
amended or supplemented.
(x) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended ("1940 Act"), and the rules
and regulations of the Commission thereunder.
(y) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The Company and each of its Subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of their respective
7
<PAGE> 8
businesses and the value of their respective properties and as is
customary for companies engaged in similar industries.
(aa) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"), no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"), and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(bb) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date
is later, or if the information reported or incorporated by reference
in the Prospectus, if any, concerning the Company's business with Cuba
or with any person or affiliate located in Cuba changes in any
material way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the
Department.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set
forth, the Company agrees to sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase at a price
of $_____ per share, the number of Firm Shares set forth opposite the
name of each Underwriter in Schedule I hereof, subject to adjustments
in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is
to be made in New York Clearing House or "next day" funds by certified
or bank cashier's checks drawn to the order of the Company against
delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such payment and delivery are
to be made at the offices of Alex. Brown & Sons Incorporated, 135 East
Baltimore Street, Baltimore, Maryland, at 10:00 a.m., Baltimore time,
on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as
you and the Company shall agree upon, such time and date being herein
referred to as the "Closing Date." (As used herein, "business day"
means a day on which the New York Stock Exchange is open for
8
<PAGE> 9
trading and on which banks in New York are open for business and not
permitted by law or executive order to be closed.) The certificates
for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives requests in writing not
later than the second full business day prior to the Closing Date, and
will be made available for inspection by the Representatives at least
one business day prior to the Closing Date.
(c) In addition, on the basis of representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Company hereby grants an option to the several
Underwriters to purchase the Option Shares at the price per share as
set forth in the first paragraph of this Section 2. The option
granted hereby may be exercised in whole or in part by giving written
notice only once at any within 30 days after the date of this
Agreement, by you, as Representatives of the several Underwriters, to
the Company, setting forth the number of Option Shares as to which the
several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the
time and date at which such certificates are to be delivered. The
time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be
earlier than three nor later than ten full business days after the
exercise of such option, nor in any event prior to the Closing Date
(such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days
before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the
total number of Option Shares being purchased as the number of Firm
Shares being purchased by such Underwriter bears to the total number
of Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters. You, as Representatives of
the several Underwriters, may cancel such option at any time prior to
its expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised, payment
for the Option Shares shall be made on the Option Closing Date in New
York Clearing House or "next day" funds by certified or bank cashier's
check drawn to the order of the Company against delivery of
certificates therefor at the offices of Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland.
3. OFFERING BY THE UNDERWRITERS. It is understood that the
several Underwriters are to make a public offering of the Firm Shares as soon
as the Representatives deem it advisable to do so. The Firm Shares are to be
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 2 hereof, the
Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters (the "AAU").
9
<PAGE> 10
4. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will (A) use its best efforts to
cause the Registration Statement to become effective or, if
the procedure in Rule 430A of the Rules and Regulations is
followed, to prepare and timely file with the Commission under
Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information
previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules
and Regulations, and (B) not file any amendment to the
Registration Statement or supplement to the Prospectus or
document incorporated by reference therein of which the
Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall
have reasonably objected in writing or which is not in
compliance with the Rules and Regulations, and (C) file on a
timely basis all reports and any definitive proxy or
information statements required to be filed by the Company
with the Commission subsequent to the date of the Prospectus
and prior to the termination of the offering of the Shares by
the Underwriters.
(ii) The Company will advise the Representatives
promptly (A) when the Registration Statement or any
post-effective amendment thereto shall have become effective,
(B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any
additional information, or (D) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iii) The Company will cooperate with the
Representatives in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions as the
Representatives may reasonably have designated in writing and
will make such applications, file such documents and furnish
such information as may be reasonably required for that
purpose, provided the Company shall not be required to qualify
as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company
will, from time to time, prepare and file such statements,
reports and other documents as are or may be required to
continue such qualifications in effect for so long a period as
the Representatives may reasonably request for distribution of
the Shares.
(iv) The Company will deliver to, or upon the
order of, the Representatives from time to time as many copies
of any Preliminary Prospectus as
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<PAGE> 11
the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during
the period when delivery of a Prospectus is required under the
Act, as many copies of the Prospectus in final form, or as
thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the
Representatives, at or before the Closing Date, four signed
copies of the Registration Statement and all amendments
thereto including all exhibits filed therewith, and will
deliver to the Representatives such number of copies of the
Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested),
including documents incorporated by reference therein but
without exhibits, and of all amendments thereto, as the
Representatives may reasonably request.
(v) The Company will comply with the Act, the
Rules and Regulations, the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated
in this Agreement and the Prospectus. If, during the period
in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements
therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading,
or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will
either (A) prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the
Prospectus or (B) prepare and file with the Commission an
appropriate filing under the Exchange Act which shall be
incorporated by reference in the Prospectus so that the
Prospectus as so amended or supplemented will not, in light of
the circumstances when it is so delivered, be misleading, or
so that the Prospectus will comply with the law.
(vi) The Company will make generally available to
its security holders, as soon as it is practicable to do so,
but in any event not later than 15 months after the effective
date of the Registration Statement, an earning statement
(which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning
statement shall satisfy the requirements of Section 11(a) of
the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made
available.
(vii) The Company will, for a period of five years
from the Closing Date, deliver or otherwise make available to
the Representatives copies of annual reports and copies of all
other documents, reports and information furnished by the
Company to its stockholders or filed with any securities
exchange pursuant to the requirements of such exchange or with
the Commission pursuant to the Act or the Exchange Act.
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<PAGE> 12
(viii) No offering, sale, short sale or other
disposition of any shares of Common Stock of the Company or
other securities convertible into or exchangeable or
exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of 90
days after the date of this Agreement, directly or indirectly,
by the Company otherwise than hereunder or with the prior
written consent of Alex. Brown & Sons Incorporated, except
that the Company may, without such employee consent, grant
options or issue shares of Common Stock pursuant to the
Company's stock option plans.
(ix) The Company has caused L. Lowry Mays and B.J.
McCombs to furnish to you, on or prior to the date of this
Agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise
dispose of any shares of Common Stock of the Company or other
capital stock of the Company, or any other securities
convertible, exchangeable or exercisable for Common Stock or
derivative of Common Stock owned by such person or request the
registration for the offer or sale of any of the foregoing (or
as to which such person has the right to direct the
disposition of) for a period of 90 days after the date of this
Agreement, directly or indirectly, except with the prior
written consent of Alex. Brown & Sons Incorporated ("Lockup
Agreements").
(x) The Company shall apply the net proceeds from
the sale of the Shares as set forth in the Prospectus.
(xi) The Company shall not invest, or otherwise
use, the proceeds received by the Company from its sale of the
Shares in such a manner as would require the Company or any of
the Subsidiaries to register as an investment company under
the 1940 Act.
(xii) The Company will not take, directly or
indirectly, any action designed to cause or result in, or that
has constituted or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any
securities of the Company.
5. COSTS AND EXPENSES. Unless otherwise agreed to by the Company
and the Underwriters, the Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Company under this
Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, this Agreement, the AAU, the
Underwriters' Selling Memorandum, the Underwriters' Invitation Letter,
Questionnaire and Power of Attorney, the Listing Application, the preliminary
and final Blue Sky Survey and any supplements or amendments thereto; the filing
fees of the Commission; the filing fees and expenses (including legal fees and
disbursements) incident to securing any required review by the NASD of
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<PAGE> 13
the terms of the sale of the Shares; the listing fee of the New York Stock
Exchange; and the expenses, including the fees and disbursements of counsel for
the Underwriters, incurred in connection with the qualification of the Shares
under state securities or Blue Sky laws. The Company shall not, however, be
required to pay for any of the Underwriters' expenses (other than those related
to qualification of the Shares under NASD regulation and state securities or
Blue Sky laws) except that, if this Agreement shall not be consummated because
the conditions in Section 6 hereof are not satisfied, or because this Agreement
is terminated by the Representatives pursuant to Section 11 hereof, or by
reason of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on its part to be performed, unless such failure
to satisfy such condition or to comply with said terms be due to the default or
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder, but the Company shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares or other special or consequential
damages.
6. CONDITIONS TO OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date are subject to the
accuracy, as of the Closing Date or the Option Closing Date, as the case may
be, of the representations and warranties of the Company contained herein, and
to the performance by the Company of its respective covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings
required by Rule 424 and Rule 430A of the Rules and Regulations shall
have been made, and any request of the Commission for additional
information (to be included in the Registration Statement or
otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order
suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued, and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company,
shall be contemplated by the Commission, and no injunction,
restraining order, or order of any nature by a federal or state court
of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, the
opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., special counsel
to the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters (and stating that it
may be relied upon by counsel to the Underwriters) to the effect that:
(i) The Company is validly existing as a
corporation in good standing under the laws of the State of
Texas, with corporate power and authority to own or
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<PAGE> 14
lease its properties and conduct its business as described in
the Registration Statement and the Prospectus;
(ii) Each of the Subsidiaries is validly existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and
authority to own its properties and conduct its business as
described in the Registration Statement and Prospectus;
(iii) All of the issued and outstanding shares of
capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and
nonassessable and are owned by the Company or another
Subsidiary; and, to the best of such counsel's knowledge,
except (A) as reflected in the Company's financial statements,
(B) as described in the Registration Statement or (C) as
disclosed on Schedule II hereto, such shares are so owned free
and clear of any pledge, lien, charge, encumbrance, security
interest or other adverse claim, and there are no outstanding
rights, subscriptions, warrants, calls, preemptive rights,
options or agreements of any kind with respect to the capital
stock of any of the Subsidiaries;
(iv) The Company and each of the Subsidiaries are
duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such
qualification, except in which the failure to qualify would
not have a material adverse effect upon the business of the
Company and the Subsidiaries taken as a whole;
(v) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization"
in the Registration Statement and the Prospectus; the
outstanding shares of capital stock, including the Common
Stock, of the Company have been duly authorized and validly
issued and are fully paid and nonassessable; the capital stock
of the Company, including the Shares, conforms in all material
respects to the description thereof contained in the
Registration Statement and the Prospectus; the certificates
for the Shares are in due and proper form; the Firm Shares and
the Option Shares, if any, to be sold by the Company pursuant
to this Agreement have been duly authorized and will be
validly issued, fully paid and nonassessable when issued and
paid for as contemplated by this Agreement; no preemptive
rights of shareholders exist with respect to any of the Shares
or the issue and sale thereof; and the Underwriters have
acquired good and marketable title to the Shares being sold by
the Company on the Closing Date and Option Closing Date, if
any, free and clear of all claims, liens, encumbrances and
adverse claims whatsoever;
(vi) The Registration Statement, all Preliminary
Prospectuses, the Prospectus and each amendment or supplement
thereto and document incorporated by reference therein comply
as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the applicable
rules and regulations thereunder (except that such counsel
need express no opinion as to the
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<PAGE> 15
financial statements, schedules and other financial
information included or incorporated by reference therein);
(vii) The Registration Statement has become
effective under the Act and, to the best of such counsel's
knowledge, no stop order proceedings with respect thereto have
been instituted or are pending or threatened under the Act;
(viii) To the best of such counsel's knowledge,
there are no contracts, licenses, agreements, leases or other
documents required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required,
and such contracts, licenses, agreements, leases and documents
as are summarized in the Registration Statement or the
Prospectus are fairly summarized in all material respects;
(ix) To the best of such counsel's knowledge,
there are no material legal proceedings pending or threatened
against the Company or any of the Subsidiaries except as set
forth in the Registration Statement and the Prospectus;
(x) To the best of such counsel's knowledge,
there are no material legal proceedings pending or threatened
against any of the Company's or any Subsidiary's directors or
officers relating in any way to their status or service as
directors or officers, as the case may be, except as set forth
in the Registration Statement and the Prospectus;
(xi) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated
do not and will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under,
the articles of incorporation or bylaws of the Company, or any
agreement or instrument known to such counsel to which the
Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries may be bound, or under any
federal, state or local law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the
Subsidiaries;
(xii) This Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid
and binding agreement of the Company enforceable against the
Company in accordance with its terms except as rights to
indemnity and contribution hereunder may be limited by federal
or state securities laws and except as the enforceability
hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and by general principles of
equity;
(xiii) No approval, license, consent, order,
authorization, designation, declaration or filing by or with
any regulatory, administrative or other governmental body is
necessary in connection with the execution and delivery of
this Agreement
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<PAGE> 16
and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or NYSE or as
required by state securities and Blue Sky laws as to which
such counsel need express no opinion) except such as have been
obtained or made and is in full force and effect;
(xiv) To the best of such counsel's knowledge, the
Company and each of the Subsidiaries have all necessary and
material licenses (excluding those issued or issuable by the
FCC), certificates, permits, authorizations, consents and
approvals and have made all necessary filings required under
any federal, state, local or international law, regulation or
rule and have obtained all necessary authorizations, consents
and approvals from other persons which are necessary in order
to conduct their respective businesses as described in the
Registration Statement and the Prospectus, except where the
failure to have such licenses, authorizations, consents or
approvals or the failure to do so, would not have a material
adverse effect on the Company and the Subsidiaries taken as a
whole, and to the best of such counsel's knowledge, neither
the Company nor any of the Subsidiaries is in violation of, or
in default under, any license, (excluding those issued or
issuable by the FCC) certificates, permits, authorization,
consent or approval or any law, regulation or rule or any
decree, order or judgment applicable to the Company or the
Subsidiaries, where such violation or default could have a
material adverse effect on the Company and the Subsidiaries
taken as a whole;
(xv) To such counsel's knowledge, no person holds
a right, contractual or otherwise, to cause the Company to
register, pursuant to the Act, any securities of the Company
upon the issuance and sale of its Shares to the Underwriters
hereunder or, if any person holds such aright, such person has
fully and irrevocably waived such right;
In rendering such opinion, Akin, Gump, Strauss, Hauer & Feld,
L.L.P. may rely as to matters governed by the laws of states other
than Texas or federal laws on local counsel in such jurisdictions,
provided that in each case Akin, Gump, Strauss, Hauer & Feld, L.L.P.
shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. In addition to the
matters set forth above, such opinion shall also include a statement
to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, at
the time it became effective under the Act (but after giving effect to
any modifications incorporated therein pursuant to Rule 430A under the
Act) and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in light of the
circumstances under which they are made, not misleading (except that
such counsel need express no view as to financial statements,
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<PAGE> 17
schedules or statistical or financial information contained or
incorporated by reference therein). With respect to such statement,
Akin, Gump, Strauss, Hauer & Feld, L.L.P. may state that their belief
is based upon the procedures set forth therein, but is without
independent check and verification.
(c) The Underwriters shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of
Wiley, Rein & Fielding, special communications counsel for the
Company, dated the Closing Date or the Option Closing Date, as the
case may be, addressed to the Underwriters to the effect that:
(i) No consent, approval, authorization or order
of, or filing or declaration with, the FCC is required for or
in connection with the authorization, issuance, transfer, sale
or delivery of the Shares by the Company as described in the
Prospectus assuming that (i) no individual or entity will
acquire an attributable ownership interest in the Company as
that term is defined by the FCC; and (ii) less than 25% of the
capital stock of the Company will be owned by alien
individuals or entities; provided, however, certain of the
transaction documents may be subject to a requirement that
they be filed with the FCC pursuant to Section 73.3613 of its
rules.
(ii) The authorization, issuance, transfer, sale
and delivery of the Shares by the Company as described in
the Prospectus will not result in a breach or violation of
any term or provision of the Communications Act or the
Telecommunications Act of 1996, or any orders, rules or
regulations of the FCC thereunder, assuming that (i) no
individual or entity will acquire an attributable ownership
interest in the Company as that term is defined by the FCC; and
(ii) less than 25% of the capital stock of the Company will be
owned by alien individuals or entities.
(iii) The Company and the Subsidiaries hold valid
authorizations from the FCC ("Licenses") for the U.S. radio and
television stations (the "Stations") identified in the
Prospectus under "Business -- Radio Broadcasting" and "Business
-- Television Broadcasting" in those instances where a date is
entered in the column "Date of Acquisition" and for WENZ (FM),
Cleveland, Ohio, which was acquired on May 31, 1996. All of
the Licenses are in full force and effect.
(iv) To counsel's knowledge, the Licenses are
sufficient to operate the Stations on the frequencies and in
the markets listed in the Prospectus under "Business -- Radio
Broadcasting" and "Business -- Television Broadcasting" in the
columns "Frequency/Amplitude" and "Market (Rank)/Station"
respectively.
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<PAGE> 18
(v) To counsel's knowledge, other than rule making
proceedings or similar proceedings of general applicability to
the radio and television broadcasting industry, there is not
now issued, outstanding, pending or threatened, any notice of
violation, order to show cause, complaint, or investigation by
or before the FCC directed against the Company or the Stations,
that would materially and adversely affect the operations of
the Stations generally. To counsel's knowledge, there are no
material legal proceedings pending or threatened against the
Company or any of the Subsidiaries, except as set forth in the
Registration Statement and the Prospectus.
(vi) Those portions of the Prospectus under the
caption "Risk Factors -- Government Regulation" and "Business
-- Federal Regulation of Television and Radio Broadcasting," in
the Company's Annual Report on Form 10-K, as amended to date,
incorporated therein by reference, under the caption "Item 1.
Business - Federal Regulation of Television and Radio
Broadcasting" are accurate and fairly present the information
set forth therein in all material respects (i) with respect to
the information contained in the Prospectus, as of the date of
the Prospectus and (ii) with respect to the information
contained in the Company's Annual Report on Form 10-K, as of
March 29, 1996.
(vii) The Company and the Subsidiaries have pending
before the FCC or the FCC has granted the license assignment or
transfer of control applications for the U.S. radio and
television stations listed in the Prospectus Summary under the
caption "Recent Developments."
(d) The Representatives shall have received from Wolin,
Fuller, Ridley & Miller LLP, counsel for the Underwriters, an opinion
dated the Closing Date or the Option Closing Date, as the case may be,
with regard to the Company, the Subsidiaries, the validity of the
Shares, the Registration Statement, the Prospectus and such other
matters as the Representatives may reasonably request. In rendering
such opinion, Wolin, Fuller, Ridley & Miller LLP may rely as to all
matters governed other than by the laws of the state of Texas or
federal laws on the opinion of counsel referred to in Paragraph (b) of
this Section 6. In addition to the matters set forth above, such
opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel which leads them to believe that
(i) the Registration Statement, or any amendment thereto, as of the
time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the
Act) as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Prospectus,
or any supplement thereto, on the date it was filed pursuant to the
Rules
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<PAGE> 19
and Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements, in light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to
financial statements, schedules or statistical or financial
information contained or incorporated by reference therein). With
respect to such statement, Wolin, Fuller, Ridley & Miller LLP may
state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
(e) The Representatives shall have received at or prior
to the Closing Date from Wolin, Fuller, Ridley & Miller LLP a
memorandum or summary, in form and substance satisfactory to the
Representatives, with respect to the qualification for offering and
sale by the Underwriters of the Shares under the state securities or
Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(f) You shall have received, on each of the dates hereof,
the Closing Date and the Option Closing Date, as the case may be, a
letter dated the date hereof, the Closing Date or the Option Closing
Date, as the case may be, in form and substance satisfactory to you, of
Ernst & Young LLP, KPMG Peat Marwick LLP and KPMG confirming that they
are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating
that in their respective opinions the financial statements and
schedules of the Company, US Radio, Inc., Ragan Henry Communications
Group, L.P., US Radio, L.P. and US Radio Stations, L.P., examined by
Ernst & Young LLP, the financial statements and schedules of Radio
Equity Partners, L.P., examined by KPMG Peat Marwick LLP, and the
financial statements and schedules of Australian Radio Network Pty. Ltd
and its controlled entities, examined by KPMG, and incorporated in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
Rules and Regulations; and containing such other statements and
information as is ordinarily included in accountants' "comfort letters"
to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration
Statement and Prospectus.
(g) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, a
certificate or certificates of the President and Chief Executive
Officer and the Vice President and Controller of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the
case may be, each of them severally represents as follows:
(i) The Registration Statement has become
effective under the Act and no stop order suspending the
effectiveness of the Registration Statement has been issued,
and no proceedings for such purpose have been taken or are, to
the best of his knowledge, contemplated by the Commission;
(ii) To the best of his knowledge, the
representations and warranties of the Company contained in
Section 1 hereof are true and correct in all material respects
as of the Closing Date or the Option Closing Date, as the case
may be;
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(iii) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the
effective date of the Registration Statement, the statements
contained in the Registration Statement were true and correct,
and such Registration Statement and Prospectus did not omit to
state a material fact require to be stated therein or
necessary in order to make the statements therein not
misleading and, since the effective date of the Registration
Statement, no event has occurred which should have been set
forth in a supplement to or an amendment of the Prospectus
which has not been so set forth in such supplement or
amendment;
(iv) To the best of his knowledge, since the
respective dates as of which information is given in the
Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a
prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and the
Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, except as referred to in the
Registration Statement;
(v) There has been no material transaction
entered into by the Company or the Subsidiaries since December
31, 1995, other than the completed or contemplated
transactions referred to in the Prospectus, transactions in
the ordinary course of business and transactions as to which
the Underwriters have given their prior written consent ; and
(vi) No material legal or governmental proceeding
is pending or, to the best of his knowledge, threatened
against the Company or any of the Subsidiaries that is likely
to have a material adverse effect on the business, operations,
financial condition or prospects of the Company and the
Subsidiaries, taken as a whole.
(h) The Company shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained
herein and related matters as the Representatives may reasonably have
requested.
(i) The Firm Shares and Option Shares, if any, have been
approved for listing, subject to notice of issuance, on the New York
Stock Exchange.
(j) The Lockup Agreements described in Section 4(x) have
been executed and deliverd and are in full force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Wolin, Fuller,
Ridley & Miller LLP, counsel for the Underwriters.
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If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to sell and deliver the portion of the Shares required to be
delivered as and when specified in this Agreement are subject to the conditions
that at the Closing Date or the Option Closing Date, as the case may be, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and in effect or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling person
may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained or
incorporated by reference in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or (ii) 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
and each such controlling person upon demand for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage or liability, action or proceeding or in responding to a
subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a
party to any action or proceeding; 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, or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or
through the Representatives specifically for use in the preparation
thereof, and provided further that the Company shall not be liable
with respect to any untrue statement contained in or any omission from
a Preliminary Prospectus if the untrue statement contained in or such
omission from such Preliminary Prospectus was corrected in the
applicable Prospectus and the person asserting any such loss,
liability, claim or damage was not given or sent a copy of the
applicable Prospectus (excluding the documents incorporated by
reference therein) in the manner and at such time as required by the
Act, providing the Company has furnished
21
<PAGE> 22
you copies of such applicable Prospectus. This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the
Act, against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or (ii) 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 light of
the circumstances under which they were made, and will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability,
action or proceeding; provided, however, that each Underwriter will be
liable in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in
reliance upon and in conformity with written information furnished to
the Company by such Underwriter or through the Representatives on
behalf of such Underwriter specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 8, such person
(the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in
writing. No indemnification provided for in Section 8(a) or (b) shall
be available to any party who shall fail to give notice as provided in
this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the indemnifying party
or parties from any liability which it or they may have to the
indemnified party for contribution or otherwise than on account of the
provisions of Sections 8(a) or (b). In case any such proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the
indemnified party
22
<PAGE> 23
in the event (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel, or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm for all such indemnified parties. Such firm
shall be designated in writing by you in the case of parties
indemnified pursuant to Section 8(a) and by the Company in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of
which indemnification may be sought hereunder (whether or not any
indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings 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, damages or liabilities (or actions or
proceedings in respect thereof) 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
Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect
not only such relative benefits 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 (or actions or proceedings in
respect thereof), 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
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the
Prospectus. 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 on the
one hand or the Underwriters on the other
23
<PAGE> 24
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters 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 above in this Section 8(d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
above in this Section 8(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), (i) no
Underwriter shall be required to contribute any amount in excess of
the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations
in this Section 8(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any
supplement or amendment thereto, each party against whom contribution
may be sought under this Section 8 hereby consents to the jurisdiction
of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him or
it by any other contributing party and consents to the service of such
process and agrees that any other contributing party may join him or
it as an additional defendant in any such proceeding in which such
other contributing party is a party.
9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and
pay for the portion of the Shares which such Underwriter has agreed to purchase
and pay for on such date (otherwise than by reason of any default on the part
of the Company), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company such amounts as
may be agreed upon and upon the terms set forth herein, of the Firm Shares or
Option Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as
Representatives, shall not have procured such other Underwriters, or any
others, to purchase the Firm Shares or Option Shares, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of shares with respect to which such default shall
occur does not exceed 10% of the Firm Shares or Option Shares, as the case may
be, covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective numbers of Firm Shares or Option Shares, as the
case may be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate number
of Firm Shares or Option Shares,
24
<PAGE> 25
as the case may be, with respect to which such default shall occur, exceeds 10%
of the Firm Shares or Option Shares, as the case may be, covered hereby, the
Company or you, as the Representatives of the Underwriters, will have the
right, by written notice given within the next 36-hour period to the parties to
this Agreement, to terminate this Agreement without liability on the part of
the nondefaulting Underwriters or of the Company except to the extent provided
in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option
Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
10. NOTICES. All communications hereunder shall be in writing
and, except as otherwise provided herein, will be mailed, delivered, telecopied
or telegraphed and confirmed as follows: if to the Underwriters, to Alex.
Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland
21202, Attention: Mr. Jeffrey Amling; with a copy to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202, Attention:
General Counsel; if to the Company, to Clear Channel Communications, Inc., 200
Concord Plaza, Suite 600, San Antonio, Texas 78216, Attention: Mr. Randall
Mays, Vice President.
11. TERMINATION. This Agreement may be terminated by you by
notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the
Shares are released by you for sale by notice to the Underwriters, or
(ii) 11:30 a.m., Baltimore, Maryland time, on the first business day
following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole, whether or not arising
in the ordinary course of business; (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other
national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make
it impracticable to market the Shares or to enforce contracts for the
sale of the Shares; (iii) suspension of trading in securities
generally on the New York Stock Exchange or limitation on prices
(other than limitations on hours or numbers of days of trading) for
securities on such exchange; (iv) the enactment, publication, decree
or other promulgation of any statute, regulation, rule or order of any
court or other governmental authority which
25
<PAGE> 26
in your opinion materially and adversely affects or may materially or
adversely affect the business or operations of the Company; (v)
declaration of a banking moratorium by either United States or New
York State authorities; (vi) the suspension of trading of the
Company's Common Stock by the Commission or the New York Stock
Exchange; or (vii) the taking of any action by any governmental body
or agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS. This Agreement has been and is made solely for
the benefit of the Underwriters and the Company and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS. The Company and the
Underwriters acknowledge and agree that the only information furnished or to be
furnished by any Underwriter to the Company for inclusion in any Prospectus or
the Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or its directors or officers, and
(c) delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
26
<PAGE> 27
Very truly yours,
CLEAR CHANNEL COMMUNICATIONS, INC.
By:
----------------------------------
Authorized Officer
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
ALEX. BROWN & SONS INCORPORATED
CS FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By:
----------------------------------
Authorized Officer
27
<PAGE> 28
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
---------------------
Underwriter to be Purchased
----------- ---------------
Alex. Brown & Sons Incorporated
CS First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers, Inc.
_________
Total 3,000,000
=========
<PAGE> 1
TENDER OFFER AGREEMENT
BETWEEN
CLEAR CHANNEL RADIO, INC.
AND
HEFTEL BROADCASTING CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 THE OFFER.................................................... 1
1.1 The Offer.................................................... 1
1.2 Schedule 14D-1............................................... 2
1.3 Shareholder Lists............................................ 2
1.4 Company Action............................................... 3
1.5 Stock Options and Warrants................................... 3
1.6 Closing...................................................... 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF PARENT..................... 4
2.1 Organization, Standing and Power............................. 4
2.2 Authority.................................................... 4
2.3 Brokers...................................................... 5
2.4 Financing.................................................... 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 5
3.1 Organization................................................. 5
3.2 Capitalization............................................... 5
3.3 Authority.................................................... 6
3.4 Brokers...................................................... 6
3.5 Board Actions................................................ 6
3.6 Financial Statements......................................... 6
ARTICLE 4 PRE-CLOSING COVENANTS........................................ 7
4.1 Conduct of Business by the Company Pending the
Closing...................................................... 7
4.2 No Other Bids................................................ 9
4.3 Control of Stations.......................................... 10
4.4 Renewal Application.......................................... 11
ARTICLE 5 ADDITIONAL AGREEMENTS........................................ 11
5.1 Access to Information of the Company;
Confidentiality.............................................. 11
5.2 Fees and Expenses............................................ 11
5.3 Additional Agreements........................................ 11
5.4 Consents and Filings......................................... 12
5.5 Indemnification.............................................. 12
5.6 Company Indebtedness......................................... 14
5.7 Convertible Securities....................................... 14
5.8 Parent Commission Filings.................................... 14
5.9 Maintain Listing............................................. 14
5.10 Independent Directors........................................ 15
ARTICLE 6 FCC APPROVAL................................................. 15
ARTICLE 7 CONDITIONS................................................... 15
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 8 TERMINATION.................................................. 16
8.1 Termination.................................................. 16
8.2 Effect of Termination........................................ 17
ARTICLE 9 DEFINITIONS.................................................. 19
ARTICLE 10 GENERAL PROVISIONS........................................... 19
10.1 Amendment.................................................... 19
10.2 Waiver....................................................... 20
10.3 Public Statements............................................ 20
10.4 Assignment and Binding Effect................................ 20
10.5 Governing Law................................................ 20
10.6 Entire Agreement............................................. 20
10.7 Severability................................................. 20
10.8 Titles....................................................... 21
10.9 Attorneys' Fees.............................................. 21
10.10 Multiple Counterparts........................................ 21
10.11 Notices...................................................... 21
10.12 Incorporation by Reference................................... 22
10.13 Representations and Warranties............................... 22
</TABLE>
-ii-
<PAGE> 4
TENDER OFFER AGREEMENT
THIS TENDER OFFER AGREEMENT (this "Agreement") is made and entered into
on June 1, 1996, by and between CLEAR CHANNEL RADIO, INC., a Nevada corporation
("Parent") and HEFTEL BROADCASTING CORPORATION, a Delaware corporation (the
"Company"), with reference to the following facts:
RECITALS:
A. Parent desires to make a tender offer (the "Offer") to purchase
all of the outstanding shares of the Class A Common Stock, par value $.001 per
share, of the Company (the "Class A Common Stock") and Class B Common Stock, par
value $.001 per share, of the Company (the "Class B Common Stock" and together
with the Class A Common Stock, the "Company Common") for a price of $23 per
share (the "Offer Price") on the terms and conditions contained herein.
B. The Board of Directors of the Company, deeming the Offer to be
desirable and in the best interests of the Company and its stockholders has
authorized and approved the Offer, subject to the terms and conditions set forth
herein, and the execution and delivery of this Agreement.
C. The Board of Directors of Parent, deeming the Offer to be
desirable and in the best interests of Parent and its stockholders, has
authorized and approved the Offer, subject to the terms and conditions set forth
herein, and the execution and delivery of this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing facts and the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
THE OFFER
1.1 The Offer. Subject to the provisions of this Agreement, as
promptly as practicable, but in no event later than five business days after the
announcement of the Offer by Parent, Parent shall commence the Offer. Subject to
Article 8, the Offer shall remain open for 40 days; provided, however, if at any
time prior to the end of such 40 day period, shares of Company Common are
tendered to Parent which when combined with the shares of Class A Common Stock
owned by affiliates of Parent total 80% of the outstanding shares of Company
Common, Parent shall publish notice of such fact and shall extend the
termination date for the Offer by 10 days. Parent expressly reserves the right
to modify the terms of the Offer, except that, without the consent of the
<PAGE> 5
Company, Parent shall not (a) reduce the Offer Price, (b) amend or add to the
conditions to the obligations of Parent to complete the transactions
contemplated hereby set forth in Article 7 (the "Closing Conditions"), (c)
change the number of shares of Company Common subject to the Offer, (d) change
the form of consideration payable in the Offer, (e) except as set forth in this
Section 1.1, extend the termination date for the Offer, or (e) terminate the
Offer except in accordance with Section 8.1. Subject to the terms and conditions
of this Agreement, on the Closing Date, Parent shall pay for all shares of
Company Common validly tendered and not withdrawn prior to the termination of
the Offer.
1.2 Schedule 14D-1. As promptly as reasonably practicable following
the execution of this Agreement, Parent shall file with the Securities and
Exchange Commission (the "Commission") a Tender Offer Statement on Schedule
14D-1 with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents therein pursuant to which the Offer will be made, together with
any supplements or amendments thereto, are referred to herein as the "Offer
Documents"). Parent covenants that the Offer Documents (i) shall comply as to
form in all material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder and (ii) on the date filed with the Commission and on the
date first published, sent or given to the holders of shares of Company Common,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent with respect to
information supplied by the Company specifically for inclusion in the Offer
Documents. Each of Parent and the Company agrees promptly to correct any
information supplied by it specifically for inclusion in the Offer Documents if
and to the extent that such information shall have become false or misleading in
any material respect, and each of Parent further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the
Commission and to be disseminated to holders of shares of Company Common, in
each case as and to the extent required by applicable Federal securities laws.
Parent agrees to provide the Company and its counsel in writing with any
comments Parent or its counsel may receive from the Commission or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
1.3 Shareholder Lists. In connection with the Offer, the Company
shall (a) cause its transfer agent to furnish Parent with mailing labels
containing the names and addresses of the record holders of Company Common as of
a recent date and of those persons becoming record holders after such date,
together with copies of all security position listings and computer files and
all other information in the Company's possession or control
-2-
<PAGE> 6
regarding the beneficial owners of Company Common, and (b) furnish to Parent
such information and assistance as Parent may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer, Parent shall hold in confidence the information contained in any such
labels and lists, will use such information only in connection with the Offer
and, if this Agreement is terminated, will, upon request, deliver to the Company
all copies of, and any extracts or summaries from, such information then in its
possession.
1.4 Company Action. The Company hereby consents to the Offer. The
Company shall, on the date of commencement of the Offer, file with the
Commission a Solicitation/Recommendation Statement on Schedule 14D-9 (as amended
from time to time, the "Schedule 14D-9") which shall reflect the recommendation
of the Company's Board of Directors to accept the Offer. Parent shall include
copies of such Schedule 14D-9 (excluding exhibits) with the Offer Documents to
be mailed to stockholders of the Company in connection with the Offer. The
Company covenants that the Schedule 14D-9 (i) shall comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder and (ii) on the date filed with the
Commission and on the date first published, sent or given to the holders of
shares of Company Common, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made
by the Company with respect to information supplied by Parent specifically for
inclusion in the Schedule 14D-9. Each of the Company and Parent agrees promptly
to correct any information supplied by it specifically for inclusion in the
Schedule 14D-9 which shall have become false or misleading in any material
respect and the Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the Commission and disseminated to
holders of shares of Company Common, in each case as and to the extent required
by applicable Federal securities laws. The Company agrees to provide Parent and
its counsel in writing with any comments the Company or its counsel may receive
from the Commission or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
1.5 Stock Options and Warrants. Whether or not then exercisable or
vested, each option to purchase Class A Common Stock of the Company or warrant
to purchase Class B Common Stock of the Company listed on Schedule 1.5 attached
hereto (collectively, "Convertible Securities" and individually, a "Convertible
Security") outstanding immediately prior to the Closing Date shall be cancelled
at the Closing Date and in settlement thereof on the Closing Date Parent shall
pay each holder of any such Convertible Security, upon receipt by Parent of any
consent of the holder thereof necessary to effect
-3-
<PAGE> 7
cancellation of such Convertible Security and written acknowledgement of such
security holder of the cancellation of such Convertible Securities in accordance
with this Section (a "Security Holder Consent and Acknowledgement"), an amount
equal to (x) the product of (i) the Offer Price minus the exercise price per
share of the Convertible Security and (ii) the total number of shares of Company
Common for which such Convertible Security is exercisable (without regard as to
whether the Convertible Security is then exercisable as to all such shares),
less (y) any federal, state, local or foreign taxes required to be withheld from
such payment. The Board of Directors of the Company (or, if appropriate, any
committee thereof) shall adopt such resolutions or take such other actions as
are necessary, subject to obtaining the applicable Security Holder Consent and
Acknowledgment to reflect the terms set forth in the prior sentence.
1.6 Closing. Unless this Agreement shall have been terminated
pursuant to the provisions of Section 8.1, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Jeffer, Mangels, Butler & Marmaro LLP, 2121 Avenue of the Stars, 10th Floor,
Los Angeles, California 90067 on the first business day after satisfaction or
waiver of the conditions set forth in Article 7 or at such other place, time and
date as the parties may mutually agree. The date and time of such Closing are
herein referred to as the "Closing Date."
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
2.1 Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has the requisite corporate power to carry on its business as it is
now being conducted.
2.2 Authority.
(a) Parent has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent. This Agreement has been duly executed and delivered by
Parent and constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms.
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(b) No consent, approval, order or authorization of, notice to,
or registration, declaration or filing with, any governmental entity is
necessary in connection with the execution and delivery of this Agreement by
Parent or the consummation by Parent of the transactions contemplated hereby
other than (i) the consent of the Federal Communications Commission (the "FCC")
to the transfer of control of the FCC licenses for the stations owned by the
Company's subsidiaries ("Company FCC Licenses"); (ii) compliance with the
Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); and (iii) compliance with the applicable requirements of the Exchange
Act.
2.3 Brokers. Parent has not entered into any contract, agreement,
arrangement or understanding with any person or entity which will result in the
obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement.
2.4 Financing. Parent has the funds, or has commitments or agreements
with financial institutions to provide the funds, in an aggregate amount not
less than the amount necessary to purchase the shares of Company Common in the
Offer, plus the amounts payable under Section 1.5 plus the aggregate amount of
payments due to the Co-Chief Executive Officers of the Company in exchange for
termination of their employment agreements with the Company and delivery of an
agreement not to compete at the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to carry on its business as it is now
being conducted.
3.2 Capitalization. The authorized capital stock of the Company and
the number, class and/or series of the shares of the capital stock of the
Company outstanding or reserved as of the date hereof is as set forth on
Schedule 3.2 attached hereto. All of the outstanding shares of the capital stock
of the Company are validly issued, fully paid, nonassessable and free of
preemptive rights and all outstanding Convertible Securities are duly authorized
and validly issued. Except as set forth on Schedules 1.5 and 3.2, there are no
shares of capital stock or other securities of the Company outstanding and no
outstanding options, warrants, subscription rights (including any preemptive
rights), calls or commitments of any character whatsoever to which the Company
is a party or is bound, requiring the issuance,
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sale or transfer by the Company of any shares of capital stock of the Company or
any securities convertible into or exchangeable or exercisable for, or rights to
purchase or otherwise acquire, any shares of capital stock of the Company.
3.3 Authority.
(a) The Company has the requisite corporate power and authority
to enter into this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
(b) No consent, approval, order or authorization of, notice to,
or registration, declaration of filing with, any governmental entity is
necessary in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated by
this Agreement, other than (i) the consent of the FCC to the transfer of control
of the Company FCC Licenses; (ii) compliance with the HSR Act; and (iii)
compliance with the applicable requirements of the Exchange Act.
3.4 Brokers. The Company has not entered into any contract,
agreement, arrangement or understanding with any person or entity which will
result in the obligation to pay any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement,
except as set forth on Schedule 3.4 attached hereto.
3.5 Board Actions. The Board of Directors of the Company (at a
meeting duly called and held) has resolved to recommend acceptance of the Offer.
3.6 Financial Statements. As of their respective dates, the Company's
Annual Reports on Form 10-K for the fiscal years ended September 30, 1994 and
1995, and Quarterly Reports for the quarters ended December 31, 1995 and March
31, 1996, and all other forms, reports, statements and documents filed by the
Company with the Commission since July 27, 1994 did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. All of the
consolidated financial statements of the Company included or incorporated by
reference in the Forms 10-K and 10Q filed with the Commission prior to the date
hereof were prepared in accordance with generally accepted accounting principles
consistently applied (except, as to the quarterly financials, for normal
year-end
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adjustments), and present fairly the financial position, results of operations
and changes in financial position of the Company and its consolidated
subsidiaries as of the dates and for the periods indicated. All of the
consolidated financial statements of the Company included or incorporated by
reference in the Forms 10-K and 10Q filed with the Commission between the date
hereof and the Closing Date will be prepared in accordance with generally
accepted accounting principles consistently applied (except, as to the quarterly
financials, for normal year-end adjustments), and will present fairly the
financial position, results of operations and changes in financial position of
the Company and its consolidated subsidiaries as of the dates and for the
periods indicated.
ARTICLE 4
PRE-CLOSING COVENANTS
4.1 Conduct of Business by the Company Pending the Closing.
Except as otherwise expressly contemplated hereby, the Company covenants and
agrees that prior to the Closing Date, unless Parent shall otherwise consent in
writing:
(a) The Company and the Company's subsidiaries (individually, a
"Company Subsidiary") shall conduct its business and keep its books and
accounts, records and files in the usual and ordinary manner in which such
business has been conducted in the past;
(b) The Company shall not directly or indirectly do, or permit
any Company Subsidiary to do, any of the following: (i) issue, sell, pledge,
dispose of or encumber any shares of, or any options, warrants or rights of any
kind to acquire any shares of or any securities convertible into or exchangeable
or exercisable for any shares of, capital stock of the Company or any Company
Subsidiary, except for shares of Company Common issuable upon exercise of the
issued and outstanding Convertible Securities set forth on Schedule 1.5; (ii)
except (A) in the ordinary course of business and consistent with prior
practice, (B) for transactions with non-affiliates of the Company which involves
payments up to $500,000 in the aggregate, and (C) the sale of KLTY-TV, sell,
pledge, dispose of or encumber any assets of the Company or any Company
Subsidiary which are material to the Company or any Company Subsidiary; (iii)
split, combine, subdivide or reclassify any shares of the Company's capital
stock or declare, set aside or pay any dividend or distribution, payable in
cash, stock, property or otherwise, with respect to any of the Company's capital
stock, other than the payment in cash of any accrued dividends on the Series A
Preferred Stock; (iv) redeem, purchase or otherwise acquire or offer to redeem,
purchase or otherwise acquire any of the Company's capital stock; (v) adopt a
plan of complete or partial liquidation or resolutions providing for the
complete or partial liquidation or dissolution of the Company or any Company
Subsidiary, except for the transactions set forth in Schedule
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4.1(b) attached hereto (collectively, the "Subsidiary Reorganizations"); (vi)
acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division or any
material assets thereof or, other than cash management transactions in the
ordinary course of business and consistent with prior practice, make any
investment either by purchase of stock or securities, contributions to capital,
property transfer or purchase of any property or assets of any other individual
or entity; (vii) amend or modify the corporate charter, bylaws or other
organizational documents of any Company Subsidiary, except in connection with
the Subsidiary Reorganizations, (viii) enter into any agreement or transaction
with any, or modify the terms of any existing agreement with any, affiliate,
(ix) terminate or fail to renew any Company FCC License, (x) fail to operate any
radio station owned by the Company or a Company Subsidiary in accordance with
the Communications Act, the rules, regulations and policies of the FCC and the
terms of the Company FCC Licenses, other than failures which, individually or in
the aggregate, are not reasonably anticipated to have a material adverse effect
on the business, assets, results of operations, financial condition or prospects
of the Company on a consolidated basis, (xi) cancel, discount or otherwise
compromise any accounts receivable except in the ordinary course of business
consistent with past practice, (xii) fail to file in a timely manner any
applications to renew a Company FCC License, (xiii) (other than agreements for
the sale of air time) enter into any agreement which involves payments by the
Company of $50,000 or more, unless such agreement provides for cancellation
thereof by the Company on 60 or fewer days notice and the amount payable by the
Company during the period from the date of delivery of notice of cancellation
until the date of cancellation plus any penalty for early termination does not
exceed $50,000, (xiv) enter into any barter or trade agreement that is prepaid,
(xv) apply to the FCC for any construction permit that would restrict the
current operations of any of the radio stations owned by the Company's
subsidiaries (individually, a "Station") or make any change in any Station's
buildings, leasehold improvements or fixtures, except in the ordinary course of
business or as necessary to comply with the Company's affirmative covenants in
Section 4.4(h) or (xvi) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(c) Except (i) for salary increases or other employee benefit
arrangements in the ordinary course of business and consistent with prior
practice, (ii) as may be required pursuant to any agreements in effect on the
date hereof, (iii) as may be required by law, neither the Company nor any
Company Subsidiary shall (1) grant any severance or termination pay to, or enter
into any new employment or severance agreement with, any officer or employee of
the Company or any Company Subsidiary, (2) adopt or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
employee benefit plan, agreement, trust fund or other arrangement for the
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benefit or welfare of employees or former employees or (3) increase the
compensation or fringe benefits of any employee or former employee or pay any
benefit not required by any existing plan, arrangement or agreement;
(d) The Company shall not directly or indirectly do, or permit
any Company Subsidiary to do, any of the following: make or revoke any material
tax election, settle or compromise any material federal, state, local or foreign
tax liability (or any other tax liability which may have a material effect on
taxable years ending after the Closing Date) or change (or make a request to any
taxing authority to change) any aspect of accounting for tax purposes in any
material respect;
(e) The Company shall deliver to Parent copies of any report,
statement or schedule filed with the Commission subsequent to the date hereof;
(f) The Company shall provide Parent with copies of the regular
monthly internal operating statements relating to the Company for the monthly
accounting periods between the date of this Agreement and the Closing Date by
the 20th day of each calendar month for the preceding calendar month, which
shall present fairly the financial position of the Company and the results of
operations for the period indicated in accordance with generally accepted
accounting principles consistently applied. Such monthly statements shall: (i)
show the actual results and budget for such month by line item, and (ii) account
for items of non-recurring income and expense separately and (iii) account for
and separately state all intercompany allocations of expenses relating to the
Company, all of which shall be presented fairly and in accordance with generally
accepted accounting principles consistently applied;
(g) The Company shall make all commercially reasonable efforts
to preserve the business organization of each Station intact, to retain
substantially as at present each Station's employees, consultants and agents,
and to preserve the goodwill of each Station's suppliers, advertisers, customers
and other having business relations with it; and
(h) The Company shall keep all tangible personal property and
real property in good operating condition (ordinary wear and tear excepted) and
repair and maintain adequate and usual supplies of inventory, office supplies,
spare parts and other materials as have been customarily maintained in the past.
The Company shall maintain in effect the casualty and liability insurance on its
assets heretofore in force.
4.2 No Other Bids. The Company shall not, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information or
assistance) any inquiry or the making of any proposal that constitutes, or
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may reasonably be expected to lead to, any inquiry or proposal that constitutes,
or may reasonably be expected to lead to, any Competing Transaction (a "Takeover
Proposal") or enter into any discussions, contracts or negotiations with respect
to any Competing Transaction and the Company shall not authorize or knowingly
permit any of its officers, directors, employees, investment bankers, attorneys,
accountants or other advisors or representatives to take any such action and the
Company will direct such parties not to take any such action. The Company
promptly shall advise Parent in writing of any Takeover Proposal and shall, in
such notice, indicate the identity of the offeror and the material terms and
conditions of any such Takeover Proposal, including, without limitation, price.
Notwithstanding the foregoing, nothing contained in this Agreement shall prevent
the Board of Directors of the Company or any committee thereof from (a) (i)
furnishing or causing to be furnished information concerning the Company and its
businesses, properties or assets to a third party, (ii) engaging in negotiations
with a third party, (iii) taking and disclosing to the Company's stockholders a
position with respect to any Takeover Proposal (and, in connection therewith,
withdrawing or modifying the approval or recommendation by the Board of
Directors of the Offer) or (iv) entering into a Competing Transaction, but in
each case referred to in the foregoing clauses (i) through (iv) only to the
extent that prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity (A) the Board of
Directors of the Company shall conclude, after consultation with its outside
legal counsel (which may be the Company's regularly engaged legal counsel), in
good faith that such action is required under applicable law for the discharge
of its fiduciary duties, and (B) the Company provides written notice to Parent
to the effect that it is furnishing information, or affording access to
properties, books or records to, or entering into discussions or negotiations
with, such person or entity or (b) complying with Rule 14e-2 promulgated under
the Exchange Act. As used in this Agreement, "Competing Transaction" shall mean
any merger, consolidation, reorganization, share exchange or other business
combination involving the Company or any Company Subsidiary or any acquisition
in any manner of beneficial ownership of 20% or more of the outstanding shares
of any class of capital stock of the Company, or any class of the capital stock
of any Company Subsidiary, or of all or a significant portion of the assets of
the Company and the Company Subsidiaries, taken as a whole.
4.3 Control of Stations. Notwithstanding Section 4.1, until the grant
of the FCC Consent Parent shall not directly or indirectly control, manage,
supervise or direct the operation of the Company's radio stations or the conduct
of the Company's business, including, but not limited to, matters relating to
programming, personnel and finances, all of which shall remain and be solely the
responsibility of and under the complete discretion and control of each licensee
of the Company's radio stations.
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4.4 Renewal Application. In the event at the Closing the application
for renewal of the license for WAMR-FM, Miami, Florida (the "Renewal
Application") remains pending or has not become a Final Order, the parties agree
the Closing shall occur and each party hereto agrees to abide by the procedures
established in Stockholders of CBS, Inc., FCC 95-469 (rel. Nov. 22, 1995) P. P.
34-35, for processing applications for transfer of control of a license during
the pendency of an application for renewal of a station license. Without
limiting the generality of the foregoing, the Company agrees to use commercially
reasonable efforts to cooperate with Parent with the prosecution of the Renewal
Application, and Parent agrees that any interest it may acquire in such license
at Closing is subject to whatever action the FCC may ultimately take with
respect to the Renewal Application. Notwithstanding anything in this Agreement
to the contrary, this Section 4.4 shall survive the Closing until any order
issued by the FCC with respect to the Renewal Application becomes a Final Order
(for purposes hereof, "Final Order" shall have the same meaning as in Article 6
except "grant of the Renewal Application" shall be substituted for "FCC
Consent").
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information of the Company; Confidentiality. From the
date hereof to the Closing Date, the Company shall afford, and shall cause its
officers, directors, employees and agents to afford, to Parent and to the
officers, employees and agents of Parent complete access during normal business
hours at all reasonable times to the Company's officers, employees, agents,
properties, books, records and contracts, and shall furnish, and cause each
Company Subsidiary to furnish, to Parent all financial, operating and other data
and information as Parent, through its officers or employees, may reasonably
request. All information provided to Parent shall be subject to the
Confidentiality Letter Agreement, dated May 31, 1996, between Clear Channel
Radio, Inc. and the Company (the "Confidentiality Agreement").
5.2 Fees and Expenses. All costs and expenses incurred in connection
with the Offer and this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees and expenses; provided, however, if the
Closing occurs, Parent shall be responsible for paying all of fees and costs
payable to the investment bankers set forth on Schedule 3.4 attached hereto.
5.3 Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
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5.4 Consents and Filings. In addition to Article 8, each party will
(a) within ten business days after the date hereof, make any required filings
and submissions under the HSR Act with respect to the Offer, (b) substantially
comply with any request for additional information issued by the Federal Trade
Commission, the Department of Justice or any other antitrust authority in
connection with the Offer, including the requests for production of documents
and production of witnesses for interviews or depositions, and (c) take all
reasonable actions to obtain any other consent, authorization, order or approval
of, or any exemption by, any governmental entity required to be obtained or made
in connection with the Offer and the other transactions contemplated by this
Agreement. Each party will cooperate with and promptly furnish information to
the other party in connection with obtaining such consents or making any such
filings and will promptly furnish to the other party a copy of all filings made
with a governmental agency, including, without limitation, any filings under the
HSR Act.
5.5 Indemnification.
(a) Parent shall indemnify, defend and hold harmless the
Company, each stockholder who executes the Stockholder Purchase Agreement of
even date herewith and each person who is now, or who becomes prior to the
Closing Date, an officer or director of Company or any Company Subsidiary (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement with the
approval of Parent (which approval shall not be unreasonably withheld), arising
out of or related to any claim, action, suit, proceeding or investigation based
in whole or in part on or arising in whole or in part out of this Agreement or
the transactions contemplated hereby. Notwithstanding the foregoing, no
indemnity shall be available to the extent a court of competent jurisdiction
finally determines that the claim for indemnity is caused by the Company
knowingly and intentionally misrepresenting that it may enter into this
Agreement. Without limiting the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party, (i)
any counsel retained by the Indemnified Parties shall be reasonably satisfactory
to Parent; (ii) Parent shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; and (iii) Parent will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that Parent shall not be liable
for any settlement of any claim effected without its written consent, which
consent shall not be unreasonably withheld. Any Indemnified Party wishing to
claim indemnification under this Section, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify Parent (but the failure
so to notify Parent shall not relieve it from any liability which it may have
under this Section except to the extent such failure materially prejudices
Parent). The Indemnified Parties as a group may
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retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any issue between the positions of any two or more Indemnified Parties. In
addition to the foregoing, and without limiting in any manner the foregoing, any
Indemnified Party shall be entitled to indemnification pursuant to any
indemnification agreement set forth on Schedule 5.5 attached hereto.
(b) From and after the Closing, Parent shall indemnify, defend
and hold harmless each person who is now, or who becomes prior to the Closing
Date, an officer or director of Company or any Company Subsidiary (the "D&O
Indemnified Parties") against all losses, claims, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement with the
approval of Parent (which approval shall not be unreasonably withheld), arising
out of or related to any claim, action, suit, proceeding or investigation based
in whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of the Company or any Company Subsidiary,
whether pertaining to any matter existing or occurring at or prior to the
Closing Date (including, without limitation, any matter relating to the
transactions contemplated hereby) and whether asserted or claimed prior to, or
at or after, the Closing Date, in each case to the full extent the Company or
the applicable Company Subsidiary would have been permitted under the law of the
State of its incorporation and its Certificate, or Articles, of Incorporation
and Bylaws to indemnify such person (and Parent shall pay expenses in advance of
the final disposition of any such action or proceeding to each D&O Indemnified
Party upon receipt of any undertaking by or on behalf of such D&O Indemnified
Party to repay such amount if it shall ultimately be determined that he or she
is not entitled to indemnification). Without limiting the foregoing, in the
event any such claim, action, suit, proceeding or investigation is brought
against any D&O Indemnified Party (whether arising before or after the Closing
Date), (i) any counsel retained by the Indemnified Parties for any period after
the Closing Date shall be reasonably satisfactory to Parent; (ii) after the
Closing Date, Parent shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received; and
(iii) after the Closing Date, Parent will use all reasonable efforts to assist
in the vigorous defense of any such matter, provided that Parent shall not be
liable for any settlement of any claim effected without its written consent,
which consent shall not be unreasonably withheld. Any D&O Indemnified Party
wishing to claim indemnification under this Section, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify Parent (but the
failure so to notify Parent shall not relieve it from any liability which it may
have under this Section except to the extent such failure materially prejudices
Parent). The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards
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of professional conduct, a conflict on any issue between the positions of any
two or more Indemnified Parties. In addition to the foregoing, and without
limiting in any manner the foregoing, after the Closing Date any D&O Indemnified
Party shall be entitled to indemnification pursuant to any indemnification
agreement set forth on Schedule 5.5 attached hereto.
(c) The provisions of this Section 5.5 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and each D&O
Indemnified Party, and each Indemnified Party's and each D&O Indemnified Party's
heirs and representatives.
5.6 Company Indebtedness. Concurrently with the Closing, Parent shall
repay or cause to be repaid all outstanding indebtedness under the Credit
Agreement, dated as of August 19, 1994, as amended and restated as of March 13,
1996, among the Company, its subsidiaries and the lenders signatory thereto (the
"Credit Agreement") or, at Parent's option, obtain the consent of the Company's
lenders under the Credit Agreement to have such indebtedness remain outstanding.
5.7 Convertible Securities. The Company and the Company Subsidiaries
shall take such action as may be permitted under the Company's Stock Option Plan
and/or the terms of the Convertible Securities to effect the cancellation of the
Convertible Securities on the Closing Date and shall comply with all
requirements regarding income tax withholding in connection therewith. In
addition to the foregoing, the Company will use its best efforts to obtain the
Security Holder Consents and Acknowledgements referred to in Section 1.5 and to
provide Parent with such other evidence requested by Parent that no holder of
any Convertible Security will have any right to acquire any equity interest in
the Company, Parent or any of their respective subsidiaries as a result of the
exercise or conversion of any Convertible Security or other rights after the
Closing Date.
5.8 Parent Commission Filings. Between the date hereof and the
Closing Date, the Company shall, and shall cause each Company Subsidiary to,
cooperate with Parent in connection with the preparation and filing of, and
provide to Parent for inclusion or incorporation by reference in, any reports,
filings, schedules or registration statements (including any prospectus
contained in any such registration statement) to be filed by Parent with the
Commission ("Parent Filings"). Without limiting the foregoing, the Company
shall, and shall cause each Company Subsidiary to, take all reasonable actions
requested by Parent to enable Parent to include or incorporate by reference in
the Parent Filings any financial statement of the Company or any Company
Subsidiary and any auditors' report thereon.
5.9 Maintain Listing. For period of one year from and after the
Closing, Parent shall use its best efforts to cause the shares of Class A Common
Stock to remain listed or quoted on
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a recognized national exchange or National Association of Securities Dealers,
Inc. quotation system.
5.10 Independent Directors. From and after the Closing and until the
later of one year from the Closing Date or the date on which the Company no
longer is a reporting company under the Exchange Act, Parent shall cause the
Company to maintain two independent directors.
ARTICLE 6
FCC APPROVAL
Within five business days after execution of this Agreement, the
parties shall file with the FCC applications (the "FCC Applications") for the
consent of the FCC to the change in control of the holders of the Company FCC
Licenses ("FCC Consent"). The parties shall thereafter prosecute the FCC
Applications with all reasonable diligence and otherwise use commercially
reasonable efforts to obtain the FCC Consent as expeditiously as practicable and
shall use commercially reasonable efforts to cause the FCC Consent to become a
"Final Order." Each party will use commercially reasonable efforts to comply
with the reasonable requests of the FCC for further information in connection
with the FCC Applications. If reconsideration or judicial review is sought with
respect to the FCC Consent, the party affected shall vigorously oppose such
efforts for reconsideration or judicial review. Nothing in this Article 6 shall
be construed to limit a party's right to terminate this Agreement pursuant to
Article 8 hereof. As used herein, the term "Final Order" means a written action
or order issued by the FCC setting forth the FCC Consent (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have 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 (whether upon
reconsideration or otherwise) has expired, or (ii) in the event of the filing of
any such request for review, reconsideration, appeal or stay, the action
granting the FCC Consent shall have been reaffirmed or upheld and the time for
further review, reconsideration or appeal has expired without the filing of any
such action for further review or such requests have been withdrawn or denied.
ARTICLE 7
CONDITIONS
The obligations of Parent to consummate the transactions contemplated
hereby shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
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7.1 The applicable waiting period under the HSR Act shall have
expired or terminated.
7.2 Subject to Section 4.4, the FCC Consent shall have become a Final
Order; provided, however, if the primary lenders for Parent do not require that
the FCC Consent becomes a Final Order in order to consummate the Closing, then
Parent's condition shall be that the FCC shall have granted the FCC Consent and
shall have given public notice of the grant of the FCC Consent.
7.3 No temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a government, regulatory or administrative agency or
commission shall be in effect which restrains or prohibits the transactions
contemplated hereby.
7.4 All representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date, except those representations and warranties which address
matters only as of a particular date shall remain true and correct in all
material respects as of such date. The Company shall have performed in all
material respects all agreements and covenants required hereby to be performed
by it prior to or at the Closing Date.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement and the Offer may be terminated, by
written notice promptly given to the other parties hereto, at any time prior to
the Closing Date:
(a) By mutual written consent of the parties;
(b) By either Parent or the Company, if the FCC denies or
dismisses the FCC Applications and the time for reconsideration or court review
under the Communications Act of 1934 with respect to such denial or dismissal
has expired and there is not pending with respect thereto a timely filed
petition for reconsideration or request for review; or
(c) By either the Company or Parent, if the Board of Directors
of the Company concludes, after taking into account the advice of outside legal
counsel (which may be the Company's regularly engaged legal counsel), that
accepting a proposed Competing Transaction is required under applicable law for
the discharge of its fiduciary duties and the Company enters into an agreement
for such Competing Transaction; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 8.1(c) earlier than 48 hours
after furnishing notice to Parent of such Competing Transaction in accordance
with Section 4.2;
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<PAGE> 20
(d) By either the Company or Parent if (i) the Company shall
have determined, pursuant to duly adopted resolutions of its Board of Directors,
not to recommend acceptance of the Offer, or the Company's recommendation to
accept the Offer is withdrawn or modified, or resolved to be withdrawn or
modified, by reason of receipt of a Takeover Proposal, or (ii) the Company
recommends, pursuant to duly adopted resolutions, any Takeover Proposal from a
person or entity other than Parent or its affiliates; provided, however, that
Parent shall not terminate this Agreement pursuant to this subsection if as a
result of the Company's receipt of a Takeover Proposal from a third-party the
Company, as required by applicable law as advised by outside counsel, withdraws,
modifies or amends its approval or recommendation of acceptance of the Offer but
within five business days thereafter the Company publicly reconfirms to all of
its stockholders its recommendation of acceptance of the Offer;
(e) By Parent, if the Company fails to perform or breaches any
of its material obligations or duties under this Agreement and the Company has
not cured such failure to perform or breach within 15 days after delivery of
written notice from Parent or upon a material breach of any representation and
warranty of the Company contained herein;
(f) By the Company, if Parent fails to perform or breaches any
of its material obligations or duties under this Agreement, and the defaulting
party has not cured such failure to perform or breach within 15 days after
delivery of written notice from the Company or upon a material breach of any
representation and warranty of Parent contained herein; and
(g) By either Parent or the Company, if the Closing shall not
have occurred on or before October 31, 1996 (the "Termination Date"); provided,
however, the right to terminate this Agreement under this Section 8.1(g) shall
not be available to any party whose failure to fulfill any obligation hereunder
has been the cause of, or results in, the failure of the Closing to have
occurred on or before the Termination Date.
8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligations on the part of any party hereto, except for
the agreements set forth in Sections 5.1 and 5.5(a) and except (i) liability for
any wilful breach of any obligation, covenant or agreement contained herein or
any intentional failure of the representations and warranties contained hereto
to have been true, and (ii) (x) if the stockholders who are parties to the
Stockholder Purchase Agreement of even date herewith among such stockholders and
Parent terminate such agreement and (y) (1) the Company terminates this
Agreement pursuant to Section 8.1(c) or
-17-
<PAGE> 21
8.1(d), or (y) Parent terminates this Agreement and the Offer pursuant to
Section 8.1(c) or 8(d), the Company will pay to Parent $13.5 million within five
business days after the conditions contained in the foregoing clauses (x) and
(y) are satisfied; provided, however, if the Company is prohibited by its
principal senior lender or lenders from paying the sum required under this
clause (ii) in cash, then in lieu of such payment, the Company shall immediately
issue to the Parent a number of shares of Class A Common Stock having a fair
market value equal to such sum (determined by taking the average closing price
of the Class A Common Stock on the Nasdaq National Market for the ten (10)
business days immediately following the public announcement of the termination
of this Agreement). If the Company shall issue shares to Parent as contemplated
in the preceding sentence, such shares shall be registered under the Securities
Act and freely tradeable upon delivery, or if the foregoing is not reasonably
practicable, shall be subject to a registration rights agreement enabling Parent
to sell such shares without undue delay or expense.
(b) The Company acknowledges that the agreements contained in
Section 8.2(a)(ii) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement. Accordingly, if the Company fails to promptly pay any amounts under
Section 8.2(a)(ii) when due, the Company shall in addition thereto pay to Parent
all costs and expenses (including fees and disbursements of counsel) incurred in
collecting such amounts together with interest on the unpaid amount from the
date such payment was required to be made until the date such payment is
received by the party entitled to such payment at a per annum rate equal to the
prime rate, published in The Wall Street Journal under the heading "Money Rates"
or a successor heading, as in effect from time to time during such period.
(c) Parent agrees that recovery of damages shall be the sole
and exclusive remedy of Parent in connection with a termination of this
Agreement for the reasons set forth in Section 8.2(a)(i). Parent also agrees
recovery of the amount set forth in Section 8.2(a)(ii) shall be the sole and
exclusive remedy of Parent in connection with a termination of this Agreement
for the reasons set forth in Section 8.2(a)(ii), regardless of the actual
damages sustained. The Company agrees that recovery of damages shall be the sole
and exclusive remedy of the Company in connection with a termination of this
Agreement for the reasons set forth in Section 8.2(a)(i). Parent hereby waives
the remedy of specific performance of the consummation of the transactions
contemplated hereby.
-18-
<PAGE> 22
ARTICLE 9
DEFINITIONS
The following terms shall have the meanings set forth in the Sections
opposite such term.
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Agreement Preamble
Class A Common Stock Recital A
Class B Common Stock Recital A
Closing 1.6
Closing Conditions 1.1
Closing Date 1.6
Commission 1.2
Company Preamble
Company Common Recital A
Company FCC Licenses Section 2.2
Company Subsidiary 4.1(a)
Competing Transaction 4.2
Confidentiality Agreement 5.1
Convertible Security or Convertible Securities 1.5
Credit Agreement 5.6
Closing Date 1.5
D&O Indemnified Parties 5.5(b)
Exchange Act 1.2
FCC 2.2
FCC Applications Article 6
FCC Consent Article 6
Final Order Article 6
HSR Act 2.2
Indemnified Parties 5.5(a)
Offer Recital A
Offer Documents 1.2
Offer Price Recital A
Parent Preamble
Parent Filings 5.8
Renewal Application 4.4
Schedule 14D-9 1.4
Security Holder Consent and Acknowledgement 1.5
Subsidiary Reorganizations 4.1(b)(v)
Takeover Proposal 4.2
Termination Date 8.1(g)
</TABLE>
ARTICLE 10
GENERAL PROVISIONS
10.1 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
-19-
<PAGE> 23
10.2 Waiver. Any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of any other party hereto or
(b) waive compliance with any of the agreements of any other party or with any
conditions to its own obligations. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of the party
making the waiver or granting the extension by a duly authorized officer. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
10.3 Public Statements. Each of the parties hereto promptly shall
advise, consult and cooperate with the other prior to issuing, or permitting any
of its subsidiaries, directors, officers, employees or agents to issue, any
press release or other statement to the press or any third-party with respect to
this Agreement or the transactions contemplated hereby; provided, however, if a
party is advised in writing by its counsel that applicable law requires such
party to make a press release or statement, such party may do so only after
consultation with the other parties hereto.
10.4 Assignment and Binding Effect. Prior to Closing, neither this
Agreement nor any of the rights or obligations hereunder may be assigned by any
party without the prior written consent of the other parties. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, transferees, assigns,
representatives, and agents and no other person shall have any right, benefit or
obligation hereunder. Notwithstanding the foregoing, the Indemnified Parties and
D&O Indemnified Parties shall be third-party beneficiaries of Section 5.5.
10.5 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
10.6 Entire Agreement. This Agreement constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. Notwithstanding the foregoing, this Agreement does not
supersede the Confidentiality Agreement, which shall remain in full force and
effect; provided, however, at the Closing Date, the Company shall be deemed to
have waived any provision in the Confidentiality Agreement which restricts
Parent from acquiring any shares of capital stock of the Company.
10.7 Severability. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to
-20-
<PAGE> 24
be invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such instrument.
10.8 Titles. The titles, captions or headings of the Articles and
Sections herein are for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.9 Attorneys' Fees. Should any party hereto institute any action or
proceeding at law or in equity to enforce any provision of this Agreement,
including an action for declaratory relief, or for damages by reason of an
alleged breach of any provision of this Agreement, or otherwise in connection
with this Agreement, or any provision hereof, the prevailing party shall be
entitled to recover from the losing party or parties reasonable attorneys' fees
and costs for services rendered to the prevailing party in such action or
proceeding.
10.10 Multiple Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
10.11 Notices. Unless applicable law requires a different method of
giving notice, any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing. Assuming that
the contents of a notice meet the requirements of the specific Section of this
Agreement which mandates the giving of that notice, a notice shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, or if
transmitted by telegraph, telecopy or other electronic written transmission
device or if sent by overnight courier service, and if addressed to the
applicable party as set forth below. If such notice, demand or other
communication is served personally, service shall be conclusively deemed given
at the time of such personal service. If such notice, demand or other
communication is given by mail, service shall be conclusively deemed given
seventy-two (72) hours after the deposit thereof in the United States mail. If
such notice, demand or other communication is given by overnight courier, or
electronic transmission, service shall be conclusively deemed given at the time
of confirmation of delivery. The addresses for the parties are as follows:
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<PAGE> 25
If to Parent:
Clear Channel Radio, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Randal Mays
Telecopier No.: (210) 829-8080
with a copy to:
Patton Boggs, L.L.P.
2550 M Street, N.W.
Washington, D.C. 20037
Attention: Gerald J. Laporte, Esq.
Telecopier No.: (202) 457-6315
If to the Company:
6767 West Tropicana Avenue, Suite 102
Las Vegas, Nevada 89103
Attention: Mr. Carl Parmer
Telecopier: (702) 367-3491
with a copy to:
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, Tenth Floor
Los Angeles, California 90067
Attention: Bruce P. Jeffer, Esq.
Telecopier No.: (310) 203-0567
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided, by a written notice given
in the aforesaid manner to the other parties hereto.
10.12 Incorporation by Reference. All Schedules attached hereto or to
be delivered in connection herewith are incorporated herein by this reference.
10.13 Representations and Warranties. All representations and
warranties of the parties contained herein shall expire, and be terminated and
extinguished, on the Closing Date.
-22-
<PAGE> 26
IN WITNESS WHEREOF, each of Parent and the Company has caused this
Agreement to be executed as of the date first written above by its officer
thereunto duly authorized.
CLEAR CHANNEL RADIO, INC.
By:___________________________
Name:_______________________
Title:______________________
HEFTEL BROADCASTING
CORPORATION
By:___________________________
Name:_______________________
Title:______________________
-23-
<PAGE> 27
LIST OF SCHEDULES
1.5 Holders of Convertible Securities
3.2 Capitalization
3.4 Fees
4.1 Subsidiary Reorganizations
5.5 Indemnification Agreements
-24-
<PAGE> 28
SCHEDULE 1.5
HOLDERS OF CONVERTIBLE SECURITIES
OPTIONS
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
SHARES PRICE DATE
--------- -------- ----------
<S> <C> <C> <C>
Cecil Heftel 271,075 $15.25 12/14/2005
Carl Parmer 48,264 $15.25 12/14/2005
Richard Heftel 30,000 $15.25 12/14/2005
William Tanner 30,000 $15.25 12/14/2005
David DuBose 10,000 $15.25 12/14/2005
David Haymore 5,000 $15.25 12/14/2005
Javier Luevano 5,000 $15.25 12/14/2005
Jose Valle 10,000 $15.25 12/14/2005
Julio Omana 25,000 $15.25 12/14/2005
John Kendrick 30,000 $15.25 12/14/2005
Carlos Rubio 30,000 $15.25 12/14/2005
John Mason* 10,000 $15.25 12/14/2005
Madison Graves 5,000 $18.63 11/19/2005
Javier Romero 15,000 $15.50 12/05/2005
Luis Diaz- 37,500 $14.00 06/30/2005
Albertini
John Kendrick 25,000 $10.00 08/02/2004
John Mason 5,000 $10.00 08/02/2004
-------
Total 591,839
</TABLE>
WARRANTS
1. Cecil Heftel has a warrant to purchase 806,678 shares of Class B Common
Stock of the Company at an exercise price of $1.05 per share. The
expiration date of the warrant is April 27, 1997.*
2. Mr. Robert Sevey has a warrant to purchase 43,428 shares of Class B Stock
of the Company at an exercise price of $2.29 per share. The expiration
date of the warrant is April 27, 1997.*
- -----------------------------
* Not granted under the Company's Stock Option Plan.
<PAGE> 29
SCHEDULE 3.2
COMPANY CAPITALIZATION
<TABLE>
<CAPTION>
COMPANY
CLASS AUTHORIZED OUTSTANDING
----- ---------- -----------
<S> <C> <C>
Class A Common 30,000,000 6,336,610
Stock
$0.001 par value
Class B Common 7,000,000 3,769,176
Stock
$0.001 par value
Preferred Stock 5,000,000 335,634
$0.001 par value shares of Series A
</TABLE>
The Company has outstanding options to purchase 591,839 shares of Class A Common
Stock and outstanding warrants to purchase 850,106 shares of Class B Common
Stock.
<PAGE> 30
SCHEDULE 3.4
FEES
1. Letter Agreement dated February 16, 1995, between Alex. Brown & Sons
Incorporated and the Company.
2. Letter Agreement dated March 7, 1996, between Donaldson, Lufkin &
Jenrette and the Company.
<PAGE> 31
SCHEDULE 4.1(B)
SUBSIDIARY REORGANIZATIONS
1. La Oferta, Inc., an Illinois corporation, will be merged into HBC
Chicago, Inc., a Delaware corporation.
2. Viva Broadcasting Corporation, a Florida corporation, and Viva
Acquisition Corporation, a Florida corporation, will be merged into HBC
Florida, Inc., a Delaware corporation ("HFI"). Immediately thereafter
Viva America Media Group, a Florida general partnership will be
dissolved, with HFI assuming all liabilities and receiving all assets.
<PAGE> 32
SCHEDULE 5.5
INDEMNIFICATION AGREEMENTS
1. Indemnification Agreement dated November 20, 1995 by and between the
Company and Madison B. Graves, II.
2. Indemnification Agreement dated January 1, 1993 by and between the
Company and John E. Mason.
3. Indemnification Agreement dated January 1, 1993 by and between the
Company and Carl Parmer.
4. Indemnification Agreement dated January 1, 1993 by and between the
Company and Cecil Heftel.
5. Indemnification Agreement dated January 1, 1993 by and between the
Company and Richard Heftel.
6. Indemnification Agreement dated January 1, 1993 by and between the
Company and Susan Heftel-Liquido.
7. Indemnification Agreement dated July 27, 1994 by and between the Company
and Jeffrey Amling.
<PAGE> 1
STOCKHOLDER PURCHASE AGREEMENT
This STOCKHOLDER PURCHASE AGREEMENT (this "Agreement") is made and
entered into on June 1, 1996, by and among Clear Channel Radio, Inc., a Nevada
corporation ("Purchaser"), and the stockholders listed on Exhibit A attached
hereto (each a "Stockholder", and collectively the "Stockholders") with
reference to the following facts:
A. Each Stockholder owns (1) the number of shares of Class A Common
Stock, $.001 par value per share, and Class B Common Stock, $.001 par value per
share, of the Company (collectively, the "Common Stock") set forth opposite such
Stockholder's name on Exhibit A attached hereto, in the aggregate totaling
3,516,529 shares of the Common Stock and (2) the number of shares of the Series
A Preferred Stock set forth opposite such Stockholder's name on Exhibit A hereto
(the Series A Preferred Stock and the Common Stock are collectively referred to
as the "Stocks"); and
B. The Purchaser desires to purchase and the Stockholders desire to
sell the Stocks on the terms and conditions set forth herein; and
C. In connection with this transaction, Purchaser and Heftel
Broadcasting Corporation, a Delaware corporation (the "Company"), are
simultaneously entering into a Tender Offer Agreement of even date herewith (the
"Tender Offer Agreement") providing for the making of a cash tender offer (the
"Offer") by the Purchaser for all of the outstanding shares of Common Stock.
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
1. Definitions. Except as otherwise defined in this Agreement, all
terms, the first letters of which are capitalized, shall have the meanings
assigned to them in the Tender Offer Agreement.
2. Purchase of Stock. Subject to the terms and conditions set forth
herein, each Stockholder hereby agrees to sell and the Purchaser hereby agrees
to purchase, all the shares of Common Stock owned by each Stockholder (the
"Shares") on the terms set forth in the Tender Offer Agreement and the Series A
Preferred Stock for $1.00 per share plus accrued but unpaid dividends thereon.
The Closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Jeffer, Mangels, Butler & Marmaro LLP, 2121
Avenue of the Stars, 10th Floor, Los Angeles, California 90067 on the first
business day after satisfaction or waiver of the conditions set forth in
Sections 11 and 12 or at such other place, time and date as the parties may
mutually agree. The date and time of such Closing are herein referred to as the
"Closing Date."
3. Stock Options and Warrants. Each Stockholder hereby consents to the
treatment prescribed by the Tender Offer Agreement with respect to each option
or warrant to purchase shares of Common Stock held by such Stockholder.
-2-
<PAGE> 3
4. Representations and Warranties of the Stockholders. Each Stockholder
hereby represents and warrants to the Purchaser as follows:
(a) Authority. This Agreement has been duly executed and delivered
by such Stockholder and constitutes such Stockholder's valid and binding
obligation enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency, and other similar laws affecting the
enforcement of creditors' right generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time or both) under any provision of any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to him or to his property
or assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required by or with respect to him in connection with the execution and delivery
of this Agreement or the consummation by him of the transactions contemplated
hereby.
-3-
<PAGE> 4
(b) The Shares. Such Stockholder has, and the sale by such
Stockholder of the Shares hereunder will pass to the Purchaser, upon acceptance
for payment and payment therefore, good title to the Shares, free and clear of
any claims, liens, encumbrances and security interests whatsoever. Such
Stockholder does not own any share of Common Stock other than the Shares.
5. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Stockholders as follows:
(a) Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser
and the consummation by the Purchaser of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Purchaser. This Agreement has been duly executed and delivered by the Purchaser
and constitutes a valid and binding obligation of Purchaser enforceable in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) Securities Act. Any Shares purchased by the Purchaser pursuant
to this Agreement will be acquired for investment only and not with a view to
any public distribution thereof and the Purchaser will not offer to sell or
otherwise
-4-
<PAGE> 5
dispose of any Shares so acquired by it in violation of any of the registration
requirements of the Securities Act of 1933, as amended.
6. Covenants of the Stockholders. (a) Each Stockholder agrees in his
capacity as a Stockholder, until the termination of this Agreement, not to
(i) sell, transfer, pledge, assign or otherwise dispose of, or
tender or agree to tender into any tender offer with
respect to, or enter into any contract, option or other
arrangement with respect to the sale, transfer, pledge,
assignment or other disposition of such Stockholder's
Shares to any person other than the Purchaser or the
Purchaser's designee;
(ii) acquire any additional shares of Common Stock without the
prior consent of the Purchaser;
(iii) deposit any Shares into a voting trust or grant a proxy or
enter into a voting agreement with respect to any Shares;
(iv) hold discussions with any person other than the Purchaser
and it's affiliates with respect to any offer or potential
offer for the Shares other than the Offer; or
(v) solicit, encourage or take any other action to facilitate
(including by way of furnishing information) any inquires
or proposals for
-5-
<PAGE> 6
any merger or consolidation involving the Company, the
acquisition of any shares of Common Stock or the
acquisition of all or substantially all the assets of the
Company by any person other than the Purchaser or its sole
stockholder.
(b) Each Stockholder agrees to notify the Purchaser promptly
and to provide all details requested by the Purchaser if such Stockholder shall
be approached or solicited, directly or indirectly, by any person with respect
to any matter described in Section 6(a)(iv) or 6(a)(v).
(c) Each Stockholder agrees that, unless this Agreement has
been terminated or the Purchaser has purchased all the Shares, at any annual or
special meeting of the shareholders of the Company and in any action by written
consent of the shareholders of the Company, such Stockholder will vote such
Stockholder's Shares against any action or agreement which would result in a
breach of any representation, warranty or covenant of the Company in the Tender
Offer Agreement or which would otherwise, in the sole judgment of the Purchaser,
impede, interfere with or attempt to discourage the Offer.
7. No Brokers. Except for such fees as may be payable as set forth
in the Tender Offer Agreement, each of the Stockholders, and the Purchaser
represents, as to himself, herself or itself and his, her or its affiliates,
that no agent, broker, investment banker or other firm or person is or will be
entitled to any broker's or finder's fees or any other commission
-6-
<PAGE> 7
or similar fee in connection with any of the transactions contemplated by this
Agreement and respectively agrees to indemnify and hold the others harmless from
and against any and all claims, liabilities or obligations with respect to any
such fees, commissions or expenses asserted by any person on the basis of any
act or statement alleged to have occurred or been made by such party or its
affiliates.
8. Survival of Representations. All representations, warranties and
agreements made by the parties to this Agreement shall survive the closings
hereunder notwithstanding any investigation at any time made by or on behalf of
any party hereto.
9. Legend. Promptly after the request of Purchaser each Stockholder
shall cause all certificates representing Shares to bear in a conspicuous place
the following legend:
"The shares represented by this certificate may not be sold, exchanged
or otherwise transferred or disposed of except, in compliance with the
terms and conditions of the Stockholders' Purchase Agreement, dated as
of June 1, 1996, among Clear Channel Radio, Inc, and, inter alia, the
registered holder of this certificate.
10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that the
Purchaser may assign in its sole discretion, any or all of its rights, interests
and obligations hereunder to it's sole stockholder or to any direct or indirect
wholly-owned subsidiary of such stockholder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to
-7-
<PAGE> 8
the benefit of and be enforceable by the parties and their respective successors
and assigns.
11. Conditions to Obligations of Certain Stockholders. The
obligations of Cecil Heftel ("Heftel") and Carl Parmer ("Parmer") to consummate
the transactions contemplated hereby shall be subject to the fulfillment on or
prior to the Closing Date of each of the following conditions:
(a) the amounts set forth in Paragraph 1 of each of the
Agreements Not to Compete entered into between the Company and Heftel and Parmer
of even date herewith shall have been paid.
(b) the amounts set forth in Paragraph 1 of each of the
Settlement Agreements between the Company and Heftel and Parmer of even date
herewith shall have been paid.
12. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) The applicable waiting period under the HSR Act shall have
expired or terminated.
(b) The FCC Consent shall have become a Final Order; provided,
however, if the primary lenders for Purchaser do not require that the FCC
Consent becomes a Final Order in order to consummate the Closing, then
Purchaser's condition shall be that the FCC shall have granted the FCC Consent
and shall have given public notice of the grant of the FCC Consent.
Notwithstanding the foregoing, in the event at the Closing the application for
renewal of the license for WAMR-FM, Miami,
-8-
<PAGE> 9
Florida remains pending or has not become a Final Order, the parties agree the
Closing shall occur.
(c) No temporary restraining order, preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a government, regulatory or administrative agency or
commission shall be in effect which restrains or prohibits the transactions
contemplated hereby.
(d) All representations and warranties of the Stockholders
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, except those representations and warranties which
address matters only as of a particular date shall remain true and correct in
all material respects as of such date. The Stockholders shall have performed in
all material respects ass agreements and covenants required by this Agreement to
be performed by them prior to or at the Closing Date.
13. Termination. This agreement may be terminated, by written notice
promptly given to the other parties hereto, at any time prior to the Closing
Date:
(a) by mutual written consent of all of the parties hereto;
(b) by any Stockholder as to his individual obligations if the
Company is able to terminate the Tender Offer Agreement pursuant to any of
subparagraphs 8.1(b), (c), (d), (f), or (g) of the Tender Offer Agreement; and
-9-
<PAGE> 10
(c) by the Purchaser if the Purchaser has terminated the Tender
Offer Agreement pursuant to any of subparagraphs 8.1(b), (c), (d), (e), or (g)
of the Tender Offer Agreement.
14. Indemnification. Purchaser shall indemnify, defend and hold
harmless each Stockholder (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses, liabilities or judgments, or amounts that are
paid in settlement with the approval of Purchaser (which approval shall not be
unreasonably withheld), arising out of or related to any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of this Agreement or the Tender Offer Agreement or the transactions
contemplated hereby or thereby. Notwithstanding the foregoing, no indemnity
shall be available to the extent a court of competent jurisdiction finally
determines that the claim for indemnity is caused by the Indemnified Party
knowingly and intentionally misrepresenting that it may enter into this
Agreement. Without limiting the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party, (i)
any counsel retained by the Indemnified Parties shall be reasonably satisfactory
to Purchaser; (ii) Purchaser shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; and (iii) Purchaser will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that Purchaser shall not be liable
for any
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<PAGE> 11
settlement of any claim effected without its written consent, which consent
shall not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify Purchaser (but the failure to so
notify Purchaser shall not relieve it from any liability which it may have under
this Section except to the extent such failure materially prejudices Purchaser).
The Indemnified Parties as a group may retain only one law firm to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict on any issue between the positions
of any two or more Indemnified Parties.
15. General Provisions.
(a) Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder shall be
specifically enforceable.
(b) Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed
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<PAGE> 12
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to the Purchaser, to
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Randal Mays
(ii) if to a Stockholder, to the address set forth
below such Stockholder's name on Exhibit A.
(e) Interpretation. When a reference is made in this Agreement
to Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
(f) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more the 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes
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<PAGE> 13
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
(i) Partial Invalidity. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. In
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
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<PAGE> 14
IN WITNESS WHEREOF, the Purchaser and the Stockholders have executed
this Agreement as of the date first written above.
Clear Channel Radio, Inc.
By:___________________________
Name:______________________
Title:_____________________
________________________
Catharine Rolph
___________________________________
Margaret A.H. Wilson, individually
and as custodian for each of Nalani
Wilson, Ryan Wilson and Deven
Wilson, under the Hawaii Uniform
Transfers to Minors Act
___________________________________
Susan Heftel-Liquido, as trustee
of the Susan Heftel-Liquido Trust
u/t/d 2/1/93 and as custodian for each of
Francisco Liquido, Tiara Liquido, Carlo Liquido and Fernando
Liquido under Hawaii Uniform Transfers to Minors Act
___________________________________
Christopher Lee Heftel, individually
and as custodian for each of Logan Heftel,
Brannon Heftel and Hayden Heftel under the Tennessee
Uniform Transfers to Minors Act
___________________________________
Terry Heftel, individually and
as custodian for each of Jonathan Heftel,
Jeffrey Welch and Jeremy Heftel under the Utah
Uniform Transfers to Minors Act
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<PAGE> 15
___________________________________
Richard Heftel, as trustee of the Richard Heftel
Living Trust dated January 9, 1996,
and as custodian for each of Kawika Heftel, Christian Heftel
and Brittany Heftel, under the California Uniform Transfers to
Minors Act
________________________
Cecil Heftel
________________________
Michelle Lopez Hendrick
________________________
Michael Donohoe
________________________
James Donohoe
___________________________________
Lani Donohoe, as custodian for Josh
Donohoe, under the California Uniform
Transfers to Minors Act
___________________________________
Carl Parmer
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<PAGE> 16
EXHIBIT "A"
<TABLE>
<CAPTION>
Name Number of Shares of Class B
- ---- ---------------------------
<S> <C>
Catharine Rolph 232,146
Margaret A.H. Wilson 445,649
Susan Heftel-Liquido, as trustee
of the Susan Heftel-Liquido Trust
u/t/d 2/1/93 503,727
Christopher Lee Heftel 321,872
Terry Heftel 96,810
Richard Heftel, as trustee
of the Richard Heftel Living Trust
dated January 9, 1996 559,118
Cecil Heftel 696,181
Michele Lopez 4,400
Michael Donohoe 4,400
James Donohoe 4,400
Lani Donohoe, as custodian for Josh
Donohoe, under the California Uniform
Transfers to Minors Act 4,400
Margaret Wilson, as custodian for Nalani
Wilson, under the Hawaii Uniform
Transfers to Minors Act 4,400
Margaret Wilson, as custodian for Ryan
Wilson, under the Hawaii Uniform
Transfers to Minors Act 4,400
Margaret Wilson, as custodian for Deven
Wilson, under the Hawaii Uniform
Transfers to Minors Act 4,400
Susan Heftel-Liquido, as custodian for
Francisco Liquido, under Hawaii Uniform
Transfers to Minors Act 4,400
Susan Heftel-Liquido, as custodian for
Tiara Liquido, under the Hawaii Uniform
Transfers to Minors Act 4,400
</TABLE>
-16-
<PAGE> 17
<TABLE>
<CAPTION>
Name Number of Shares of Class B
- ---- ---------------------------
<S> <C>
Susan Heftel-Liquido, as custodian for
Carlo Liquido, under the Hawaii
Uniform Transfers to Minors Act 4,400
Susan Heftel-Liquido, as custodian for
Fernando Liquido, under the Hawaii
Uniform Transfers to Minors Act 4,400
Christopher Lee Heftel, as custodian for
Logan Heftel, under the Tennessee
Uniform Transfers to Minors Act 4,400
Christopher Lee Heftel, as custodian for
Brannon Heftel, under the Tennessee
Uniform Transfers to Minors Act 4,400
Christopher Lee Heftel, as custodian for
Hayden Heftel, under the Tennessee
Uniform Transfers to Minors Act 4,400
Terry Heftel, as custodian for
Jonathan Heftel, under the Utah
Uniform Transfers to Minors Act 4,400
Terry Heftel, as custodian for
Jeffrey Welch, under the Utah
Uniform Transfers to Minors Act 4,400
Terry Heftel, as custodian for
Jeremy Heftel, under the Utah
Uniform Transfers to Minors Act 4,400
Richard Heftel, as custodian for
Kawika Heftel, under the California
Uniform Transfers to Minors Act 4,400
Richard Heftel, as custodian for
Christian Heftel, under the California
Uniform Transfers to Minors Act 4,400
Richard Heftel, as custodian for
Brittany Heftel, under the California
Uniform Transfers to Minors Act 4,400
</TABLE>
Carl Parmer owns 413,026 shares of Class B Common Stock and 160,000 shares of
Class A Common Stock.
Catharine Rolph owns 335,635 shares of Series A Preferred Stock.
-17-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the references to our firm under the captions "Selected
Financial Information" and "Experts" in the Registration Statement (Form S-3 No.
33-04581) and related Prospectus of Clear Channel Communications, Inc. for the
registration of 3,300,000 shares of its common stock and to the incorporation by
reference therein of our reports dated February 16, 1996, and March 25, 1996,
with respect to the consolidated financial statements of Clear Channel
Communications, Inc. incorporated by reference in its Annual Report (Form 10-K)
for the year ended December 31, 1995 and the related financial statement
schedules included therein, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
June 5, 1996
San Antonio, Texas
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 4, 1996, with respect to the consolidated
financial statements of US Radio, Inc. incorporated by reference in the
Registration Statement (Form S-3) and related Prospectus of Clear Channel
Communications, Inc. for the registration of 3,300,000 shares of its common
stock.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 22, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 1995, with respect to the combined
financial statements of Ragan Henry Communications Group, L.P., US Radio, L.P.
and US Radio Stations, L.P. incorporated by reference in the Registration
Statement (Form S-3) and related Prospectus of Clear Channel Communications,
Inc. for the registration of 3,300,000 shares of its common stock.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 22, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF KPMG
Board of Directors
Clear Channel Communications, Inc.
We consent to the incorporation by reference in the registration statement
on Form S-3 of Clear Channel Communications, Inc. of our report dated 12
February 1996, with respect to the consolidated balance sheet for the Australian
Radio Network Pty Limited and its controlled entities as at 31 December 1995 and
the related consolidated profit and loss account and statement of cash flows for
the year then ended.
Additionally, we consent to the incorporation by reference in the
aforementioned registration statement of our reports dated 25 July 1995, with
respect to the consolidated balance sheet of Wesgo Limited and its controlled
entities as at 30 June 1994 and 31 December 1994, and the related consolidated
profit and loss accounts and statements of cash flows for the year ended 30 June
1994 and for the six month period ended 31 December 1994 respectively, and with
respect to the combined balance sheets of Albert's radio stations, acquired by
the Australian Radio Network Pty Limited, as at 30 June 1994 and 31 December
1994, and the related combined profit and loss accounts and statement of cash
flows for the year ended 30 June 1994 and for the six month period ended 31
December 1994 respectively, which reports appear in the Form 8-K/A of Clear
Channel Communications, Inc. dated 27 July 1995.
Finally we consent to the references to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG
Sydney, Australia
21 May 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF KPMG PEAT MARWICK LLP
Radio Equity Partners, L.P. and subsidiary
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of Clear Channel Communications, Inc. of our report dated March 29,
1996, relating to the consolidated balance sheets of Radio Equity Partners, L.P.
and its subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of operations, partners' capital and cash flows for the
years then ended, which report appears in the Form 8-K of Clear Channel
Communications, Inc. dated June 5, 1996.
/s/ KPMG PEAT MARWICK LLP
New York, New York
June 5, 1996
