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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant
to Section 14(d)(4) of the Securities Exchange Act of 1934
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HEFTEL BROADCASTING CORPORATION
(Name of Subject Company)
HEFTEL BROADCASTING CORPORATION
(Name of Person(s) Filing Statement)
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Class A Common Stock, par value $.001
(Title of Class of Securities)
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422799 10 6
(CUSIP Number of Class of Securities)
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Carl Parmer
Co-Chief Executive Officer and President
Heftel Broadcasting Corporation
6767 West Tropicana Avenue, Suite 102
Las Vegas, Nevada 89103
(702) 284-6484
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person Filing Statement)
Copies to:
Frederick W. Gartside, Esq.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Heftel Broadcasting Corporation, a
Delaware corporation (the "Company"). The address of the Company's principal
executive offices is 6767 West Tropicana Avenue, Suite 102, Las Vegas, Nevada
89103. The title of the class of equity securities to which this statement
relates is the Class A Common Stock, par value $.001 per share, of the Company
("Class A Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the offer by Clear Channel Radio, Inc., a
Nevada corporation ("Clear Channel"), which is an indirect wholly-owned
subsidiary of Clear Channel Communications, Inc., a Texas corporation
("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1 filed on
June 6, 1996 (the "Schedule 14D-1"), to acquire all of the outstanding shares of
Class A Common Stock and Class B Common Stock, par value $.001, of the Company
(the Class A Common Stock and the Class B Common Stock collectively are referred
to herein as the "Company Common") for a price of $23 per share. The address of
the principal executive offices of Clear Channel and Parent is 200 Concord
Plaza, Suite 600, San Antonio, Texas 78216.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The person filing this statement is the Company. Its
business address is set forth under Item 1 above.
(b)(1) Tender Offer Agreement.
The following is a summary of the material terms
of the Tender Offer Agreement, dated June 1, 1996, between the Company and Clear
Channel, as amended (the "Offer Agreement"). This summary is not a complete
description of the terms and conditions thereof and is qualified in its entirety
by reference to the full text thereof, which is incorporated herein by
reference. A copy of the Tender Offer Agreement and Amendment No. 1 have been
filed with the Commission as an Exhibit to Clear Channel's Schedule 14D-1 and a
copy of Amendment No. 2 to the Tender Offer Agreement has been filed with the
Commission as an Exhibit to this Schedule 14D-9.
Offer. The Offer Agreement requires Clear Channel
to make a tender offer (the "Offer") to purchase all of the outstanding shares
of Company Common for a price of $23 per share (the "Offer Price"). Subject to
satisfaction of Clear Channel's closing conditions, Clear Channel will be
obligated to purchase any and all shares tendered in response to the Offer.
Clear Channel's obligation to purchase tendered shares is not conditioned on a
specified minimum number of shares being tendered. As discussed under Item
3(b)(2) below, concurrently with the execution of the Offer Agreement, Clear
Channel also
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entered into a Stockholder Purchase Agreement dated June 1, 1996 (the
"Stockholder Purchase Agreement") with certain stockholders of the Company
(collectively, the "Selling Stockholders"), pursuant to which each of the
Selling Stockholders agreed to sell, and Clear Channel agreed to purchase, all
shares of Company Common owned by such Selling Stockholders at a price per share
equal to the Offer Price. The Selling Stockholders collectively own 160,000
shares of Class A Common Stock and 3,356,529 shares of Class B Common Stock, or
a total of 3,516,529 shares of Company Common, representing approximately 34.8%
of the outstanding shares of Company Common. The Selling Stockholders also own
options to acquire 349,339 shares of Class A Common Stock and warrants to
acquire 806,678 shares of Class B Common Stock, and have agreed to tender the
shares issuable upon exercise of such options and warrants pursuant to the
Offer. If Clear Channel is deemed the beneficial owner of all shares subject to
the Stockholder Purchase Agreement (including those issuable upon exercise of
options and warrants), Clear Channel would beneficially own 6,829,345 shares or
59.1% of the outstanding shares of Company Common on a fully-diluted basis.
The Offer Agreement provides the Offer must 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 Clear Channel which,
when combined with the shares of Class A Common Stock owned by affiliates of
Clear Channel, total 80% of the outstanding shares of Company Common, Clear
Channel must publish notice of such fact and must extend the termination date
for the Offer by ten days.
Clear Channel may not do any of the following
without the consent of the Company: (a) reduce the Offer Price, (b) amend or add
to the conditions to the obligations of Clear Channel to complete the
transactions contemplated by the Offer Agreement set forth in Article 7 of the
Offer Agreement, (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 the Offer Agreement, extend the termination date for the Offer,
or (e) terminate the Offer except in accordance with Section 8.1 of the Offer
Agreement.
The Company caused its transfer agent to furnish
Clear Channel with mailing labels containing the names and addresses of the
recordholders of Company Common and has agreed to furnish Clear Channel with
such information and assistance as Clear Channel may reasonably request in
communicating the Offer to the Company's stockholders.
Conduct of The Company's Business Prior to the
Closing. Under the Offer Agreement, except as otherwise expressly contemplated
by the Offer Agreement, the Company covenants and agrees that prior to the date
of the closing of the transactions contemplated by the Offer Agreement (the
"Closing Date"), unless Clear Channel shall otherwise consent in writing:
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(i) The Company and the Company's
subsidiaries (individually, a "Company Subsidiary") shall conduct their business
and keep their books and accounts, records and files in the usual and ordinary
manner in which such business has been conducted in the past;
(ii) The Company shall not directly or
indirectly do, or permit any Company Subsidiary to do, any of the
following:
a. 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
options and warrants outstanding on the date of the Offer Agreement set forth on
a Schedule attached to the Offer Agreement (collectively "Convertible
Securities");
b. except (A) in the
ordinary course of business and consistent with prior practice, (B) for
transactions with non-affiliates of the Company which involve payments up to
$500,000 in the aggregate, and (C) for 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;
c. 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;
d. redeem, purchase or
otherwise acquire or offer to redeem, purchase or otherwise acquire any of the
Company's capital stock;
e. 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 certain consolidations of subsidiaries of the Company set forth in a
Schedule attached to the Offer Agreement (collectively, the "Subsidiary
Reorganizations");
f. 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;
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g. amend or modify the
corporate charter, bylaws or other organizational documents of any Company
Subsidiary, except in connection with the Subsidiary Reorganizations;
h. enter into any
agreement or transaction with any, or modify the terms of any existing agreement
with any, affiliate;
i. terminate or fail to
renew any license for a radio station issued by the Federal Communications
Commission (individually, a "Company FCC License");
j. fail to operate any
radio station owned by the Company or a Company Subsidiary (individually, a
"Station") in accordance with the Communications Act of 1934, the rules,
regulations and policies of the Federal Communications Commission (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;
k. cancel, discount or
otherwise compromise any accounts receivable except in the ordinary course of
business consistent with past practice;
l. fail to file in a
timely manner any applications to renew a Company FCC License;
m. (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;
n. enter into any barter
or trade agreement that is prepaid;
o. apply to the FCC for
any construction permit that would restrict the current operations of any
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 regarding maintaining the Company's
properties in good operating condition; or
p. enter into any
contract, agree- ment, commitment or arrangement to do any of the foregoing;
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(iii) Except (a) for salary increases
or other employee benefit arrangements in the ordinary course of business and
consistent with prior practice, (b) as may be required pursuant to any
agreements in effect on the date of the Offer Agreement, (c) 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 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;
(iv) 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;
(v) The Company shall deliver to
Clear Channel copies of any report, statement or schedule filed with the
Commission subsequent to the date of the Offer Agreement;
(vi) The Company shall provide Clear
Channel with copies of the regular monthly internal operating statements
relating to the Company for the monthly accounting periods between the date of
the Offer 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: (1) show the actual results and budget
for such month by line item, and (2) account for items of non-recurring income
and expense separately and (3) 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;
(vii) The Company shall make all
commercially reasonable efforts to preserve the business organization of each
Station intact, to retain substantially as at date of the Offer Agreement each
Station's employees, consultants and agents, and to preserve the goodwill of
each Station's suppliers, advertisers, customers and others having business
relations with it; and
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(viii) 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 in force on the date of the
Offer Agreement.
No Solicitation of Competing Transactions. The
Offer Agreement provides 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 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 Clear Channel 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, the Board of Directors of the
Company or any committee thereof is not prevented 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 Clear
Channel 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 Securities Exchange Act of 1934, as amended (the "Exchange Act"). As used in
the Offer Agreement, "Competing Transaction" means 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
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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.
Renewal Application. In the event at the closing
of the transactions contemplated by the Offer Agreement (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
Offer Agreement provides the Closing shall occur and the Company and Clear
Channel agree to abide by the procedures established in Stockholders of CBS,
Inc., FCC 95-469 (rel. Nov. 22, 1995) Sections 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 agreed to use commercially reasonable efforts to
cooperate with Clear Channel with the prosecution of the Renewal Application,
and Clear Channel agreed that any interest it may acquire in such license at the
Closing will be subject to whatever action the FCC may ultimately take with
respect to the Renewal Application. These agreements will survive the Closing
until any order issued by the FCC with respect to the Renewal Application
becomes a final order.
Indemnification. Pursuant to the Offer Agreement
Clear Channel agreed to indemnify, defend and hold harmless the Company, each
stockholder who executed the Stockholder Purchase Agreement (as defined under
Item 3(b)(2)) and each person who on the date of the Offer Agreement, or who
becomes prior to the Closing Date, an officer or director of the Company or any
Company Subsidiary against all losses, claims, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement with the
approval of Clear Channel (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 Offer Agreement or the transactions contemplated thereby; provided, however,
no indemnity will 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 the Offer
Agreement.
From and after the Closing, Clear Channel
agreed to indemnify, defend and hold harmless each person who on the date of the
Offer Agreement, or who becomes prior to the Closing Date, an officer or
director of the 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 Clear
Channel (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
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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 by the Offer Agreement) 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 Clear Channel agreed to 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). All rights to indemnification
existing in favor of D&O Indemnified Parties will continue in full force and
effect after the Closing Date.
Company Indebtedness. Concurrently with the
Closing, the Offer Agreement requires Clear Channel to 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 Clear Channel's option, obtain the consent of the Company's
lenders under the Credit Agreement to have such indebtedness remain outstanding.
Covenant to Maintain Listing. Pursuant to the
Offer Agreement, for a period of one year from and after the Closing, Clear
Channel agreed to use its best efforts to cause the shares of Class A Common
Stock to remain listed or quoted on a recognized national exchange or National
Association of Securities Dealers, Inc. ("NASD") quotation system.
Independent Directors. Pursuant to the Offer
Agreement, 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, Clear Channel agreed to cause the Company to maintain
two independent directors.
Board of Directors. Pursuant to the Offer
Agreement, the Company will, concurrently with the Closing, take all actions
necessary to cause persons designated by Clear Channel to become directors of
the Company so that such persons shall constitute at least a majority of the
Board of Directors of the Company or if Clear Channel so requests, all of the
directors of the Company. In furtherance thereof, the Company will increase the
size of its Board of Directors, or use its reasonable efforts to secure the
resignation of directors, or both, as necessary to permit Clear Channel's
designees to be elected to the Company's Board of Directors. The Company also
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will, concurrently with the Closing, cause persons designated by Clear Channel
to constitute at least a majority of each committee of the Company's Board of
Directors or if Clear Channel so requests, all of the directors on each
committee of the Company's Board of Directors. The Company's obligations to
appoint designees to its Board of Directors shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder.
Representations and Warranties. The Offer
Agreement contains representations and warranties by the Company regarding the
Company's organization, capital structure and power and authority to enter into
the Offer Agreement, the Offer Agreement being a valid and binding obligation of
the Company, no governmental consents being necessary for the Company to
complete the transaction contemplated by the Offer Agreement other than the
consents set forth in the Offer Agreement, no agreements with brokers or
investment bankers except as set forth in a schedule attached to the Offer
Agreement, board approval of the Offer, the Company's filings with the
Commission not containing an untrue statement of a material fact or omitting to
state a material fact, and the Company's financials included in its Form 10-Ks
and Form 10-Qs being prepared in accordance with generally accepted accounting
principles consistently applied and presenting fairly the financial condition of
the Company. The Offer Agreement also contains representations and warranties by
Clear Channel regarding its organization and power and authority to enter into
the Offer Agreement, the Offer Agreement being a valid and binding obligation of
Clear Channel, no consents being necessary for Clear Channel to complete the
transaction contemplated by the Offer Agreement other than the consents set
forth in the Offer Agreement, no agreements with brokers or investment bankers,
and Clear Channel having the funds, or commitments or agreements with financial
institutions to provide the funds, in an aggregate amount of not less than the
amount necessary to purchase shares of Company Common in the Offer, plus the
amounts payable for shares received upon exercise of the Convertible Securities
plus the aggregate amount of payments due to the co-chief executive officers of
the Company in connection with termination of their employment agreements with
the Company and their execution of agreements not to compete at the Closing.
Conditions to Clear Channel's Obligations. The
Offer Agreement provides the obligations of Clear Channel to consummate the
Offer are subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
(a) The applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") shall have
expired or terminated.
(b) The consent of the FCC to transfer
of control of the Company FCC Licenses (the "FCC Consent") shall have become a
final order; provided, however, if the primary lenders for Clear Channel do not
require that the FCC Consent
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becomes a final order in order to consummate the Closing, then Clear Channel'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.
(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 by the Offer Agreement.
(d) All representations and warranties
of the Company contained in the Offer 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 and except the
representation and warranty regarding the Company's Board of Directors adopting
a resolution to recommend acceptance of the Offer need only be true as of June
1, 1996. The Company shall have performed in all material respects all
agreements and covenants required by the Offer Agreement to be performed by it
prior to or at the Closing Date.
Termination. The Offer Agreement provides it and
the Offer may be terminated at any time prior to the Closing
Date:
(a) By mutual written consent of the
parties;
(b) By either Clear Channel or the
Company, if the FCC denies or dismisses the applications for approval of the
transfer of control of the Company FCC Licenses 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 Clear
Channel, 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 the Offer Agreement
pursuant to this subsection earlier than 48 hours after furnishing notice to
Clear Channel of such Competing Transaction;
(d) By either the Company or Clear
Channel if (i) the Company shall have determined, pursuant to duly adopted
resolutions of its Board of Directors, to recommend
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against acceptance of the Offer by reason of receipt of a Takeover Proposal,
(ii) after receipt of a Takeover Proposal, the Company shall not have, within
five days after being so requested by Clear Channel, determined pursuant to duly
adopted resolutions to recommend acceptance of the Offer, or after so
recommending acceptance of the Offer shall have withdrawn or modified or
resolved to modify or withdraw such recommendation or or (iii) the Company
recommends, pursuant to duly adopted resolutions, any Takeover Proposal from a
person or entity other than Clear Channel or its affiliates; provided, however,
that Clear Channel shall not terminate the Offer Agreement pursuant to clause
(i) of 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, recommends against acceptance of the Offer but
within five business days thereafter the Company publicly withdraws its
recommendation against acceptance of the Offer;
(e) By Clear Channel, if the Company
fails to perform or breaches any of its material obligations or duties under the
Offer Agreement and the Company has not cured such failure to perform or breach
within 15 days after delivery of written notice from Clear Channel or upon a
material breach of any representation and warranty of the Company contained in
the Offer Agreement;
(f) By the Company, if Clear Channel
fails to perform or breaches any of its material obligations or duties under the
Offer 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 Clear Channel
contained in the Offer Agreement; and
(g) By either Clear Channel 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 the Offer
Agreement under this subsection shall not be available to any party whose
failure to fulfill any obligation under the Offer Agreement has been the cause
of, or results in, the failure of the Closing to have occurred on or before the
Termination Date.
Effect of Termination. In the event of the
termination of the Offer Agreement as provided therein, the Offer Agreement
provides it shall forthwith become void and there shall be no liability or
obligations on the part of any party thereto, except for the agreements
regarding confidential information and indemnification by Clear Channel for
claims arising out of the Offer Agreement and except (i) for liability for any
wilful breach of any obligation, covenant or agreement contained therein or any
intentional failure of the representations and warranties contained therein to
have been true and (ii) (x) if the stockholders who are parties to the
Stockholder Purchase
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Agreement terminate such agreement and (y) (1) the Company terminates the Offer
Agreement pursuant to clause (c) or (d) under "Termination" above, or (2) Clear
Channel terminates the Offer Agreement and the Offer pursuant to such clauses
(c) or (d), the Company must pay to Clear Channel $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 such sum in cash, then in lieu of
such payment, the Company shall immediately issue to the Clear Channel 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 the Offer Agreement). If the
Company issues shares to Clear Channel as contemplated in the preceding
sentence, such shares shall be registered under the Securities Act of 1933, as
amended, and freely tradeable upon delivery, or if the foregoing is not
reasonably practicable, shall be subject to a registration rights agreement
enabling Clear Channel to sell such shares without undue delay or expense. Clear
Channel agrees in the Offer Agreement that recovery of damages shall be the sole
and exclusive remedy of Clear Channel in connection with a termination of the
Offer Agreement for the reasons set forth in clause (ii) of this paragraph,
regardless of the actual damages sustained. The Offer Agreement provides Clear
Channel waives the remedy of specific performance of the consummation of the
transactions contemplated thereby.
The Company acknowledges in the Offer
Agreement that the agreements regarding payment of the $13.5 million termination
fee are an integral part of the transactions contemplated in the Offer
Agreement, and that, without these agreements, Clear Channel would not enter
into the Offer Agreement. Accordingly, the Offer Agreement provides if the
Company fails to promptly pay the $13.5 million termination fee when due, the
Company shall in addition thereto pay to Clear Channel all costs and expenses
(including fees and disbursements of counsel) incurred in collecting such amount
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.
Control of Stations. Until the grant of the FCC
Consent, Clear Channel 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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Expenses. The Offer Agreement provides all costs
and expenses incurred in connection with the Offer and the Offer Agreement and
the transactions contemplated thereby shall be paid by the party incurring such
fees and expenses; provided, however, if the Closing occurs, Clear Channel
guaranteed the Company would have sufficient cash to pay all of fees and costs
payable to the investment bankers set forth on a schedule attached to the Offer
Agreement and agreed to loan funds to the Company to pay such fees and costs if
the Company does not have sufficient cash and provided further however the
Company will be required to pay a termination fee under certain circumstances
described under "Termination" above.
Additional Agreements. Each of the parties to the
Offer Agreement agreed 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 the Offer Agreement.
Consents and Filings. The Offer Agreement
provides each party will (a) within ten business days after the date thereof,
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 the Offer Agreement. In addition, each party
is required to 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.
Stock Options. A schedule attached to the Offer
Agreement lists all outstanding options to purchase Class A Common Stock and all
warrants to purchase Class B Common Stock (individually, a "Convertible
Security" and collectively, the "Convertible Securities). On the condition Clear
Channel receives a consent from the holder of the applicable Convertible
Security (the "Holder Consent"), each Convertible Security not exercised before
the Closing Date will be deemed exercised on the Closing Date and the shares of
Company Common underlying such Convertible Securities will be deemed to have
been tendered in the Offer and accepted by Clear Channel. In settlement of such
tenders so accepted, on the Closing Date, Clear Channel shall pay to the Company
the exercise price for such Convertible Securities and shall pay to the holder
thereof an amount equal to the Offer
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<PAGE> 15
Price less (i) the exercise price for the Convertible Security and (ii) any
taxes required to be withheld from such payment. The Offer Agreement provides
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 any applicable security holder consent, to
implement the terms and conditions of the prior sentence, including, without
limitation, accelerating the vesting and exercisability of all Convertible
Securities to the Closing Date; provided, however, that the vesting and
exercisability of a Convertible Security shall not be accelerated if the holder
thereof does not deliver the Holder Consent at or before the expiration of the
Offer. Messrs. Cecil Heftel, Carl Parmer and Richard Heftel have consented to
the treatment of their options to purchase Class A Common Stock set forth in the
Offer Agreement. The Offer Agreement provides 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 accelerate
the vesting of the right to purchase all shares of Class A Common Stock subject
to options included in 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 of the Offer Agreement and to provide Clear Channel with such other
evidence requested by Clear Channel that no holder of any Convertible Security
will have any right to acquire any equity interest in the Company, Clear Channel
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.
Amendment and Waiver. The Offer Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties thereto. Any party to the Offer Agreement may (a) extend the time for
the performance of any of the obligations or other acts of any other party 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.
(2) Stockholder Purchase Agreement.
The following is a summary of the material terms
of the Stockholder Purchase Agreement, dated June 1, 1996 (the "Stockholder
Purchase Agreement") among Clear Channel, Carl Parmer, Cecil Heftel and members
of Cecil Heftel's family who own shares of Class B Common Stock or Series A
Preferred Stock of the Company (Messrs. Parmer and Heftel and such members of
Mr. Heftel's family collectively are referred to herein as the "Selling
Stockholders"). This summary is not a complete
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<PAGE> 16
description of the terms and conditions thereof and is qualified in its entirety
by reference to the full text thereof, which is incorporated herein by reference
and a copy of which has been filed with the Commission as an Exhibit to Clear
Channel's Schedule 14D-1.
Purchase. Pursuant to the Stockholder Purchase
Agreement, the Selling Stockholders agreed to sell each share of Company Common
owned by them set forth on an exhibit to the Stockholder Purchase Agreement
(collectively, the "Shares") to Clear Channel at the Offer Price. In addition,
Ms. Catharine Rolph, the daughter of Cecil Heftel, agreed to sell all of the
shares of Series A Preferred Stock owned by her to Clear Channel for a price of
$1.00 per share, plus all accrued but unpaid dividends thereon (such purchase
price equals the price the Company would pay if it redeemed such shares pursuant
to the terms of such stock set forth in the Restated Certificate of
Incorporation of the Company).
Representations and Warranties. In the
Stockholder Purchase Agreement, the Selling Stockholders make representations
and warranties that the Stockholder Purchase Agreement is a valid and binding
obligation of the Selling Stockholders, the execution and delivery of the
Stockholder Purchase Agreement and the consummation of the transactions
contemplated thereby do not violate any agreements, notes, leases, permits,
licenses, judgments, orders, decrees or laws, no consent of a governmental
authority is necessary for the Selling Stockholders to execute and deliver the
Stockholder Purchase Agreement and consummate the transactions contemplated
thereby, the Selling Stockholders have good title to the Shares and upon the
sale thereof Clear Channel will acquire good title free and clear of all
encumbrances and the Selling Stockholders do not own any Company Common other
than the Shares. In the Stockholder Purchase Agreement, Clear Channel represents
and warrants that it has the corporate power and authority to execute the
Stockholder Purchase Agreement, the Stockholder Purchase Agreement is a valid
and binding obligation of Clear Channel, Clear Channel is acquiring the Shares
for investment only and not with a view to any public distribution thereof and
Clear Channel will not offer to sell or otherwise dispose of the Shares in
violation of any registration requirements of the Securities Act of 1933, as
amended.
Covenants of the Selling Stockholders. The
Selling Stockholders made the following covenants in the Stockholder Purchase
Agreement:
(a) Each Selling Stockholder agreed in
his capacity as a Selling Stockholder, until the termination of the Stockholder
Purchase Agreement, not to:
(i) sell, transfer, pledge,
assign or otherwise dispose of, or tender or agree to tender into any
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<PAGE> 17
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 Selling Stockholder's Shares to any person other than Clear
Channel or Clear Channel's designee;
(ii) acquire any additional
shares of Company Common without the prior consent of Clear Channel;
(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 Clear Channel and its 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 any merger or consolidation involving the Company,
the acquisition of any shares of Company Common or the acquisition of all or
substantially all the assets of the Company by any person other than Clear
Channel or its sole stockholder.
(b) To notify Clear Channel promptly and
to provide all details requested by Clear Channel if such Selling Stockholder
shall be approached or solicited, directly or indirectly, by any person with
respect to any matter described in clauses (a)(iv) or (a)(v) above.
(c) Unless the Stockholder Purchase
Agreement has been terminated or Clear Channel has purchased all the Shares, at
any annual or special meeting of the stockholders of the Company and in any
action by written consent of the stockholders of the Company, such Selling
Stockholder will vote such Selling 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 Offer Agreement or which would otherwise, in the
sole judgment of Clear Channel, impede, interfere with or attempt to discourage
the Offer.
Conditions to Obligations of Certain Selling
Stockholders. The obligations of Cecil Heftel, Chairman of the Board and
Co-Chief Executive Officer of the Company ("Heftel"), and Carl Parmer, Co-Chief
Executive Officer and President of the Company ("Parmer"), to consummate the
transactions contemplated by the Stockholder Purchase Agreement are subject to
the fulfillment on or prior to the date of the closing of the transactions
contemplated by the Stockholder Purchase Agreement (the "Selling Stockholder
Closing Date") of each of the following conditions:
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<PAGE> 18
(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, dated June 1, 1996, 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,
dated June 1, 1996, shall have been paid.
Conditions to Obligations of Clear Channel. The
obligations of Clear Channel to consummate the transactions contemplated by the
Stockholder Purchase Agreement are subject to the fulfillment on or prior to the
Selling Stockholder 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 Clear Channel do not
require that the FCC Consent becomes a Final Order in order to consummate the
closing of the transactions contemplated by the Stockholder Purchase Agreement
(the "Selling Stockholder Closing"), then Clear Channel'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, Florida remains pending or has not become a Final Order, the parties
agree the Selling Stockholder 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 by the Stockholder Purchase Agreement.
(d) All representations and warranties of
the Selling Stockholders contained in the Stockholder Purchase Agreement shall
be true and correct in all material respects at and as of the Selling
Stockholder 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 Selling Stockholders shall have
performed in all material respects agreements and covenants required by the
Stockholder Purchase Agreement to be performed by them prior to or at the
Selling Stockholder Closing Date.
Indemnification. Pursuant to the Stockholder
Purchase Agreement, Clear Channel agreed to indemnify each Selling Stockholder
(the "Indemnified Party") against all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement with the
approval of Clear
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<PAGE> 19
Channel 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 Stockholder Purchase Agreement or the Offer Agreement or the transactions
contemplated therein; provided, however, that 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 or intentionally
misrepresenting that he or she may enter into the Stockholder Purchase
Agreement.
Termination. The Stockholder Purchase Agreement
may be terminated, by written notice promptly given to the other parties
thereto, at any time prior to the Selling Stockholder Closing Date:
(a) by mutual written consent of all of
the parties thereto;
(b) by any Selling Stockholder as to his
individual obligations if the Company is able to terminate the Offer Agreement
pursuant to any of subparagraphs 8.1(b), (c), (d), (f), or (g) of the Offer
Agreement; and
(c) by Clear Channel if Clear Channel has
terminated the Offer Agreement pursuant to any of subparagraphs 8.1(b), (c),
(d), (e), or (g) of the Offer Agreement.
(3) Agreements with Cecil Heftel and Carl Parmer.
Settlement Agreements. In December 1993, the
Company entered into ten-year Employment Agreements with Cecil Heftel and Carl
Parmer under which each of them is entitled to receive a base annual salary of
$500,000 and bonuses based on the performance of the Company. Under those
Employment Agreements, if the Company terminates the employment of Mr. Heftel or
Mr. Parmer without cause, he will be entitled to receive a lump sum payment
equal to the present value of all amounts remaining to be paid by the Company to
him under his Employment Agreement. For purposes of calculating future bonuses,
the Company will be deemed to have achieved the performance level necessary to
pay the maximum bonus.
Clear Channel has informed Mr. Heftel and
Mr. Parmer that it intends to cause the Company to terminate their employment,
without cause, immediately following the purchase of Shares pursuant to the
Stockholder Purchaser Agreement.
Concurrently with the execution of the
Stockholder Purchase Agreement, Mr. Heftel and Mr. Parmer each entered into a
Settlement Agreement (each, a "Settlement Agreement") with the Company. Pursuant
to the respective Settlement Agreements, the employment by the Company of Mr.
Heftel and Mr. Parmer will terminate immediately following the
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<PAGE> 20
purchase of Shares pursuant to the Stockholder Purchase Agreement and the
Company will pay Mr. Heftel $11,861,069 and Mr. Parmer $6,941,960 in exchange
for releases by Mr. Heftel and Mr. Parmer from any claims resulting from
termination of their Employment Agreements with the Company. Clear Channel has
guaranteed the obligations of the Company under the Settlement Agreements.
The total amount to be paid to each of Mr.
Heftel and Mr. Parmer under his Settlement Agreement and Agreement Not to
Compete (described below) does not exceed the present value of all amounts
remaining to be paid to him by the Company under his Employment Agreement.
Agreements Not To Compete. Concurrently with the
execution of the Stockholder Purchase Agreement, each of Cecil Heftel and Carl
Parmer entered into an Agreement Not To Compete with the Company. Pursuant to
these agreements each of Messrs. Heftel and Parmer agreed that for a period of
five years commencing on the Selling Stockholder Closing Date, without the prior
written consent of the Company, he will not, directly or indirectly, own (except
that he may own securities which constitute not more than five percent (5%) of a
publicly traded company's issued and outstanding capital stock), work for, act
as consultant or advisor to, manage, operate, or control or participate in the
ownership, management, operation or control of, any radio station in the markets
set forth in the Agreement Not To Compete which broadcasts predominantly in
Spanish. In consideration of these agreements not to compete, the Company agreed
to pay $4.5 million to Mr. Parmer and $2.5 million to Mr. Heftel on the Selling
Stockholder Closing Date. Clear Channel guaranteed the obligations of the
Company under each Agreement Not To Compete.
(4) Confidentiality Agreement
The following is a summary of the material terms of the
Confidentiality Agreement, dated May 31, 1996, (the "Confidentiality Agreement")
between the Company and Clear Channel. This summary is not a complete
description of the terms and conditions thereof and is qualified in its entirety
by reference to the full text thereof, which is incorporated herein by reference
and a copy of which has been filed with the Commission as an Exhibit to Clear
Channel's Schedule 14D-1.
Under the Confidentiality Agreement, Clear Channel agreed to
use any information concerning the Company (whether prepared by the Company, its
advisors, or otherwise) that is furnished to it by or on behalf of the Company
(herein collectively referred to as the "Evaluation Material") solely for the
purpose of evaluating a possible transaction between the Company and Clear
Channel and to keep all Evaluation Material confidential. The term "Evaluation
Material" does not include information that (i) was already in Clear Channel's
possession, provided that it does not have reason to know that such
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<PAGE> 21
information is subject to another confidentiality agreement with or other
obligation of secrecy to the Company or another party, or (ii) becomes generally
available to the public other than as a result of a disclosure by Clear Channel
or its directors, officers, partners, employees, agents, advisors or
representatives (collectively, the "Representatives") or (iii) has been
independently acquired or developed by Clear Channel or its Representatives
without violating Clear Channel's obligations under the Confidentiality
Agreement.
Clear Channel agreed that none of its officers, directors,
employees or other Representatives who had access to Evaluation Material will,
directly or indirectly, initiate or maintain contact (except for those contacts
made in the ordinary course of business) with any officer, director, employee or
agent of the Company, except with the express prior written permission of the
Company, or solicit or cause to be solicited, based on use of the Evaluation
Materials, the employment of any director, officer or employee of the Company or
of any of its subsidiaries (whether employed by the Company or its subsidiaries
prior to, during or following such period).
The obligations under the Confidentiality Agreement expire on
May 31, 1998.
(5) Contracts with Officers, Directors or Affiliates. Certain
contracts, agreements, arrangements or understandings between the Company or its
affiliates and certain of its executive officers, directors or affiliates are
described in the Company's Proxy Statement dated February 12, 1996 relating to
the Company's Annual Meeting of Stockholders held on March 11, 1996 (the "Proxy
Statement") under the heading "Executive Compensation and Other Matters," on
pages 7 through 10 of the Proxy Statement, a copy of which has been filed as an
Exhibit hereto.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board of Directors of the Company has determined that
the making of the Offer is in the best interests of the Company and its
stockholders and has unanimously approved the Offer Agreement and the Offer, but
is expressing no opinion and is remaining neutral with respect to whether
stockholders should accept the Offer and tender their shares.
(b) Set forth below are a summary of the history of
the negotiations and the reasons for the position stated in Item 4(a).
History of Negotiations. In the Fall of 1995,
Mr. L. Lowry Mays, President and Chief Executive Officer of Clear Channel
Communications, Inc., indirect owner of Clear Channel ("Parent"), informally
inquired of Cecil Heftel whether the Company would have any interest in a
possible acquisition by Parent. Mr. Heftel informed Mr. Mays that the Company
was not
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<PAGE> 22
interested in an acquisition at that time, and Parent did not pursue the matter
further.
In late January 1996, the board of directors of
the Company, after meeting with the Company's financial advisor, Alex. Brown &
Sons Incorporated ("ABS"), determined to investigate the sale of the Company.
ABS and the Company identified certain companies in the broadcasting business as
potential acquirors of the Company. In February 1996, the Company began entering
into confidentiality agreements with certain of these potential acquirors and
provided to such potential acquirors certain information regarding the Company,
including reports filed with the Commission. ABS contacted Parent to determine
whether Parent had any interest in pursuing a possible business combination with
or acquisition of the Company and forwarded to Parent a form of confidentiality
agreement, but Parent refused to enter into the confidentiality agreement and
informed ABS that it was not interested in pursuing a transaction at that time
on such terms. The Company and ABS limited parties contacted in order to avoid
premature disclosure of the possibility of a sale of the Company, which the
Board of Directors believed could adversely affect the Company's business.
By March 18, 1996, the Company had received
letters of interest from six potential acquirors which set forth general terms
of a proposed transaction involving the Company. After reviewing these letters,
the Company continued discussions with five potential acquirors.
In late March, 1996, the Company began intensive
negotiations with one potential acquiror. The Company caused its counsel to
prepare drafts of a proposed acquisition agreement and the Company and its
counsel spent numerous hours negotiating the terms and structure of the proposed
acquisition. In addition, the Company and its counsel delivered various
documents and information to the prospective acquiror in response to due
diligence requests of such prospective acquiror. The price which this
prospective acquiror was willing to pay under the last draft of the acquisition
agreement circulated among the participants was $22.50 and was subject to upward
or downward adjustment based on the results of operations of the Company through
September 30, 1996, and the balance sheet of the Company at September 30, 1996.
As of May 29, 1996, this prospective acquiror had not yet agreed to the terms of
the proposed acquisition agreement.
On the morning of May 29, 1996, Carl Parmer, Co-
Chief Executive Officer and President of the Company, received a telephone call
from Randall Mays, Vice President of Parent, in which he offered, on behalf of
Parent or a subsidiary of Parent, to purchase the shares of Company Common held
by Mr. Parmer, Cecil Heftel and the members of Cecil Heftel's family for the
Offer Price and to make a tender offer for the remaining shares of the Company
Common for the Offer Price. For the remainder of such day, the Company and its
representatives had negotiations
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with Parent and its counsel with respect to the structure of the transaction
proposed by Parent.
On May 30, 1996, negotiations between the Company
and Parent and their respective representatives continued, and counsel for the
Company delivered to Parent a draft of a proposed Tender Offer Agreement. Parent
and its legal counsel also commenced discussions on May 30, 1996, with
representatives of the Selling Stockholders and their counsel. On May 30 and 31,
1996, the Company, Parent, representatives of the Selling Stockholders and their
respective counsel had conference calls in which certain terms of the proposed
Tender Offer Agreement, Stockholder Purchase Agreement, Settlement Agreements
and Agreements Not to Compete were negotiated and resolved. On May 31, 1996,
Clear Channel entered into a Confidentiality Agreement with the Company.
In the late afternoon (Pacific time) of May 31,
1996, the Board of Directors of the Company unanimously approved the Offer and
determined to recommend that the stockholders tender their shares of Company
Common in response to the Offer.
On June 1, 1996, Clear Channel and the Company
entered into the Offer Agreement, Clear Channel and the Selling Stockholders
entered into the Stockholder Purchase Agreement and Messrs. Heftel and Parmer
entered into their respective Settlement Agreements and Agreements Not To
Compete with the Company and Clear Channel.
On several occasions during the following days,
representatives of Clear Channel and the Company discussed the composition of
the Company's Board of Directors following the closing of the Offer and
Stockholder Purchaser Agreement but did not reach agreement with respect to such
matter.
On June 6, 1996, Clear Channel and the Company
entered into an Amendment No. 1 to the Offer Agreement, which Amendment (a)
provides for the treatment of options and warrants as described elsewhere in
this Schedule 14D-9, rather than cancellation and payment for such options and
warrants upon the closing of the Offer, (b) provides that upon the occurrence of
the Closing Clear Channel shall guarantee that the Company will pay the
investment banking firm fees and expenses incurred by the Company under
agreements listed on a schedule to the Offer Agreement (including by loaning
funds to the Company if necessary) rather than pay such fees and expenses
directly, and (c) waives the provision which requires the Company to file its
Schedule 14D-9 on June 7, 1996. On June 6, 1996, the Selling Stockholders who
own options or warrants also consented to the treatment of their options and
warrants as provided in Amendment No. 1 to the Offer Agreement.
On June 6, 1996, the Board of Directors of the
Company unanimously approved Amendment No. 1 to the Offer
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<PAGE> 24
Agreement and discussed the effect the market price of Class A Common Stock may
have on its previous determination to recommend acceptance of the Offer by the
Company's stockholders.
On June 20, 1996, Clear Channel and the Company
entered into an Amendment No. 2 to the Offer Agreement, which Amendment (a)
provides the Company may either recommend acceptance of the Offer by its
stockholders or may remain neutral with respect to the Offer in its Schedule
14D-9, instead of the original provision which required the Company to recommend
acceptance of the Offer, (b) provides the representation by the Company that its
board of directors resolved to recommend acceptance of the Offer need only be
true as of June 1, 1996, and (c) modified one of the termination sections to
provide either the Company or Clear Channel may terminate the Offer Agreement if
(i) the Company shall have determined, pursuant to duly adopted resolutions of
its Board of Directors, to recommend against acceptance of the Offer by reason
of receipt of a Takeover Proposal, (ii) after receipt of a Takeover Proposal,
the Company shall not have, within five days after being so requested by Clear
Channel, determined pursuant to duly adopted resolutions to recommend acceptance
of the Offer, or after so recommending acceptance of the Offer shall have
withdrawn or modified or resolved to modify or withdraw such recommendation or
(iii) the Company recommends, pursuant to duly adopted resolutions, any Takeover
Proposal from a person or entity other than Clear Channel or its affiliates;
provided, however, that Clear Channel shall not terminate the Offer Agreement
pursuant to clause (i) of 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, recommends against acceptance of
the Offer but within five business days thereafter the Company publicly
withdraws its recommendation against acceptance of the Offer.
On June 20, 1996, the Board of Directors of the
Company unanimously approved Amendment No. 2 to the Offer Agreement, confirmed
that the making of the Offer was in the best interests of the Company and its
stockholders and determined to refrain from expressing an opinion on, and
instead remain neutral with respect to, whether stockholders should accept the
Offer and tender their shares.
Reasons for the Position. In arriving at its determination
that the making of the Offer is in the best interests of the Company and its
stockholders and its initial decision to recommend acceptance of the Offer, the
Board of Directors considered, among other things, (i) the terms and conditions
of the Offer, including (a) the amount and form of the consideration being
offered to the Company's stockholders, (b) the fact that the Offer was being
made for any and all shares of Company Common and at the same price per share at
which the Selling Stockholders had agreed to sell their shares to Clear Channel,
and (c) the fact that Clear Channel had agreed to use
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<PAGE> 25
its best efforts, for a period of one year from and after the closing of the
Offer, to cause the shares of Class A Common Stock to remain listed or quoted on
a recognized national exchange or NASD quotation system; (ii) the recent and
historical market prices and trading volume of the Shares, and historical and
projected earnings of the Company; (iii) the Board of Directors' knowledge of
the business, operations, prospects, properties, assets and earnings of the
Company; (iv) the absence of any financing condition or any other term or
condition which in the Board's view was unduly onerous or could materially
impair the consummation of the Offer; (v) the financial condition and business
reputation of Clear Channel, the representation from Clear Channel that it has
funds or commitments for funds to pay for all shares tendered in the Offer and
the ability of Clear Channel to complete the Offer in a timely manner; (vi)
possible alternatives, which the Board concluded were not reasonably likely to
result in a more favorable combination of price, form of consideration and
likelihood of consummation than the Offer; (vii) the market trading multiples
for selected broadcasting companies and prices paid in recent acquisitions in
the broadcasting industry, (viii) the scope and level of the negotiating process
that led to the finalization of the Offer Agreement; (ix) the fact that the
Offer Agreement does not preclude the Company from reviewing, if after
consultation with its outside legal counsel such action is required for the
discharge of its fiduciary duties to the stockholders of the Company, an
unsolicited proposal which may differ from the Offer; and (x) the oral
presentations by ABS at the May 31, 1996, board meeting and the oral opinion,
which was later confirmed in a written opinion dated June 3, 1996, to the effect
that, as of the date of the opinion, the consideration to be received by the
stockholders pursuant to the Offer was fair from a financial point of view to
the stockholders (the full text of ABS's written opinion is attached as Exhibit
(a)(3) hereto and is incorporated herein by reference. STOCKHOLDERS ARE URGED TO
READ THE OPINION OF ABS CAREFULLY AND IN ITS ENTIRETY).
The Board of Directors did not assign relative
weights to the foregoing factors or determine that any factor was of primary
importance. Rather, the directors viewed their position as being based on the
totality of the information presented to and considered by them.
At the time the Company's Board of Directors
approved the Offer on May 31, 1996, the Company's trading price for the Class A
Common Stock on the Nasdaq National Market was less than $23 per share. Since
the Company and Clear Channel jointly announced the Offer on June 2, 1996, the
trading price for the Class A Common Stock on the Nasdaq National Market has
increased to more than $23 per share. On June 19, 1996, the closing sale price
per share of the Class A Common Stock on the Nasdaq National Market was $29.
Although the Board of Directors of the Company has determined that the making of
the Offer is in the best interests of the Company and its stockholders and has
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unanimously approved the Offer Agreement and the Offer, the Board of Directors
is at this time expressing no opinion and is remaining neutral as to whether the
stockholders should accept the Offer and tender their shares because the market
price per share of Class A Common Stock in the Nasdaq National Market is
currently higher than the Offer Price. Since the closing of the Offer and the
closing of Clear Channel's purchase of Company Common and Series A Preferred
Stock of the Company from the Selling Stockholders pursuant to the Stockholder
Purchase Agreement are not conditioned on a specified minimum number of shares
of Company Common being tendered pursuant to the Offer, stockholders of the
Company other than the Selling Stockholders will have a choice of accepting the
Offer and tendering their shares to Clear Channel in response thereto, retaining
their shares or selling their shares in the public market or otherwise, as they
may determine. The Company is informed that the average daily volume of shares
of Class A Common Stock of the Company purchased and sold on the Nasdaq National
Market since the Offer was publicly announced on June 2, 1996 through June 19,
1996 was 520,054. Pursuant to the Offer Agreement, Clear Channel has agreed to
use its best efforts, for a period of one year from and after the closing of the
Offer, to cause the shares of Class A Common Stock to remain listed or quoted on
a recognized national exchange or NASD quotation system.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated February 16, 1996 (the "Engagement
Letter"), the Company engaged ABS to provide investment banking advice and
services to the Company in connection with the Company's review and analysis of
potential business combinations. The Company agreed to pay ABS a retainer fee of
$50,000 and a fee of $400,000 if ABS delivered a fairness opinion requested by
the Company in connection with a proposed business combination. The Company also
agreed to reimburse ABC for reasonable out-of-pocket expenses, including fees
and disbursements of counsel, incurred by ABS in carrying out its duties under
the Engagement Letter, and to pay ABS its customary per diem charges for the
services of any officers that assist in, or provide testimony in connection with
any action, suit or proceeding relating to the engagement of ABS by the Company.
In addition, ABS will receive a fee upon completion of the Offer and
consummation of the transactions contemplated by the Stockholder Purchase
Agreement of $3.1 million. The terms of the fee arrangement with ABS, which ABS
and the Company believe are customary in transactions of this nature, were
negotiated at arm's length between the Company and ABS and the Board of
Directors of the Company was aware of and approved such arrangement.
ABS has provided certain investment banking services to the Company and
Parent from time to time for which it has received customary compensation. In
the ordinary course of its business, ABS may actively trade the equity
securities of the Company
-26-
<PAGE> 27
and/or Parent for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Except as disclosed herein the Company has not retained, employed or
compensated, and does not plan to retain, employ or compensate, any persons to
make solicitations or recommendations to security holders with regard to the
Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO
SECURITIES.
(a) Other than the following transactions completed on the Nasdaq
National Market there are no transactions in Company Common known by the Company
to have been effected by an executive officer, director, affiliate or subsidiary
of the Company:
(i) On June 5, 1996, Madison B. Graves, II, a
director of the Company, sold 12,000 shares of Class A Common
Stock;
(ii) On June 13 and 17, 1996, John Kendrick, Senior Vice
President and Chief Financial Officer of the Company, exercised options to
purchase 8,333 and 5,000 shares of Class A Common Stock, respectively, and sold
such shares; and
(iii) On June 13, 1996, John E. Mason, a director of the
Company, exercised an option to purchase 2,500 shares of Class A Common Stock
and sold such shares.
(b) All of the officers and directors who are parties to the
Stockholder Purchase Agreement intend to sell their shares of Company Common to
Clear Channel pursuant to the terms thereof. In addition, each of the officers
and directors of the Company intends to consent to the treatment of their
Convertible Securities set forth in the Offer Agreement described under Item
3(b).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT
COMPANY.
(a) None, except as disclosed in Items 3(b) and 4.
(b) None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
On June 14, 1996, Levine v. Cecil Heftel, H. Carl Parmer,
Madison Graves, Richard Heftel, John Mason, Heftel Broadcasting
Corporation and Clear Channel Communications, Inc. (Case No.
15066) was filed in the Court of Chancery of the State of
Delaware in the County of New Castle. This complaint is a
purported class action complaint on behalf of Jeffrey Levine and
all other stockholders of the Company to enjoin the defendants
-27-
<PAGE> 28
from effectuating the Offer. The plaintiff alleges, inter alia, that the Offer
is coercive to minority stockholders and manifestly unfair and that the Offer
Price is substantially below the fair market value of the Class A Common Stock.
The plaintiff also alleges that Cecil Heftel and Carl Parmer are breaching their
fiduciary duties to the stockholders of the Company by entering into the
Settlement Agreements and Agreements Not To Compete described under Item 3(b)
hereof. The suit seeks to enjoin preliminarily and permanently the defendants
from proceeding with or consummating the proposed transactions or in the event
the Offer is completed, the rescission thereof and/or the grant of rescissory
damages. In addition, plaintiff seeks unspecified compensatory damages and an
award of attorneys' fees and costs. The Company believes this action is
groundless and has no merit. The Company intends to oppose this action
vigorously.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit Description
(a)(1) Text of Press Release dated June 2, 1996
(incorporated herein by reference to
Exhibit 99(a)(6) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996)
(a)(2) Summary Advertisement of Clear Channel
(incorporated herein by reference to
Exhibit 99(a)(3) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996)
(a)(3) Opinion of Alex. Brown & Sons
Incorporated dated June 3, 1996.
(c)(1) Tender Offer Agreement, dated June 1, 1996,
between the Company and Clear Channel
(incorporated herein by reference to
Exhibit 99(c)(1) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996).
(c)(2) Amendment No. 1 to Tender Offer
Agreement dated June 6, 1996
(incorporated herein by reference to
Exhibit 99(c)(9) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996).
(c)(3) Amendment No. 2 to Tender Offer
Agreement dated June 20, 1996
-28-
<PAGE> 29
(c)(4) Agreement Not To Compete, dated June 1, 1996,
between the Company and Carl Parmer
(incorporated herein by reference to
Exhibit 99(c)(4) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996).
(c)(5) Agreement Not To Compete, dated June 1, 1996,
between the Company and Cecil Heftel
(incorporated herein by reference to Exhibit
99(c)(3) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(6) Settlement Agreement, dated June 1, 1996,
between the Company and Carl Parmer
(incorporated herein by reference to Exhibit
99(c)(6) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(7) Settlement Agreement, dated June 1, 1996,
between the Company and Cecil Heftel
(incorporated herein by reference to Exhibit
99(c)(5) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(8) Confidentiality Letter Agreement dated May 31, 1996,
between the Company and Clear Channel
(incorporated herein by reference to Exhibit
99(c)(12) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(9) Consents of Cecil Heftel, Carl Parmer and Richard
Heftel to treatment of Options (incorporated herein
by reference to Exhibit 99(c)(10) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996).
(c)(10) Consent of Stockholders dated as of June 20, 1996.
(c)(11) Pages 7 through 10 of the Proxy Statement for the
1996 Annual Stockholders' Meeting.
-29-
<PAGE> 30
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: June 20, 1996 HEFTEL BROADCASTING CORPORATION
By: /s/ Carl Parmer
______________________________
Carl Parmer, Co-Chief
Executive Officer and
President
-30-
<PAGE> 31
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Text of Press Release dated June 2, 1996
(incorporated herein by reference to
Exhibit 99(a)(6) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996)
(a)(2) Summary Advertisement of Clear Channel
(incorporated herein by reference to
Exhibit 99(a)(3) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996)
(a)(3) Opinion of Alex. Brown & Sons
Incorporated dated June 3, 1996.
(c)(1) Tender Offer Agreement, dated June 1, 1996,
between the Company and Clear
Channel (incorporated herein by reference to
Exhibit 99(c)(1) of Clear Channel's
Schedule 14D-1 filed on
June 7, 1996).
(c)(2) Amendment No. 1 to Tender Offer
Agreement dated June 6, 1996
(incorporated herein by reference to
Exhibit 99(c)(9) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996).
(c)(3) Amendment No. 2 to Tender Offer
Agreement dated June 20, 1996
(c)(4) Agreement Not To Compete, dated June 1, 1996,
between the Company and Carl
Parmer (incorporated herein by reference to
Exhibit 99(c)(4) of Clear Channel's
Schedule 14D-1 filed on June 7, 1996).
(c)(5) Agreement Not To Compete, dated June 1, 1996,
between the Company and Cecil
Heftel (incorporated herein by reference to Exhibit
99(c)(3) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(6) Settlement Agreement, dated June 1, 1996,
between the Company and Carl Parmer
(incorporated herein by reference to Exhibit
99(c)(6) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
-31-
<PAGE> 32
(c)(7) Settlement Agreement, dated June 1, 1996,
between the Company and Cecil Heftel
(incorporated herein by reference to Exhibit
99(c)(5) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(8) Confidentiality Letter Agreement dated
May 31, 1996, between the Company and
Clear Channel (incorporated herein by
reference to Exhibit 99(c)(12) of Clear
Channel's Schedule 14D-1 filed on June 7, 1996).
(c)(9) Consents of Cecil Heftel, Carl Parmer and
Richard Heftel to treatment of Options
(incorporated herein by reference to Exhibit
99(c)(10) of Clear Channel's Schedule 14D-1
filed on June 7, 1996).
(c)(10) Consent of Stockholders dated as of June 20, 1996.
(c)(11) Pages 7 through 10 of the Proxy Statement for the
1996 Annual Stockholders' Meeting.
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<PAGE> 1
Exhibit (a)(3)
[ALEX. BROWN LETTERHEAD]
June 3, 1996
The Board of Directors
Heftel Broadcasting Corporation
6767 West Tropicana Avenue
Las Vegas, NV 89103
Dear Sirs:
Heftel Broadcasting Corporation ("Heftel" or the "Company") intends to
enter into a Tender Offer Agreement (the "Agreement") with Clear Channel
Communications, Inc. ("Clear Channel"), a Texas Corporation, on or about June
3, 1996. Pursuant to the Agreement, Clear Channel would promptly commence a
tender offer (the "Offer") to purchase all of the outstanding shares of the
Class A Common Stock, par value of $.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") for a price of $23.00 per share, in cash.
You have requested our opinion as to whether the $23.00 per share, in cash, to
be received by the holders of the Class A and Class B Common Stock pursuant to
the Agreement is fair, from a financial point of view, to such holders.
Alex. Brown & Sons Incorporated ("Alex. Brown"), as a customary part of
its investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and
other purposes. We have acted as financial advisor to the Board of Directors of
Heftel in connection with the transaction described above and will receive a
fee for our services, a portion of which is contingent upon the completion of
the Offer and the transfer of Heftel shares held by certain Heftel executives.
We also acted as manager of a public offering of the Class A Common Stock of
Heftel in July of 1994. Alex. Brown regularly publishes research reports
regarding the radio broadcasting industry and the businesses and securities of
publicly owned companies in that industry. In the ordinary course of business,
we may actively trade the securities of both the Company and the Buyer for our
own account and the account of our customers and, accordingly, may at any time
hold a long or short position in securities of the Company and the Buyer. we
have also acted as a manager for a September 1993 public offering of Clear
Channel Common Stock, and are currently acting as a manager for an anticipated
public offering of Clear Channel common stock.
In connection with our opinion, we have reviewed certain publicly
available financial information concerning Heftel and certain internal
financial analyses and other information furnished to us by Heftel. We have
also held discussions with members of the senior management of Heftel regarding
the business and prospects of the Company. In addition, we have (i) reviewed
the reported price and trading activity for the Common Stock of Heftel, (ii)
compared certain financial and stock market information for Heftel with similar
information for certain radio
<PAGE> 2
Heftel Broadcasting Corporation
June 3, 1996
Page Two
broadcasting companies whose securities are publicly traded, (iii) reviewed the
financial terms of certain recent business combinations which we deemed
comparable in whole or in part and (iv) performed such other studies and
analyses and considered such other factors as we deemed appropriate.
We have not independently verified the information described above and
for purposes of this opinion have assumed the accuracy, completeness and
fairness thereof. With respect to information relating to the prospects of
Heftel, we have assumed that such information reflects the best currently
available estimates and judgments of management of Heftel as to the likely
future financial performance of Heftel. In addition, we have not made an
independent evaluation or appraisal of the assets of Heftel, nor have we been
furnished with any such evaluation or appraisal. Our opinion is based on
market, economic and other conditions as they exist and can be evaluated as
of the date of this letter.
Our opinion expressed herein was prepared for the use of the Board of
Directors of the Company and does not constitute a recommendation to the
Company's stockholders as to whether or not to tender their shares pursuant to
the Offer. We hereby, consent; however, to the inclusion of this letter as an
exhibit to the Schedule 14D-9 to be filed with the Securities and Exchange
Commission in connection with this Offer.
Based upon and subject to the foregoing, it is our opinion that, as of
the date of this letter, the $23.00 per share, in cash, to be received by the
holders of the Class A and Class B Common Stock pursuant to the Agreement is
fair, from a financial point of view, to such holders.
Very truly yours,
/s/ J. S. Amling
-------------------------------
ALEX. BROWN & SONS INCORPORATED
<PAGE> 1
Exhibit (c)(3)
AMENDMENT NO. 2 TO TENDER OFFER AGREEMENT
THE TENDER OFFER AGREEMENT dated June 1, 1996 (the "Agreement"), by and
between CLEAR CHANNEL RADIO, INC., a Nevada corporation, and HEFTEL
BROADCASTING CORPORATION, a Delaware corporation as heretofore amended by that
certain Amendment No. 1 to Tender Offer Agreement dated June 6, 1996
("Amendment No. 1"), is hereby amended as follows:
1. The second and third sentences of Section 1.4 are deleted in their
entirety and replaced by the following new sentences:
"The Company shall, on or before June 21, 1996, 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 either the
recommendation of the Company's Board of Directors to accept the Offer
or a statement by the Company's Board of Directors that it is not
expressing an opinion, and is remaining neutral, with respect to the
Offer." The Company shall mail copies of such Schedule 14D-9 (excluding
exhibits) to its stockholders on or before June 21, 1996.
2. Article 1 is amended by adding the following new Section 1.7:
"1.7 Directors. The Company will, concurrently with the Closing, take
all actions necessary to cause persons designated by Parent to become
directors of the Company so that such persons shall constitute at least
a majority of the Board of Directors of the Company or if Parent so
requests, all of the directors of the Company. In furtherance thereof,
the Company will increase the size of its Board of Directors, or use its
reasonable efforts to secure the resignation of directors, or both, as
necessary to permit Parent's designees to be elected to the Company's
Board of Directors. The Company also will, concurrently with the
Closing, cause persons designated by Parent to constitute at least a
majority of each committee of the Company's Board of Directors or if
Parent so requests, all of the directors on each committee of the
Company's Board of Directors. The Company's obligations to appoint
designees to its Board of Directors shall be subject to Section
<PAGE> 2
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to such
section and rule in order to fulfill its obligations under this Section
1.7. Parent will supply the Company with all information which the
Company shall reasonably request with respect to nominees to the
Company's Board of Directors in order for the Company to make the filing
required by Section 14(f) of the Exchange Act.
3. Section 7.4 is amended by adding the following at the end of the
first sentence thereof immediately after the word "date":
"and except the representation and warranty contained in Section 3.5
need only be true as of June 1, 1996"
4. Section 8.1(d) is deleted in its entirety and replaced by the
following new Section 8.1(d):
"(d) By either the Company or Parent if (i) the Company shall have
determined, pursuant to duly adopted resolutions of its Board of
Directors, to recommend against acceptance of the Offer by reason of
receipt of a Takeover Proposal, (ii) after receipt of a Takeover
Proposal the Company shall not have, within five days after being so
requested by Parent, determined pursuant to duly adopted resolutions to
recommend acceptance of the Offer, or after so recommending acceptance
of the Offer shall have withdrawn or modified or resolved to modify or
withdraw such recommendation or (iii) 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 clause (i) of 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, recommends against acceptance of the
Offer but within five business days thereafter the Company publicly
withdraws its recommendation against acceptance of the Offer;"
5. Except as amended hereby or by Amendment No. 1, the Agreement is
not changed and is in full force and effect.
-2-
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to be executed on June 20, 1996 by its officer thereunto duly
authorized.
CLEAR CHANNEL RADIO, INC.
By: /s/ Randall T. Mays
---------------------------
Name: Randall T. Mays
-------------------------
Title: Vice President
------------------------
HEFTEL BROADCASTING
CORPORATION
By: /s/ Carl Parmer
---------------------------
Name: Carl Parmer
-------------------------
Title: President and Co-Chief
Executive Officer
------------------------
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<PAGE> 1
Exhibit (c)(10)
CONSENT OF STOCKHOLDERS
("CONSENT")
Reference is hereby made to the Stockholder Purchase Agreement, dated
June 1, 1996, among Clear Channel Radio, Inc. ("Clear Channel") and the
undersigned (the "Agreement"). The undersigned hereby consent to Amendment No.
2 to the Tender Offer Agreement, dated June 1, 1996, between Clear Channel
Radio, Inc. and Heftel Broadcasting Corporation, as amended (the "Offer
Agreement") and hereby acknowledge the term "Tender Offer Agreement" as used in
the Agreement shall mean the Offer Agreement as heretofore and hereafter
amended. A copy of Amendment No. 2 is attached hereto.
In WITNESS WHEREOF, the undersigned have executed this Consent as of
June 20, 1996.
/s/ Catharine Rolph
- -----------------------------------
Catharine Rolph
/s/ Margaret A.H. Wilson
- -----------------------------------
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
/s/ Susan Heftel-Liquido
- -----------------------------------
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
/s/ Christopher Lee Heftel
- -----------------------------------
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
/s/ Terry Heftel
- -----------------------------------
Terry Heftel, individually and as
custodian for each of Jonathan Heftel,
Jeffrey Welch and Jeremy Heftel under
the Utah Uniform Transfers to Minors Act
1
<PAGE> 2
/s/ Richard Heftel
- -----------------------------------
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
/s/ Cecil Heftel
- -----------------------------------
Cecil Heftel
/s/ Michelle Lopez Hendrick
- -----------------------------------
Michelle Lopez Hendrick
/s/ Michael Donohoe
- -----------------------------------
Michael Donohoe
/s/ James Donohoe
- -----------------------------------
James Donohoe
/s/ Lani Donohoe
- -----------------------------------
Lani Donohoe, as custodian for Josh
Donohoe, under the California
Uniform Transfers to Minors Act
/s/ Carl Parmer
- -----------------------------------
Carl Parmer
2
<PAGE> 1
Exhibit (c)(11)
Employment Agreements
To replace the Company's Management Agreement with Heftel Management
Group, the Company entered into ten-year Employment Agreements with each of
Messrs. Cecil Heftel and Carl Parmer on December 1, 1993. These Employment
Agreements are substantially similar and provide for each of Messrs. Heftel
and Parmer to receive a base annual salary of $500,000 and bonuses based on the
performance of the Company. Upon the occurrence of any Termination Event (as
defined below) and the vote of a majority of the Board of Directors, which
must include two-thirds of the members of the Board of Directors who are not
employees of the Company (collectively, "Termination Conditions"), the Company
may terminate the Employment Agreement. If such a termination occurs, Mr.
Heftel or Mr. Parmer, as the case may be, will be entitled to receive all
amounts payable by the Company under his Employment Agreement to the date of
termination. If the Company terminates the Employment Agreement without
satisfying the Termination Conditions or if Mr. Heftel or Mr. Parmer terminates
the Employment Agreement because of a breach by the Company of its obligations
thereunder, the assignment to him of duties substantially inferior to the
duties of a Co-Chief Executive Officer or a change in control of the Company,
Mr. Heftel or Mr. Parmer, as the case may be, will be entitled to receive a
lump sum payment equal to the present value of all amounts remaining to be paid
by the Company under the Employment Agreement. For purposes of calculating
future bonuses, the Company will be deemed to have achieved the performance
level necessary to pay the maximum bonus. Payments as a result of a Termination
Event have been deferred by Messrs. Heftel and Parmer pursuant to an agreement
with the Company's lender.
In January 1994, KTNQ/KLVE and Mr. Richard Heftel entered into a
seven-year Employment Agreement pursuant to which Mr. Heftel receives a yearly
salary of $300,000 plus bonuses based on the performance of KTNQ/KLVE. Upon the
occurrence of any Termination Event and the action of a majority of the Board
of Directors who are not employees of KTNQ/KLVE or its affiliates
(collectively, a "Termination Reason"), KTNQ/KLVE may terminate the Employment
Agreement. If such a termination occurs, Mr. Heftel will be entitled to receive
all amounts payable by KTNQ/KLVE under his Employment Agreement to the date of
termination. If KTNQ/KLVE terminates the Employment Agreement for a reason
other than the occurrence of a Termination Reason or if Mr. Heftel terminates
the Employment Agreement because of a breach by KTNQ/KLVE of its obligations
thereunder, the assignment to him of duties substantially inferior to the
duties of a President and General Manager or a change in control of KTNQ/KLVE,
Mr. Heftel will be entitled to receive a lump sum payment equal to the present
value of all amounts remaining to be paid by KTNQ/KLVE under the Employment
Agreement. For purposes of calculating future bonuses, KTNQ/KLVE will be deemed
to have achieved the performance level reached in the fiscal year ended
immediately prior to the termination. Payments as a result of a Termination
Reason have been deferred by Mr. Heftel pursuant to an agreement with the
Company's lender.
"Termination Event" means any of the following: (i) the commission and
proving of an act of fraud or embezzlement against the employer by the
executive, (ii) the executive being convicted of a crime constituting a felony;
(iii) the executive committing acts involving willful malfeasance or gross
misconduct in connection with his employment which have the potential for
causing a materially adverse effect on the business or licensing of the
employer; (iv) mutual agreement of the employer and the executive to terminate
the Employment Agreement; and (v) any material default in performance of the
Employment Agreement by the executive which has not been cured within 30 days
following written notice by the employer to the executive.
On August 1, 1995, the Company and Mr. John Kendrick entered into a
three-year Employment Agreement pursuant to which Mr. Kendrick currently
receives a yearly salary of $180,000 (subject to increases in the second and
third years) plus bonuses determined by the Company subject to a minimum bonus
of $35,000 for the first year (the minimum bonus is increased in the second and
third years). The Company may terminate the Employment Agreement upon the
occurrence of certain events which are similar to Termination Events. If such a
termination occurs, Mr. Kendrick will be entitled to receive all amounts
payable by the Company under his Employment Agreement to the date of
termination. If the Company terminates the Employment Agreement for a reason
other than the occurrence of the events set forth in the Employment Agreement,
Mr. Kendrick will be entitled to receive his salary and minimum bonus through
the later of the one year anniversary of the termination date or the end of the
term of the Employment Agreement (the "Period") (which the Company may pay in a
lump sum payment equal to the present value of such amounts) and monthly
premiums payable for allowing Mr. Kendrick and his family to participate in the
Company's health insurance for the shorter of the Period or the maximum COBRA
continuation coverage period mandated by law. At the end of the initial three
year term, the Employment Agreement is
-7-
<PAGE> 2
automatically extended for one year unless the Company gives notice of
non-renewal at least six months prior to the end of the initial three year
period. If a change in control of the Company occurs, the term of the Employment
Agreement is automatically extended for three years from the date of the change
of control.
Stock Option Plan
The Company adopted a stock option Plan ("Stock Option Plan") in 1994,
under which a maximum of 750,000 shares of Class A Common Stock may be issued
upon exercise of options granted to directors, officers or other key employees
of the Company or its subsidiaries.
The Stock Option Plan is administered by the Board of Directors, or in the
discretion of the Board of Directors, a committee of not less than two
directors. The Board of Directors or this committee determines employees to whom
options will be granted, the timing and manner of grant of options, the exercise
price, the number of shares covered by and all of the terms of options, the
duration of leaves of absence which may be granted to optionees without
constituting termination of employment for purposes of the Stock Option Plan,
and all other determinations necessary or advisable for administration of the
plan. The Compensation Committee will function as the Stock Option Committee to
administer the Stock Option Plan.
The Stock Option Plan permits the grant of stock options which qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended, ("ISOs") and stock options which do not so qualify ("NQSOs"). The
purchase price for shares subject to any option must not be less than 100% of
the fair market value of the shares of Class A Common Stock on the date the
option is granted. No ISO shall be exercisable after the earliest of the
expiration of ten years after the date the option is granted, three months after
the date the optionee's employment with the Company terminates if termination is
for any reason other than permanent disability or death, or one year after the
date the optionee's employment terminates if termination is a result of death or
permanent disability.
Under the Stock Option Plan, each Eligible Director (as defined below) will
receive a NQSO to purchase 5,000 shares of Class A Common Stock automatically on
the date the person becomes an Eligible Director. An Eligible Director is a
non-employee director who does not own directly or indirectly more than 1% of
the outstanding shares of Class A or Class B Common Stock and who has not within
the preceding three years received any stock option or other similar stock award
from the Company or any of its subsidiaries. No NQSO shall be exercisable after
the earliest of ten years after the date of grant, three months after the date
the holder ceases to be a director for any reason other than permanent
disability or death or one year after the holders ceases to be a director of the
Company as a result of death or permanent disability.
Unless sooner terminated by the Board of Directors, the Stock Option Plan
expires in April 2004.
DIRECTOR COMPENSATION
Each member of the Board of Directors who is not an employee of the Company
receives an annual fee of $10,000, payable in quarterly installments of $2,500,
and a fee of $2,000 for each board or committee meeting attended. The Company
also reimburses directors for expenses related to attending board or committee
meetings. For options granted to certain directors, see "Stock Option Plan."
CERTAIN TRANSACTIONS
The Tower Comopany, Inc. ("TTC"), a wholly-subsidiary of the Company,
previously loaned $293,303 to Mr. Christopher Heftel, the son of Mr. Cecil
Heftel. This loan bears interest at 7% per annum, with principal and interest
due on demand. At December 31, 1995, Mr. Heftel owed $386,773 to TTC.
TTC previously loaned $100,000 to Mr. Cecil Heftel. This loan bears
interest at 7% per annum, with principal and interest due on demand. At December
31, 1995, Mr. Heftel owed $135,695 to TTC.
-8-
<PAGE> 3
On February 11, 1992, the predecessor-in-interest to the Company
granted to Mr. Carl Parmer as part of his employment agreement the right to
purchase 188,925 shares of Class B Common Stock at a per share price of $4.51.
In connection with entering into Mr. Parmer's Employment Agreement in December
1993, the Company issued to Mr. Parmer a warrant to purchase 188,925 shares of
Class B Common Stock at the same exercise price as a replacement of the rights
of Mr. Parmer to purchase the 188,925 shares of Class B Common Stock under his
previous employment agreement. On August 3, 1994, Mr. Parmer exercised these
warrants and in connection with such exercise, the Company made a loan in the
amount of $1.25 million, approximately $852,000 of which was used to pay the
exercise price of the warrants and the remainder of which was used to pay
income taxes payable by Mr. Parmer upon exercise of the warrants. The loan
bears interest at a rate of 7.67% per annum and is due on August 3, 2004. As of
December 31, 1995, Mr. Parmer owed a total of $1,294,318 under this loan.
On June 3, 1993, Messrs. Carl Parmer and Richard Heftel each borrowed
$366,000 from the Company and used the proceeds to purchase 94,462 shares of
Class B Common Stock from a third-party stockholder. These loans accrue
interest at a rate of 4.5% per annum. Interest and principal are due on June 2,
2002. As of December 31, 1995, a total of $408,548 was owed by each of Messrs.
Parmer and Heftel under this loan. On October 8, 1993, Mr. Carl Parmer borrowed
$1 million from the Company and used the proceeds to purchase 226,695 shares of
Class B Common Stock. This loan accrues interest at 4.5% per annum. Interest
and principal are due on October 8, 2003. As of December 31, 1995, a total of
$1,100,250 was owed by Mr. Parmer under this loan. Each of Messrs. Parmer and
Heftel has agreed to use at least 50% of the after-tax proceeds of any future
sales of stock of the Company owned by him to repay his loans.
On December 30, 1993, the Company repurchased 220,000 shares of Class B
Common Stock from the daughter of Mr. Cecil Heftel. The purchase price for
these shares is payable in 60 installments of $10,000 beginning in August 1994
and one installment of $1 million on the first day of the month after the month
in which the 60th installment is paid.
From time to time, Messrs. Cecil Heftel and Carl Parmer have advanced
funds to the Company and the Company has advanced funds to each of them. These
advances do not bear interest. At December 31, 1995, the Company owed Mr.
Heftel $33,317 and Mr. Parmer owed the Company $330,110.
In the year ended September 30, 1995 and 1994, the Company advanced
funds to Heftel Management Group, of which Mr. Cecil Heftel is the sole
beneficial owner. These advances do not bear interest. At December 31, 1995,
Heftel Management Group owed the Company $817,042.
On August 19, 1994, Rodriguez-Heftel-Texas, Inc., a wholly-owned
subsidiary of the Company ("RHT"), and Marcos A. Rodriguez, Jr. ("Rodriguez")
entered into an Employment and Non-Competition Agreement. On November 16, 1994,
the Company, Rodriguez Broadcasting, Inc., a wholly-owned subsidiary of the
Company, RHT, Rodriguez and Metroplex Broadcasting, Ltd., which Rodriguez owns
("MBL"), entered into a Settlement Agreement pursuant to which, among other
things, (a) Rodriguez ceased being an employee of RHT, (b) Rodriguez was paid a
total of $200,000 in 12 equal monthly installments commencing on December 1,
1994, (c) Rodriguez and his affiliates were reimbursed for certain business
expenses incurred prior to the date of the settlement, (d) RHT and MBL entered
into a lease for the premises owned by RHT, which has an initial term of two
years expiring on November 30, 1996, two options to extend the term for an
additional two year period and a rent payment of $4,115 per month, (e) RHT
reimbursed MBL up to $192,000 for tenant improvements made by MBL to the
premises owned by RHT, and (f) Rodriguez agreed to the non-compete provisions
of his employment agreement for a period five years from November 16, 1994.
In June 1992, the Company repurchased and retired 2,115,468 shares of
Series A Preferred Stock held by Mr. Cecil Heftel. Pursuant to an agreement
with Mr. Heftel, $1,142,495 of cumulative unpaid dividends from the date of
issuance through June 25, 1992 relating to the repurchased Series A Preferred
Stock are to be declared and paid at such time as dividends are declared and
paid on the remaining outstanding Series A Preferred Stock. In January 1995,
the Company repurchased and retired 633,628 shares of the Series A Preferred
Stock held by children of Mr. Heftel. A portion of the repurchase price
represented unpaid cumulative dividends on such shares. At the same time, the
Company used $3,449,976 of the net proceeds of its initial public offering to
repurchase and retire 1,326,662 shares of the Series A Preferred Stock owned by
Mr. Heftel, a portion of which represented the payment required under the June
1992 agreement with Mr. Heftel.
9
<PAGE> 4
On January 10, 1995, the Company granted to Mr. Carl Parmer a warrant
to purchase 160,000 shares of Class A Common Stock at an exercise price of
$10.50 per share (which was the closing price for the Class A Common Stock on
January 9, 1995). On January 24, 1995, Mr. Parmer exercised this warrant in
full. The exercise price was payable on or before June 30, 1995. On June 30,
1995, Mr. Parmer borrowed $1,680,000 from the Company to pay the exercise price
and granted to the Company a security interest in these shares to secure his
obligation to repay the loan. This loan bears interest at 8.75% per annum. At
December 31, 1995, Mr. Parmer owed the Company $1,729,000.
On September 7, 1995, the Company, through a subsidiary, acquired from
Mambisa Broadcasting Corporation ("Mambisa") the remaining 51% interest in Viva
America Media Group, a Florida general partnership ("Viva Media"), which it did
not own. Amancio Victor Suarez and Charles Fernandez, former directors of the
Company, own part of Mambisa. The purchase price was $19.8 million. At the
closing of the acquisition, Messrs. Suarez and Fernandez resigned as directors
and officers of the Company. In connection with this transaction, the following
were terminated for no additional consideration: (i) the Management Agreement,
dated August 19, 1994, among the Company, Viva Media and SFS Management, Inc.,
an affiliate of Messrs. Suarez and Fernandez, pursuant to which SFS managed the
two Miami stations owned by Viva Media and two other stations in Miami owned by
the Company; (ii) the Joint Sales Agreement, dated August 19, 1994, between HBC
Florida, Inc., a subsidiary of the Company ("HBC Florida"), and Mambisa
relating to the sale of advertising on such four Miami stations; and (iii) the
Warrant to purchase up to 237,600 shares of Class B Common Stock of the Company
held by Mr. Fernandez and the employment arrangements between the Company, and
any of its subsidiaries, and Mr. Fernandez. In addition, the Company granted
Mr. Suarez a limited right of first refusal on a sale of WAQI-AM which right
expires on September 7, 1997.
On January 10, 1996, pursuant to an Agreement of Purchase and Sale,
dated September 7, 1995, between the Company and Mambisa (the "Purchase
Agreement") the Company, through HBC Florida, purchased the entire parcel of
real property on which the radio transmission towers for WAQI-AM (the "WAQI
Towers") are located for approximately $1.5 million in cash and a note for
approximately $1.5 million (the "Note"). The Company has the right to subdivide
such parcel and resell to Mambisa the portion of the parcel on which the WAQI
Towers are not located for the same per acre price paid by the Company to
Mambisa. The parties currently are attempting to complete such a subdivision.
The Note is due on the later of the date on which all rights to subdivide the
parcel expire or the date on which the resale of the subdivided portion of the
parcel is completed.
On December 3, 1995, the Company and Rodriguez entered into a Put,
Option and Reorganization Agreement (the "Put/Option Agreement"). Pursuant to
this agreement, in exchange for payment by the Company of $450,000, Rodriguez
granted the Company the right to purchase his shares of Hispanic Coalition,
Inc. ("HCI") for a period of eight years from the date a new FM radio station
in Haltom City, Texas (for which HCI is seeking a construction permit from the
Federal Communications Commission) (The "Haltom Station") commences operations.
In addition, pursuant to this agreement, the Company granted to Rodriguez the
right to sell his shares of common stock of HCI to the Company for a period of
three years following the date the Haltom Station commences operations. In
connection with the Put/Option Agreement, the Company entered into a Loan
Commitment dated December 3, 1995, (the "Loan Agreement") with HCI which
provided for loans to HCI by the Company. The Board of Directors of the Company
subsequently approved these agreements. However, there are currently disputes
relating to these agreements, and therefore, only $100,000 has been loaned
under the Loan Agreement. Rodriguez has filed a notice of arbitration with
respect to the disputes relating to these agreements. Cecil Heftel and the
Company have entered into agreements under which Mr. Heftel will indemnify the
Company against any losses arising out of these agreements and Mr. Heftel will
be entitled to reimbursement of any indemnity amounts solely from the balance
of any amounts received by the Company in connection with Haltom Station which
remain after payment of all losses and expenses of the Company relating to such
station and the agreements with Rodriguez and HCI.
