HEFTEL BROADCASTING CORP, 10-K, 1996-12-23

HEFTEL BROADCASTING CORP
10-K, 1996-12-23
RADIO BROADCASTING STATIONS

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]

For the Transition period from to

Commission file number 0-24516

HEFTEL BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 99-0113417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

6767 West Tropicana Avenue, Suite 102 89103
Las Vegas, Nevada (Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (702) 367-3322

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.001 Par Value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.

Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The number of shares outstanding of registrant's classes of common stock as of
December 18, 1996:

Class A Common Stock, $.001 Par Value - 11,547,731 shares
Class B Common Stock, $.001 Par Value - None

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 18, 1996:

Class A Common Stock, $.001 Par Value - $130,684,733
Class B Common Stock, $.001 Par Value - None

<PAGE> 2
HEFTEL BROADCASTING CORPORATION

September 30, 1996

INDEX
<TABLE>
<CAPTION>
PART I PAGE

<S> <C> <C>
Item 1. Business 3

Item 2. Properties 14

Item 3. Legal Proceedings 15

Item 4. Submission of Matters to a Vote of Security Holders 16

PART II

Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 17

Item 6. Selected Financial Data 18

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 20

Item 8. Financial Statements and Supplementary Data 23

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 45

PART III

Item 10. Directors and Executive Officers of the Registrant 45

Item 11. Executive Compensation 46

Item 12. Security Ownership of Certain Beneficial Owners
and Management 49

Item 13. Certain Relationships and Related Transactions 50

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 52
</TABLE>

<PAGE> 3

HEFTEL BROADCASTING CORPORATION

PART I

ITEM 1. BUSINESS

GENERAL

Heftel Broadcasting Corporation (the "Company") was incorporated in
1992 and is the successor by merger to Heftel Broadcasting Corporation, a Hawaii
corporation, which was formed in 1974. The Company is the largest Spanish
language radio broadcasting company in the United States and currently owns and
programs 17 radio stations, 16 of which are located in five of the ten largest
Hispanic markets in the United States, including Los Angeles, New York, Miami,
Chicago, and Dallas/Ft. Worth. The Company has agreed to acquire Tichenor Media
System, Inc. ("Tichenor"), the third largest Spanish language radio broadcasting
company in the United States. Tichenor owns or programs 20 radio stations which
serve six of the ten largest Hispanic markets in the United States, including
San Francisco/San Jose, Chicago, Houston, San Antonio,
McAllen/Brownsville/Harlingen and El Paso. Following the Tichenor acquisition,
the Company will own or program 37 radio stations in 11 markets, including
stations in each of the top ten Hispanic markets in the United States. See
"Recent Developments -- Tichenor Merger."

The Company's strategy is to own and program top performing radio
stations, principally in the largest Spanish language radio markets in the
United States. The top ten Hispanic markets account for approximately 17.2
million Hispanics, representing approximately 63% of the total Hispanic
population in the United States. Upon completion of the Tichenor acquisition,
the Company will have the largest Spanish language radio station combination, as
measured by audience and revenue share, in eight of the top ten Hispanic
markets. Additionally, the Company will have the highest rated radio station in
any format in four of the top ten Hispanic markets.

The Company intends to acquire or develop additional Spanish language
radio stations in the leading Hispanic markets. When evaluating a potential
acquisition, the Company considers the following factors: (i) the ability to
generate satisfactory rates of return on its investment, (ii) the ability to
increase operating cash flow at the station, (iii) the strategic importance of
the station to the Company's overall business objectives, (iv) the size and
projected rates of growth of the market's broadcasting revenues, Hispanic
population and consumer spending and (v) the number of competitive stations in
the market.

The Company believes Spanish language broadcasting has significant
growth potential for the following reasons:

- The Hispanic population is the fastest growing population segment
in the United States and is expected to grow from an estimated
27.2 million (approximately 10.3% of the total United States
population) at the end of 1995 to an estimated 30.7 million
(approximately 11.3% of the total United States population) by the
year 2000. These estimates imply a growth rate of approximately
three times the expected growth rate for the total United States
population during the same period.

- Advertisers have substantially increased their use of Spanish
language media in recent years. Total advertising revenues from
advertising in Spanish language media rose from $166 million in
1983 to $1.06 billion in 1995. This represents a compound annual
growth rate of 16.7%, which is more than double the growth rate of
total advertising over the same period. Although Hispanic
consumers will spend an estimated $340 billion in 1997, or 6.5% of
the total consumer spending

3
<PAGE> 4

in the United States, Spanish language advertising currently
represents less than 0.7% of the total advertising expenditures.

- Advertisers have begun to target Hispanic households because they
are younger and spend a greater percentage of their household
income on consumer products than non-Hispanic households. Hispanic
households in the United States average 3.5 persons, compared to
an average of 2.5 persons for non-Hispanic households. In
addition, 82% of Hispanic households in the United States are
family units, compared to 71% of all households in the United
States. During the 1990's, one in four new households in the
United States is expected to be headed by a person of Hispanic
origin.

- Hispanics have maintained strong social and cultural ties to their
countries of origin, particularly in their continued use of the
Spanish language. An estimated 78% of Hispanics speak at least
some Spanish and approximately 40% speak it exclusively. Spanish
is expected to continue to be the language of preference for
Hispanics.

- The number of Spanish language media outlets is disproportionately
lower than the number of similar English language outlets. In the
radio segment, there are currently approximately 400 Spanish
language commercial stations, which constitute only approximately
4% of all commercial radio stations in the United States, although
the Hispanic population comprises approximately 10.3% of the
United States population.

RECENT DEVELOPMENTS

Secondary Public Stock Offering

On October 18, 1996, the Company filed a Registration Statement on Form
S-3 with the Securities and Exchange Commission to register the sale of up to
4,025,000 shares of its Class A Common Stock in a secondary public offering. The
net proceeds from this stock offering will be used to repay outstanding debt
under the Company's existing credit agreement. The registration statement has
not yet been declared effective by the Securities and Exchange Commission.

Clear Channel Tender Offer

Clear Channel Communications, Inc. (together with its wholly owned
subsidiaries "Clear Channel") is a diversified publicly held broadcasting
company that currently owns or programs 99 radio stations and 18 television
stations in 33 markets. On August 5, 1996, Clear Channel completed a tender
offer and a related private purchase of stock from existing stockholders of the
Company (collectively, the "Tender Offer"). As a result of the Tender Offer,
Clear Channel currently owns approximately 63% of the outstanding Class A Common
Stock of the Company.

Concurrent with completion of the Tender Offer, Mr. Cecil Heftel,
former Chairman and Co-Chief Executive Officer, and Mr. Carl Parmer, former
Co-Chief Executive Officer and President, each entered into agreements not to
compete and employment settlement agreements (each, a "Settlement Agreement")
with the Company. Pursuant to their respective Settlement Agreement, the
employment by the Company of Mr. Heftel and Mr. Parmer terminated immediately
following the purchase of their respective shares pursuant to the Tender Offer.
An aggregate of approximately $25.8 million was paid to Messrs. Heftel and
Parmer upon closing of the Tender Offer in exchange for releases from any claims
resulting from termination of their respective employment agreements with the
Company and as compensation for their respective agreements not to compete with
the Company in certain specified markets for a period of five years from the
date of closing of the Tender

4
<PAGE> 5

Offer. In connection with the Tender Offer, the Company's Board of Directors was
replaced with the current directors, all of whom were designated by Clear
Channel.

Tichenor Merger

On July 9, 1996, Clear Channel and Tichenor entered into an Agreement
and Plan of Merger, which was amended and restated on October 10, 1996 ("Merger
Agreement"), which, subject to the terms and conditions thereof, provides for
the acquisition of Tichenor by the Company (the "Tichenor Merger"). Pursuant to
the Merger Agreement, a wholly owned subsidiary of the Company will merge with
and into Tichenor, and Tichenor shall continue as the surviving corporation as a
wholly owned subsidiary of the Company. At the time the Merger Agreement was
executed, Clear Channel had commenced but not completed the Tender Offer. The
then existing management and Board of Directors of the Company were not involved
in the negotiations concerning the acquisition of Tichenor. On August 14, 1996,
after the consummation of the Tender Offer, Clear Channel offered to assign the
Merger Agreement to the Company in accordance with the Merger Agreement, and on
October 10, 1996, the current Board of Directors of the Company approved the
Tichenor Merger and the assignment to the Company of the Merger Agreement. In
approving the Tichenor Merger, the Company considered, among other things, the
strength of the combined management of the Company and Tichenor; the marketing
and operating benefits of the expansion of the Company's presence into each of
the top ten Hispanic markets; and the benefits of diversifying the Company's
operations thereby reducing its reliance on any individual market.

Under the terms of the Merger Agreement, the shareholders and warrant
holders of Tichenor will receive an aggregate of 5,689,878 shares of the
Company's Class A Common Stock and approximately $3.4 million in cash. The
Company will also assume Tichenor's outstanding debt which was approximately
$71.3 million on September 30, 1996. In addition, Clear Channel will convert all
of its shares of the Company's Class A Common Stock and its shares of common
stock of Tichenor into 7,428,235 shares of a redesignated Class B Common Stock
("Nonvoting Common Stock") that will not have any voting rights except as
specifically provided for in the charter or as otherwise required by law.

The Tichenor Merger requires the approval of the Federal Communications
Commission ("FCC"). The FCC's cross-interest policy bars a party which holds an
attributable interest in one or more radio stations in a market from having a
"meaningful relationship" with another radio station in that market. A
"meaningful relationship" is construed by the FCC to include a non-voting equity
position in excess of 33 1/3% of the total outstanding common stock. Clear
Channel has informed the Company that it is considering a number of alternatives
to comply with FCC regulations upon consummation of the Tichenor Merger. In the
event that no other alternative is approved by the FCC, Clear Channel has
informed the Company it may place any remaining shares of Nonvoting Common Stock
above the 33 1/3% maximum in a disposition trust for the purpose of sale,
through negotiated block transactions or other type of sales. The use of a
disposition trust, and the terms thereof, would be subject to the prior consent
of the FCC.

Upon consummation of the Tichenor Merger, the Company will enter into
an employment agreement with McHenry T. Tichenor, Jr., pursuant to which Mr.
Tichenor will serve as Chairman, President and Chief Executive Officer of the
Company for a five year term. Mr. Tichenor is currently the President and Chief
Executive Officer of Tichenor. The Tichenor Merger Agreement also provides that
following the consummation of the Tichenor Merger, five designees of Tichenor
shall constitute the entire Board of Directors of the Company. Tichenor has
informed the Company its designees are McHenry T. Tichenor Jr., McHenry T.
Tichenor Sr., Robert Hughes, James M. Raines, and Ernesto Cruz.

<PAGE> 6
Business and Radio Station Asset Acquisitions

In March 1996, the Company acquired the FCC license and certain
broadcast and other equipment of WPAT-AM in the New York City market for
approximately $19.5 million in cash. The acquisition was financed through
additional borrowings under the Company's credit agreement.

Viva Media Transaction

On September 7, 1995, the Company, through a subsidiary, acquired from
Mambisa Broadcasting Corporation (Mambisa) the remaining 51% interest in Viva
America Media Group (Viva Media), a Florida partnership that owns WAQI-AM and
WRTO-FM which serve the Miami market, for $19.8 million in cash. In addition, on
September 7, 1995 the Company agreed to purchase from Mambisa real property in
Miami, Florida on which the transmission tower for WAQI-AM is located for $1.5
million in cash and a $1.5 million non-interest bearing promissory note. The
acquisition of the real property was completed in January 1996. The Company
secured the $1.5 million promissory note with a mortgage on the purchased
premises.

Refinanced Credit Agreement

New Credit Agreement

On August 5, 1996, concurrent with the completion of the Tender Offer
described under "Clear Channel Tender Offer", the Company borrowed $135 million
under a new revolving credit agreement ("New Credit Agreement") with new lenders
which provides a total credit facility of $155 million. The proceeds were used
to retire all of the outstanding debt under the Company's old credit agreement
and to pay certain noncompete and employment contract settlements plus certain
transaction and other costs relating to the Tender Offer. The lenders have a
security interest in the assets of the Company and the stock and partnership
interests of the Company's subsidiaries. The New Credit Agreement restricts the
payment of dividends and establishes limitations on, among other things, capital
expenditures and additional borrowings. The Company is also required to maintain
certain financial ratios, such as leverage and interest coverage ratios.
Interest on borrowings under the New Credit Agreement is due monthly and the
unpaid principal balance plus accrued interest is due in January 1998.

Old Credit Agreement

On March 13, 1996, the Company completed an Amended and Restated Credit
Agreement ("Old Credit Agreement") under which the credit facilities were
increased from $100 million to $175 million and the commencement of principal
payments was deferred until December 1996. Other terms of the Old Credit
Agreement remained substantially the same. On March 25, 1996, the Company
borrowed an additional $20 million under the Old Credit Agreement to fund the
acquisition of the assets of radio station WPAT-AM in New York.

Discontinued Operations

Effective August 5, 1996, the Company's Board of Directors approved a
plan to discontinue the operations of the radio network owned by the Company's
wholly owned subsidiary Spanish Coast-to-Coast, Ltd., dba Cadena Radio Centro
(CRC). The loss relating to the discontinued operations of CRC for fiscal 1996
approximates $10 million, $8.1 million of which was recognized during the
quarter ended September 30, 1996. CRC intends to fulfill its contractual program
obligations and is expected to cease operating by December 31, 1996.

<PAGE> 7

SPANISH LANGUAGE RADIO INDUSTRY

Statistical information contained herein regarding the radio industry,
population, consumer spending and advertising expenditures are taken from the
Arbitron Company 1995-1996 radio metro ratings; 1990 U.S. Census; the Hispanic
Consumer Market Report (DRI/McGraw Hill, June 1992); SRDS -- Standard Rate &
Data Services (August 1996); Advertising Age (September 30, 1996); Sales and
Marketing Management's Survey of Buying Power; Strategy Research Corporation --
1996 U.S. Hispanic Market Study; Duncan's Radio Market Guide (1996 Edition);
Hispanic Business (December 1995); Market Segment Research, Inc., and Paul Kagan
Associates, Inc.

PROGRAMMING

Due to differences in origin, Hispanics are not a homogeneous group.
The music, culture, customs and Spanish dialects vary from one radio market to
another. Consequently, the Company programs its stations in a manner responsive
to the local preferences of a target demographic audience in each of the markets
it serves. A well researched mix of music and on-air programming at an
individual station can attract a wide audience targeted by Spanish language
advertisers. Programming is consistently monitored to maintain its quality and
relevance to the target audience. Most music formats are primarily variations of
Regional Mexican, Tropical, Tejano and Contemporary music styles. The local
program director selects music from the various music styles that best reflects
the music preferences of the local Hispanic audiences. A brief description of
each music style follows:

Regional Mexican. Regional Mexican consists of various types of music
played in different regions of Mexico. Ranchera music, originating in Jalisco,
Mexico, is a traditional folkloric sound commonly referred to as Mariachi music.
Mariachi music features acoustical instruments and is considered the music
indigenous to Mexicans who have lived in the country towns. Nortena means
northern, and is representative of Northern Mexico. Featuring an accordion,
Nortena has a Polka sound with a distinct Mexican flavor. Banda is a regional
format from the state of Sinaloa, Mexico and is popular in California. Banda
resembles up-tempo marching band music with synthesizers. Regional Mexican also
includes Cumbia music, which originates from Colombia.

Contemporary. The Contemporary format includes pop, Latin rock, and
ballads. This format is similar to English adult contemporary and contemporary
hit radio stations.

Tropical. The Tropical format primarily consists of Salsa, Merengue and
Cumbia music. Salsa is dance music combining Latin Caribbean rhythms with jazz.
Salsa symbolizes music from Puerto Rico, Cuba, and the Dominican Republic and is
popular with Hispanics living in New York, Miami and Chicago. Merengue music is
also up-tempo dance music originating from the Dominican Republic.

Tejano. Tejano music originated in Texas and is based on Mexican themes
but is indigenous to Texas. It is a combination of contemporary rock, Ranchera,
and country music. The lyrics are sung in both Spanish and English. The on-air
talent speak in Spanish and English.

Full service. The Full Service format includes all the traditional
radio services: music, news, sports, traffic reports, special information
programs and weather.

News/Talk. News includes local, national, international reports and
weather, business, traffic and sports. Talk includes commentary, analysis,
discussion, interviews, call-ins and information shows.

<PAGE> 8

STATIONS

The following table sets forth selected information regarding Company
owned radio stations:

<TABLE>
<CAPTION>
GEOGRAPHIC RANKING BY PRIMARY
STATION MARKET HISPANIC STATION DEMOGRAPHIC
CALL LETTERS SERVED(1) POPULATION(2) FORMAT TARGET
------------ --------- --------------- ------- ---------
<S> <C> <C> <C> <C>
KTNQ-AM Los Angeles 1 News/Talk Adults
25-54
KLVE-FM Los Angeles 1 Contemporary Adults
25-54
WADO-AM New York(3) 2 News/Talk Adults
25+
WPAT-AM New York 2 Brokered n/a

WAMR-FM (4) Miami 3 Adult Contemporary Adults
25-54
WAQI-AM Miami 3 News/Talk Adults
35+
WRTO-FM Miami 3 Tropical Adults
18-34
WQBA-AM Miami 3 News/Talk/Sports Adults
35+
WLXX-AM Chicago 5 Tropical Adults
18-49
KESS-AM Dallas/Ft. Worth 9 Full Service Adults
18+
KINF-AM (5) Dallas/Ft. Worth 9 Talk Adults
18-49
KMRT-AM Dallas/Ft. Worth 9 Contemporary Adults
18-49
KMRT-FM Dallas/Ft. Worth 9 Contemporary Adults
18-49
KICI-FM Dallas/Ft. Worth 9 Tejano Adults
18-49
KHCK-FM Dallas/Ft. Worth 9 Tejano Adults
18-49
KLSQ-AM Las Vegas 33 Regional Mexican Adults
18-49
</TABLE>

- -------------------------------------------------

(1) Actual city of license may differ from the metropolitan market served.

(2) Ranking of the principal radio market served by the Company's
station(s) among all U.S. radio markets by Hispanic population as
reported by Strategy Research Corporation -- 1996 U.S. Hispanic Market
Study.

(3) The Company also owns WGLI-AM which currently is not broadcasting.

(4) Formerly WQBA-FM

(5) Formerly KICI-AM

<PAGE> 9
The following table sets forth selected information with regard to Company owned
radio stations:

<TABLE>
<CAPTION>
Date License FCC
Station/Location Acquired Expiration Date Frequency
- ---------------- -------- --------------- ---------
<S> <C> <C> <C>
KTNQ-AM, Los Angeles, CA 10/85 12/1/97 1020 kHz
KLVE-FM, Los Angeles, CA 10/85 12/1/97 107.5 MHZ
WADO-AM, New York, NY 8/94 6/1/98 1280 kHz
WPAT-AM, New York, NY 3/96 6/1/98 930 kHz
WAQI-AM, Miami, FL 10/89 2/1/03 710 kHz
WRTO-FM, Miami, FL 10/89 2/1/03 98.3 MHZ
WQBA-AM, Miami, FL 8/94 2/1/03 1140 kHz
WAMR-FM, Miami, FL 8/94 2/1/03 107.5 MHZ
KESS-AM, Dallas/Ft. Worth, TX 8/94 8/1/97 1270 kHz
KINF-AM, Dallas/Ft. Worth, TX 8/94 8/1/97 1440 kHz
KMRT-AM, Dallas/Ft. Worth, TX 12/94 8/1/97 1480 kHz
KICI-FM, Corsicana, TX 4/95 8/1/97 107.9 MHZ
KMRT-FM, Dallas/Ft. Worth, TX 6/95 8/1/97 106.7 MHZ
KHCK-FM, Dallas/Ft. Worth, TX 7/95 8/1/97 99.1 MHZ
WLXX-AM, Chicago, IL 7/95 12/1/96 1200 kHz
KLSQ-AM, Las Vegas, NV 8/95 10/1/97 870 kHz
</TABLE>

The Company also owns WGLI-AM in Babylon, New York which currently is
not broadcasting.

COMPETITION

Broadcasting is a highly competitive business. The Company's radio
stations compete for audiences and advertising revenues with other radio
stations of all formats, as well as with other media, such as newspapers,
magazines, television, cable television, outdoor advertising and direct mail,
within their respective markets. Audience ratings and market shares are subject
to change and any adverse change in a particular market could have a material
adverse effect on the revenue of stations located in that market.

The radio broadcasting industry is also subject to competition from new
media technologies being developed, such as the delivery of audio programming by
cable and direct satellite television systems, which are already available in
many markets, and satellite and terrestrial delivery of digital audio
broadcasting and satellite radio. See "--Federal Regulation of Radio
Broadcasting." There can be no assurance the development or introduction of any
new media technology will not have an adverse effect on the radio broadcasting
industry.

Companies operating radio stations must always be alert to the
possibility of another station changing its programming format to compete
directly for listeners and advertisers. There are typically several other
well-capitalized station operators competing in the same geographic markets as
the Company. If one or more of these operators decide to convert one of their
stations to a format similar to one of the Company's radio stations in the same
geographic area, the result could be lower ratings and advertising revenue,
increased

<PAGE> 10
promotion and other expenses and consequently lower broadcast cash
flow for the Company.

FEDERAL REGULATION OF RADIO BROADCASTING

Existing Regulation and Legislation. Radio broadcasting is subject to
the jurisdiction of the FCC under the Communications Act of 1934, as amended
(the "Communications Act"). The Communications Act prohibits the operation of a
radio broadcasting station except under a license issued by the FCC and empowers
the FCC, among other things, to issue, renew, revoke and modify broadcasting
licenses; assign frequency bands; determine stations' frequencies, locations and
power; regulate the equipment used by stations; adopt other regulations to carry
out the provisions of the Communications Act; impose penalties for violation of
such regulations; and impose fees for processing applications and other
administrative functions. The Communications Act prohibits the assignment of a
license or the transfer of control of a licensee without prior approval of the
FCC.

The Telecommunications Act of 1996 (the "1996 Act") represents the most
comprehensive overhaul of the country's telecommunications laws in more than 60
years. The 1996 Act significantly changes both the broadcast ownership rules and
the process for renewal of broadcast station licenses. The 1996 Act also relaxes
local radio ownership restrictions. The FCC has already implemented some of
these changes through Commission Orders. The 1996 Act establishes a "two-step"
renewal process that limits the FCC's discretion to consider applications filed
in competition with an incumbent's renewal application. Additionally, the 1996
Act substantially liberalizes the national broadcast ownership rules,
eliminating the national radio limits.

This new regulatory flexibility has engendered aggressive local,
regional, and/or national acquisition campaigns. Removal of previous station
ownership limitations on leading incumbents (i.e., existing networks and major
station groups) has increased sharply the competition for, and the prices of,
attractive stations.

Multiple Ownership Restrictions. The FCC has promulgated rules that,
among other things, limit the ability of individuals and entities to own or have
an official position or ownership interest above a certain level (an
"attributable" interest, as defined more fully below) in broadcast stations, as
well as other specified mass media entities. Prior to the passage of the 1996
Act, these rules included limits on the number of radio stations that could be
owned on both a national and local basis. On a national basis, the rules
generally precluded any individual or entity from having an attributable
interest in more than 20 AM radio stations and 20 FM radio stations.

The 1996 Act substantially relaxed the radio ownership limitations. The
FCC began its implementation of the 1996 Act with several orders issued on March
8, 1996. The Act and the FCC's subsequently issued rule changes eliminated the
national ownership restriction, allowing a single entity to own nationally any
number of AM or FM broadcast stations. The Act and the FCC's new rules also
greatly eased local radio ownership restrictions. As with the old rules, the
maximum allowable varies depending on the number of radio stations within a
market. In markets with more than 45 stations, one company may own, operate or
control eight stations, with no more than five in any one service (AM or FM). In
markets of 30-44 stations, one company may own seven stations, with no more than
four in any one service; in markets with 15- 29 stations, one entity may own six
stations, with no more than four in any one service. In markets with 14
commercial stations or less, one company may own up to five stations or 50% of
all of the stations, whichever is less, with no more than three in any one
service. It should be noted, however, that the Department of Justice recently
has precluded certain entities from acquiring the maximum number of radio
stations allowed in a market under the 1996 Act because of concerns that
antitrust laws would be violated. Thus, it is possible that the Company would,
in certain instances, be unable to acquire the maximum number of stations
allowed in a market under the 1996 Act.

<PAGE> 11

In 1992, the FCC placed limitations on time brokerage (local marketing)
agreements ("LMA") through which the licensee of one radio station provides the
programming for another licensee's station in the same market. Stations
operating in the same service (e.g., where both stations are AM) and in the same
market are prohibited from simulcasting more than 25% of their programming.
Moreover, in determining the number of stations that a single entity may
control, an entity programming a station pursuant to an LMA is required, under
certain circumstances, to count that station toward its maximum even though it
does not own the station.

A number of cross-ownership rules pertain to licensees of television
and radio stations. FCC rules, the Communications Act or both generally prohibit
an individual or entity from having an attributable interest in both a
television station and a radio station, daily newspaper or cable television
system that is located in the same local market area served by the television
station. The FCC has employed a liberal waiver policy with respect to the
TV/radio cross-ownership restriction (the so-called "one-to-a-market" rule),
generally permitting common ownership of one AM, one FM, and one TV station in
any of the 25 largest markets, provided there are at least 30 separately owned
stations in the market. The 1996 Act directed the Commission to extend its
one-to-a-market waiver policy to the top 50 markets, consistent with the public
interest, convenience and necessity. On November 7, 1996, the FCC released a
Second Further Notice of Proposed Rulemaking seeking comment on a number if
issues relating to the local television ownership rules, including its tentative
conclusion that it should extend the presumptive waiver of the one-to-a-market
rule to the top 50 markets. The Commission also requested further comment on
whether there is a continued need for the rule and, if there is, whether the
rule should be further modified. In addition, on September 27, 1996, the FCC
released a Notice of Inquiry seeking comment on whether it should relax its
policy of granting waivers of the radio/newspaper cross-ownership restriction.

Expansion of the Company's broadcast operations in particular areas and
nationwide will continue to be subject to the FCC's ownership rules and any
further changes the FCC or Congress may adopt. Significantly, the 1996 Act
requires the Commission to review its remaining ownership rules biennially -- as
part of its regulatory reform obligations -- to determine whether its various
rules are still necessary. The Company cannot predict the impact of the biennial
review process or any other agency or legislative initiatives upon the FCC's
broadcast rules. Further, the 1996 Act's relaxation of the FCC's ownership rules
may increase the level of competition in one or more of the markets in which the
Company's stations are located, particularly to the extent that any of the
Company's competitors may have greater resources and thereby be in a better
position to capitalize on such changes.

Under the FCC's ownership rules, a direct or indirect purchaser of
certain types of securities of the Company could violate FCC regulations if that
purchaser owned or acquired an "attributable" or "meaningful" interest in other
media properties in the same areas as stations owned by the Company or in a
manner otherwise prohibited by the FCC. All officers and directors of a
licensee, as well as general partners, limited partners who are not properly
"insulated" from management activities, and stockholders who own five percent or
more of the outstanding voting stock of a licensee (either directly or
indirectly), generally will be deemed to have an attributable interest in the
license. Certain institutional investors who exert no control or influence over
a licensee may own up to ten percent of such outstanding voting stock without
being considered "attributable". Under current FCC regulations, debt
instruments, non-voting stock, properly insulated limited partnership interests
(as to which the licensee certifies that the limited partners are not
"materially involved" in the management and operation of the subject media
property) and voting stock held by minority stockholders in cases in which there
is a single majority stockholder generally are not attributable. The FCC's
"cross-interest" policy, which precludes an individual or entity from having a
"meaningful" (even though not attributable) interest in one media property and
an attributable interest in a broadcast, cable or newspaper property in the same
area, may be invoked in certain circumstances to reach interests not expressly
covered by the multiple ownership rules.

<PAGE> 12

In January 1995, the FCC initiated a rulemaking proceeding designed to
permit a "thorough review of [its] broadcast media attribution rules." Among the
issues on which comment was sought were (i) whether to change the voting stock
attribution benchmarks from five percent to ten percent and, for passive
investors, from ten percent to twenty percent; (ii) whether there are any
circumstances in which non-voting stock interests, which are currently
considered non-attributable, should be considered attributable; (iii) whether
the FCC should eliminate its single majority shareholder exception (pursuant to
which voting interests in excess of five percent are not considered cognizable
if a single shareholder owns more than fifty percent of the voting power); (iv)
whether to relax insulation standards for business development companies and
other widely-held limited partnerships; (v) how to treat limited liability
companies and other new business forms for attribution purposes; (vi) whether to
eliminate or codify the cross-interest policy; and (vii) whether to adopt a new
policy which would consider whether multiple cross interests or other
significant business relationships (such as time brokerage agreements, debt
relationships or holdings of nonattributable interests), which individually do
not raise concerns, raise issues with respect to diversity and competition. On
November 7, 1996, the FCC released a Further Notice of Proposed Rulemaking in
order to elicit further comment on several issues concerning its review of the
broadcast attribution rules. In general, the FCC seeks comment as to whether the
recent relaxation of the multiple ownership rules resulting from passage of the
1996 Act should affect the Commission's review of the rules, including whether a
combination of debt and equity exceeding a certain threshold should be
considered to be an attributable interest. The Company cannot predict with
certainty when this proceeding will be concluded or whether any of these
standards will be changed. Should the attribution rules be changed, the Company
is unable to predict what effect, if any, such changes would have on the Company
or its activities.

License Grant and Renewal. Prior to the passage of the 1996 Act, radio
broadcasting licenses generally were granted or renewed for a period of seven
years upon a finding by the FCC that the "public interest, convenience, and
necessity" would be served thereby. At the time an application is made for
renewal of a radio license, parties in interest may file petitions to deny the
application, and such parties, including members of the public, may comment upon
the service the station has provided during the preceding license term. In
addition, prior to passage of the 1996 Act, any person was permitted to file a
competing application for authority to operate on the station's channel and
replace the incumbent licensee. Renewal applications were granted without a
hearing if there were no competing applications or if issues raised by
petitioners to deny such applications were not serious enough to cause the FCC
to order a hearing. If competing applications were filed, a full comparative
hearing was required.

Under the 1996 Act, the statutory restriction on the length of
broadcast licenses has been amended to allow the FCC to grant broadcast licenses
for terms of up to eight years, although the FCC has not yet implemented this
provision. The 1996 Act also requires renewal of a broadcast license if the FCC
finds that (1) the station has served the public interest, convenience, and
necessity; (2) there have been no serious violations of either the
Communications Act or the FCC's rules and regulations by the licensee; and (3)
there have been no other serious violations which taken together constitute a
pattern of abuse. In making its determination, the FCC may still consider
petitions to deny but cannot consider whether the public interest would be
better served by a person other than the renewal applicant. Instead, under the
1996 Act, competing applications for the same frequency may be accepted only
after the Commission has denied an incumbent's application for renewal of
license.

By order dated April 12, 1996, the FCC modified its rules to implement
the new two-step renewal procedure and to eliminate the right to file an
application that is mutually exclusive with a renewal. This modification became
effective prior to the filing of the license renewal application for WLXX-AM in
Chicago which is currently pending. Also on April 12, 1996, the FCC issued a
notice of Proposed Rulemaking to consider how to implement the new (longer)
license term provision of the 1996 Act.

<PAGE> 13

Although in the vast majority of cases broadcast licenses are granted
by the FCC even when petitions to deny are filed against them, there can be no
assurance that any of the Company's stations' licenses will be renewed.

Alien Ownership Restrictions. The Communications Act restricts the
ability of foreign entities or individuals to own or hold certain interests in
broadcast licenses. Foreign governments, representatives of foreign governments,
non-U.S. citizens, representatives of non-U.S. citizens, and corporations or
partnerships organized under the laws of a foreign nation are barred from
holding broadcast licenses. Non-U.S. citizens, collectively, may directly or
indirectly own or vote up to twenty percent of the capital stock of a licensee.
In addition, a broadcast license may not be granted to or held by any
corporation that is controlled, directly or indirectly, by any other corporation
more than one-fourth of whose capital stock is owned or voted by non-U.S.
citizens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations, if the FCC finds that the public
interest will be served by the refusal or revocation of such license. The FCC
has interpreted this provision of the Communications Act to require an
affirmative public interest finding before a broadcast license may be granted to
or held by any such corporation, and the FCC has made such an affirmative
finding only in limited circumstances. The Company, which serves as a holding
company for subsidiaries that serve as licensees for the stations, therefore may
be restricted from having more than one-fourth of its stock owned or voted
directly or indirectly by non-U.S. citizens, foreign governments,
representatives of non-U.S. citizens or foreign governments, or foreign
corporations. The Communications Act previously prohibited granting of a
broadcast station license (i) to any corporation with an alien officer or
director, or (ii) to any corporation controlled by another corporation with any
alien officers or more than one-fourth alien directors. The restrictions on
non-U.S. citizens serving as officers or directors of licensees and their parent
corporations have been eliminated, however, by the 1996 Act.

Other Regulations Affecting Radio Broadcasting Stations. The FCC has
significantly reduced its past regulation of broadcast stations, including
elimination of formal ascertainment requirements and guidelines concerning
amounts of certain types of programming and commercial matter that may be
broadcast. In 1990, the U.S. Supreme Court refused to review a lower court
decision that upheld the FCC's 1987 action invalidating most aspects of the
Fairness Doctrine, which had required broadcasters to present contrasting views
on controversial issues of public importance. The FCC has, however, continued to
regulate other aspects of fairness obligations in connection with certain types
of broadcasts. In addition, there are FCC rules and policies, and rules and
policies of other federal agencies, that regulate matters such as political
advertising practices, equal employment opportunity, application procedures and
other areas affecting the business or operations of broadcast stations.

Recent Developments, Proposed Legislation and Regulation. The FCC
presently is seeking comment on its policies designed to increase minority
ownership of mass media facilities. Congress, however, has enacted legislation
that eliminated the minority tax certificate program of the FCC, which gave
favorable tax treatment to entities selling broadcast stations to entities
controlled by an ethnic minority. In addition, a recent Supreme Court decision
has cast into doubt the continued validity of other FCC programs designed to
increase minority ownership of mass media facilities.

Congress and the FCC currently have under consideration, and may in the
future adopt, new laws, regulations and policies regarding a wide variety of
matters that could affect, directly or indirectly, the operation and ownership
of the Company's broadcast properties. In addition to the changes and proposed
changes noted above, such matters include, for example, the license renewal
process, spectrum use fees, political advertising rates, potential restrictions
on the advertising of certain products (liquor, beer and wine, for example) and
the rules and policies to be applied in enforcing the FCC's equal employment
opportunity regulations. Other matters that could affect the Company's broadcast
properties include technological

<PAGE> 14

innovations and developments generally affecting competition in the mass
communications industry.

The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act, or the 1996 Act, nor of the regulations
and policies of the FCC thereunder. The 1996 Act also covers satellite and
terrestrial delivery of digital audio radio service, and direct broadcast
satellite systems. Proposals for additional or revised regulations and
requirements are pending before and are being considered by Congress and federal
regulatory agencies from time to time. Also, various of the foregoing matters
are now, or may become, the subject of court litigation, and the Company cannot
predict the outcome of any such litigation or the impact on its broadcast
business.

INDUSTRY SEGMENTS

The Company considers radio broadcasting to be its only business
segment.

EMPLOYEES

As of November 1, 1996, the Company employed 314 persons on a full-time
basis, including 10 corporate employees and 13 employees (at WADO-AM, New York)
who are subject to two collective bargaining agreements. The Company considers
its employee relations to be good.

ITEM 2. PROPERTIES

The Company's corporate offices are located in a 3,560 square foot
leased facility in Las Vegas, Nevada. The initial term of the lease expires in
1999 and the Company has two options to extend the lease for additional
five-year terms. Subsequent to the consummation of the Tichenor Merger, the
Company plans to relocate and combine its corporate office with Tichenor's
corporate office in Dallas.

The studios for both KTNQ-AM and KLVE-FM are located in a 27,638 square
foot leased facility in Hollywood, California. The initial term of the lease
expires in April 2003 and the Company has two options to extend the lease for
additional five-year terms.

The Company has a special permit from the United States Department of
Forestry for the lease of its FM tower on top of Mt. Wilson in Los Angeles. This
permit has been subject to renewal on an annual basis since it was granted in
1986 and has been renewed each year. Many other radio stations in Los Angeles
have similar permits which are subject to the same or similar renewal
requirements.

The Company leases a tower site and an equipment room in City of
Industry, California for broadcast of the KTNQ-AM signal. The lease expires in
April 2080. The Company also leases another equipment room at the tower site
under a lease which expires in December 2089. The Company owns the towers at the
leased tower site.

The Company owns a tower located in Miramar, Florida which broadcasts
the signal for WAQI-AM. In January 1996, the Company acquired this land for $3.0
million. The Company leases a tower located in Miami, Florida for the broadcast
of the signal for WRTO-FM under a lease which expires on August 31, 1997. The
Company owns a tower located in Dade County, Florida which broadcasts the signal
for WQBA-AM and leases a tower located in Dade County, Florida for the broadcast
of the WAMR-FM signal. The initial term of this lease expires in April 2000, and
the Company has two options to extend the lease for periods of five years each.

<PAGE> 15

The broadcast studios for WQBA-AM , WAMR-FM, WAQI-AM, and WRTO-FM are
located in a 15,563 square foot facility in Miami leased by the Company. This
lease expires in April 2000.

The administrative offices for WADO-AM are currently located in a 5,600
square foot facility in New York leased by the Company. The broadcast studios
for WADO-AM are located in a 2,600 square foot facility owned by the Company.
The Company owns a tower in Carlstadt, New Jersey which broadcasts the signal
for WADO-AM. The ground radial system and guy wires for the tower are located on
adjacent property leased from the State of New Jersey until March 2016.

Studio, transmitter and office facilities of WPAT-AM are located in a
7,600 square foot building in Clifton, New Jersey. Adjacent to the building is
the tower site. The related building, tower site and the towers are owned by the
Company. The Company plans to relocate and combine the administrative offices
and studios of WADO-AM with the facilities of WPAT-AM in early 1997.

The Texas stations' offices are located in a 22,000 square foot
facility in Dallas owned by the Company. The Company owns a tower in Ft. Worth
for the broadcast of the signal for KESS-AM and leases the land on which such
tower is located under a lease which expires in September 2001. The Company owns
a tower located in Denton, Texas which broadcasts the signal for KICI-AM and a
tower located in Dallas which broadcasts the signal for KMRT-AM. The Company
also owns a tower located in Dallas which broadcasts the signal for KICI-FM. The
Company leases land in Tarrant County and Wise County on which the towers that
broadcast the signals for KMRT-FM and KHCK-FM, respectively, are located. These
leases expire in September 2001 and July 2000, respectively, and provide for
options to renew the leases through September 2006 and July 2005, respectively.
The Company owns the towers and equipment buildings located on the leased land.

The studio and administrative office for WLXX-AM relocated to a new
facility in Chicago in September 1996. The Company subleases approximately 2,400
square feet for which the lease expires in 2006. The Company also leases land in
Chicago on which a tower which broadcasts the signal for WLXX-AM is located.
This lease expires in March 1998 and provides for four options to renew the
lease for a term of ten years each.

The studio and administrative office for KLSQ-AM occupy 1,500 square
feet at the same facility as the Company's corporate office in Las Vegas,
Nevada. The initial term of the lease expires in 1999 and the lease provides for
two options to renew the lease for a term of five years each. The Company also
leases land in Laughlin, Nevada and Henderson, Nevada, on which the towers that
broadcast the signal for KLSQ-AM are located. These leases expire in 2019 and
2004, respectively. Each of the leases provides for renewal options which extend
the expiration date of the respective leases.

ITEM 3. LEGAL PROCEEDINGS

<PAGE> 16

subject to this suit to its director and officer insurance carriers. The Tender
Offer closed without any action by plaintiffs. The Company has filed a motion to
dismiss the suit and has requested plaintiffs to dismiss the suit voluntary. No
action has been taken on such motion or such request. The Company's management
believes the disposition of this litigation will not have a materially adverse
effect on the Company's consolidated financial position or results of
operations.

In the ordinary course of business, the Company becomes involved in
certain other legal claims and litigation. In the opinion of management, based
upon consultations with legal counsel, the disposition of such litigation
pending against the Company will not have a materially adverse effect on its
consolidated financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company did not submit any matters to a vote of holders of Common
Stock during the fourth quarter of fiscal 1996.

16
<PAGE> 17

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Company's Class A Common Stock is traded in the over-the-counter
market, and prices for the shares are quoted on the Nasdaq National Market under
the symbol "HBCCA." The following table sets forth the high and low closing sale
prices per share as reported on the Nasdaq National Market for each of the
quarters in the fiscal years ended September 30, 1995 and 1996:

<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal Year Ended September 30, 1995:
First Quarter $16 $ 9 1/2
Second Quarter 13 7/8 10
Third Quarter 15 3/4 10 1/8
Fourth Quarter 21 3/4 15 1/4

Fiscal Year Ended September 30, 1996:
First Quarter 19 1/2 14 3/4
Second Quarter 21 15 1/4
Third Quarter 29 7/8 19 1/2
Fourth Quarter 43 5/8 28 1/4
</TABLE>

As of December 18, 1996, the number of stockholders of record of the
Company's Class A Common Stock was 14. This figure does not include an estimate
of the indeterminate number of beneficial holders whose shares may be held of
record by brokerage firms and clearing agencies. There are no outstanding shares
of the Company's Class B Common Stock.

During the quarter ended September 30, 1996, the Company issued 5,000
shares of the Company's Class A Common Stock to a former director pursuant to
the exercise and sale of an in-the-money stock option granted in December 1995.
This issuance was not registered with the Securities and Exchange Commission.

DIVIDEND POLICY

The Series A Preferred Stock ("Preferred Stock") dividends have a
cumulative annual rate of $0.08 per share. In January 1995, the Company redeemed
1,960,290 shares of Preferred Stock using proceeds of the Company's 1994 initial
public offering. The Company declared and paid cash dividends on the Preferred
Stock equal to the cumulative unpaid dividends through the date of redemption,
which approximated $2.9 million. In 1992, the Company redeemed 2,115,468 shares
of Preferred Stock owned by Cecil Heftel and agreed with Mr. Heftel to defer
payment of cumulative unpaid dividends until dividends on the remaining shares
of Preferred Stock were declared and paid. Such dividends relating to the 1992
Preferred Stock redemption, which totaled $1.1 million, are included in the $2.9
million of unpaid cumulative dividends described above. On August 5, 1996, in
connection with the Tender Offer, the remaining 335,634 shares of Preferred
Stock were redeemed and retired. Total dividends paid during fiscal 1996
relating to these retired shares were $42,961. Any future determination as to
declaration of dividends on the common stock will be at the discretion of the
Company's Board of Directors and will depend on the Company's results of
operations, financial condition, capital requirements, lending agreements and
other factors deemed relevant by the Board of Directors.

<PAGE> 18

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data for Heftel
Broadcasting Corporation and its subsidiaries for each of the five years ended
September 30, 1996 (in thousands, except per share data):

<TABLE>
<CAPTION>
Year ended September 30,
1992 1993 1994(1) 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net broadcasting revenues $ 19,134 $ 20,932 $ 27,433 $ 64,160 $ 71,732
Revenues relating to Mi CASA 581 399 -- -- --
------------ ------------ ------------ ------------ ------------
Total net revenues 19,715 21,331 27,433 64,160 71,732

Station operating expenses 10,520 10,479 15,345 43,643 48,896
Expenses relating to Mi CASA 768 1,470 -- -- --
Corporate expenses 3,671 2,530 3,454 4,720 5,072
Depreciation and amortization 2,050 1,760 1,906 3,344 5,140
------------ ------------ ------------ ------------ ------------
Total operating expenses 17,009 16,239 20,705 51,707 59,108
------------ ------------ ------------ ------------ ------------
Operating income 2,706 5,092 6,728 12,453 12,624

Other income (expense):
Interest expense, net (2,192) (2,312) (2,997) (6,389) (11,034)
Income (loss) in equity of joint
venture(2) (991) 746 616 -- --
Loss on retirement of debt (1,936) -- (1,738) -- (7,461)
Restructuring charges -- -- -- -- (29,011)
Other expenses, net (921) (533) (1,407) (428) (1,671)
------------ ------------ ------------ ------------ ------------
Total other income (expense) (6,040) (2,099) (5,526) (6,817) (49,177)
------------ ------------ ------------ ------------ ------------
Income (loss) before
minority interest
and income taxes (3,334) 2,993 1,202 5,636 (36,553)
Minority interest -- -- -- (351) (1,167) --
Provision for income tax -- (272) (100) (150) (65)
------------ ------------ ------------ ------------ ------------
Income (loss) from
continuing operations (3,334) 2,721 751 4,319 (36,618)
Discontinued operations:
Loss on discontinued
operations of CRC(3) -- -- (285) (626) (9,988)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (3,334) $ 2,721 $ 466 $ 3,693 $ (46,606)
============ ============ ============ ============ ============

Income (loss) from continuing
operations per common and
common equivalent share $ (.90) $ .65 $ .14 $ .40 $ (3.56)
============ ============ ============ ============ ============

Net income (loss) per common and
common equivalent share $ (.90) $ .55 $ .05 $ .34 $ (4.53)
============ ============ ============ ============ ============

Weighted average shares
outstanding 4,046,360 4,638,019 5,384,678 10,805,346 10,294,967
============ ============ ============ ============ ============

OTHER OPERATING DATA:
Broadcast cash flow(4) $ 8,614 $ 10,453 $ 12,088 $ 20,517 $ 22,836

BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital $ (716) $ 715 $ 18,366 $ 14,967 $ 7,168
Net intangible assets 10,387 8,727 70,528 109,253 121,742
Total assets 23,347 25,770 113,353 151,637 165,751
Long-term debt,
less current portion 24,995 25,779 58,472 95,937 136,126
Stockholders'
equity (deficiency) $ (11,018) $ (10,164) $ 44,436 $ 43,581 $ 12,101
</TABLE>

See accompanying notes

<PAGE> 19

NOTES TO SELECTED FINANCIAL DATA

(1) During August 1994, the Company completed three separate business
acquisitions and began consolidating a previously unconsolidated
investment in a joint venture. Total net revenues and net income
(loss), adjusted for interest expense on retired debt, relating to
these acquisitions and transaction from the respective dates of these
transactions to September 30, 1994 was approximately $5,488,000 and
$(80,000), respectively.

(2) See Note 1 of Notes to Consolidated Financial Statements of the
Company.

(3) The Company's Board of Directors approved a plan to discontinue the
operations of the radio network owned by CRC, effective August 5, 1996.
The total loss relating to the discontinued operations of CRC for
fiscal 1996 was approximately $10 million, $8.1 million of which was
recognized during the quarter ended September 30, 1996. The loss on
disposal of CRC includes approximately $1.9 million of operating losses
from the measurement date, August 5, 1996, through the planned disposal
date, December 31, 1996. CRC intends to fulfill its contractual program
obligations and is expected to cease operating by December 31, 1996.

(4) Data on station operating income excluding depreciation and
amortization (commonly referred to as "broadcast cash flow"), although
not calculated in accordance with generally accepted accounting
principles, is widely used in the broadcast industry as a measure of a
broadcast company's operating performance. Nevertheless, this measure
should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity which is
calculated in accordance with generally accepted accounting principles.

<PAGE> 20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO THE YEAR
ENDED SEPTEMBER 30, 1995

During fiscal 1995, the Company completed several radio station
acquisitions. Due to the financial effects of these transactions, the results of
operations for 1996 reflect a full fiscal year of operations for these radio
stations compared to a partial year in 1995. Consequently, the results of
operations for the two years ended September 30, 1996 are not entirely
comparable.

Net revenues increased by $7.6 million, or 11.8%, to $71.7 million in
the year ended September 30, 1996 from $64.2 million in the same period of 1995.
Operating expenses increased by $7.4 million, or 14.3%, to $59.1 million in the
year ended September 30, 1996 from $51.7 million in the same period of 1995.
These increases were due primarily to the results of operations for the full
fiscal year of additional radio stations acquired during fiscal 1995.

Interest expense, net of interest income, increased by $4.6 million, or
72.7%, to $11.0 million in the year ended September 30, 1996 from $6.4 million
in the same period of 1995 primarily due to increased borrowings totaling
approximately $42.0 million resulting from radio station asset acquisitions and
certain transaction costs related to the Tender Offer.

Other expenses increased by $37.7 million to $38.1 million during the
year ended September 30, 1996 as compared to $428,000 for the same period in
1995. For the year ended September 30, 1996, the Company incurred a non-cash
loss of $7.5 million as a result of refinanced debt. In addition, in 1996 the
Company incurred a loss of $29.0 million relating to certain one-time
restructuring charges described further in the following paragraphs. During
fiscal 1996, the Company incurred $1.4 million in cost related to unconsummated
acquisitions as compared to $142,000 for fiscal 1995. In fiscal 1995, the
Company recorded $1.2 million in minority interest relating to Viva Media. In
1996, the Company owned 100% of Viva Media; therefore no minority interest was
recorded.

Effective August 5, 1996, the Company's Board of Directors approved a
plan to discontinue the operations of the radio network owned by CRC. The total
loss relating to the discontinued operations of CRC for fiscal 1996 was
approximately $10 million. The charge to operations during the quarter ended
September 30, 1996 was approximately $8.1 million, of which $6.2 million relates
to non-cash charges resulting from the write-off of goodwill. No income tax
benefit was realized due to the Company's availability of net operating loss
carryforwards. The loss on disposal of CRC includes approximately $1.9 million
of operating losses from the measurement date, August 5, 1996, through the
planned disposal date, December 31, 1996. CRC intends to fulfill its contractual
program obligations and is expected to cease operating by December 31, 1996.

In connection with the Tender Offer, the Company incurred certain
one-time restructuring charges totaling approximately $29.0 million during the
quarter ended September 30, 1996. The material components of the restructuring
charges are $18.8 million in payments to former senior executives relating to
employment contract settlements, $4.7 million in broker commissions and
transaction costs, $2.5 million in costs relating to the planned closing of
duplicate facilities, plus $1.9 million in severance relating to employee
terminations resulting from the restructuring.

During fiscal 1996, the Company incurred a net loss of $46.6 million
compared to net income of $3.7 million in the same period of 1995. The change
from net income in 1995 to the net loss in 1996 of $50.3 million consist
primarily of the increase in interest expense, loss on retirement of debt,
discontinued operations of CRC, and the restructuring charges related to the
Tender Offer, all as described above.

<PAGE> 21

RESULTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO THE YEAR
ENDED SEPTEMBER 30, 1994

During fiscal 1995, the Company completed several radio station
acquisitions. Additional stations were acquired in August 1994. Due to the
financial effects of these transactions, the results of operations for 1995
reflect the operations of more radio stations than the results of operations for
1994. Consequently, the financial condition and results of operations for the
two years ended September 30, 1995 are not entirely comparable.

Net revenues increased by $36.7 million, or 133.9%, to $64.2 million in
the year ended September 30, 1995 from $27.4 million in the same period of 1994.
Operating expenses increased by $31.0 million, or 149.7%, to $51.7 million in
the year ended September 30, 1995 from $20.7 million in the same period of 1994.
These increases were due primarily to the results of operations of additional
radio stations acquired in August 1994 and during fiscal 1995.

Interest expense, net of interest income, increased by $3.4 million, or
113.2%, to $6.4 million for the year ended September 30, 1995 from $3.0 million
in the same period of 1994 primarily due to increased borrowings resulting from
new business acquisitions.

Other expenses decreased by $2.7 million, or 86%, to $428,000 during
the year ended September 30, 1995 as compared to $3.1 million for the same
period in 1994. For the year ended September 30, 1994, the Company incurred a
loss of $1.7 million as a result of refinanced debt. In addition, in 1995, the
Company incurred $142,000 in costs relating to unconsummated acquisitions
compared to $1.1 million in the prior year.

Effective August 20, 1994, the Company began accounting for its 49%
investment in Viva Media on a consolidated basis. Accordingly, the results of
operations include the accounts of Viva Media from August 20, 1994 through
September 30, 1994, and for the entire fiscal year ended September 30, 1995.

Net income increased by $3.2 million to $3.7 million in the year ended
September 30, 1995 from $466,000 in the same period of 1994.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities for the year ended September 30,
1996 was $20.1 million, compared to net cash provided by operations of $6.3
million for the same period in 1995. Excluding the effects of the loss on
discontinued operations of CRC and the cash portion of certain restructuring
charges related to the Tender Offer incurred during fiscal 1996, net cash
provided by operating activities would have been $5.3 million as compared to net
cash used of $20.1 million. Generally, capital expenditures are financed with
cash provided by operations and long-term borrowings. On August 5, 1996,
concurrent with the completion of the Tender Offer, the Company borrowed $135
million under the New Credit Agreement, which provides a total credit facility
of $155 million. The proceeds were used to retire all of the outstanding debt
under the Company's Old Credit Agreement (as hereafter defined) and to pay
certain non-compete and employment contract settlements plus certain transaction
and other costs relating to the Tender Offer. The lender has a security interest
in substantially all the assets of the Company and its subsidiaries, including
the stock and partnership interests of the Company's subsidiaries. The New
Credit Agreement restricts the payment of dividends and establishes limitations
on, among other things, capital expenditures and additional borrowings. The
Company is also required to maintain certain financial ratios, such as leverage
and interest coverage ratios. The entire principal balance outstanding plus
unpaid interest is due in January 1998.

<PAGE> 22

On March 13, 1996, the Company completed an Amended and Restated Credit
Agreement ("Old Credit Agreement") resulting in an increase to the total credit
facilities from $100 million to $175 million and the commencement of principal
payments was deferred until December 31, 1996. Other terms of the Old Credit
Agreement remained substantially the same. On March 25, 1996, the Company
borrowed an additional $20 million under the Old Credit Agreement. The proceeds
were used to fund the acquisition of the FCC license and certain broadcast and
other equipment of WPAT-AM in New York.

On January 10, 1996, the Company borrowed $1.5 million under its Old
Credit Agreement and issued a $1.5 million non-interest promissory note in
connection with the acquisition of real property in Miami on which an AM
transmitting tower is located. During fiscal 1995, the Company borrowed
$36,475,000 under the Old Credit Agreement. Proceeds of these borrowings were
used primarily for business acquisitions, capital expenditures and working
capital.

On October 18, 1996, the Company filed a Registration Statement on Form
S-3 with the Securities and Exchange Commission to register the sale of up to
4,025,000 shares of its Class A Common Stock in a secondary public offering. The
net proceeds from this stock offering will be used to repay outstanding debt
under the New Credit Agreement. The registration statement has not yet been
declared effective by the Securities and Exchange Commission.

Available cash on hand plus cash provided by operations were sufficient
to pay interest due under the credit agreements and fund certain capital
expenditures during the year ended September 30, 1996. The Company's management
believes it will have sufficient cash flow to finance its operations and satisfy
its debt service requirements. The Company regularly reviews potential
acquisitions of additional radio stations. Future acquisitions are expected to
be financed through additional borrowings under the New Credit Agreement and/or
cash provided by operations.

Following the Tichenor Merger, the Company may refinance all or a
portion of the consolidated indebtedness. There can be no assurance, however,
that any such refinancing will be consummated, or if consummated, what the terms
of the new financing will be.

NET OPERATING LOSS CARRYFORWARDS

As of September 30, 1996, the Company had tax net operating loss
carryforwards for federal and state tax purposes of approximately $21.9 million
and $3.4 million, respectively. The loss carryforwards expire through the year
2011 if not used.

NEW ACCOUNTING STANDARDS

Beginning fiscal 1997, the Company will adopt Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" which requires impairment
losses to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amounts. Statement No. 121
also addresses the accounting for long-lived assets that are expected to be
disposed of. The adoption of this new accounting standard is not expected to
have a material effect on the Company's financial statements.

<PAGE> 23

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Auditors........................................... 24

Consolidated Balance Sheets as of September 30, 1996 and 1995............ 25

Consolidated Statements of Operations for each of the three years
in the period ended September 30, 1996................................ 27

Consolidated Statements of Stockholders' Equity for each
of the three years in the period ended September 30, 1996............. 28

Consolidated Statements of Cash Flows for each of the three years
in the period ended September 30, 1996................................ 29

Notes to Consolidated Financial Statements............................... 30
</TABLE>

<PAGE> 24
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Heftel Broadcasting Corporation

We have audited the accompanying consolidated balance sheets of Heftel
Broadcasting Corporation as of September 30, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended September 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Heftel Broadcasting Corporation at September 30, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended September 30, 1996, in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Los Angeles, California
November 7, 1996

<PAGE> 25

HEFTEL BROADCASTING CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,131,960 $ 5,404,310
Accounts receivable, net of allowance of $1,657,860
in 1996 and $1,491,877 in 1995 17,015,323 15,501,811
Amounts receivable from officers and stockholders -- 2,357,932
Prepaid expenses and other current assets 1,012,232 2,243,445
------------- --------------
Total current assets 23,159,515 25,507,498

Property and equipment, at cost:
Land 6,662,690 648,690
Buildings and improvements 4,601,932 4,024,013
Broadcast and other equipment 12,620,463 10,238,010
Furniture and fixtures 2,970,813 2,669,401
------------- -------------
26,855,898 17,580,114
Less accumulated depreciation and amortization (7,019,970) (5,335,151)
------------- -------------
19,835,928 12,244,963

Intangible assets:
Broadcast licenses 98,725,706 83,725,706
Cost in excess of fair value of net assets acquired 24,135,219 30,665,219
Covenants not-to-compete 7,000,000 --
Other intangible assets 505,000 505,000
------------- -------------
130,365,925 114,895,925
Less accumulated amortization (8,624,020) (5,643,246)
------------- -------------
121,741,905 109,252,679
Other non-current assets:
Deferred charges, net 360,000 3,104,679
Notes receivable from related parties -- 803,303
Other 653,778 724,162
-------------- -------------
1,013,778 4,632,144
------------- -------------

Total assets $ 165,751,126 $ 151,637,284
============= =============
</TABLE>

See accompanying notes.

<PAGE> 26

HEFTEL BROADCASTING CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30
1996 1995
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and
other non-current obligations (Note 5) $ 1,859,301 $ 795,758
Accounts payable 707,967 1,191,625
Accrued expenses (Note 10) 13,423,891 7,714,844
Amounts payable to officers and stockholders -- 838,241
------------- -------------
Total current liabilities 15,991,159 10,540,468

Long-term debt, less current portion (Note 5) 136,126,364 95,936,528
Other non-current obligations, less current portion (Note 5) 1,532,214 1,579,133

Commitments and contingencies (Note 6)

Stockholders' equity (Note 8):
Series A Preferred Stock, cumulative, $.001 par value, 2,600,000 shares
authorized, none issued or outstanding in 1996, 335,634 shares issued
and outstanding in 1995. Liquidation preference of $355,772 in 1995 -- 336
Undesignated series preferred stock, $.001 par value, 2,400,000
shares authorized, none issued or outstanding -- --
Class A Common Stock, $.001 par value, 30,000,000 shares authorized,
11,547,731 issued and outstanding in 1996 and
6,191,799 shares in 1995 11,548 6,192
Class B Common Stock, $.001 par value, 7,000,000 shares authorized,
none issued and outstanding in 1996 and 4,679,763 shares in 1995 -- 4,680
Additional paid-in capital 102,578,149 95,693,269
Accumulated deficit (90,488,308) (43,839,535)
Less treasury stock at cost, 810,587 shares in 1995 -- (4,019,735)
Notes receivable from stockholders related to
purchase of stock -- (4,264,052)
------------- -------------
Net stockholders' equity 12,101,389 43,581,155
------------- -------------

Total liabilities and stockholders' equity $ 165,751,126 $ 151,637,284
============= =============
</TABLE>

See accompanying notes.

<PAGE> 27

HEFTEL BROADCASTING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Revenues:
Broadcasting revenues $81,242,695 $72,577,882 $31,344,144
Less agency commissions (9,510,663) (8,418,340) (3,911,414)
------------ ------------ -----------
Net revenues 71,732,032 64,159,542 27,432,730

Operating expenses:
Selling 12,363,883 10,393,242 3,857,446
Programming 12,185,339 10,174,717 3,080,245
Promotion and market research 8,608,195 10,099,402 3,619,097
Engineering 2,666,454 1,842,711 535,609
General and administrative 13,072,385 11,132,437 4,252,718
Corporate expenses 5,071,859 4,720,380 3,453,839
Depreciation and amortization 5,140,131 3,344,419 1,905,864
------------ ------------ -----------
Total operating expenses 59,108,246 51,707,308 20,704,818
------------ ------------ -----------

Operating income 12,623,786 12,452,234 6,727,912

Other income (expense):
Interest income 206,605 217,830 183,060
Interest expense (11,240,835) (6,607,180) (3,180,272)
Net income in equity of joint venture (Note 1) -- -- 616,390
Costs relating to unconsummated acquisitions (1,383,187) (141,988) (1,099,701)
Loss on retirement of debt (Note 5) (7,461,267) -- (1,737,707)
Restructuring charges (Note 3) (29,011,237) -- --
Miscellaneous, net (287,140) (285,568) (307,577)
------------ ------------ -----------
(49,177,061) (6,816,906) (5,525,807)
------------ ------------ -----------
Income (loss) before minority interest and
provision for income taxes (36,553,275) 5,635,328 1,202,105
Minority interest (Note 1) -- (1,166,780) (351,502)
Provision for income taxes (Note 7) (65,000) (150,000) (100,000)
------------ ------------ -----------
Income (loss) from continuing operations (36,618,275) 4,318,548 750,603

Discontinued operations (Note 3):
Loss on operations of CRC (1,844,939) (625,970) (284,709)
Loss on disposal of CRC (8,142,598) -- --
------------ ------------ -----------
Total loss on discontinued operations (9,987,537) (625,970) (284,709)
------------ ------------ -----------
Net income (loss) $(46,605,812) $ 3,692,578 $ 465,894
============ ============ ===========

Income (loss) from continuing operations
per common and common equivalent share $(3.56) $0.40 $0.14
============ ============ ===========

Net income (loss) per common
and common equivalent share $(4.53) $0.34 $0.05
============ ============ ===========

Weighted average common shares outstanding 10,294,967 10,805,346 5,384,678
============ ============ ===========
</TABLE>

See accompanying notes.

<PAGE> 28

HEFTEL BROADCASTING CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(NOTES 8 AND 9)

<TABLE>
<CAPTION>
NOTES NET
COMMON STOCK ADDITIONAL RECEIVABLE STOCKHOLDERS'
--------------- PREFERRED PAID-IN ACCUMULATED TREASURY FROM EQUITY
CLASS A CLASS B STOCK CAPITAL DEFICIT STOCK STOCKHOLDERS (DEFICIENCY)
------- ------ ------- ------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1993 $-- $ 4,194 $ 2,296 $ 36,697,744 $(45,136,729) $(1,000,000) $ (732,000) $(10,164,495)
Reissuance of treasury stock -- -- -- -- -- 1,000,000 (1,000,000) --
Purchase of treasury
stock, at cost -- -- -- -- -- (4,019,735) -- (4,019,735)
Common stock issued in
connection with:
Public offering 3,875 -- -- 33,933,625 -- -- -- 33,937,500
Private sale of stock 1,240 -- -- 11,498,760 -- -- -- 11,500,000
Conversion of Class B to
Class A Common Stock 216 (216) -- -- -- -- -- --
Acquisitions 701 513 -- 12,281,305 -- -- -- 12,282,519
Exercise of warrants -- 189 -- 851,863 -- -- (852,052) --
Issuance of stock options -- -- -- 434,808 -- -- -- 434,808
1994 net income -- -- -- -- 465,894 -- -- 465,894
------- ------ ------- ------------ ----------- ---------- ----------- ------------
Balance at September 30, 1994 6,032 4,680 2,296 95,698,105 (44,670,835) (4,019,735) (2,584,052) 44,436,491
Repurchase of preferred stock -- -- (1,960) (1,958,330) -- -- -- (1,960,290)
Preferred stock dividends -- -- -- -- (2,861,278) -- -- (2,861,278)
Common stock issued in
connection with
exercise of warrants 160 -- -- 1,679,840 -- -- (1,680,000) --
Issuance of stock options -- -- -- 273,654 -- -- -- 273,654
1995 net income -- -- -- -- 3,692,578 -- -- 3,692,578
------- ------ ------- ------------ ----------- ---------- ----------- ------------
Balance at September 30, 1995 6,192 4,680 336 95,693,269 (43,839,535) (4,019,735) (4,264,052) 43,581,155
Repurchase of preferred stock -- -- (336) (335,298) -- -- -- (335,634)
Preferred stock dividends -- -- -- -- (42,961) -- -- (42,961)
Retirement of treasury stock -- (811) -- (4,018,924) -- 4,019,735 -- --
Payment on stockholder notes -- -- -- -- -- -- 4,264,052 4,264,052
Common stock issued in
connection with:
Conversion of Class B to
Class A Common Stock 3,869 (3,869) -- -- -- -- -- --
Exercise of warrants
and options 1,442 -- -- 10,546,817 -- -- -- 10,548,259
Business Acquisition 45 -- -- 692,285 -- -- -- 692,330
1996 net loss -- -- -- -- (46,605,812) -- -- (46,605,812)
------- ------ ------- ------------ ----------- ---------- ----------- ------------
Balance at September 30, 1996 $11,548 $-- $-- $ 102,578,149 $(90,488,308) $ -- $ -- $ 12,101,389
======= ====== ======= ============ =========== ========== =========== ============
</TABLE>

See accompanying notes.

<PAGE> 29

HEFTEL BROADCASTING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (46,605,812) $ 3,692,578 $ 465,894
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization 5,140,131 3,587,341 1,947,646
Provision for losses on accounts receivable 2,871,700 1,522,235 855,220
Income in equity of joint venture -- -- (616,390)
Loss on retirement of debt, net of cash paid 7,461,267 -- 1,061,207
Non-cash loss on restructuring charges 1,219,048 -- --
Non-cash interest and stock compensation expense 993,674 925,740 434,808
Changes in operating assets and liabilities,
net of effect from acquisitions
and discontinued operations:
Accounts receivable (4,711,197) (3,545,065) (2,505,996)
Prepaid expenses and other current assets 1,175,118 (327,714) (555,749)
Accounts payable (421,251) (1,331,888) (537,997)
Accrued expenses 4,087,219 2,433,390 199,874
Other, net 297,960 (393,245) (225,420)
Discontinued operations:
Non-cash charges and working capital changes 8,393,531 (283,385) 242,927
------------- ------------ ------------
Net cash (used in) provided by operating activities (20,098,612) 6,279,987 766,024

INVESTING ACTIVITIES:
Purchases of property and equipment (3,687,780) (4,011,331) (402,730)
Purchase of businesses and radio station assets (20,150,000) (37,600,000) (6,980,000)
Payment of noncompete agreements (7,000,000) -- --
Advances/loans to related parties 2,357,932 (623,838) (1,915,230)
Payments received on notes receivable -- 222,586 199,035
------------- ------------ ------------
Net cash used in investing activities (28,479,848) (42,012,583) (9,098,925)

FINANCING ACTIVITIES:
Proceeds from public and private stock issuances 10,548,259 -- 45,437,500
Repurchase of Preferred and Common Stock (335,634) (1,960,290) (2,687,735)
Payment of Series A Preferred Stock dividends (42,961) (2,861,278) --
Proceeds from borrowings under credit agreements 163,459,267 36,475,000 59,565,733
Payment of costs related to new financing (5,799,878) (82,411) (4,301,039)
Repayment of long-term debt and
other non-current obligations (123,752,057) (653,026) (80,709,589)
Payment on notes receivable from stockholders 4,229,114 -- --
------------ ------------
Net cash provided by financing activities 48,306,110 30,917,995 17,304,870
------------- ------------ ------------
Net (decrease) increase in cash and cash equivalents (272,350) (4,814,601) 8,971,969
Cash and cash equivalents at beginning of year 5,404,310 10,218,911 1,246,942
------------- ------------ ------------
Cash and cash equivalents at end of year $ 5,131,960 $ 5,404,310 $ 10,218,911
============= ============ ============

Supplemental disclosure of cash flow information:
Interest paid $ 10,124,821 $ 5,117,883 $ 3,627,863
============= ============ ============
Taxes paid $ 65,000 $ 78,800 $ 339,282
============= ============ ============
</TABLE>

See accompanying notes

29
<PAGE> 30

HEFTEL BROADCASTING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Heftel Broadcasting Corporation (HBC or the Company), through its
subsidiaries, owns and operates seventeen Spanish language radio stations
serving the Los Angeles, Miami, New York City, Dallas/Ft. Worth, Chicago and Las
Vegas markets.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts
of Heftel Broadcasting Corporation and subsidiaries (collectively, the Company).
All significant intercompany accounts and transactions have been eliminated in
consolidation. The Company's fiscal year end is September 30.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of
three months or less when purchased to be cash equivalents.

Accounts Receivable

The Company sells broadcast time to a diverse customer base including
advertising agencies and other direct customers. The Company performs credit
evaluations of its customers and generally does not require collateral. The
Company maintains allowances for potential losses and such losses have been
within management's expectations.

Investment in Joint Venture/Minority Interest

Until August 19, 1994, the Company's investment in its joint venture
was accounted for using the equity method of accounting. In connection with
certain agreements entered into between the Company and its joint venture
partner, management considered it appropriate to consolidate the accounts of the
joint venture and therefore such accounts and results of operations have been
consolidated and are included in the accompanying consolidated financial
statements effective August 20, 1994. On September 7, 1995, the Company, through
a subsidiary, acquired the remaining 51% interest in this joint venture (Note
4).

Depreciation and Amortization

Depreciation of property and equipment is computed using the
straight-line method over the estimated useful lives of the related assets,
which range from 3 to 40 years. Leasehold improvements are amortized using the
straight-line method over the shorter of the lease terms or the useful lives of
the improvements. Expenditures for repairs and maintenance are charged to
expense as incurred.

<PAGE> 31

Intangible Assets

Intangible assets are stated at cost. Broadcast licenses are amortized
over 40 years using the straight-line method. Other intangible assets, including
cost in excess of fair value of net assets acquired, are amortized over the
expected period of benefit, ranging from 5 to 40 years, using the straight-line
method. The carrying value of intangible assets is reviewed if the facts and
circumstances suggest that such value may have been impaired. If this review
indicates that the carrying value of an intangible asset will not be
recoverable, as determined based on the undiscounted cash flows of the Company
over the remaining amortization period, the carrying value of the intangible
asset is reduced by the estimated shortfall of cash flows.

Beginning fiscal 1997, the Company will adopt Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." The adoption of this new
accounting standard is not expected to have a material effect on the Company's
financial position or results of operations.

Income Taxes

The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). Under SFAS
109, income taxes for financial reporting purposes are determined using the
liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates expected to
apply to taxable income in the periods in which the deferred tax asset or
liability is expected to be realized or settled.

Revenue Recognition

Revenue is recognized as commercials are broadcast. The Company also
enters into barter transactions in which advertising time is traded for
merchandise or services used principally for promotional and other business
purposes. Barter revenue is recorded as commercials are broadcast at the
estimated fair value of the merchandise or services received. If merchandise or
services are received prior to the broadcast of commercials, recognition of the
related revenue is deferred and recognized as the commercials are broadcast.
Barter revenues accounted for approximately 6%, 7% and 7% of broadcasting
revenues in 1996, 1995 and 1994, respectively.

Earnings Per Share

Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common and common equivalent shares (if
dilutive) outstanding during each year. For purpose of this computation,
cumulative preferred stock dividends are deducted from net income (loss) whether
or not preferred stock dividends have been declared or paid.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.

<PAGE> 32
Stock-Based Compensation

The Company accounts for its stock compensation arrangements under
the provisions of APB 25, "Accounting for Stock Issued to Employees," and
intends to continue to do so.

In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123), SFAS 123 established a fair value-based
method of accounting for compensation cost related to stock options and other
forms of stock-based compensation plans. However, SFAS 123 allows an entity to
continue to measure compensation costs using the principles of APB 25 if
certain pro forma disclosures are made. SFAS 123 is effective for fiscal years
beginning after December 15, 1995. The Company intends to adopt the provisions
for pro forma disclosure requirements of SFAS 123 in fiscal 1997.

Reclassifications

Certain reclassifications have been made to the prior years' balances
to conform to the current year presentation.

2. RECENT DEVELOPMENTS

Change in Control of Company

On August 5, 1996, Clear Channel Radio, Inc., a wholly owned subsidiary
of Clear Channel Communications, Inc. (Clear Channel), completed a stock
purchase and tender offer of the Company's Class A and B Common Stock for $23
per share. The consummation of these transactions, as more fully described
below, increased Clear Channel's investment in the Company from a previously
owned 21% interest to 63%. Clear Channel is a diversified radio and television
broadcasting company.

Pursuant to a Stockholder Purchase Agreement dated June 1, 1996 between
Clear Channel and Mr. Cecil Heftel, former Chairman and Co-Chief Executive
Officer, Mr. Carl Parmer, former President and Co-Chief Executive officer and
members of the Heftel family, Clear Channel acquired 160,000 shares of the
Company's Class A Common Stock and 3,356,529 shares of the Company's Class B
Common Stock on August 5, 1996 (each share of Class B Common Stock converts
automatically into one share of Class A Common Stock upon sale). An additional
1,156,017 shares of Class A Common Stock were acquired by Clear Channel upon the
exercise of stock options and warrants held by the selling stockholders.

Under a separate Tender Offer Agreement dated June 1, 1996 between the
Company and Clear Channel, Clear Channel also acquired 231,776 shares of the
Company's Class A Common Stock, of which an aggregate of 199,167 shares were
tendered by employees of the Company upon the exercise of their stock options on
August 5, 1996. An additional 236,700 shares of Class A Common Stock were
tendered to Clear Channel by public shareholders.

In connection with the change in control of the Company, the employment
of Mr. Cecil Heftel and Mr. Carl Parmer was terminated pursuant to employment
contract settlement agreements with each which provided for a lump sum payment
upon termination (Note 3). In addition, Mr. Heftel and Mr. Parmer entered into
five-year noncompete agreements with the Company in exchange for the payment of
$2.5 million and $4.5 million, respectively. Further, the entire Board of
Directors was replaced with five new members effective August 5, 1996.

Proposed Merger Plan

On July 10, 1996, Clear Channel issued a press release announcing its
plans to submit to the Company's Board of Directors a proposal and plan to have
the Company acquire Tichenor Media System, Inc. (Tichenor). Tichenor is a
Dallas-based Spanish language broadcaster with twenty radio stations in six
markets. Under the terms of the merger plan, Tichenor shareholders would
exchange their capital stock for approximately 5.68 million shares of the
Company's Class A Common Stock plus approximately $3.4 million in cash. The
completion of this acquisition, which is scheduled to close during the first
quarter of calendar 1997, is subject to approval by the Federal Trade Commission
and Federal Communications Commission.

<PAGE> 33

3. DISCONTINUED OPERATIONS / RESTRUCTURING CHARGES

Discontinued Operations - CRC

The Company's Board of Directors approved a plan to discontinue the
operations of the radio network owned by the Company's wholly owned subsidiary
Spanish Coast-to-Coast, Ltd., dba, Cadena Radio Centro (CRC) effective August 5,
1996. The charge to operations during the quarter ended September 30, 1996 was
approximately $8.1 million, of which $6.2 million relates to non-cash charges
resulting from the write-off of goodwill. No income tax benefit was realized due
to the Company's availability of net operating loss carryforwards. The loss on
disposal of CRC includes approximately $1.9 million of operating losses from the
measurement date, August 5, 1996, through the disposal date, December 31, 1996.
CRC intends to fulfill its contractual program obligations through the disposal
date, December 31, 1996. CRC's net assets will be used to satisfy outstanding
obligations and remaining property and equipment, which is not material, will be
transferred to other subsidiaries after the disposal date.

Restructuring Charges

In connection with the change in control of ownership described in
Note 2, the Company incurred certain one-time restructuring charges totaling
approximately $29.0 million during the quarter ended September 30, 1996. The
material components of the restructuring charges are $18.8 million in payments
to former senior executives relating to employment contract settlements, $4.7
million in broker commissions and transaction costs, $2.5 million in costs
relating to the planned closing of duplicate facilities, plus $1.9 million in
severance relating to employee terminations resulting from the restructuring.

4. BUSINESS AND ASSET ACQUISITIONS

1996 ASSET ACQUISITION
New York

On March 25, 1996, the Company acquired the assets of radio station
WPAT-AM which serves the New York City market for approximately $19.5 million.
The asset acquisition was financed through additional borrowings under the
Company's credit agreement.

1995 AND 1994 ACQUISITIONS

During fiscal years 1995 and 1994, the Company acquired several
businesses as described further in the following paragraphs. The aggregate
purchase price of these acquisitions, including acquisition costs, was
approximately $42 million in 1995 and $52.7 million in 1994 and consisted of the
following:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash paid $37,600,000 $ 6,980,000
Common stock, issued at
fair value -- 12,283,000
Long-term debt and
liabilities assumed 3,521,000 33,437,000
Cancellation of note receivable 900,000 --
----------- -----------
Total fair value of acquisitions $42,021,000 $52,700,000
=========== ===========
</TABLE>

All of the business acquisitions made by the Company during fiscal
year 1995 and 1994 were accounted for using the purchase method of accounting.
Accordingly, the accompanying financial statements

<PAGE> 34

include the accounts of the acquired businesses since the respective dates of
acquisition.

1995 ACQUISITIONS

In December 1994, the Company acquired station KMRT-AM, which serves
the Dallas/Ft. Worth market, for approximately $1.5 million. From August 1994
through the date of acquisition, the Company programmed KMRT-AM under a Local
Marketing Agreement (LMA).

In April 1995, the Company acquired station KICI-FM, which serves the
Dallas/Ft. Worth market, in exchange for cancellation of a note for $900,000
payable by the seller to a subsidiary of the Company. From August 1994 through
the date of acquisition, the Company programmed KICI-FM under an LMA.

In June 1995, the Company acquired the assets of the radio station
KCYT-FM (serving the Dallas/Ft. Worth market) for approximately $2.0 million.
The acquisition was financed through additional borrowings under the Company's
credit agreement and the issuance of notes payable to the sellers. From February
1995 through the date of acquisition, the Company programmed KCYT-FM under an
LMA. Subsequent to the acquisition, the station call letters were changed to
KMRT-FM.

In July 1995, the Company acquired the assets of radio station KDZR-FM,
which serves the Dallas/Ft. Worth market, for approximately $4.7 million. This
acquisition was financed through additional borrowings under the Company's
credit agreement. From February 1995 through the date of acquisition, the
Company programmed KDZR-FM under an LMA. Subsequent to the acquisition, the
station call letters were changed to KHCK-FM.

In July 1995, the Company acquired the assets of radio station WOPA-AM,
which serves the Chicago market, for approximately $4.5 million plus 44,811
shares of Class A Common Stock with a fair value of approximately $692,000. This
acquisition was financed through additional borrowings under the Company's
credit agreement. Subsequent to the acquisition, the station call letters were
changed to WLXX-AM.

In August 1995, the Company acquired the assets of radio station
KOWA-AM, which serves the Las Vegas market, for approximately $900,000. The
acquisition was financed through additional borrowings under the Company's
credit agreement. Subsequent to the acquisition, the station call letters were
changed to KLSQ- AM.

On September 7, 1995, the Company acquired the previously unowned 51%
interest in Viva America Media Group (Viva Media), a partnership that owns
WAQI-AM and WRTO-FM, which serve the Miami market, for $19.8 million in cash.
The acquisition was financed through additional borrowings under the Company's
credit agreement. Under the terms of an Amended and Restated Agreement and Plan
of Reorganization, and in connection with this transaction, the following
contractual arrangements were terminated for no additional consideration: (i) a
warrant to purchase up to 237,600 shares of Class B Common Stock held by a
former officer of the Company and the employment relationship between the
Company and that officer and (ii) certain agreements regarding the management of
the Miami stations.

1994 ACQUISITIONS
Cadena Radio Centro

In August 1994, the Company acquired Spanish Coast-to-Coast, Ltd., dba
Cadena Radio Centro (CRC) in exchange for 700,938 shares of HBC Class A Common
Stock valued at $6.5 million. In connection with this transaction, CRC's parent
company purchased 1,240,181 shares of HBC Class A Common Stock for $11.5

<PAGE> 35

million in cash. CRC is a Los Angeles based Spanish language news broadcasting
service which provides news services to Spanish language radio broadcasting
companies including HBC subsidiaries. On September 9, 1996, the Company's Board
of Directors elected to discontinue the operations of CRC (Note 3).

New York/Miami Radio Stations

In August 1994, the Company acquired Radio WADO, Inc. (WADO), Broadcast
Investment, Inc. (BII) and SRN Texas, Inc. (STI) for approximately $31.7
million. WADO, BII and STI collectively owned 100% of Spanish Radio Network
(SRN), a Florida general partnership, which owned and operated two Spanish
language radio stations in Miami (WQBA-AM/FM), and one Spanish language radio
station in New York City (WADO- AM). The call letters for WQBA-FM have since
changed to WAMR-FM. SRN also owned WGLI-AM in Babylon, New York which is
currently not operating. The purchase price included the assumption of
approximately $25.8 million in long-term debt, $850,000 in current liabilities,
a payment of approximately $3.5 million in cash and 137,762 shares of HBC Class
B Common Stock valued at approximately $1.4 million. The acquisitions of these
companies are hereafter referred to as the "New York/Miami Radio Stations."

Dallas/Ft. Worth Radio Stations

In August 1994, the Company acquired Rodriguez Broadcasting, Inc. (RBI)
for $1.5 million in cash. RBI owned two Spanish language radio stations (KICI-AM
and KICI-FM) which serves the Dallas/Ft. Worth market. Immediately prior to the
closing of this transaction, RBI transferred the license for KICI-FM to
Corsicana Communications, Inc. (Corsicana), an entity owned by the former
shareholder of RBI, for a $900,000 note receivable and therefore the Company did
not purchase this station. However, on August 19, 1994, the Company and
Corsicana entered into an LMA to program KICI-FM and obtained an option,
exercisable after November 17, 1994, to purchase KICI-FM in exchange for
cancellation of the note receivable. The acquisition of KICI-FM was completed in
April 1995.

Prior to August 19, 1994, RBI had entered into an Asset Purchase
Agreement to acquire a license for KMRT-AM, which serves the Dallas/Ft. Worth
market, and also entered into an LMA regarding KMRT which permitted RBI to
program the station pending its acquisition. On August 19, 1994, RBI assigned
its rights under this LMA to a subsidiary of the Company. The acquisition of
KMRT-AM was completed in December 1994.

On August 19, 1994, HBC also acquired Mark Rodriguez, Jr. Broadcasting,
Inc. (MRB) in exchange for 374,885 shares of HBC Class B Common Stock valued at
approximately $4.4 million plus the assumption of approximately $6.5 million in
long-term debt. MRB owned and operated a Spanish language radio station
(KESS-AM) in Ft. Worth, Texas.

Pro Forma Financial Information

The following unaudited pro forma financial information presents the
consolidated results of operations as if the above acquisitions had occurred at
the beginning of the periods presented, after giving effect to certain
adjustments including depreciation and amortization of assets acquired and
interest expense on acquisition debt. This pro forma information is presented
for comparative purposes only and does not purport to be indicative of what
would have occurred had the acquisitions been made as of those dates or results
which may occur in the future (in thousands, except per share data).

35
<PAGE> 36

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
Net broadcasting revenue $68,218 $63,535
Net income $ 3,251 $ 722
Net income per common share $ 0.29 $ 0.08
</TABLE>

5. LONG-TERM DEBT AND OTHER NON-CURRENT OBLIGATIONS

Long-term debt at September 30 consists of the following:

<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
NewCredit Agreement, variable interest
rate (7.32% at September 30, 1996),
interest payable monthly,
principal payable in January 1998 $ 135,000,000 $ --
Old Credit Agreement, variable interest
rate (ranging from 8.13% to 9.75%),
interest payable quarterly,
principal repaid in August 1996 -- 93,040,733
Note payable to stockholder, interest
at 4.5%, payable in monthly
installments of $10,000,
balance repaid in August 1996 -- 1,257,835
Noncompete agreements, interest at 12%,
payable to former officers and
stockholders in variable monthly
installments, repaid in May 1996 -- 215,359
Non-interest bearing note payable
to former Viva Media partners
due February 1997 1,499,250 --
Various notes payable, interest at
10%, payable in varying installments,
due 1996 through 2015 1,439,514 2,154,229
------------- -------------
137,938,764 96,668,156
Less current portion (1,812,400) (731,628)
------------- -------------
$ 136,126,364 $ 95,936,528
============= =============
</TABLE>

New Credit Agreement

On August 5, 1996, concurrent with the completion of the transactions
described in Note 2, the Company borrowed $135 million under a new credit
agreement (New Credit Agreement) with new lenders which provides a total credit
facility of $155 million. The proceeds were used to retire all of the
outstanding debt under the Company's old credit agreement and to pay certain
noncompete and employment contract settlements plus certain transaction and
other costs relating to the Stockholder Purchase Agreement and Tender Offer. In
connection with the retirement of debt outstanding under the Old Credit
Agreement, the Company expensed $7,461,267 relating to unamortized financing
costs. The lenders have a security interest in assets of the Company and the
stock and partnership interests of the Company's subsidiaries. The New Credit
Agreement restricts the payment of dividends and establishes limitations on,
among other things, capital expenditures and additional borrowings. The Company
is also required to maintain certain financial ratios, such as leverage and
interest coverage ratios. The entire principal balance outstanding plus unpaid
interest is due in January 1998. The interest rate on the Company's New Credit
Agreement varies and is based on quoted market prices. Consequently, the
carrying value of the debt

<PAGE> 37

approximates fair value.

Old Credit Agreement

On March 13, 1996, the Company completed an Amended and Restated Credit
Agreement (Old Credit Agreement) resulting in an increase to the total credit
facilities from $100 million to $175 million and the commencement of principal
payments was deferred until December 31, 1996. Other terms of the Old Credit
Agreement remained substantially the same. On March 25, 1996, the Company
borrowed an additional $20 million under the Old Credit Agreement. The proceeds
were used to fund the acquisition of the assets of WPAT-AM in New York.

On January 10, 1996, the Company borrowed $1.5 million under its Old
Credit Agreement and issued a $1.5 million non-interest bearing promissory note
in connection with the acquisition of real property in Miami on which an AM
transmitting tower is located. During fiscal 1995, the Company borrowed
$36.5 million under the Old Credit Agreement. Proceeds of these borrowings were
used primarily for business acquisitions, capital expenditures and working
capital.

Other Non-current Obligations

In connection with radio program promotions, the Company has, from time
to time, awarded several $1,000,000 prizes. Such prizes are payable to program
prize winners in annual non-interest bearing installments generally ranging from
40 to 50 years. As of September 30, 1996 and 1995, the long-term portion of the
remaining unpaid balance totaled $1,532,214 and $1,579,133, respectively, net of
discount of $4,815,867 and $4,991,737, respectively, and is included in other
non-current obligations in the accompanying consolidated balance sheets. The
imputed interest rates used range from 10% to 12%.

Principal maturities of long-term debt and other non-current
obligations, net of imputed interest, during the next five years and thereafter
are as follows:

<TABLE>
<CAPTION>
OTHER
LONG-TERM NON-CURRENT
DEBT OBLIGATIONS TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
Year ending
September 30:
1997 $ 1,812,400 $ 46,901 $ 1,859,301
1998 135,316,892 42,498 135,359,390
1999 284,411 27,566 311,977
2000 278,536 30,837 309,373
2001 176,275 34,496 210,771
Thereafter 70,250 1,396,817 1,467,067
------------ ------------ ------------
$137,938,764 $ 1,579,115 $139,517,879
============ ============ ============
</TABLE>

6. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases real properties and equipment under operating leases
expiring on various dates through 2089. Future minimum payments due under
noncancelable operating leases that have initial or remaining terms in excess of
one year are as follows:

<PAGE> 38

<TABLE>
<S> <C>
Year ending September 30:
1997 $1,186,552
1998 1,183,537
1999 1,158,644
2000 849,549
2001 556,494
Thereafter 989,081
------------
$5,923,857
============
</TABLE>

Management expects that, in the normal course of business, leases that
expire will be renewed or replaced by leases on other properties. All real
property leases require the payment of property taxes, maintenance, insurance
and other incidental expenses. Rent expense for the years ended September 30,
1996, 1995 and 1994 was $1,655,506, $1,345,376 and $590,210, respectively.

Litigation

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 from effectuating the
Tender Offer. The plaintiff also alleges that Cecil Heftel and Carl Parmer,
former directors and executive officers of the Company, breached their fiduciary
duties to the stockholders of the Company by negotiating a settlement of amounts
which would be owed to them under their employment agreements upon a termination
thereof by the Company at the closing of the Tender Offer. The suit seeks the
rescission of the Tender Offer and/or the grant of rescissory damages. In
addition, plaintiff seeks unspecified compensatory damages and an award of
attorneys' fees and costs. The Company has tendered the claims subject to this
suit to its director and officer insurance carriers. The Tender Offer closed
without any action by plaintiffs. The Company has filed a motion to dismiss the
suit and has requested plaintiffs to dismiss the suit voluntary. No action has
been taken on such motion or such request. The Company's management believes the
disposition of this litigation will not have a materially adverse effect on the
Company's consolidated financial position or results of operations.

7. INCOME TAXES

The provision for income taxes for the years ended September 30, 1996,
1995 and 1994 consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ -- $100,000 $ 19,000
State 65,000 50,000 12,000
-------- -------- --------
65,000 150,000 31,000
Deferred:
Federal -- -- 69,000
-------- -------- --------
$ 65,000 $150,000 $100,000
======== ======== ========
</TABLE>

<PAGE> 39

Deferred income taxes reflect the net tax effects of temporary
differences between the financial reporting and tax bases of assets and
liabilities and available tax net operating loss carryforwards. Temporary
differences and carryforwards at September 30 which give rise to a significant
portion of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 7,934,000 $ 4,685,000
Deferred prizes payable 640,000 657,000
Allowance for doubtful accounts receivable 663,000 597,000
Depreciation 145,000 469,000
Other accrued liabilities 5,401,000 132,000
------------ ------------
Total deferred tax assets 14,783,000 6,540,000
Valuation allowance (14,579,000) (5,700,000)
------------ ------------
Net deferred tax assets 204,000 840,000

Deferred tax liabilities:
Equity in earnings of Joint Venture -- 810,000
Other 273,000 99,000
------------ ------------
Total deferred tax liabilities 273,000 909,000
------------ ------------
Net deferred tax asset (liability) $ (69,000) $ (69,000)
============ ============
</TABLE>

The increase in the valuation allowance of $8,879,000 from prior year
is primarily due to the increase in net operating loss carryforwards and
restructuring charges not currently deductible for tax purposes.

The reconciliation of income tax computed at the federal statutory tax
rate to the Company's effective tax rate for the years ended September 30, 1996,
1995 and 1994 is as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- ---------
<S> <C> <C> <C>
Federal income tax at
statutory rate $(15,918,000) $ 1,345,000 $ 192,000
Benefit of net operating
loss carryforwards -- (1,494,000) (281,000)
Net operating loss carryforward
not benefitted 7,201,000 -- --
State and local income
tax, net of federal tax benefit 42,000 33,000 8,000
Non-deductible and non-taxable
items, net 8,740,000 266,000 181,000
------------ ----------- ---------
$ 65,000 $ 150,000 $ 100,000
============ =========== =========
</TABLE>

As of September 30, 1996, the Company had tax net operating loss
carryforwards for federal and state tax purposes of approximately $21,949,000
and $3,389,000, respectively. The loss carryforwards expire through the year
2011 if not used.

8. STOCKHOLDERS' EQUITY

Common Stock

The Company is authorized to issue 30,000,000 and 7,000,000 shares of
Class A and Class B Common Stock, respectively, each with a par value of $.001
per share. The rights of these classes of common stock are identical except that
the Class A stock is entitled to one vote per share and the Class B stock is
entitled to ten votes per share on certain matters. As of September 30, 1996,
there were no Class B shares outstanding.

<PAGE> 40

On January 2, 1996 the Company issued 44,811 shares of common stock to
one of the parties to the acquisition of WLXX-AM in Chicago in accordance with
the terms of the purchase agreement.

Treasury Stock

In December 1993, the Company repurchased 810,587 shares of its Class B
Common Stock from certain stockholders for $4,019,735. In September 1996, the
810,587 shares held as treasury stock were retired.

Preferred Stock

The Company is authorized to issue 5,000,000 shares of $.001 par value
Preferred Stock, 2,600,000 of which is designated as Series A Preferred Stock
and the remaining 2,400,000 shares are undesignated.

Series A Preferred Stock dividends are payable quarterly and have a
cumulative annual rate of $.08 per share. As of September 30, 1996, there were
no issued or outstanding shares of Series A Preferred Stock. As of September 30,
1995, cumulative unpaid dividends totaled $20,138. The Series A Preferred Stock
is superior to common stock in liquidation in the amount of $1 per share plus
cumulative unpaid dividends and is redeemable at the option of the Company at $1
per share plus cumulative unpaid dividends.

During fiscal 1996, the Company's Board of Directors periodically
approved the payment of cumulative unpaid dividends on the outstanding Series A
Preferred Stock. The aggregate of such dividend payments totaled $40,276.

In August 1996, the Company redeemed all of the outstanding Series A
Preferred Stock and paid cumulative unpaid dividends through the redemption date
of $2,685.

In January 1995, the Company redeemed and retired 1,960,290 shares of
its outstanding Series A Preferred Stock owned by the Company's then current
Chairman and Co-Chief Executive Officer and certain of his children. The
redemption price was equal to $1 per share plus cumulative unpaid dividends
through the date of redemption of $2,861,278. The dividends paid included
$1,142,495 of cumulative dividends relating to Preferred Stock retired in June
1992 for which the payment of related cumulative dividends had been deferred
pursuant to an agreement between the Company and the holder of the retired
Preferred Stock.

In April 1995, the Company paid approximately $251,000 in cumulative
unpaid dividends on its outstanding Series A Preferred Stock held by the
daughter of the Company's then current Chairman and Co-Chief Executive Officer.

Second Amended and Restated Certificate of Incorporation

In September 1996, the Company's Board of Directors approved a Second
Amended and Restated Certificate of Incorporation (Second Amended Certificate),
which upon filing will increase the total number of authorized shares of the
Company to 105,000,000 shares consisting of three classes of capital stock as
follows; (i) 50,000,000 shares of Class A Common Stock, par value $.001 per
share; (ii) 50,000,000 shares of Class B Common Stock, par value $.001 per
share; and (iii) 5,000,000 shares of Preferred Stock, par value $.001 per share.
The rights of the Class A and Class B Common Stock will be identical except that
the Class B Common Stock shall have no voting rights, except in certain matters.
The Second Amended Certificate is expected to be filed immediately prior to the
consummation of the Tichenor Merger, which is expected to close during the first
quarter of calendar 1997.

<PAGE> 41

9. MANAGEMENT INCENTIVE STOCK OPTIONS

In January 1995, the Company granted options to purchase 160,000 shares
of common stock to an officer of the Company at an exercise price of $10.50 per
share. The officer subsequently exercised his option to purchase the 160,000
shares and delivered to the Company an 8.75% interest bearing promissory note
due June 2005 as payment for the stock. This note and related accrued interest
were paid in full on August 5, 1996.

Stock Option Plan

In July 1994, the Company adopted a stock option plan (Stock Option
Plan) 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, at 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, the exercise price, the number of shares and all other
terms of options granted. Generally, options granted under the Stock Option Plan
vest over a two or three year period. In August 1994 the Company granted options
to purchase 5,000 shares each of Class A Common Stock to two directors of the
Company and options to purchase 25,000 shares of Class A Common Stock to an
officer, all at an exercise price of $10.00 per share.

In December 1995, the Company issued an aggregate of 519,339 stock
options to various employees of the Company under its Stock Option Plan. The
exercise price ranged from $15.25 to $15.50 per share, the market price at the
date of issuance. The options vest over a period ranging from two to three
years.

On August 5, 1996, all unexercised and outstanding employee stock
options were tendered in connection with the Tender Offer Agreement described in
Note 2. Other fully vested options and warrants were exercised during the months
of June and July 1996. As of September 30, 1996, there were no outstanding
options or warrants.

Following is a summary of employee stock options and warrants granted,
exercised and outstanding for the three years ended September 30, 1996:

<TABLE>
<CAPTION>
NUMBER OPTION PRICE
OF SHARES PER SHARE
---------- --------------
<S> <C> <C>
Options outstanding at September 30, 1993 1,078,631 $ 1.05-$ 4.51
Granted 153,800 $ 4.51-$ 10.00
Exercised (188,925) $ 4.51
Cancelled -- --
---------- --------------
Options outstanding at September 30, 1994 1,043,506 $ 1.05-$ 10.00
Granted 237,100 $ 4.51-$ 14.00
Exercised (160,000) $ 10.50
Cancelled (198,000) $ 4.51
---------- --------------
Options outstanding at September 30, 1995 922,606 $ 1.05-$ 14.00
Granted 524,339 $15.25-$18.625
Exercised (1,441,945) $ 1.05-$18.625
Cancelled (5,000) $ 10.00
---------- --------------
Options outstanding at September 30, 1996 -- --
========== ==============
</TABLE>

<PAGE> 42

10. OTHER FINANCIAL INFORMATION

Accrued Expenses

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 1995
----------- -----------
<S> <C> <C>
Wages, salaries and benefits $ 1,861,745 $ 2,347,107
Commissions payable 3,057,275 2,237,857
Interest payable 756,348 664,399
Liabilities assumed in
business acquisitions -- 1,166,813
Restructuring charges 5,747,843 --
Other accrued operating expenses 2,000,680 1,298,668
----------- -----------
$13,423,891 $ 7,714,844
=========== ===========

Allowance for Doubtful Accounts Receivable

Balance at September 30, 1993 $ 930,654
Provision charged to expense 855,220
Amounts charged to reserve (1,275,471)
Other (arising from business
acquisitions) 431,883
-----------
Balance at September 30, 1994 942,286
Provision charged to expense 1,522,235
Amounts charged to reserve (972,644)
-----------
Balance at September 30, 1995 1,491,877
Provision charged to expense 2,871,700
Amounts charged to reserve (2,705,717)
-----------
Balance at September 30, 1996 $ 1,657,860
===========
</TABLE>

Supplemental Disclosures of Noncash Transactions

Noncash transactions for the year ended September 30 included the
following:

<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Issuance of common stock in connection
with business acquisition $ 692,330 $ -- $ --
Issuance of promissory note in connection
with the acquisition of real property 1,499,250 -- --
Reissuance of treasury stock in exchange
for note receivable -- -- 1,000,000
Repurchase of common stock in exchange
for note payable -- -- 1,332,000
Issuance of common stock upon exercise of
stock options in exchange for note receivable -- 1,680,000 852,052
---------- ---------- ----------
$2,191,580 $1,680,000 $3,184,052
========== ========== ==========
</TABLE>

In addition to the above, in fiscal 1994 the Company issued common
stock with a fair value of $12,283,000 and assumed long-term debt and other
liabilities totaling $33,437,000 in connection with certain business
acquisitions.

<PAGE> 43

In fiscal 1995, the Company cancelled a $900,000 note receivable and
assumed long-term debt and other liabilities totaling $3,521,000 in connection
with certain business acquisitions.

11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for
the years ended September 30, 1996 and 1995 (in thousands, except per share
data):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1995 1996 1996 1996
- --------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net revenues 17,457 15,696 19,900 18,679

Station operating expenses 11,818 10,948 13,069 13,061
Corporate expenses, depreciation
and amortization 1,798 2,589 2,874 2,951
--------- --------- --------- ---------
Operating Income 3,841 2,159 3,957 2,667

Income (loss) from continuing
operations 1,302 (308) (362) (37,250)

Net income (loss) 858 (971) (863) (45,630)

Income (loss) from continuing
operations per common and
common equivalent shares $ 0.12 $ (0.03) $ (0.04) $ (3.38)
========= ========= ========= =========

Net income (loss) per common
and common equivalent shares $ 0.08 $ (0.10) $ (0.09) $ (4.14)
========= ========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1994 1995 1995 1995
- --------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net revenues 16,806 13,208 16,630 17,516

Station operating expenses 10,902 9,795 10,300 12,644
Corporate expenses, depreciation
and amortization 1,867 2,393 2,015 1,792
--------- --------- --------- ---------
Operating Income 4,037 1,020 4,315 3,080

Income (loss) from continuing
operations 1,768 (423) 2,473 501

Net income (loss) 1,367 (849) 3,162 11

Income (loss) from continuing
operations per common and
common equivalent shares $ 0.16 $ (0.04) $ 0.22 $ 0.05
========= ========= ========= =========

Net income (loss) per common
and common equivalent shares $ 0.13 $ (0.08) $ 0.29 $ 0.00
========= ========= ========= =========
</TABLE>

<PAGE> 44

12. SUBSEQUENT EVENTS

Secondary Public Stock Offering

On October 18, 1996, the Company filed a Registration Statement on Form
S-3 with the Securities and Exchange Commission to register the sale of
4,025,000 shares of Class A Common Stock to be offered in a secondary public
offering. The proceeds from this stock offering will be used to repay
outstanding debt under the Company's credit agreement. The registration
statement has not yet been declared effective by the Securities and Exchange
Commission.

<PAGE> 45

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

The current directors and executive officers of the Company are as
follows:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
L. Lowry Mays................ 61 President, Chief Executive
Officer and Director
John T. Kendrick............. 44 Senior Vice President and
Chief Financial Officer
Ernesto Cruz................. 42 Director
B.J. McCombs................. 68 Director
James M. Raines.............. 56 Director
John H. Williams............. 62 Director
</TABLE>

All directors hold office until the annual meeting of stockholders next
following their election, or until their successors are elected and qualified.
Except for Mr. John Kendrick, officers are elected annually by the Board of
Directors and serve at the discretion of the Board. (See "Item 11- Employment
Agreements").

Information with respect to the business experience and affiliations of
the current directors and executive officers of the Company is set forth below.

Mr. Mays became President, Chief Executive Officer and director of the
Company on August 5, 1996. Mr. Mays is also President, Chief Executive Officer
and director of Clear Channel and has served as such since 1972.

Mr. Kendrick joined the Company as Vice President, Finance in September
1993. In December 1993, he was promoted to Senior Vice President and Chief
Financial Officer. From October 1992 through September 1993, Mr. Kendrick
provided financial consulting to the entertainment and computer software
industries. From June 1988 through October 1992, Mr. Kendrick served as Senior
Vice President and Chief Financial Officer of Skouras Pictures, Inc.

Mr. Cruz became a director of the Company on August 5, 1996. Mr. Cruz
has been a Managing Director of Credit Suisse First Boston Corp. for more than
five years.

Mr. McCombs became a director of the Company on August 5, 1996. Mr.
McCombs also serves as a director of Clear Channel. Mr. McCombs is and has been
a private investor for more than five years.

<PAGE> 46
Mr. Raines became a director of the Company on August 5, 1996. Mr.
Raines has been the President of James M. Raines & Company and has served in
such a position for more than five years. Mr. Raines also serves as a director
of 50-OFF Stores, Inc.

Mr. Williams became a director of the Company on August 5, 1996. Mr.
Williams also serves as a director of Clear Channel and of GAINSCO, Inc. Mr.
Williams is Senior Vice President of Everen Securities, Inc., and has served in
such a position for more than five years.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16 of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file various reports
with the Securities and Exchange Commission concerning their holdings of, and
transactions in, securities of the Company. Copies of these filings must be
furnished to the Company.

Based on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company notes Messrs. Lowry Mays, Ernesto Cruz, B.J. McCombs, James M.
Raines and John H. Williams failed to file a Form 3 on a timely basis after they
were elected to the Company's Board of Directors.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the compensation
of the Chief Executive Officer, the former Co-Chief Executive Officers and the
other most highly compensated executive officers of the Company for the fiscal
years ended September 30, 1996, 1995 and 1994:

46
<PAGE> 47

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------- -------------
Securities Under- All Other
Name and Principal Position Salary Bonus ying Option Compensation
--------------------------- ------- ----- ---------------- ------------
<S> <C> <C> <C> <C> <C>
L. Lowry Mays, President and Chief Executive
Officer .................................... 1996 $ -- $ -- $ -- $ --

Cecil Heftel, former Chairman of the Board
and Co-Chief Executive Officer ............. 1996 $428,205 $806,808 271,075 $ --(1)
1995 $500,000 $170,002 -- $ --
1994 $416,667(2) -- $ --

H. Carl Parmer, former President and
Co-Chief Executive Officer ................. 1996 $485,897 $471,224 48,264 $420,819(1)(3)
1995 $500,000 $467,897 160,000 $ --
1994 $452,985(2) $300,000 -- $ --
John T. Kendrick, Senior Vice
President and Chief Financial
Officer .................................... 1996 $183,194 $ 42,500 30,000 $ --
1995 $160,615(4) $ 14,754 -- $ --
1994 $128,846 $ 25,000 -- $ --
</TABLE>

- --------------------

(1) Does not include payments made to Messrs. Heftel and Parmer under the
Settlement Agreements relating to the termination of their employment
or the agreements not to compete entered into in connection with the
completion of the Tender Offer. See "Item 1: Business - Recent
Developments - Clear Channel Tender Offer."

(2) Does not include amounts received by Messrs. Heftel and Parmer from
Heftel Management Group, of which they were the sole beneficial owners
during the applicable period, which received fees of $133,400 for
management services rendered during the period from October 1, 1993
until December 1, 1993. Effective December 1, 1993, the Management
Agreement was terminated and the Company entered into employment
agreements with Messrs. Heftel and Parmer.

(3) Includes bonuses paid of $384,849 to reimburse Mr. Parmer for interest
paid to the Company under loans made by the Company to Mr. Parmer to
pay the exercise price of certain warrants, the exercise of which was
made at the request and for the benefit of the Company.

(4) On August 1, 1995, the Company entered into an Employment Agreement
with Mr. Kendrick.

WARRANTS AND OPTIONS

The following sets forth information concerning the grants of stock
options to the executive officers named in the "Summary Compensation Table"
under the Company's Stock Option Plan. The vesting of all of these options was
accelerated to the date of the closing of the Tender Offer. All of these options
were exercised on such closing date and the shares acquired upon exercise were
sold to Clear Channel in the Tender Offer.

<PAGE> 48

Option Grants In Last Fiscal Year

<TABLE>
<CAPTION>
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of Stock
Shares Granted to Price Appreciation for
Underlying Employees Exercise Option Term
Option in Fiscal Price Expiration ----------------------
Name Granted Year ($/Sh) Date 5% 10%
---- ------- ---- ---------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Cecil Heftel 271,075 53% $15.25 12/14/05 $2,599,784 $6,588,362

H. Carl Parmer 48,264 9% $15.25 12/14/05 $ 462,883 $1,173,036
John T. Kendrick 30,000 6% $15.25 12/14/05 $ 287,719 $ 729,137
</TABLE>

The following table provides certain information concerning exercises
of warrants and options in the last fiscal year, and unexercised options and
warrants held as of September 30, 1996, by the executive officers named in the
Summary Compensation Table:

Aggregate Option and Warrant Exercises In Last
Fiscal Year and Fiscal Year End Values

<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options and Warrants In-the-Money Options and
at September 30, 1996 Warrants at September 30, 1996
Shares Acquired Value ---------------------------- ------------------------------
Name Upon Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Lowry Mays --- --- --- --- --- ---
Cecil Heftel 806,678 $11,454,828 --- --- --- ---

Cecil Heftel 271,075 2,100,831 --- --- --- ---

H. Carl Parmer 48,264 374,046 --- --- --- ---

John T. Kendrick 16,667 216,671 --- --- --- ---

John T. Kendrick 8,333 133,328 --- --- --- ---

John T. Kendrick 5,000 50,000 --- --- --- ---

John T. Kendrick 25,000 193,750 --- --- --- ---
</TABLE>

EMPLOYMENT AGREEMENTS

The Company had ten-year Employment Agreements with each of Messrs.
Cecil Heftel and Carl Parmer which were terminated in connection with the
closing of the Tender Offer. See "Item 1. Business - Recent Developments - Clear
Channel Tender Offer."

<PAGE> 49

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 $190,000 (subject to increases in the third year and
each year thereafter) plus bonuses determined by the Company subject to a
minimum bonus of $45,000 for the second year (the minimum bonus is increased in
the third year and each year thereafter). The Company may terminate the
Employment Agreement upon the occurrence of any of the following events: (i)
fraud, negligence, wilful misconduct or embezzlement, (ii) Mr. Kendrick is
indicted or convicted of a crime constituting a felony, (iii) any act or
omission by Mr. Kendrick which causes a material adverse effect on the Company's
business or jeopardizes any FCC license for any of the Company's radio stations,
(iv) Mr. Kendrick fails to perform his duties within 15 business days after
notice, (v) unlawful drug use, (vi) receipt of payments or gifts in excess of
$250 from advertisers for Mr. Kendrick's own benefit, or (vii) commission of a
crime of moral turpitude. 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 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. The Tender Offer was
deemed a change of control, and therefore the term of the Employment Agreement
has been automatically extended to August 4, 1999.

DIRECTOR COMPENSATION

Each member of the Board of Directors who is not an employee of the
Company receives a fee of $2,500 for each board or committee meeting attended.
The Company also reimburses directors for expenses related to attending board or
committee meetings.

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

During the fiscal year ended September 30, 1996, Messrs. Jeffrey
Amling, Madison Graves and John Mason, former directors of the Company, and
Messrs. L. Lowry Mays, James H. Raines, and Ernesto Cruz, current directors of
the Company, served on the Compensation Committee.

During the year ended September 30, 1996, the Company obtained legal
services from the law firm of Jeffer, Mangels, Butler & Marmaro LLP. Mr. John
Mason is of-counsel to this law firm.

L. Lowry Mays is an executive officer and director of the Company and
is also a stockholder, director, and member of the compensation committee of
Clear Channel.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

STOCK OWNERSHIP

The following table sets forth certain information regarding ownership
of the Company's Class A Common Stock as of December 5, 1996, by each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Class A Common Stock:

<PAGE> 50

<TABLE>
<CAPTION>
Name and Address Number Percent of Class
---------------- ------------- -----------------
<S> <C> <C>
Clear Channel Communications, Inc. 7,297,821 (1) 63.2%
200 Concord Plaza, Suite 600
San Antonio, Texas 78216

Ronald Baron 987,000 (2) 14.5%
767 Fifth Avenue, 24th Floor
New York, New York 10153
</TABLE>

--------------------

(1) Includes shares held by Clear Channel Radio, Inc., a wholly-owned
subsidiary of Clear Channel Communications, Inc.

(2) Includes 20,000 shares owned by Baron Investment Partners, L.P., of
which Mr. Baron is the general partner, 870,000 shares owned by Baron
Asset Fund and Baron Growth & Income Fund (collectively the "Funds"),
which are registered investment companies advised by BAMCO, Inc., and
97,000 shares owned by Baron Capital Management, Inc. ("BCMI"). Mr.
Baron controls BAMCO, Inc. and BCMI. Mr. Baron disclaims beneficial
ownership of the shares owned by the Funds and BCMI.

No directors or executive officers of the Company own any shares of
Class A Common Stock. No shares of the Company's Class B Common Stock are
outstanding.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Tower Company, Inc. ("TTC"), a wholly subsidiary of the Company,
previously loaned $293,303 to Mr. Christopher Heftel, the son of Mr. Cecil
Heftel, the former Co-Chief Executive Officer and Chairman of the Board of the
Company. This loan accrued interest at 7% per annum, with principal and interest
due on demand. All amounts owed were repaid on August 5, 1996.

TTC previously loaned $100,000 to Mr. Cecil Heftel. This loan accrued
interest at 7% per annum, with principal and interest due on demand. All amounts
owed were repaid on August 5, 1996.

On February 11, 1992, the predecessor-in-interest to the Company
granted to Mr. Carl Parmer, the former Co-Chief Executive Officer and President
of the Company, 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 accrued
interest at a rate of 7.67% per annum and was due on August 3, 2004. All amounts
owed were repaid on August 5, 1996.

On June 3, 1993, Messrs. Carl Parmer and Richard Heftel, a former
director of the Company and the current general manager of the Company's Los
Angeles stations, 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 accrued interest at a rate of 4.5% per annum. Interest
and principal were due on June 2, 2002. On October 8, 1993, Mr. Carl Parmer
borrowed $1 million from the Company and used the proceeds to

50
<PAGE> 51

purchase 226,695 shares of Class B Common Stock. This loan accrued interest at
4.5% per annum. Interest and principal were due on October 8, 2003. All amounts
owed were repaid on August 5, 1996.

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 was 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. On August 5, 1996, the Company repaid this
obligation in full.

During the year ended September 30, 1996, the Company advanced funds to
Heftel Management Group, of which Mr. Cecil Heftel is the sole beneficial owner.
These advances did not bear interest. On August 5, 1996, all of such advances
were repaid.

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 accrued interest at 8.75% per annum. All
amounts owed were repaid on August 5, 1996.

On January 10, 1996, pursuant to an Agreement of Purchase and Sale,
dated September 7, 1995, between the Company and Mambisa Broadcasting
Corporation ("Mambisa"), the Company 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.
Amancio Victor Suarez and Charles Fernandez, former directors of the Company,
own part of Mambisa.

On December 3, 1995, the Company, Marcos A. Rodriguez, Jr.
("Rodriguez") and Hispanic Coalition, Inc. ("HCI") entered into certain
agreements relating to HCI and a new FM radio station in Haltom City, Texas (for
which HCI was seeking a construction permit from the FCC) (the "Haltom Station")
(the "Haltom City Agreements"). As a result of disputes relating to the Haltom
City Agreements, Rodriguez and the Company entered into a Settlement Agreement
pursuant to which the Company released all claims and rights it may have to
acquire the construction permit for the Haltom Station, including all rights
under the Haltom City Agreements. Mr. Cecil Heftel and the Company entered into
an agreement under which Mr. Heftel agreed to indemnify the Company against any
losses arising out of the Haltom City Agreements. The Company has sent written
demand to Mr. Heftel for indemnification of $1,383,187.

In connection with the Tender Offer, each of Messrs. Cecil Heftel and
Carl Parmer entered into agreements not to compete and a Settlement Agreement
relating to the termination of their employment. Approximately $25.8 million was
paid to Messrs. Heftel and Parmer under these agreements (see "Item 1. Business
- - Recent Developments - Clear Channel Tender Offer").

<PAGE> 52

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) List of Financial Statements

The consolidated financial statements are filed as Item 8 of Part II of
this Form 10-K.

(a) (2) List of Financial Statement Schedules

Information required by Schedule VIII - Valuation and Qualifying
Accounts is included in Note 10 of the consolidated financial
statements filed as Item 8 of Part II of this Form 10-K.

All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and
therefore have been omitted.

(a) (3) List of Exhibits

The exhibits listed in the accompanying Index to Exhibits are filed as
part of this Form 10-K.

(b) Reports on Form 8-K

The Company filed a report on Form 8-K dated August 19, 1996, relating
to the Company entering into a $155 million credit facility with
Nations Bank of Texas, N.A. and other lenders. This matter is described
under the Caption "Recent Developments" in Item 1 of Part I of this
Form 10-K.

The Company filed a report on Form 8-K dated September 23, 1996, as
amended October 15, 1996, relating to the discontinuance of the
operations of the radio network owned by the Company's wholly owned
subsidiary, Spanish Coast-to- Coast Ltd., dba Cadena Radio Centro,
effective August 5, 1996. This matter is described under the Caption
"Recent Developments" in Item 1 of Part I of this Form 10-K.

<PAGE> 53
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 20 day of
December, 1996.

HEFTEL BROADCASTING CORPORATION

By: /s/ L. Lowry Mays
--------------------------------
L. Lowry Mays, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/ L. Lowry Mays President, Chief December 20, 1996
- -------------------------------- Executive Officer
L. Lowry Mays and Director

/s/ John T. Kendrick Senior Vice President, December 20, 1996
- -------------------------------- Chief Financial Officer
John T. Kendrick and Assistant Secretary
(principal accounting
officer)

/s/ Ernesto Cruz Director December 20, 1996
- --------------------------------
Ernesto Cruz

/s/ B.J. McCombs Director December 20, 1996
- --------------------------------
B.J. McCombs

/s/ James M. Raines Director December 20, 1996
- --------------------------------
James M. Raines

/s/ John H. Williams Director December 20, 1996
- --------------------------------
John H. Williams

<PAGE> 54

Index to Exhibits

<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
------- ------------------ -------------
<S> <C>
2.1.1 Amended and Restated Agreement and Plan of Reorganization,
dated September 7, 1995, among Registrant, Viva Acquisition
Corporation, Mambisa Broadcasting Corporation
("Mambisa"), SFS Management Corporation, Amancio
Victor Suarez, Charles Fernandez and Amancio Jorge Suarez, Jr.,
(such three individuals are referred to herein collectively as
the ("Stockholders") (the "Purchase Agreement") (Schedules
omitted) (incorporated by reference to Exhibit 1.1.1 to
Registrant's Form 8-K filed on September 22, 1995)

2.1.2 Escrow Agreement, dated September 7, 1995, among the
Registrant, Mambisa, the Stockholders and Citibank,
N.A.(incorporated by reference to Exhibit 1.1.2 to
Registrant's Form 8-K filed on September 22, 1995)

2.1.3 Mutual Release, dated September 7, 1995, among the parties to
the Purchase Agreement and other parties (incorporated by
reference to Exhibit 1.1.3 to Registrant's Form 8-K filed on
September 22, 1995)

2.1.4 Agreement of Purchase and Sale, dated September 7, 1995, among the
Registrant, Mambisa, Amancio Victor Suarez and Amancio Jorge
Suarez, Jr. (incorporated by reference to Exhibit 1.1.4 to Registrant's
Form 8-K filed on September 22, 1995)

2.1.5 Promissory Note dated January 9, 1996, executed by Registrant and HBC
Florida, Inc. to the order of Mambisa Broadcasting Corporation

2.2.1 Tender Offer Agreement, dated June 1, 1996, between the Company and
Clear Channel Radio, Inc. ("Clear Channel") (incorporated herein by
reference to Exhibit 99(c)(1) of Clear Channel's Schedule 14D-1 filed
on June 7, 1996)

2.2.2 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)

2.2.3 Amendment No. 2 to Tender Offer Agreement, dated June 20, 1996
(incorporated by reference to Exhibit (c)(3) of the Company's
Schedule 14D-9 dated June 20, 1996)

2.2.4 Amendment No. 3 to Tender Offer Agreement, dated July 2, 1996
</TABLE>

<PAGE> 55

<TABLE>
<CAPTION>
<S> <C>
(incorporated by reference to Exhibit 99(c)(15) of Amendment No. 2 to
the Schedule 14D-1 of Clear Channel filed on July 9, 1996)

2.3 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)

2.4.1 Asset Purchase Agreement, dated November 1, 1995, between
HBC New York, Inc. and Park Radio of Greater New York, Inc.
(incorporated by reference to Exhibit 2.2 of Registrant's Form
10-K filed on December 29, 1995)

2.4.2 First Amendment to Asset Purchase Agreement, dated
March 25, 1996 between HBC New York, Inc. and Park Radio of
Greater New York, Inc. (incorporated by reference to Exhibit 1.1.2 of
Registrant's Form 8-K filed on March 28, 1996)

2.5.1 Agreement and Plan of Merger, dated July 9, 1996, between Clear
Channel Communications, Inc. and Tichenor Media System, Inc.
with Exhibits (Schedules omitted) (incorporated by reference to
Exhibit 99(c)(16) of Amendment No. 2 to Schedule 14D-1 of Clear
Channel Communications, Inc., filed on July 9, 1996)

2.5.2 Stock Purchase Agreement dated as of July 9, 1996, by and among
Clear Channel Communications, Inc., and McHenry T. Tichenor, Sr.
(incorporated by reference to Exhibit 99(c)(17) of Amendment No. 2
to Schedule 14D-1 of Clear Channel Communications, Inc., filed
on July 9, 1996)

2.5.3 Stock Purchase Agreement dated as of July 9, 1996, by and among
Clear Channel Communications, Inc., and McHenry T. Tichenor, Jr.
(incorporated by reference to Exhibit 99(c)(18) of Amendment No. 2
to Schedule 14D-1 of Clear Channel Communications, Inc., filed
on July 9, 1996)

2.5.4 Stock Purchase Agreement dated as of July 9, 1996, by and
among Clear Channel Communications, Inc., and Warren Tichenor
(incorporated by reference to Exhibit 99(c)(19) of Amendment No. 2
to Schedule 14D-1 of Clear Channel Communications, Inc., filed
on July 9, 1996)

2.5.5 Stock Purchase Agreement dated as of July 9, 1996, by and among
Clear Channel Communications, Inc., and William Tichenor
(incorporated by reference to Exhibit 99(c)(20) of Amendment No. 2
</TABLE>

<PAGE> 56

<TABLE>
<CAPTION>
<S> <C>
to Schedule 14D-1 of Clear Channel Communications, Inc., filed
on July 9, 1996)

2.5.6 Stock Purchase Agreement dated as of July 9, 1996, by and
among Clear Channel Communications, Inc., and Jean Russell
(incorporated by reference to Exhibit 99(c)(21) of Amendment
No. 2 to Schedule 14D-1 of Clear Channel Communications, Inc.,
filed on July 9, 1996)

2.5.7 Amended and Restated Agreement and Plan of Merger, dated
October 10, 1996, between Clear Channel Communications, Inc.
and Tichenor Media System, Inc. without Exhibits (Schedules omitted)

2.5.8 Assignment Agreement, dated October 10, 1996 by Registrant and
Heftel Merger Sub, Inc.

2.5.9 Form of Registration Rights Agreement by and among the
Registrant, McHenry T. Tichenor, Sr., McHenry T. Tichenor, Jr.,
Warren W. Tichenor, William E. Tichenor, Jean T. Russell,
McHenry T. Tichenor, Jr., as Custodian for David T. Tichenor,
Alta Subordinated Debt Partners III, L.P., Prime II Management, LP,
PrimeComm, LP, Ricardo A. del Castillo, Jeffrey T. Hinson and
David D. Lykes (included in Exhibit 2.5.1)

2.5.10 Form of Employment Agreement by and between the Registrant and
McHenry T. Tichenor, Jr. (included in Exhibit 2.5.1)

2.5.11 Form of Stockholders Agreement by and among the Registrant and
each of the stockholders listed on the signature pages thereto (included
in Exhibit 2.5.1)

2.5.12 Form of the Registrant's Indemnification Agreement (included
in Exhibit 2.5.1)

2.5.13 Form of Registration Rights Agreement by and among the Registrant
and Clear Channel Communications, Inc. (included in Exhibit 2.5.1)

3.1 Restated Certificate of Incorporation of the Registrant (1)
</TABLE>

<PAGE> 57

<TABLE>
<CAPTION>
<S> <C>
3.2 Amended and Restated Bylaws of the Registrant (1)

4.1 Specimen certificate for the Class A Common Stock (1)

4.2 Article 4 of the Restated Certificate of Incorporation (included in
Exhibit 3.1)

4.3 Credit Agreement, dated August 5, 1996, among the Registrant,
Nations Bank of Texas, N.A. and the other lenders signatory
thereto (incorporated by reference to Exhibit 1.0 of Registrant's
Form 8-K filed on August 20, 1996)

4.4 Form of Second Amended and Restated Certificate of Incorporation of
the Registrant (included in Exhibit 2.5.7)

4.5 Loan Agreement, dated July 9, 1996, between Clear Channel
Communications, Inc., as the lender, and TMS Assets California, Inc.,
as the borrower (2)

4.6 Guarantee, dated July 9, 1996, by Tichenor Media System, Inc., in favor
of Clear Channel Communications, Inc. (2)

10.1 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)

10.2 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)

10.3 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)

10.4 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)

10.5 Stock Option Plan (incorporated by reference to Exhibit 10.4 of Registrant's
Registration Statement on Form S-1 (Registration No. 33-78370)
filed on April 29, 1994, as amended ("Registrant's S-1"))

10.6 Lease dated April 26, 1994, between the Registrant and Tropicana
Trail Limited Partnership (incorporated by reference to Exhibit 10.14
of Registrant's S-1)
</TABLE>

<PAGE> 58

<TABLE>
<CAPTION>
<S> <C>
10.7 Lease dated May 15, 1987, between the Registrant and Hollywood
and Vine Development Co. (incorporated by reference to Exhibit
10.15 of Registrant's S-1)

10.8 Tower Lease Agreement, dated April 13, 1990, between the Registrant
and KTNQ/KLVE, Inc. (formerly Heftel Broadcasting of California, Inc.),
together with the Assignment and Assumption Agreement dated
April 13, 1990 between the Registrant and The Tower Company
(incorporated by reference to Exhibit 10.16 of Registrant's S-1)

10.9 Lease Agreement dated June 18, 1991 between Newcrow XI and
KTNQ/KLVE, Inc. (incorporated by reference to Exhibit 10.17 of
Registrant's S-1)

10.10 Reciprocal Easement Agreement, dated June 18, 1991, between
Newcrow XI and KTNQ/KLVE, Inc. (incorporated by reference
to Exhibit 10.18 of Registrant's S-1)

10.11 Form of Indemnification Agreement (incorporated by reference to
Exhibit 10.22 of Registrant's S-1)

10.12 Employment Agreement between KTNQ/KLVE, Inc. and Richard
Heftel (incorporated by reference to Exhibit 10.23 of Registrant's S-1)

10.13 Amendment No. 1 to Employment Agreement dated May 31, 1996,
between KTNQ/KLVE, Inc. and Richard Heftel (incorporated by
reference to Exhibit 10.5 of Registrant's Form 10-Q/A filed on
November 6, 1996)

10.14 Lease Agreement, dated July 17, 1995, between the Registrant and
485 Madison Associates, a New York Limited Partnership
(incorporated by reference to Exhibit 10.20 of Registrant's Form 10-K
filed on December 29, 1995)

10.15 Employment Agreement dated August 1, 1995 between the Registrant and
John T. Kendrick.

11 Statement regarding Computations of Per Share Earnings

21 Subsidiaries of the Registrant

23 Consent of Ernst & Young LLP

23.1 Consent of Ernst & Young LLP
</TABLE>

- -----------------------------------------------------

Registrant agrees to furnish supplementally a copy of any omitted schedules to
the Commission upon request.

(1) Incorporated by reference to the identically numbered Exhibit to the
Company's Registration Statement on Form S-1, as amended (Reg. No.
33-78370)

(2) Not a current obligation of the Registrant. Will remain an obligation
of a subsidiary of the Registrant upon consummation of the Tichenor
Merger.

<PAGE> 1
EXHIBIT 2.1.5

PROMISSORY NOTE

$1,499,250.00 Miami, Florida
January 9, 1996

FOR VALUE RECEIVED the undersigned, HBC FLORIDA, INC., a
Delaware corporation ("HBC") and HEFTEL BROADCASTING CORPORATION, a Delaware
corporation ("Heftel") (HBC and Heftel are hereinafter collectively referred to
as "Maker") jointly and severally promise to pay to the order of MAMBISA
BROADCASTING CORPORATION, a Florida corporation, or its successors or assigns
(hereinafter referred to as the "Payee"), at 1790 Coral Way, Suite 200, Miami,
Florida 33145 or such other place as the holder hereof may from time to time
designate in writing, the principal sum of ONE MILLION FOUR HUNDRED NINETY NINE
THOUSAND TWO HUNDRED FIFTY and No/100 ($1,499,250.00) Dollars bearing no
interest (except in the event of maturity or default). The aforesaid principal
sum and interest, if applicable, shall be paid in lawful money of the United
States of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment. Upon the Maturity Date (as
hereinafter defined) such principal shall be due and payable in full.

This Note is prepayable in whole or in part at any time
without penalty or premium.

For purposes hereof, the "Maturity Date" shall be the date
upon the earlier to occur of either: (i) the closing of the "Resale" of the
Mortgaged Property (as defined below) in accordance with the terms and
definitions contained in that certain Agreement of Purchase and Sale between
HBC, as successor to Heftel, and Payee dated September 7, 1995, as amended (the
"Agreement"), or (ii) the expiration of all rights to effectuate a "Subdivision"
pursuant to Section 18 of the Agreement.

It is agreed that if any payment of principal or interest or
any installment thereof, not be made within five (5) days following the date
that same is due as above provided; or if a default occurs under paragraph 12 of
the Mortgage (as hereinafter defined) which default remains uncured for a period
of fifteen (15) days following receipt by Maker of written notice thereof from
Payee; then, in any or all such events, the entire amount of principal of this
Note with all interest then accrued, shall, at the option of Payee and without
further notice (the Maker expressly waives notice of such default), become and
be due and collectible, time being of the essence of this Note. If this Note
shall not be paid at maturity or according to the tenor thereof and strictly as
above provided, it may be placed in the hands of an attorney at law for
collection, and in that event,

1
<PAGE> 2
each party liable for the payment hereof, as Maker, endorser, guarantor, or
otherwise, hereby agrees to pay Payee in addition to the sums above stated, a
reasonable sum as an attorney's fee, which shall include attorney's fees at
trial level and on appeal, together with all reasonable costs incurred in
connection therewith, whether suit be brought or not. After maturity and during
a period of default, this Note shall bear interest at a rate equal to the lesser
of: (i) fifteen (15%) percent per annum, or (ii) the highest rate permitted
under then applicable law.

Nothing herein contained, nor in any instrument or transaction
related hereto, shall be construed or so operate as to require the Maker, or any
person liable for the payment of the loan made pursuant to this Note, to pay
interest in an amount or at a rate greater than the highest rate permissible
under applicable law. Should any interest or other charges paid by the Maker, or
any parties liable for the payment of the loan made pursuant to this Note,
result in the computation or earning of interest in excess of the highest rate
permissible under applicable law, then any and all such excess shall be and the
same is hereby waived by Payee, and all such excess shall be automatically
credited against and in reduction of the principal balance, and any portion of
said excess which exceeds the principal balance shall be paid by Payee to the
Maker and any parties liable for the payment of the loan made pursuant to this
Note, it being the intent of the parties hereto that under no circumstances
shall the Maker, or any parties liable for the payment of the loan hereunder, be
required to pay interest in excess of the highest rate permissible under
applicable law.

This Note is secured by a Purchase Money Mortgage and Security
Agreement (the "Mortgage") of even date herewith from HBC in favor of Payee
encumbering and conveying real estate and property (the "Mortgaged Property")
therein described and duly recorded among the Public Records of Broward County,
Florida, the terms and provisions of which are incorporated herein by this
reference.

As to this Note and the Mortgage and any other instruments
securing the indebtedness evidenced under the Note and/or Mortgage, the Maker,
endorsers and guarantors severally waive all applicable exemption rights,
whether under the State Constitution, Homestead laws or otherwise, and also
severally waive presentment, protest and demand, notice of protest, demand and
any other notice of any kind, dishonor and nonpayment of this Note, and
expressly agree that the Maturity Date of this Note, or any payment hereunder,
may be extended from time to time without in any way affecting the liability of
the Maker, endorsers or guarantors.

2
<PAGE> 3
Maker agrees to pay all filing fees and similar charges and
all costs incurred by Payee in collecting or securing or attempting to collect
or secure this Note, including attorney's fees, whether or not involving
litigation and/or appellate, administrative or bankruptcy proceedings.

In any action or proceeding brought in connection with this
Note, Maker hereby: (a) waives demand, presentment, protest, notice of dishonor,
suit against or joinder of any other person, and all other requirements
necessary to charge or hold Maker liable with respect to the Loan; (b) waives
any right to immunity from any such action or proceeding; and waives any
immunity or exemption of any property, wherever located, from garnishment, levy,
execution, seizure or attachment prior to or in execution of judgment, or sale
under execution or other process for the collection of debts; (c) waives any
right to interpose any set-off or non-compulsory counterclaim or to plead laches
or any statute of limitations as a defense in any such action or proceeding; (d)
submits to the jurisdiction of the state and federal courts in the State of
Florida for purposes of any such action or proceeding; (e) agrees that the venue
of any such action or proceeding may be laid in Dade County, Florida and waives
any claim that the same is an inconvenient forum; and (f) stipulates that
service of process in any such action or proceeding shall be properly made if
mailed by any form of registered or certified mail (airmail if international),
postage prepaid, to the address then registered in the holder's records for
Payee, and that any process so served shall be effective ten (10) days after
mailing. No provision of this Note shall limit Payee's right to serve legal
process in any other manner permitted by law or to bring any such action or
proceeding in any other competent jurisdiction.

The sums due under this Note shall not be subject to offset,
deduction, or claims in the nature thereof which any maker, endorser or
guarantor hereof may have against the holder hereof, other than the claims
arising out of the sale of the Mortgaged Property pursuant to the Agreement or
any other claims under or pursuant to the Agreement.

3
<PAGE> 4
This Note is to be construed according to the applicable laws
of the State of Florida.

HEFTEL BROADCASTING CORPORATION, a
Delaware corporation

By:/s/ John Kendrick
--------------------------------
Name:John Kendrick
-------------------------------
Title:SVP CFO
-----------------------------
[CORPORATE SEAL]

HBC FLORIDA, INC., a Delaware
corporation

By:/s/ John Kendrick
--------------------------------
Name:John Kendrick
-------------------------------
Title:SVP CFO
-----------------------------
[CORPORATE SEAL]

<PAGE> 1
AMENDED AND RESTATED

AGREEMENT

AND

PLAN OF MERGER

BETWEEN

CLEAR CHANNEL COMMUNICATIONS, INC. ("PARENT")

AND

TICHENOR MEDIA SYSTEM, INC. ("TICHENOR")

OCTOBER 10, 1996

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS.......................................................................... 2
1.1 Defined Terms............................................................... 2
1.2 References and Titles....................................................... 11

ARTICLE 2 THE MERGER........................................................................... 11
2.1 The Merger. ......................................................................... 11
2.2 Effect of the Merger................................................................. 11
2.3 Governing Instruments, Directors and Officers of the Surviving
Corporation ......................................................................... 11
2.4 Effect on Securities................................................................. 12
2.5 Exchange of Certificates............................................................. 15
2.6 Closing.............................................................................. 19
2.7 Effective Time of the Merger......................................................... 19
2.8 Taking of Necessary Action; Further Action........................................... 20

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TICHENOR........................................... 20
3.1 Organization......................................................................... 20
3.2 Authority and Enforceability......................................................... 20
3.3 Consents and Approvals............................................................... 20
3.4 FCC Matters.......................................................................... 21
3.5 Financial Statements................................................................. 22
3.6 Capital Structure.................................................................... 22
3.7 Absence of Certain Changes or Events................................................. 23
3.8 Litigation. ......................................................................... 25
3.9 Environmental Matters................................................................ 25
3.10 Brokers.............................................................................. 26
3.11 Vote Required........................................................................ 26

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT,
HEFTEL AND HEFTEL SUB................................................................ 27
4.1 Representations and Warranties of Parent............................................. 27
4.2 Representations and Warranties of Heftel and Heftel Sub.............................. 28

ARTICLE 5 COVENANTS............................................................................ 30
5.1 Conduct by Parent Pending Closing.................................................... 30
5.2 Conduct of Business by Tichenor Pending Closing...................................... 31
5.3 Conduct of Business by Heftel Pending Closing........................................ 33
5.4 Access to Assets, Personnel and Information.......................................... 36
5.5 No Solicitation...................................................................... 38
5.6 Heftel Stockholders Meeting.......................................................... 38
5.7 Tichenor Shareholders Meeting........................................................ 39
5.8 Registration Statement and Proxy Statement/Prospectus................................ 39
5.9 Stock Exchange Listing............................................................... 41
5.10 Additional Arrangements.............................................................. 41
5.11 Agreements of Affiliates............................................................. 41
5.12 Public Announcements................................................................. 41
5.13 Notification of Certain Matters...................................................... 42
5.14 Payment of Expenses.................................................................. 42
</TABLE>

<PAGE> 3
<TABLE>
<S> <C> <C>
5.15 Registration Rights Agreement........................................................ 42
5.16 Employment Agreement................................................................. 42
5.17 Stockholders Agreement............................................................... 42
5.18 Indemnity Agreement.................................................................. 42
5.19 Insurance; Indemnification........................................................... 43
5.20 Parent Registration Rights Agreement................................................. 45
5.21 FCC Approval......................................................................... 45
5.22 Composition of the Board of Directors................................................ 46

ARTICLE 6 CONDITIONS........................................................................... 46
6.1 Conditions to Each Party's Obligation to Effect the Merger........................... 46
6.2 Conditions to Obligations of Parent, Heftel and Heftel Sub. ......................... 47
6.3 Conditions to Obligation of Tichenor................................................. 49

ARTICLE 7 TERMINATION.......................................................................... 49
7.1 Termination Rights................................................................... 49
7.2 Effect of Termination................................................................ 51

ARTICLE 8 MISCELLANEOUS........................................................................ 52
8.1 Nonsurvival of Representations and Warranties. ...................................... 52
8.2 Amendment. .......................................................................... 52
8.3 Notices.............................................................................. 52
8.4 Counterparts. ....................................................................... 52
8.5 Severability......................................................................... 52
8.6 Entire Agreement; No Third Party Beneficiaries....................................... 53
8.7 Applicable Law. ..................................................................... 53
8.8 No Remedy in Certain Circumstances. ................................................. 53
8.9 Assignment........................................................................... 53
8.10 Indemnification for Negligence....................................................... 54
8.11 Confidentiality Agreements........................................................... 54
8.12 Waivers.............................................................................. 54
8.13 Incorporation........................................................................ 55

Disclosure Letter

EXHIBITS
1.1(a) - Form of Heftel's Second Amended and Restated Certificate of
Incorporation
5.11 - Form of Affiliate Letter
5.15 - Registration Rights Agreement
5.16 - Employment Agreement
5.17 - Stockholders Agreement
5.18 - Indemnity Agreement
5.20 - Parent Registration Rights Agreement
8.9 - Assignment Agreement
</TABLE>

<PAGE> 4
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER

THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"AGREEMENT") is made and entered into as of the 10th day of October 1996, by and
between CLEAR CHANNEL COMMUNICATIONS, INC., a Texas corporation ("PARENT"), and
TICHENOR MEDIA SYSTEM, INC., a Texas corporation ("TICHENOR").

Recitals

A. Parent has acquired a majority interest in Heftel Broadcasting
Corporation ("HEFTEL"), a Delaware corporation, by way of a concurrent stock
purchase and tender offer (the "HEFTEL ACQUISITION").

B. The board of directors of each of Parent and Tichenor determined
that it was in the best interests of its respective shareholders to approve the
merger of Heftel and Tichenor by means of the merger of a to-be-named wholly
owned subsidiary of Heftel, to be formed under the laws of the State of Texas
immediately following the completion of the Heftel Acquisition ("HEFTEL SUB"),
with and into Tichenor upon the terms and subject to the conditions set forth in
an Agreement and Plan of Merger (the "ORIGINAL AGREEMENT") made and entered into
as of the 9th day of July 1996, by and between Parent and Tichenor.

C. To facilitate such merger, upon completion of the Heftel
Acquisition, Parent agrees to propose to Heftel and Heftel Sub that such
entities agree to be bound by the terms of this Agreement as they relate to such
entities and use its reasonable efforts to cause the execution of the
documentation reflecting such agreement to be bound hereby.

D. For federal income tax purposes, it is intended that such merger
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended.

E. Parent and Tichenor desire to make certain modifications to the
terms of the Original Agreement relating to certain covenants and agreements in
connection with such merger.

NOW, THEREFORE, for and in consideration of the recitals and the mutual
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:

<PAGE> 5
Statement of Agreement

ARTICLE 1

DEFINITIONS

1.1 DEFINED TERMS. As used in this Agreement, each of the following
terms has the meaning given in this Section 1.1 or in the Sections referred to
below:

"AFFILIATE" means, with respect to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with such Person.

"AGREEMENT" means this Agreement and Plan of Merger, as amended,
supplemented or modified from time to time.

"ALIEN" means (a) a person who is a citizen of a country other than the
United States; (b) any entity organized under the laws of a government other
than the government of the United States or any state, territory or possession
of the United States; (c) a government other than the government of the United
States or of any state, territory or possession of the United States; and (d) a
representative of, or an individual or entity controlled by, any of the
foregoing.

"ARTICLES OF MERGER" means the articles of merger, prepared and
executed in accordance with the applicable provisions of the TBCA, filed with
the Secretary of State of Texas to reflect the consummation of the Merger.

"ASSIGNMENT AGREEMENT" has the meaning specified in Section 8.9(b).

"BANK CREDIT AGREEMENT" means that certain Second Amended and Restated
Credit Agreement, dated as of August 9, 1994, as amended through the date of the
Original Agreement, among Tichenor and the other parties thereto.

"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any successor statutes and any
regulations promulgated thereunder.

"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System List.

"CLOSING" means the closing of the Merger and the consummation of the
other transactions contemplated by this Agreement.

"CLOSING DATE" means the date on which the Closing occurs, which date
shall be the business day immediately following the day on which all conditions
precedent have been fully satisfied or waived (or such later date as is agreed
upon by the parties).

<PAGE> 6

"CLOSING MATERIAL ADVERSE EFFECT" means (a) when used with respect to
Tichenor, (i) the loss of any Tichenor FCC License or the inability of Tichenor
to operate any Tichenor Station due to the failure to obtain the consent of any
person other than the FCC or any other Governmental Authority (in either case
for which reinstatement or waiver within 90 days is not reasonably likely)
accounting for, in the aggregate, 10% of Tichenor's consolidated gross revenue
stated on Tichenor's consolidated income statement for the prior quarter, (ii)
the failure of Tichenor to either (A) refinance the outstanding indebtedness
under the Bank Credit Agreement or any successor credit facility at or prior to
the Effective Time or (B) obtain appropriate waivers so that, in either case, no
defaults will exist thereunder as of the Effective Time arising out of the
transactions contemplated by this Agreement or (iii) any other event, liability,
obligation, judgment or consequence having an adverse economic impact on
Tichenor and its Affiliates, taken as a whole, in excess of $20 million; and (b)
when used with respect to Heftel, (i) the loss of any Heftel FCC License or the
inability of Heftel to operate any Heftel Station due to the failure to obtain
the consent of any person other than the FCC or any other Governmental Authority
(in either case for which reinstatement or waiver within 90 days is not
reasonably likely) accounting for, in the aggregate, 10% of Heftel's
consolidated gross revenue stated on Heftel's consolidated income statement for
the prior quarter, (ii) the failure of Heftel to either (A) refinance the
outstanding indebtedness under the Heftel Credit Agreement or any successor
credit facility at or prior to the Effective Time or (B) obtain appropriate
waivers so that, in either case, no defaults will exist thereunder as of the
Effective Time arising out of the Heftel Acquisition or the Merger or (iii) any
other event, liability, obligation, judgment or consequence having an adverse
economic impact on Heftel and its Affiliates, taken as a whole, in excess of $40
million. With respect to clauses (a) and (b) above, a Closing Material Adverse
Effect shall not be deemed to have occurred based upon any change in the
financial condition of Tichenor or Heftel, as the case may be, resulting from
(a) increased competition, (b) events or conditions that affect the radio
broadcasting industry generally and affect all other similarly situated
companies in the radio broadcasting industry or (c) general economic conditions.

"CODE" means the Internal Revenue Code of 1986, as amended.

"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.

"CONVERSION NUMBER" means 7.8261.

"COSTS" has the meaning specified in Section 5.19(b).

"DGCL" means the Delaware General Corporation Law.

"DISCLOSURE LETTER" means the DISCLOSURE LETTER attached hereto and any
documents listed on such DISCLOSURE LETTER and expressly incorporated therein by
reference.

"DISSENTING SHAREHOLDER(S)" means holder(s) of Tichenor Common Stock,
Tichenor Junior Preferred and Tichenor Senior Preferred who have validly
perfected dissenters' rights under Article 5.12 of the TBCA.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

<PAGE> 7
"EFFECTIVE TIME" has the meaning specified in Section 2.7.

"EMPLOYMENT AGREEMENT" has the meaning specified in Section 5.16.

"ENVIRONMENTAL LAW" means any federal, state, local or foreign statute,
code, ordinance, rule, regulation, policy, guideline, permit, consent, approval,
license, judgment, order, writ, decree, common law, injunction or other
authorization in effect on the date of the Original Agreement or at a previous
time applicable to Tichenor's operations relating to (a) emissions, discharges,
releases or threatened releases of Hazardous Materials into the natural
environment, including into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater, publicly-owned
treatment works, septic systems or land; (b) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of Hazardous
Materials; (c) occupational health and safety; or (d) otherwise relating to the
pollution of the environment, solid waste handling treatment or disposal, or
operation or reclamation of oil and gas operations or mines.

"EXCHANGE AGENT" means the transfer agent for shares of Heftel Common
Stock or such other entity selected by Heftel and consented to by Tichenor,
which consent shall not be unreasonably withheld.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"EXCHANGE FUND" has the meaning specified in Section 2.5(a).

"FCC" means the Federal Communications Commission.

"GAAP" means generally accepted accounting principles, as recognized by
the U.S. Financial Accounting Standards Board (or any generally recognized
successor).

"GOVERNMENTAL ACTION" means any authorization, application, approval,
consent, exemption, filing, license, notice, registration, permit or other
requirement of, to or with any Governmental Authority.

"GOVERNMENTAL AUTHORITY" means any national, state, county or municipal
government, domestic or foreign, any agency, board, bureau, commission, court,
department or other instrumentality of any such government, or any arbitrator in
any case that has jurisdiction over any of the Tichenor Companies, Parent, the
Heftel Companies or any of their respective properties or assets, including the
FCC.

"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

"HAZARDOUS MATERIAL" means (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste" or "solid waste," in either case as defined by
the Resource Conservation and Recovery Act, as amended; (c) any solid,
hazardous, dangerous or toxic chemical, material, waste or substance, within the
meaning of and regulated by any Environmental Law; (d) any radioactive material,
including any naturally occurring radioactive

<PAGE> 8
material, and any source, special or byproduct material as defined in 42 U.S.C.
2011 et seq. and any amendments or authorizations thereof; (e) any
asbestos-containing materials in any form or condition; (f) any polychlorinated
biphenyls in any form or condition; or (g) petroleum, petroleum hydrocarbons, or
any fraction or byproducts thereof.

"HEFTEL" means Heftel Broadcasting Corporation, a Delaware corporation.

"HEFTEL CERTIFICATE" means a certificate representing shares of Heftel
Common Stock.

"HEFTEL COMMON STOCK" means the Class A Common Stock, par value $.001
per share, of Heftel.

"HEFTEL COMPANIES" means Heftel and the Heftel Subsidiaries.

"HEFTEL CREDIT AGREEMENT" means that certain Credit Agreement, dated
August 19, 1994, among Heftel, its subsidiaries and The Chase Manhattan Bank
(National Association), on its own behalf and as agent.

"HEFTEL DESIGNEES" has the meaning specified in Section 5.22.

"HEFTEL DISCLOSURE DOCUMENTS" means Heftel's Annual Report on Form 10-K
for the fiscal years ended September 30, 1994 and 1995, and Quarterly Reports
for the quarters ended December 31, 1995 and March 31, 1996, and all other
forms, reports, registration statements and other statements and documents filed
by Heftel with the SEC from July 27, 1994 to the date of this Agreement.

"HEFTEL FCC LICENSES" has the meaning specified in Section 5.3(b).

"HEFTEL MATERIAL AGREEMENT(S)" means (a) any written or oral agreement,
contract, commitment or understanding to which Heftel is a party, by which
Heftel is directly or indirectly bound, or to which any asset of Heftel may be
subject, involving total value or consideration in excess of $600,000 and/or,
(b) the Heftel Credit Agreement, as amended and supplemented as of the date
hereof.

"HEFTEL MEETING" means the meeting of the stockholders of Heftel called
for the purpose of voting on the Heftel Proposal.

"HEFTEL PROPOSAL" means, collectively, (a) the proposal to amend and
restate the Restated Certificate of Incorporation of Heftel to read as set forth
in EXHIBIT 1.1(A) hereto, (b) the proposal to approve the issuance of Heftel
Common Stock and New Heftel Class B Common Stock in connection with the Merger
and (c) such other proposals as may be necessary or desirable, including without
limitation, such proposals to approve further amendments of Heftel's certificate
of incorporation to facilitate the transactions contemplated in this Agreement,
which proposals are to be presented to the stockholders of Heftel in the Proxy
Statement/Prospectus.

"HEFTEL STATION" has the meaning specified in Section 5.3(b).

<PAGE> 9
"HEFTEL SUB" means a to-be-named wholly owned subsidiary of Heftel to
be formed under the laws of the State of Texas.

"HEFTEL SUB COMMON STOCK" means the common stock, par value $.001 per
share, of Heftel Sub.

"HEFTEL SUBSIDIARIES" means Broadcast Investment, Inc., a Florida
corporation; HBC Florida, Inc., a Delaware corporation; HBC Texas, Inc., a
Delaware corporation; KESS-AM License Corp., a Delaware corporation; KICI-AM
License Corp., a Delaware corporation; KLVE-FM License Corp., a Delaware
corporation; KMRT-AM License Corp., a Delaware corporation; KTNQ/KLVE, Inc., a
California corporation; KTNQ-AM License Corp., a Delaware corporation; Mi Casa
Publications, Inc., a California corporation; Radio WADO, Inc., a New Jersey
corporation; Rodriguez Broadcasting, Inc., a Texas corporation;
Rodriguez-Heftel- Texas, Inc., a Texas corporation; Spanish Coast to Coast,
Ltd., a Delaware corporation; Spanish Radio Network, a Florida general
partnership; SRN Texas, Inc., a Texas corporation; The Tower Company, Inc., a
Hawaii corporation; Viva Acquisition Corporation, a Florida corporation; Viva
Broadcasting Corporation, a Florida corporation; WADO-AM License Corp., a
Delaware corporation; WGLI-AM License Corp., a Delaware corporation; WQBA-AM
License Corp., a Delaware corporation; WQBA-FM License Corp., a Delaware
corporation; Heftel Broadcasting Texas, L.P.; Heftel GP Texas, Inc.; HBC
Broadcasting Texas, Inc.; HBC Chicago, Inc.; HBC- Las Vegas, Inc.; HBC New York,
Inc.; KCYT-FM License Corp.; KECS-FM License Corp.; KESS-AM License Corp.;
KESS-TV License Corp.; KHCK-FM License Corp.; KICI-FM License Corp; KLSQ-AM
License Corp.; La Oferta, Inc.; License Corp. No. 1; License Corp. No. 2; Viva
America Media Group; WLXX-AM License Corp.; and WPAT-AM License Corp.

"INDEMNIFIED PARTIES" has the meaning specified in Section 5.19(c).

"INDEMNIFYING PARTY" has the meaning specified in Section 5.19(d).

"INDEMNITY AGREEMENT" has the meaning specified in Section 5.18.

"LIEN" means any lien, mortgage, security interest, pledge, deposit,
restriction, burden, encumbrance, rights of a vendor under any title retention
or conditional sale agreement, or lease or other arrangement substantially
equivalent thereto.

"MAJOR TICHENOR SHAREHOLDER" means, collectively, McHenry T. Tichenor,
Sr., McHenry T. Tichenor, Jr., McHenry T. Tichenor, Jr., as Custodian for David
T. Tichenor, Warren W. Tichenor, William E. Tichenor, Jean T. Russell, David
Lykes, Jeffrey T. Hinson, Ricardo A. del Castillo, Alta Subordinated Debt
Partners III, L.P., Prime II Management, L.P. and PrimeComm, L.P.

"MATERIAL ADVERSE EFFECT" means (a) when used with respect to Tichenor,
a result or consequence that would materially adversely affect the condition
(financial or otherwise), results of operations or business of the Tichenor
Companies (taken as a whole) or the aggregate value of their assets, would
materially impair the ability of the Tichenor Companies (taken as a whole) to
own, hold, develop and operate their assets, or would impair Tichenor's ability
to perform its obligations hereunder or consummate the transactions contemplated
hereby; and (b) when used

<PAGE> 10
with respect to Heftel, a result or consequence that would materially adversely
affect the condition (financial or otherwise), results of operations or business
of Heftel and its subsidiaries (taken as a whole) or the aggregate value of
their assets, would materially impair the ability of the Heftel Companies (taken
as a whole) to own, hold and operate their assets, or would impair Heftel's or
Heftel Sub's ability to perform its respective obligations hereunder or
consummate the transactions contemplated hereby.

"MERGER" has the meaning specified in Section 2.1.

"MERGER CONSIDERATION" means the product of the Conversion Number and
the Share Price.

"MERGER INDEMNIFIED PARTIES" has the meaning specified in Section
5.19(c).

"NASDAQ" means the National Market System of The Nasdaq Stock Market,
Inc.

"NEW HEFTEL CLASS B COMMON STOCK" means the Class B Common Stock, par
value $.001 per share, of Heftel having the terms, rights and privileges set
forth in EXHIBIT 1.1(A) hereto.

"PARENT" means Clear Channel Communications, Inc., a Texas corporation.

"PARENT REGISTRATION RIGHTS AGREEMENT" has the meaning specified in
Section 5.20.

"PARENT REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate
(including Heftel and Heftel Sub) or other representative of Parent or its
subsidiaries.

"PERMITTED ENCUMBRANCES" means (a) with respect to Tichenor, (i) Liens
for Taxes, assessments or other governmental charges or levies if the same shall
not at the particular time in question be due and delinquent or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or,
if commenced, shall have been stayed) are being contested in good faith by
appropriate proceedings and if any of the Tichenor Companies shall have set
aside on its books such reserves (segregated to the extent required by sound
accounting practices) as may be required by or consistent with GAAP and, whether
reserves are set aside or not, are listed on the DISCLOSURE LETTER; (ii) Liens
of carriers, warehousemen, mechanics, laborers, materialmen, landlords, vendors,
workmen and operators arising by operation of law in the ordinary course of
business or by a written agreement existing as of the date of the Original
Agreement and necessary or incident to the proper operation of such Person's
business, properties and related facilities and assets for sums not yet due or
being contested in good faith by appropriate proceedings, if any of the Tichenor
Companies shall have set aside on its books such reserves (segregated to the
extent required by sound accounting practices) as may be required by or
consistent with GAAP and, whether reserves are set aside or not, are listed on
the DISCLOSURE LETTER; (iii) Liens incurred in the ordinary course of business
in connection with worker's compensation, unemployment insurance and other
social security legislation (other than ERISA) which would not, individually or
in the aggregate, result in a Material Adverse Effect on the Tichenor Companies;
(iv) Liens incurred in the ordinary course of business to secure the

<PAGE> 11
performance of bids, tenders, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance and repayment bonds and other obligations
of a like nature; (v) Liens, easements, rights-of-way, restrictions, servitudes,
permits, conditions, covenants, exceptions, reservations and other similar
encumbrances incurred in the ordinary course of business or existing on property
and not materially impairing the value of the assets of any of Tichenor
Companies or interfering with the ordinary conduct of the business of any of the
Tichenor Companies or rights to any of their assets; (vi) Liens arising under or
created pursuant to the Bank Credit Agreement or the Term Loan; and (vii) Liens
described on the DISCLOSURE LETTER and (b) with respect to Heftel, (i) Liens for
Taxes, assessments or other governmental charges or levies if the same shall not
at the particular time in question be due and delinquent or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or,
if commenced, shall have been stayed) are being contested in good faith by
appropriate proceedings and if any of the Heftel Companies shall have set aside
on its books such reserves (segregated to the extent required by sound
accounting practices) as may be required by or consistent with GAAP and, whether
reserves are set aside or not, are listed on the Heftel Disclosure Documents;
(ii) Liens of carriers, warehousemen, mechanics, laborers, materialmen,
landlords, vendors, workmen and operators arising by operation of law in the
ordinary course of business or by a written agreement existing as of the date of
the Original Agreement and necessary or incident to the proper operation of such
Person's business, properties and related facilities and assets for sums not yet
due or being contested in good faith by appropriate proceedings, if any of the
Heftel Companies shall have set aside on its books such reserves (segregated to
the extent required by sound accounting practices) as may be required by or
consistent with GAAP and, whether reserves are set aside or not, are listed on
the Heftel Disclosure Documents; (iii) Liens incurred in the ordinary course of
business in connection with worker's compensation, unemployment insurance and
other social security legislation (other than ERISA) which would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Heftel Companies; (iv) Liens incurred in the ordinary course of business to
secure the performance of bids, tenders, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance and repayment bonds and other
obligations of a like nature; (v) Liens, easements, rights-of-way, restrictions,
servitudes, permits, conditions, covenants, exceptions, reservations and other
similar encumbrances incurred in the ordinary course of business or existing on
property and not materially impairing the value of the assets of any of Heftel
Companies or interfering with the ordinary conduct of the business of any of the
Heftel Companies or rights to any of their assets; (vi) Liens arising under or
created pursuant to the Heftel Credit Agreement; and (vii) Liens described on
the Heftel Disclosure Documents.

"PERSON" means any natural person, corporation, company, limited or
general partnership, joint stock company, joint venture, association, limited
liability company, trust, bank, trust company, land trust, business trust or
other entity or organization, whether or not a Governmental Authority.

"PROXY STATEMENT/PROSPECTUS" means a proxy statement of Heftel in
definitive form relating to the Heftel Meeting, which proxy statement will be
included as a prospectus in the Registration Statement.

"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in Section
5.15.

<PAGE> 12
"REGISTRATION STATEMENT" means the Registration Statement to be filed
with the SEC by Heftel in connection with the issuance of Heftel Common Stock
and New Heftel Class B Common Stock pursuant to the Merger.

"RESPONSIBLE OFFICER" means, with respect to any Tichenor Company,
McHenry T. Tichenor, Jr. or Jeffrey T. Hinson, and with respect to any other
corporation, the Chief Executive Officer, President or any Vice President of
such corporation.

"SEC" means the Securities and Exchange Commission.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SHARE PRICE" means the per share closing sales price of the Heftel
Common Stock on Nasdaq (as reported by The Wall Street Journal, or if not so
reported, by another authoritative source) on the trading day immediately
preceding the Closing Date.

"STOCKHOLDERS AGREEMENT" has the meaning specified in Section 5.17.

"SURVIVING CORPORATION" has the meaning specified in Section 2.2.

"TBCA" means the Texas Business Corporation Act.

"TAXES" means taxes of any kind, levies or other like assessments,
customs, duties, imposts, charges or fees, including income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth and franchise taxes, estimated
taxes, withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed or payable
to the United States or any state, local or foreign governmental subdivision or
agency thereof, and in each instance such term shall include any interest,
penalties or additions to tax attributable to any such Tax, including penalties
for the failure to file any federal, state, local or foreign returns,
declarations, reports, estimates, information returns or statements required to
be filed by a Person with respect to any Taxes.

"TENDER OFFER AGREEMENT" means the Tender Offer Agreement, dated June
1, 1996, between Parent and Heftel relating to the Heftel Acquisition, as
amended through the date hereof.

"TENDER OFFER INDEMNIFIED PARTIES" has the meaning specified in Section
5.19(b).

"TERM LOAN" means that certain Loan Agreement, dated as of the date of
the Original Agreement, between TMS Assets California, Inc., a Delaware
corporation, and Parent, as in effect on the date hereof.

"THIRD-PARTY CONSENT" means the consent or approval of any Person other
than Tichenor, Parent or any Governmental Authority.

"TICHENOR" means Tichenor Media System, Inc., a Texas corporation.

<PAGE> 13
"TICHENOR CERTIFICATE" means a certificate representing shares of
Tichenor Common Stock, shares of Tichenor Junior Preferred or shares of Tichenor
Senior Preferred, or documents or agreements representing the Tichenor Warrant.

"TICHENOR COMMON STOCK" means the common stock, par value $1.00 per
share, of Tichenor.

"TICHENOR COMPANIES" means Tichenor and the Tichenor Subsidiaries.

"TICHENOR FCC LICENSES" has the meaning specified in Section 5.2(b).

"TICHENOR FINANCIAL STATEMENTS" means the audited and unaudited
consolidated financial statements of Tichenor and its subsidiaries (including
the related notes with respect to such audited financial statements) for the
years ended December 31, 1994 and 1995, and for the five months ended May 31,
1996.

"TICHENOR JUNIOR PREFERRED" means the Junior Preferred Stock, par value
$10 per share, of Tichenor.

"TICHENOR MATERIAL AGREEMENT(S)" means (a) any written or oral
agreement, contract, commitment or understanding to which any of the Tichenor
Companies is a party, by which any of the Tichenor Companies is directly or
indirectly bound, or to which any asset of any of the Tichenor Companies may be
subject, involving total value or consideration in excess of $400,000, (b) the
Bank Credit Agreement and/or (c) the Term Loan, in each case as amended and
supplemented as of the date of the Original Agreement.

"TICHENOR REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate or other
representative of any of the Tichenor Companies.

"TICHENOR SENIOR PREFERRED" means the 14% Senior Redeemable Cumulative
Preferred Stock, par value $1,000 per share, of Tichenor.

"TICHENOR STATION" has the meaning specified in Section 5.2(b).

"TICHENOR SUBSIDIARIES" means WADO Radio, Inc., a Texas corporation;
Tichenor License Corporation, a Texas corporation; TC Television, Inc., a Texas
corporation; Tichenor Assets California, Inc., a Delaware corporation; Tichenor
License California, Inc., a Delaware corporation; Tall Tower Partnership, a
Texas general partnership; and KDOS Limited Partnership, a Texas limited
partnership.

"TICHENOR WARRANT" means that certain Warrant Agreement, dated June 15,
1993, entitling Alta Subordinated Debt Partners III, L.P. to purchase such
number of shares of Tichenor Common Stock as shall equal 4% of the total number
of shares of Tichenor Common Stock of all classes outstanding on a fully diluted
basis after giving effect to the exercise of all other warrants, options and
rights to acquire any shares of Tichenor Common Stock and the

<PAGE> 14
conversion of any convertible securities issued by Tichenor (including without
limitation the Tichenor Junior Preferred).

1.2 REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections
and other subdivisions of or to this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections or other subdivisions of this Agreement are for convenience only, do
not constitute any part of this Agreement, and shall be disregarded in
construing the language hereof. The words "THIS AGREEMENT," "HEREIN," "HEREBY,"
"HEREUNDER" and "HEREOF," and words of similar import, refer to this Agreement
as a whole and not to any particular subdivision unless expressly so limited.
The words "THIS ARTICLE," "THIS SECTION" and "THIS SUBSECTION," and words of
similar import, refer only to the Article, Section or subsection hereof in which
such words occur. The word "OR" is not exclusive, and the word "INCLUDING" (in
its various forms) means "INCLUDING WITHOUT LIMITATION." Pronouns in masculine,
feminine or neuter genders shall be construed to state and include any other
gender, and words, terms and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.

As used in the representations and warranties contained in this
Agreement, the phrase "TO THE KNOWLEDGE" of the representing party shall mean
that Responsible Officers of such representing party, individually or
collectively, either (a) know that the matter being represented and warranted is
true and accurate or (b) have no reason, after reasonable inquiry, to believe
that the matter being represented and warranted is not true and accurate.

ARTICLE 2

THE MERGER

2.1 THE MERGER. Subject to the terms and conditions set forth in this
Agreement and assuming the consummation of the Assignment Agreement pursuant to
Section 8.9, at the Effective Time, Heftel Sub shall be merged with and into
Tichenor in accordance with the provisions of this Agreement. Such merger is
referred to herein as the "MERGER."

2.2 EFFECT OF THE MERGER. Upon the effectiveness of the Merger, the
separate existence of Heftel Sub shall cease and Tichenor, as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its
corporate existence under the laws of the State of Texas. The Merger shall have
the effects specified in this Agreement and the TBCA.

2.3 GOVERNING INSTRUMENTS, DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION.

(a) The articles of incorporation of Tichenor, as in effect
immediately prior to the Effective Time, shall be the articles of incorporation
of the Surviving Corporation until duly amended in accordance with its terms and
applicable law.

<PAGE> 15
(b) The bylaws of Tichenor, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until duly
amended in accordance with their terms and applicable law.

(c) The directors and officers of the Surviving Corporation
from the Effective Time until their respective successors have been duly elected
or appointed in accordance with the articles of incorporation and bylaws of the
Surviving Corporation and applicable law shall be the directors and officers of
Tichenor.

2.4 EFFECT ON SECURITIES.

(a) HEFTEL SUB COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof, each share
of Heftel Sub Common Stock outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid share of Tichenor Common
Stock.

(b) TICHENOR SECURITIES.

(i) TICHENOR COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof
(but subject to the provisions of Section 2.5(e)), each share of
Tichenor Common Stock that is issued and outstanding immediately prior
to the Effective Time (other than shares of Tichenor Common Stock held
by Dissenting Shareholders and Tichenor Common Stock held by Parent or
any Affiliate of Parent) shall be converted into the right to receive
shares of validly issued, fully paid and nonassessable Heftel Common
Stock, with each such share of Tichenor Common Stock being converted
into the number of shares of Heftel Common Stock equal to the
Conversion Number. Each share of Tichenor Common Stock, when so
converted, shall automatically be cancelled and retired, shall cease to
exist and shall no longer be outstanding; and the holder of any
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Heftel
Common Stock to be issued in exchange therefor (along with any cash in
lieu of fractional shares of Heftel Common Stock as provided in Section
2.5(e) and any unpaid dividends and distributions with respect to such
shares of Heftel Common Stock as provided in Section 2.5(c)), without
interest, upon the surrender of such certificate in accordance with
Section 2.5.

(ii) TICHENOR SENIOR PREFERRED. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder
thereof, each share of Tichenor Senior Preferred (other than shares of
Tichenor Senior Preferred held by Dissenting Shareholders) that is
issued and outstanding shall be converted into the right to receive
cash in the amount of $1,000 per share plus all accrued and unpaid
dividends through December 31, 1995. Each share of Tichenor Senior
Preferred, when so converted, shall automatically be cancelled and
retired, shall cease to exist and shall no longer be outstanding; and
the holder of any certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive
the cash to be paid in exchange therefor, without interest, upon the
surrender of such certificate in accordance with Section 2.5.

<PAGE> 16
(iii) TICHENOR JUNIOR PREFERRED. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder
thereof, each share of Tichenor Junior Preferred (other than shares of
Tichenor Junior Preferred held by Dissenting Shareholders) that is
issued and outstanding prior to the Effective Time shall be converted
into the right to receive shares of validly issued, fully paid and
nonassessable Heftel Common Stock, with each such share being converted
into 4.3478 shares of Heftel Common Stock. Each share of Tichenor
Junior Preferred, when so converted, shall automatically be cancelled
and retired, shall cease to exist and shall no longer be outstanding;
and the holder of any certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to
receive the shares of Heftel Common Stock to be issued in exchange
therefor (along with any cash in lieu of fractional shares of Heftel
Common Stock as provided in Section 2.5(e) and any unpaid dividends and
distributions with respect to such shares of Heftel Common Stock as
provided in Section 2.5(c)), without interest, upon the surrender of
such certificate in accordance with Section 2.5.

(iv) TICHENOR TREASURY STOCK. At the Effective Time, by virtue
of the Merger, all shares of Tichenor Common Stock and Tichenor Junior
Preferred that are issued and held as treasury stock shall be cancelled
and retired and shall cease to exist, and no shares of Heftel Common
Stock or other consideration shall be paid or payable in exchange
therefor.

(v) TICHENOR COMMON STOCK HELD BY PARENT. At the Effective
Time, by virtue of the Merger and without any action on the part of any
holder thereof (but subject to the provisions of Section 2.5(e)), each
share of Tichenor Common Stock that is issued and outstanding
immediately prior to the Effective Time and held by Parent or any
Affiliate of Parent shall be converted into the right to receive shares
of validly issued, fully paid and nonassessable New Heftel Class B
Common Stock, with each such share of Tichenor Common Stock being
converted into the number of shares of New Heftel Class B Common Stock
equal to the Conversion Number. Each share of Tichenor Common Stock,
when so converted, shall automatically be cancelled and retired, shall
cease to exist and shall no longer be outstanding; and the holder of
any certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of
New Heftel Class B Common Stock to be issued in exchange therefor
(along with any cash in lieu of fractional shares of New Heftel Class B
Common Stock as provided in Section 2.5(e) and any unpaid dividends and
distributions with respect to such shares of New Heftel Class B Common
Stock as provided in Section 2.5(c)), without interest, upon the
surrender of such certificate in accordance with Section 2.5.

(vi) TICHENOR WARRANT. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, the
Tichenor Warrant, if outstanding as of the Effective Time, shall be
converted into the right to receive 180,000 shares of validly issued,
fully paid and nonassessable Heftel Common Stock. The Tichenor Warrant,
when so converted, shall automatically be cancelled and retired, shall
cease to exist and shall no longer be outstanding; and the holder of
the Tichenor Warrant shall cease to have any rights with respect
thereto, except the right to receive the

<PAGE> 17
shares of Heftel Common Stock to be issued in exchange therefor and any
unpaid dividends and distributions with respect to such shares of
Heftel Common Stock as provided in Section 2.5(c), without interest,
upon the surrender of such warrant in accordance with Section 2.5.

(vii) NO ADDITIONAL RIGHTS. Except as provided in this Section
2.4(b) or as otherwise agreed to by the parties, (A) the provisions of
any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the
Tichenor Companies shall become null and void, and (B) the Tichenor
Companies shall use all reasonable efforts to ensure that, following
the Effective Time, no holder of options or rights or any participant
in any plan, program or arrangement shall have any right thereunder to
acquire any equity securities of the Tichenor Companies, Parent,
Heftel, Heftel Sub or any direct or indirect subsidiary thereof.

(viii) SHARES OF DISSENTING SHAREHOLDERS. Any issued and
outstanding shares of Tichenor Common Stock, Tichenor Senior Preferred
or Tichenor Junior Preferred held by a Dissenting Shareholder shall be
converted into the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the
TBCA; provided, however, shares of Tichenor Common Stock, Tichenor
Senior Preferred or Tichenor Junior Preferred outstanding at the
Effective Time and held by a Dissenting Shareholder who shall, after
the Effective Time, withdraw his demand for payment or lose his
dissenters' right as provided in the TBCA, shall be deemed to be
converted, as of the Effective Time, into the right to receive the
shares of Heftel Common Stock or cash specified in Section 2.4(b)(i),
(ii) and (iii), respectively, in accordance with the procedures
specified in Section 2.5(b). Tichenor shall give Parent (or, if after
consummation of the Assignment Agreement, Heftel) (A) prompt notice of
any written demands for such payment, withdrawals of demands for such
payment and any other instruments served pursuant to the TBCA received
by Tichenor, and (B) the opportunity to direct all negotiations and
proceedings with respect to demands for such payment under the TBCA.
Tichenor will not voluntarily make any payment with respect to any
demands for dissenters' rights and will not, except with the prior
written consent of Parent (or, if after consummation of the Assignment
Agreement, Heftel), settle or offer to settle any such demands.

(ix) HEFTEL COMMON STOCK HELD BY PARENT. At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent or any Affiliate of Parent (but subject to the provisions of
Section 2.5(e)), each share of Heftel Common Stock that is issued and
outstanding immediately prior to the Effective Time and held by Parent
or any Affiliate of Parent shall be converted into the right to receive
one (1) share of validly issued, fully paid and nonassessable New
Heftel Class B Common Stock. Each share of Heftel Common Stock, when so
converted, shall automatically be cancelled and retired, shall cease to
exist and shall no longer be outstanding; and the holder of any
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of New
Heftel Class B Common Stock to be issued in exchange therefor (along
with any unpaid dividends and distributions with respect to such shares
of New Heftel Class B Common Stock as provided in Section 2.5(c)),
without interest, upon the surrender of such certificate in accordance
with Section 2.5.

<PAGE> 18
2.5 EXCHANGE OF CERTIFICATES.

(a) EXCHANGE FUND. At or prior to the Effective Time, Heftel shall
deposit with the Exchange Agent: (i) for the benefit of the holders of (A)
shares of Tichenor Common Stock (other than Parent and Affiliates of Parent),
(B) shares of Tichenor Junior Preferred and (C) the Tichenor Warrant, if
outstanding as of the Effective Time, and for exchange in accordance with this
Agreement, certificates representing the shares of Heftel Common Stock to be
issued in exchange for such Tichenor securities pursuant to Section 2.4(b)(i),
(iii) and (vi), respectively; (ii) for the benefit of the holders of Tichenor
Senior Preferred, cash in the amount of $3,000,000; (iii) for the benefit of
Parent and Affiliates of Parent, certificates representing shares of New Heftel
Class B Common Stock to be issued pursuant to Section 2.4(b)(v) and (ix); and
(iv) cash in an amount sufficient to provide for the payments to be made in lieu
of issuing any fractional shares of Heftel Common Stock or New Heftel Class B
Common Stock as provided in Section 2.5(e). Additionally, subject to the
provisions of Section 2.5(f), Heftel shall, if and when a payment date has
occurred with respect to a dividend or distribution that has been declared
subsequent to the Effective Time, deposit with the Exchange Agent an amount in
cash (or property of like kind to that which is the subject of such dividend or
distribution) equal to the dividend or distribution per share of Heftel Common
Stock times the number of shares of Heftel Common Stock evidenced by Tichenor
Certificates theretofore representing Tichenor Common Stock, Tichenor Junior
Preferred and the Tichenor Warrant that have not theretofore been surrendered
for exchange in accordance with this Section 2.5. The cash to be paid in
conversion of the Tichenor Senior Preferred, such shares of Heftel Common Stock
and New Heftel Class B Common Stock, together with any dividends or
distributions with respect thereto (as provided in Section 2.5(c)), are referred
to herein as the "EXCHANGE FUND." The Exchange Agent, pursuant to irrevocable
instructions consistent with the terms of this Agreement, shall deliver the
Heftel Common Stock to be issued pursuant to Section 2.4(b)(i), (iii) and (vi),
respectively, the New Heftel Class B Common Stock to be issued pursuant to
Section 2.4(b)(v) and (ix), the cash to be paid pursuant to Section 2.4(b)(ii),
and cash in an amount sufficient to provide for the payments to be made in lieu
of issuing any fractional shares of Heftel Common Stock or New Heftel Class B
Common Stock as provided in Section 2.5(e) out of the Exchange Fund, and the
Exchange Fund shall not be used for any other purpose whatsoever. The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership with
respect to the Heftel Common Stock or the New Heftel Class B Common Stock held
by it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect thereto for
the account of Persons entitled thereto.

(b) EXCHANGE PROCEDURES.

(i) As soon as reasonably practicable after the Effective
Time, Heftel shall cause the Exchange Agent to mail to each holder
of record of a Tichenor Certificate that, immediately prior to the
Effective Time, represented (A) shares of Tichenor Common Stock,
(B) shares of Tichenor Junior Preferred, (C) the Tichenor Warrant,
if outstanding as of the Effective Time, or (D) Tichenor Senior
Preferred, which was converted pursuant to Section 2.4(b), a
letter of transmittal to be used to effect the exchange of such
Tichenor Certificate, along with instructions for using such
letter of transmittal to effect such exchange. As soon as
reasonably practicable after the Effective Time, Heftel shall
cause the Exchange Agent to mail to Parent and each Affiliate of

<PAGE> 19
Parent that holds Heftel Common Stock that immediately prior to
the Effective Time was converted into the right to receive New
Heftel Class B Common Stock pursuant to Section 2.4(b)(ix), a
letter of transmittal to be used to effect the exchange of such
Heftel Common Stock, along with instructions for using such letter
of transmittal to effect such exchange. The letter of transmittal
(or the instructions thereto) shall specify that delivery of any
Tichenor Certificate or Heftel Common Stock, as applicable, shall
be effected, and risk of loss and title thereto shall pass, only
upon delivery of thereof to the Exchange Agent and shall be in
such form and have such other provisions as Heftel may reasonably
specify.

(ii) Upon surrender to the Exchange Agent of a Tichenor
Certificate for cancellation, together with a duly completed and
executed letter of transmittal and any other required documents
(including, in the case of any Person constituting an "affiliate"
of Tichenor for purposes of Rule 145(c) and (d) under the
Securities Act, a written agreement from such Person as described
in Section 5.11, if not theretofore delivered to Heftel), (A) (x)
the holder (other than Parent and Affiliates of Parent) of such
Tichenor Certificate (other than Tichenor Certificates
representing Tichenor Senior Preferred) shall be entitled to
receive in exchange therefor a Heftel Certificate representing the
number of whole shares of Heftel Common Stock that such holder has
the right to receive pursuant to Section 2.4(b)(i), (iii), or
(vi), as the case may be, any cash in lieu of fractional shares of
Heftel Common Stock as provided in Section 2.5(e), and any unpaid
dividends and distributions that such holder has the right to
receive pursuant to Section 2.5(c) (after giving effect to any
required withholding of taxes), (y) Parent and Affiliates of
Parent holding a Tichenor Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of
whole shares of New Heftel Class B Common Stock that such holder
has the right to receive pursuant to Section 2.4(b)(i)(v), any
cash in lieu of fractional shares of New Heftel Class B Common
Stock as provided in Section 2.5(e), and any unpaid dividends and
distributions that such holder has the right to receive pursuant
to Section 2.5(c) (after giving effect to any required withholding
of taxes), and (z) the holder of such Tichenor Certificate
representing Tichenor Senior Preferred shall be entitled to
receive in exchange therefor cash pursuant to Section 2.4(b)(ii);
and (B) the Tichenor Certificate so surrendered shall forthwith be
cancelled. No interest shall be paid or accrued on the cash in
lieu of fractional shares and unpaid dividends and distributions,
if any, payable to holders of Tichenor Certificates. Upon
surrender to the Exchange Agent by Parent or an Affiliate of
Parent of a certificate representing Heftel Common Stock for
cancellation, together with a duly completed and executed letter
of transmittal and any other required documents, the holder of
such certificate shall be entitled to receive in exchange therefor
a certificate representing the number of whole shares of New
Heftel Class B Common Stock that such holder has the right to
receive pursuant to Section 2.4(b)(ix), and any unpaid dividends
and distributions that such holder has the right to receive
pursuant to Section 2.5(c) (after giving effect to any required
withholding of taxes) and the certificate so surrendered shall
forthwith be cancelled. No interest shall be paid or accrued on
the unpaid dividends and distributions, if any, payable to holders
of the certificates representing Heftel Common Stock surrendered
for cancellation.

<PAGE> 20

(iii) In the event of a transfer of ownership of Tichenor
Common Stock, Tichenor Junior Preferred or the Tichenor Warrant,
if outstanding as of the Effective Time, that is not registered in
the transfer records of Tichenor, a Heftel Certificate
representing the appropriate number of shares of Heftel Common
Stock (along with any cash in lieu of fractional shares and any
unpaid dividends and distributions that such holder has the right
to receive) may be issued or paid to a transferee if the Tichenor
Certificate representing such Tichenor securities is presented to
the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and to evidence that any
applicable stock transfer or similar taxes have been paid.

(iv) Until surrendered as contemplated by this Section
2.5(b), (A) each Tichenor Certificate (other than Tichenor
Certificates representing Tichenor Senior Preferred and Tichenor
Certificates representing Heftel Common Stock owned by Parent and
Affiliates of Parent) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender a Heftel Certificate representing shares of Heftel
Common Stock as provided in Section 2.4(b)(i), (iii) or (vi), as
the case may be (along with any cash in lieu of fractional shares
and any unpaid dividends and distributions), (B) each Tichenor
Certificate representing Tichenor Senior Preferred shall be deemed
at any time after the Effective Time to represent only the right
to receive upon such surrender cash as provided in Section
2.4(b)(ii), (C) each certificate representing Heftel Common Stock
held by Parent and any Affiliate of Parent shall be deemed at any
time after the Effective Time to represent only the right to
receive upon such surrender a certificate representing shares of
New Heftel Class B Common Stock as provided in Section 2.4(b)(ix)
(along with any unpaid dividends and distributions), and (D) each
Tichenor Certificate held by Parent and Affiliates of Parent shall
be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender a certificate
representing New Heftel Class B Common Stock as provided in
Section 2.4(b)(v) (along with any cash in lieu of fractional
shares and any unpaid dividends and distributions).

(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to Heftel Common Stock declared or made
after the Effective Time with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Tichenor Certificate. Subject to the
effect of applicable laws, (i) at the time of the surrender of a Tichenor
Certificate for exchange in accordance with the provisions of this Section 2.5,
there shall be paid to the surrendering holder, without interest, the amount of
dividends or other distributions (having a record date after the Effective Time
but on or prior to surrender and a payment date on or prior to surrender)
theretofore paid with respect to the number of whole shares of Heftel Common
Stock or New Heftel Class B Common Stock, as applicable, that such holder is
entitled to receive (less the amount of any withholding taxes that may be
required with respect thereto); and (ii) at the appropriate payment date, there
shall be paid to the surrendering holder, without interest, the amount of
dividends or other distributions (having a record date after the Effective Time
but on or prior to surrender and a payment date subsequent to surrender) payable
with respect to the number of whole shares of Heftel Common Stock or New Heftel
Class B Common Stock, as applicable, that such holder receives (less the amount
of any withholding taxes that may be required with respect thereto). Subject to
the effect of applicable laws, (i) at the time Parent or an Affiliate of Parent
surrenders Heftel Common Stock for

<PAGE> 21
exchange in accordance with the provisions of Section 2.4(b)(ix) and this
Section 2.5, there shall be paid to the surrendering holder, without interest,
the amount of dividends or other distributions (having a record date after the
Effective Time but on or prior to surrender and a payment date on or prior to
surrender) theretofore paid with respect to the number of whole shares of New
Heftel Class B Common Stock that such holder is entitled to receive (less the
amount of any withholding taxes that may be required with respect thereto); and
(ii) at the appropriate payment date, there shall be paid to the surrendering
holder, without interest, the amount of dividends or other distributions (having
a record date after the Effective Time but on or prior to surrender and a
payment date subsequent to surrender) payable with respect to the number of
whole shares of New Heftel Class B Common Stock that such holder receives (less
the amount of any withholding taxes that may be required with respect thereto).

(d) NO FURTHER OWNERSHIP RIGHTS IN TICHENOR SECURITIES. All shares
of Heftel Common Stock and New Heftel Class B Common Stock, as applicable,
issued upon the surrender for exchange of (i) shares of Tichenor Common Stock,
(ii) shares of Tichenor Junior Preferred and (iii) the Tichenor Warrant, if
outstanding as of the Effective Time, in accordance with the terms hereof
(including any cash paid pursuant to Section 2.5(c) or (e)) and the cash paid
upon the surrender for exchange of Tichenor Senior Preferred shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Tichenor
securities. After the Effective Time, there shall be no further registration of
transfers on the Surviving Corporation's stock transfer books or other records
of the shares of Tichenor Common Stock, Tichenor Senior Preferred, Tichenor
Junior Preferred or the Tichenor Warrant, in each case that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, a
Tichenor Certificate is presented to the Surviving Corporation for any reason,
it shall be cancelled and exchanged as provided in this Section 2.5.

(e) TREATMENT OF FRACTIONAL SHARES. No Heftel Certificates or
scrip representing fractional shares of Heftel Common Stock or New Heftel Class
B Common Stock, as applicable, shall be issued in the Merger and, except as
provided in this Section 2.5(e), no dividend or other distribution, stock split
or interest shall relate to any such fractional share, and such fractional share
shall not entitle the owner thereof to vote or to any other rights of a
stockholder of Heftel. In lieu of any fractional share of Heftel Common Stock or
New Heftel Class B Common Stock, as applicable, to which a holder of Tichenor
Common Stock, Tichenor Junior Preferred or the Tichenor Warrant, if outstanding
as of the Effective Time, would otherwise be entitled, such holder, upon
surrender of a Tichenor Certificate as described in this Section, shall be paid
an amount in cash (without interest) determined by multiplying (i) the Share
Price by (ii) the fraction of a share of Heftel Common Stock or New Heftel Class
B Common Stock to which such holder would otherwise be entitled, in which case
Heftel shall make available to the Exchange Agent, without regard to any other
cash being provided to the Exchange Agent, the amount of cash necessary to make
such payments.

(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
and cash held by the Exchange Agent in accordance with the terms of this Section
2.5 that remains unclaimed by the former shareholders of Tichenor for a period
of one year following the Effective Time shall be delivered to Heftel, upon
demand. Thereafter, any former securityholders of Tichenor who have not
theretofore complied with the provisions of this Section 2.5 shall look only to
Heftel for payment of their claim for Heftel Common Stock or New Heftel

<PAGE> 22
Class B Common Stock, any cash in lieu of fractional shares of Heftel Common
Stock or New Heftel Class B Common Stock and any dividends or distributions with
respect to Heftel Common Stock or New Heftel Class B Common Stock (all without
interest).

(g) NO LIABILITY. Neither Parent, Heftel, Heftel Sub, Tichenor,
the Surviving Corporation, the Exchange Agent nor any other Person shall be
liable to any former holder of Tichenor securities for any amount properly
delivered to any public official pursuant to any applicable abandoned property,
escheat or similar law. Any amounts remaining unclaimed by former holders of
Tichenor Common Stock, Tichenor Junior Preferred, Tichenor Senior Preferred or
the Tichenor Warrant, if outstanding as of the Effective Time, for a period of
three years following the Effective Time (or such earlier date immediately prior
to the time at which such amounts would otherwise escheat to or become property
of any governmental entity) shall, to the extent permitted by applicable law,
become the property of Heftel, free and clear of any claims or interest of any
such holders or their successors, assigns or personal representatives previously
entitled thereto.

(h) LOST, STOLEN, OR DESTROYED TICHENOR CERTIFICATES. If any
Tichenor Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such Tichenor Certificate to
be lost, stolen or destroyed and, if required by Heftel, the posting by such
Person of a bond, in such reasonable amount as Heftel may direct, as indemnity
against any claim that may be made against it with respect to such Tichenor
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Tichenor Certificate the shares of Heftel Common Stock (along with any
cash in lieu of fractional shares pursuant to Section 2.5(e) and any unpaid
dividends and distributions pursuant to Section 2.5(c)) or cash (with respect to
Tichenor Senior Preferred) deliverable with respect thereto pursuant to this
Agreement.

(i) EXCHANGE AT CLOSING. Notwithstanding the provisions of Section
2.5(b), each record holder of a Tichenor Certificate who surrenders such
Tichenor Certificate for cancellation to the Surviving Corporation at the
Closing, together with a duly executed letter of transmittal (which shall be
available at the Closing), shall be entitled to receive in exchange therefor (i)
cash in the amount such holder has the right to receive pursuant to Section
2.4(b)(ii), payable in cash or by wire transfer of immediately available funds
on the Closing Date, or (ii) certificates representing Heftel Common Stock in
the amount such holder has the right to receive pursuant to Section 2.4(b)(i),
(iii), (v) or (vi).

2.6 CLOSING. The Closing shall take place on the Closing Date at such
time and place as is agreed upon by Heftel and Tichenor.

2.7 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
immediately when a Certificate of Merger is issued by the Secretary of State of
Texas or at such time thereafter as is provided in the Articles of Merger (the
"EFFECTIVE TIME"). As soon as practicable after the Closing, the Articles of
Merger shall be filed, and the Effective Time shall occur, on the Closing Date;
provided, however, that the Articles of Merger may be filed prior to the Closing
Date or prior to the Closing so long as it provides for an effective time that
occurs on the Closing Date immediately after the Closing.

<PAGE> 23
2.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. Subject to the
provisions of Section 8.9, each of Parent, Heftel, Heftel Sub and Tichenor shall
use all reasonable efforts to take all such actions as may be necessary or
appropriate in order to effectuate the Merger under the TBCA as promptly as
commercially practicable. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of either of Heftel
Sub or Tichenor, the officers and directors of the Surviving Corporation are
fully authorized, in the name of the Surviving Corporation or otherwise to take,
and shall take, all such lawful and necessary action.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF TICHENOR

Tichenor hereby represents and warrants to Parent (and upon
consummation of the Assignment Agreement, to Heftel and Heftel Sub), as of the
date of the Original Agreement, as follows:

3.1 ORGANIZATION. Each of the Tichenor Companies (a) is a corporation
or partnership duly organized, validly existing and in good standing under the
laws of its state of organization, (b) has the requisite power and authority to
own, lease and operate its properties and to conduct its business as it is
presently being conducted, and (c) is duly qualified to do business as a foreign
entity, and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it or the nature of its activities makes such
qualification necessary (except where any failure to be so qualified as a
foreign entity or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Tichenor). Copies of the
certificate or articles of incorporation and bylaws, or partnership agreement of
each of the Tichenor Companies have heretofore been delivered to Parent, and
such copies are accurate and complete as of the date of the Original Agreement.
Tichenor has no corporate or other subsidiaries other than the Tichenor
Subsidiaries.

3.2 AUTHORITY AND ENFORCEABILITY. Tichenor has the requisite corporate
power and authority to enter into and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Tichenor, and no other corporate proceedings on the part of Tichenor are
necessary to authorize the execution or delivery of this Agreement or, other
than the approval of the Merger and this Agreement by the shareholders of
Tichenor, to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Tichenor and (assuming that this
Agreement constitutes a valid and binding obligation of Parent and, upon
consummation of the Assignment Agreement, Heftel and Heftel Sub) constitutes a
valid and binding obligation of Tichenor enforceable against Tichenor in
accordance with its terms.

3.3 CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit from, any
Governmental Authority is required

<PAGE> 24
by or with respect to any of the Tichenor Companies in connection with the
execution and delivery of this Agreement by Tichenor or the consummation by
Tichenor of the transactions contemplated hereby, except for the following: (a)
any such consent, approval, order, authorization, registration, declaration,
filing or permit which the failure to obtain or make would not, individually or
in the aggregate, have a Material Adverse Effect on Tichenor; (b) the filing of
the Articles of Merger with the Secretary of State of Texas pursuant to the
provisions of the TBCA; (c) the filing of a pre-merger notification report by
Tichenor under the HSR Act and the expiration or termination of the applicable
waiting period; (d) compliance with the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby and the obtaining
from the SEC of such orders as may be so required; (e) such filings and
approvals as may be required by any applicable state securities, "blue sky" or
takeover laws or Environmental Laws; (f) such filings and approvals as may be
required by any foreign pre-merger notification, securities, corporate or other
law, rule or regulation; and (g) such filings and approvals as may be required
by the FCC and the Communications Act. Except as set forth in the DISCLOSURE
LETTER, no Third-Party Consent is required by or with respect to any of the
Tichenor Companies in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.

3.4 FCC MATTERS.

(a) Tichenor holds the Tichenor FCC Licenses set forth and
described in the DISCLOSURE LETTER. The Tichenor FCC Licenses constitute all of
the licenses, permits and authorizations from the FCC that are necessary or
required for and/or used in the business and operations of the Tichenor
Stations, except where the failure to hold any such Tichenor FCC License would
not have a Material Adverse Effect on Tichenor. The Tichenor FCC Licenses are
valid and in full force and effect through the dates set forth in the DISCLOSURE
LETTER unimpaired by any condition which could have a Material Adverse Effect on
Tichenor. Except as set forth in the DISCLOSURE LETTER, no application, action
or proceeding is pending for the renewal or modification of any of the Tichenor
FCC Licenses, and, except for actions or proceedings affecting radio broadcast
stations generally, no application, complaint, action or proceeding is pending
or, to Tichenor's knowledge, threatened that may result in the (i) denial of an
application for renewal, (ii) the revocation, modification, non-renewal or
suspension of any of the Tichenor FCC Licenses, (iii) the issuance of a
cease-and-desist order or (iv) the imposition of any administrative or judicial
sanction with respect to any of the Tichenor Stations.

(b) There is not now issued or outstanding or, to Tichenor's
knowledge, threatened any investigation, proceeding, notice of violation or
material complaint against Tichenor at the FCC. Tichenor has no knowledge of any
Person who has manifested an intention to contest the renewal of any Tichenor
FCC License for any of the Tichenor Stations.

(c) The Tichenor Stations, their respective physical facilities,
electrical and mechanical systems and transmitting and studio equipment are
being operated in all material respects in compliance with the specifications of
the applicable Tichenor FCC Licenses. Tichenor has complied in all material
respects with all requirements of the FCC and the Federal Aviation
Administration with respect to the construction and/or alteration of Tichenor's
antenna structures, and "no hazard" determinations for each antenna structure
have been obtained.

<PAGE> 25
(d) Tichenor and the Tichenor Stations are in compliance in all
material respects with the Communications Act.

(e) Tichenor knows of no facts, conditions or events relating to
Tichenor or the Tichenor Stations that might cause the FCC to have a legally
valid basis to refuse to approve the change of control of the Tichenor FCC
Licenses as provided for in this Agreement or not to renew any of the Tichenor
FCC Licenses in the ordinary course.

(f) In accordance with the Communications Act, (i) Tichenor has
not issued to Aliens, either individually or in the aggregate, in excess of 25%
of the total number of shares of capital stock of Tichenor outstanding at any
time and has not permitted the transfer on the books of Tichenor of any capital
stock to any Alien that would result in Aliens holding in excess of 25% of the
total number of shares of capital stock of Tichenor then outstanding and (ii) no
Alien or Aliens are entitled to vote or direct or control the vote of more than
25% of (A) the total number of shares of capital stock of Tichenor outstanding
and entitled to vote generally for the election of directors, or (B) the total
voting power of all shares of capital stock of Tichenor outstanding and entitled
to vote generally for the election of directors.

3.5 FINANCIAL STATEMENTS. The Tichenor Financial Statements were
prepared in conformity with GAAP applied on a consistent basis during the
periods involved (except the unaudited statements do not account for income
taxes in conformity with GAAP and other items as may be indicated in the notes
thereto) and present fairly, in all material respects, the consolidated
financial position of Tichenor and the Tichenor Subsidiaries as of their
respective dates and for the periods then ended, and the consolidated results of
their operations and, with respect to the audited Tichenor Financial Statements,
their consolidated cash flows for the years then ended.

3.6 CAPITAL STRUCTURE.

(a) The authorized capital stock of Tichenor consists of 9,897,000
shares of Tichenor Common Stock, 100,000 shares of Tichenor Junior Preferred and
3,000 shares of Tichenor Senior Preferred.

(b) There are issued and outstanding (i) 684,168.93 shares of
Tichenor Common Stock, (ii) 35,772.48 shares of Tichenor Junior Preferred, (iii)
3,000 shares of Tichenor Senior Preferred and (iv) the Tichenor Warrant relating
to 28,161.70 shares of Tichenor Common Stock. 59,535.16 shares of Tichenor
Common Stock and 1,057 shares of Tichenor Junior Preferred are held by Tichenor
as treasury stock.

(c) Except as set forth in Section 3.6(b), there are outstanding
(i) no shares of capital stock or other voting securities of Tichenor, (ii) no
securities of Tichenor or any other Person convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of Tichenor,
and (iii) except as set forth in the DISCLOSURE LETTER, no subscriptions,
options, warrants, calls, rights (including preemptive rights), commitments,
understandings or agreements to which Tichenor is a party or by which it is
bound obligating Tichenor to issue, deliver, sell, purchase, redeem, acquire or
register shares of capital stock or other voting securities of Tichenor (or
securities convertible into or exchangeable or exercisable for shares

<PAGE> 26
of capital stock or other voting securities of Tichenor) or obligating Tichenor
to grant, extend or enter into any such subscription, option, warrant, call,
right, commitment, understanding or agreement.

(d) All outstanding shares of Tichenor capital stock are validly
issued, fully paid and nonassessable and, except as set forth in the DISCLOSURE
LETTER, are not subject to any preemptive right.

(e) Except as set forth in the DISCLOSURE LETTER, all outstanding
shares of capital stock and other voting securities of each of the Tichenor
Subsidiaries are owned, directly or indirectly, by Tichenor, free and clear of
all Liens, claims and options of any nature (except for Permitted Encumbrances).
Except as set forth in the DISCLOSURE LETTER, there are outstanding (i) no
securities of the Tichenor Subsidiaries or any other Person convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities of the Tichenor Subsidiaries, and (ii) no subscriptions, options,
warrants, calls, rights (including preemptive rights), commitments,
understandings or agreements to which any of the Tichenor Subsidiaries is a
party or by which it is bound obligating any of the Tichenor Subsidiaries to
issue, deliver, sell, purchase, redeem or acquire shares of capital stock or
other voting securities of any of the Tichenor Subsidiaries (or securities
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities of any of the Tichenor Subsidiaries) or obligating any
of the Tichenor Subsidiaries to grant, extend or enter into any such
subscription, option, warrant, call, right, commitment, understanding or
agreement.

(f) Except as otherwise set forth in the DISCLOSURE LETTER, there
is no shareholder agreement, voting trust or other agreement or understanding to
which Tichenor is a party or by which it is bound relating to the voting of any
shares of the capital stock of any of the Tichenor Companies.

3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise set
forth in the DISCLOSURE LETTER or as contemplated by this Agreement, since May
31, 1996, the Tichenor Companies, taken as a whole, have not suffered any
Material Adverse Effect resulting from any activities pursuant to which the
Tichenor Companies:

(a) Discharged or satisfied any Lien or paid any obligation or
liability, absolute or contingent, other than current liabilities incurred and
paid in the ordinary course of business and consistent with past practices;

(b) Paid or declared any dividends or distributions, purchased,
redeemed, acquired or retired any indebtedness, stock or other securities from
its shareholders, other securityholders or any other Person, made any loans or
advances or guaranteed any loans or advances to any Person (other than loans,
advances or guaranties made to subsidiaries or in the ordinary course of
business and consistent with past practices);

(c) Except for Permitted Encumbrances, suffered or permitted any
Lien to arise or be granted or created against or upon any of its assets;

<PAGE> 27
(d) Cancelled, waived or released any rights or claims against, or
indebtedness owed by, third parties in excess of $25,000;

(e) Amended its certificate or articles of incorporation or
bylaws;

(f) Made or permitted any amendment, supplement, modification or
termination of any Tichenor Material Agreement;

(g) Sold, leased, transferred, assigned or otherwise disposed of
any assets that, individually or in the aggregate, had a value at the time of
such lease, transfer, assignment or disposition of $500,000 or more (and, in
each case where a sale, lease, transfer, assignment or other disposition was
made, it was made for fair consideration in the ordinary course of business);

(h) Paid, loaned or advanced (other than the payment, advance or
reimbursement of expenses in the ordinary course of business) any amounts to, or
sold, transferred or leased any of its assets to, or entered into any other
transactions with, any of its Affiliates, other than loans and advances to
Tichenor Subsidiaries;

(i) Made any material change in any of the accounting principles
followed by it or the method of applying such principles;

(j) Entered into any material transactions (other than as
contemplated by this Agreement) except in the ordinary course of business and
consistent with past practices;

(k) Accelerated, terminated or cancelled any agreement, contract,
lease or license (or series of related agreements, contracts, leases and
licenses) involving more than $100,000 to which any of the Tichenor Companies is
a party or by which any of them is bound;

(l) Issued any note, bond or other debt security or created,
incurred, assumed or guaranteed any indebtedness for borrowed money or
capitalized lease obligations involving more than $100,000 in the aggregate
(other than pursuant to the Bank Credit Agreement or the Term Loan);

(m) Delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;

(n) Issued, sold or otherwise disposed of any of its capital stock
or granted any options, warrants or other rights to purchase or obtain
(including upon conversion, exchange or exercise) any of its capital stock;

(o) Expended or committed to expend capital in excess of $500,000;

(p) Made any change in tax elections or the manner taxes are
reported;

(q) Accelerated the vesting period of any option or warrant; or

<PAGE> 28
(r) Agreed, whether in writing or otherwise, to do any of the
foregoing.

3.8 LITIGATION. Except as otherwise set forth in the DISCLOSURE LETTER,
(a) no litigation, arbitration, investigation or other proceeding of any
Governmental Authority is pending or, to the knowledge of Tichenor, threatened
against any of the Tichenor Companies or their respective assets which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on Tichenor; (b) Tichenor has no knowledge of any facts that are likely
to give rise to any litigation, arbitration, investigation or other proceeding
of any Governmental Authority which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on Tichenor; and (c) no
Tichenor Company is subject to any outstanding injunction, judgment, order,
decree or ruling. There is no litigation, proceeding or investigation pending
or, to the knowledge of Tichenor, threatened against or affecting any of the
Tichenor Companies that questions the validity or enforceability of this
Agreement or any other document, instrument or agreement to be executed and
delivered by Tichenor in connection with the transactions contemplated hereby.

3.9 ENVIRONMENTAL MATTERS. Except as set forth in the DISCLOSURE
LETTER, to the knowledge of Tichenor:

(a) Each of the Tichenor Companies has conducted its business and
operated its assets, and is conducting its business and operating its assets, in
material compliance with all applicable Environmental Laws;

(b) None of the Tichenor Companies has been notified by any
Governmental Authority or other third party that any of the operations or assets
of any of the Tichenor Companies is the subject of any investigation or inquiry
by any Governmental Authority or other third party evaluating whether any
material remedial action is needed to respond to a release or threatened release
of any Hazardous Material or to the improper storage or disposal (including
storage or disposal at offsite locations) of any Hazardous Material;

(c) None of the Tichenor Companies and no other Person has filed
any notice under any federal, state or local law indicating that (i) any of the
Tichenor Companies is responsible for the improper release into the environment,
or the improper storage or disposal, of any Hazardous Material, or (ii) any
Hazardous Material is improperly stored or disposed of upon any property of any
of the Tichenor Companies;

(d) None of the Tichenor Companies has any material contingent
liability in connection with (i) the release or threatened release into the
environment at, beneath or on any property now or previously owned or leased by
any of the Tichenor Companies, or (ii) the storage or disposal, of any Hazardous
Material;

(e) None of the Tichenor Companies has received any claim,
complaint, notice, inquiry or request for information involving any matter which
remains unresolved as of the date of the Original Agreement with respect to any
alleged violation of any Environmental Law or regarding potential liability
under any Environmental Law relating to operations or conditions of any
facilities or property (including off-site storage or disposal of any Hazardous
Material

<PAGE> 29
from such facilities or property) currently or formerly owned, leased or
operated by any of the Tichenor Companies;

(f) No property now or previously owned, leased or operated by any
of the Tichenor Companies is listed on the National Priorities List pursuant to
CERCLA or on the CERCLIS or on any other federal or state list as sites
requiring investigation or cleanup;

(g) None of the Tichenor Companies is directly transporting, has
directly transported, is directly arranging for the transportation of, or has
directly arranged for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar federal or state list or which is the subject of
federal, state or local enforcement actions or other investigations that may
lead to material claims against such company for remedial work, damage to
natural resources or personal injury, including claims under CERCLA;

(h) There are no sites, locations or operations at which any of
the Tichenor Companies is currently undertaking, or except as disclosed in the
DISCLOSURE LETTER, has completed, any remedial or response action relating to
any such disposal or release, as required by Environmental Laws; and

(i) All underground storage tanks and solid waste disposal
facilities owned or operated by the Tichenor Companies are used and operated in
material compliance with Environmental Laws.

3.10 BROKERS. Except as set forth on the DISCLOSURE LETTER, no broker,
finder, investment banker or other Person is or will be, in connection with the
transactions contemplated by this Agreement, entitled to any brokerage, finder's
or other fee or compensation based on any arrangement or agreement made by or on
behalf of Tichenor and for which Parent, Heftel, Heftel Sub or any of the
Tichenor Companies will have any obligation or liability.

3.11 VOTE REQUIRED. The affirmative vote or written consent of the
holders of a majority of the outstanding shares of each of the Tichenor Common
Stock, Tichenor Junior Preferred and Tichenor Senior Preferred and the
affirmative vote of the Tichenor Common Stock and the Tichenor Junior Preferred
voting together as a single class, as provided in Tichenor's articles of
incorporation, as amended, are the only votes of the holders of any class or
series of Tichenor capital stock or other voting securities necessary to approve
this Agreement, the Merger and the transactions contemplated hereby. As of the
date hereof, the affirmative written consent of the Tichenor Senior Preferred to
approve this Agreement and the Merger has been obtained.

<PAGE> 30
ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PARENT,
HEFTEL AND HEFTEL SUB

4.1 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby represents
and warrants to Tichenor as follows:

(a) ORGANIZATION. Parent (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of Texas, (ii)
has the requisite power and authority to own, lease and operate its properties
and to conduct its business as it is presently being conducted, and (iii) is
duly qualified to do business as a foreign corporation, and is in good standing,
in each jurisdiction where the character of the properties owned or leased by it
or the nature of its activities makes such qualification necessary (except where
any failure to be so qualified as a foreign corporation or to be in good
standing would not, individually or in the aggregate, have a material adverse
effect on Parent). Copies of the articles of incorporation and bylaws of Parent
have heretofore been delivered to Tichenor, and such copies are accurate and
complete as of the date of the Original Agreement.

(b) AUTHORITY AND ENFORCEABILITY. Parent has the requisite
corporate power and authority to enter into and deliver this Agreement and to
consummate the transactions applicable to Parent contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions applicable to Parent contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent, and, other
than the approval of the Heftel Proposal by the board of directors and
stockholders of Heftel, no other corporate proceedings on the part of Parent are
necessary to authorize the execution or delivery of this Agreement. This
Agreement has been duly and validly executed and delivered by Parent and
(assuming that this Agreement constitutes a valid and binding obligation of
Tichenor) constitutes a valid and binding obligation of Parent enforceable
against Parent in accordance with its terms.

(c) CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit from, any
Governmental Authority is required by or with respect to Parent in connection
with the execution and delivery of this Agreement by Parent, except for the
following: (i) any such consent, approval, order, authorization, registration,
declaration, filing or permit which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on Parent and
its subsidiaries taken as a whole; (ii) the filing of the Articles of Merger
with the Secretary of State of Texas pursuant to the provisions of the TBCA;
(iii) the filing of a pre-merger notification report by Parent under the HSR Act
and the expiration or termination of the applicable waiting period; (iv)
compliance with the Exchange Act and the Securities Act and the rules and
regulations of the SEC thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby and the obtaining from the
SEC of such orders as may be so required; (v) the filing with Nasdaq of a
listing application relating to the shares of Heftel Common Stock to be issued
pursuant to the Merger and the obtaining from Nasdaq of its approvals thereof;
(vi) such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws or Environmental Laws; and (vii) such
filings and approvals as may be required

<PAGE> 31
by any foreign pre-merger notification, securities, corporate or other law, rule
or regulation and (viii) such filings and approvals as may be required by the
FCC and the Communications Act. No Third-Party Consent is required by or with
respect to Parent in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) any such Third-Party Consent which the failure to obtain would not,
individually or in the aggregate, have a material adverse effect on Parent, and
(ii) the valid approval of the Heftel Proposal by the stockholders of Heftel.

(d) BROKERS. No broker, finder, investment banker or other Person
is or will be, in connection with the Merger, entitled to any brokerage,
finder's or other fee or compensation based on any arrangement or agreement made
by or on behalf of Parent and for which Parent, Heftel or Heftel Sub or any of
the Tichenor Companies will have any obligation or liability.

4.2 REPRESENTATIONS AND WARRANTIES OF HEFTEL AND HEFTEL SUB. Upon
consummation of the Assignment Agreement pursuant to Section 8.9, Heftel and
Heftel Sub shall be deemed to have jointly and severally represented and
warranted to Tichenor as of such date as follows:

(a) ORGANIZATION. Each of the Heftel Companies (i) is a
corporation or partnership duly organized, validly existing and in good standing
under the laws of its state of organization, (ii) has the requisite power and
authority to own, lease and operate its properties and to conduct its business
as it is presently being conducted, and (iii) is duly qualified to do business
as a foreign entity, and is in good standing, in each jurisdiction where the
character of the properties owned or leased by it or the nature of its
activities makes such qualification necessary (except where any failure to be so
qualified as a foreign corporation or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Heftel).
Copies of the certificate or articles of incorporation and bylaws, or
partnership agreement, of each of the Heftel Companies have heretofore been
delivered to Tichenor, and such copies are accurate and complete as of the date
of the Assignment Agreement.

(b) AUTHORITY AND ENFORCEABILITY. Each of Heftel and Heftel Sub
has the requisite corporate power and authority to enter into and deliver this
Agreement and to consummate the transactions contemplated hereby. The Board of
Directors of Heftel has taken all necessary action to exempt the transactions
contemplated herein from the provisions of Section 203 of the DGCL. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Heftel and Heftel Sub, including
approval by the board of directors and stockholders of Heftel and Heftel Sub,
and, other than the approval of the Heftel Proposal by the stockholders of
Heftel and Heftel Sub, no other corporate proceedings on the part of Heftel or
Heftel Sub are necessary to authorize the execution or delivery of this
Agreement. This Agreement has been duly and validly executed and delivered by
Heftel and Heftel Sub and (assuming that this Agreement constitutes a valid and
binding obligation of Tichenor) constitutes a valid and binding obligation of
Heftel enforceable against Heftel in accordance with its terms.

<PAGE> 32
of this Agreement by Heftel and Heftel Sub or the consummation by Heftel and
Heftel Sub of the transactions contemplated hereby, except for the following:
(i) any such consent, approval, order, authorization, registration, declaration,
filing or permit which the failure to obtain or make would not, individually or
in the aggregate, have a Material Adverse Effect on Heftel; (ii) the filing of
the Articles of Merger with the Secretary of State of Texas pursuant to the
provisions of the TBCA; (iii) the filing of a pre-merger notification report by
Heftel under the HSR Act and the expiration or termination of the applicable
waiting period; (iv) the filing with the SEC of the Registration Statement and
such reports under Section 13(a) of the Exchange Act and such other compliance
with the Exchange Act and the Securities Act and the rules and regulations of
the SEC thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby and the obtaining from the SEC of such orders
as may be so required; (v) the filing with Nasdaq of a listing application
relating to the shares of Heftel Common Stock to be issued pursuant to the
Merger and the obtaining from Nasdaq of its approvals thereof; (vi) such filings
and approvals as may be required by any applicable state securities, "blue sky"
or takeover laws or Environmental Laws; (vii) such filings and approvals as may
be required by any foreign pre-merger notification, securities, corporate or
other law, rule or regulation; and (viii) such filings and approvals as may be
required by the FCC and the Communications Act. No Third-Party Consent is
required by or with respect to Heftel or Heftel Sub in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) consent of the lenders pursuant to the
Heftel Credit Agreement, (ii) any such Third-Party Consent which the failure to
obtain would not, individually or in the aggregate, have a Material Adverse
Effect on Heftel, and (iii) the valid approval of the Heftel Proposal by the
stockholders of Heftel.

(d) CAPITALIZATION. As of June 1, 1996, the authorized capital
stock of Heftel and the number, class and/or series of the shares of the capital
stock of Heftel outstanding or reserved as of the date thereof was as set forth
below. All of the outstanding shares of the capital stock of Heftel are validly
issued, fully paid, nonassessable and free of preemptive rights, and all
outstanding securities convertible into Heftel Common Stock are duly authorized
and validly issued. Except as set forth below, as of June 1, 1996, there were no
shares of capital stock or other securities of Heftel outstanding and no
outstanding options, warrants, rights (including any preemptive rights), calls
or commitments of any character whatsoever to which Heftel is a party or is
bound, requiring the issuance, sale, transfer or registration by Heftel of any
shares of capital stock of Heftel or any securities convertible into or
exchangeable or exercisable for, or rights to purchase or otherwise acquire, any
shares of capital stock of Heftel.

HEFTEL CAPITALIZATION

<TABLE>
<CAPTION>
Class Authorized Outstanding
----- ---------- -----------

<S> <C> <C>
Class A Common Stock 30,000,000 6,336,610
$0.001 par value

Class B Common Stock 7,000,000 3,769,176
$0.001 par value
</TABLE>

<PAGE> 33
<TABLE>
<S> <C> <C>
Preferred Stock 5,000,000 335,634
$0.001 par value shares of Series A
</TABLE>

As of June 1, 1996, Heftel has outstanding options to purchase 591,839 shares of
Class A Common Stock and outstanding warrants to purchase 850,106 shares of
Class B Common Stock.

(e) FINANCIAL STATEMENTS OF HEFTEL. As of their respective dates,
Heftel's Annual Report on Form 10-K for the fiscal years ended September 30,
1994 and 1995, and Quarterly Reports for the quarters ended December 31, 1995
and March 31, 1996, and all other forms, reports, registration statements and
other statements and documents filed by Heftel with the SEC since July 27, 1994
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. All of the consolidated financial statements of Heftel included or
incorporated by reference in the Forms 10-K and 10-Q filed with the SEC prior to
the date of the Original Agreement were prepared in accordance with generally
accepted accounting principles consistently applied (except, as to the quarterly
financials, for normal year-end adjustments), and present fairly the financial
position, results of operations and changes in financial position of Heftel and
its consolidated subsidiaries as of the dates and for the periods indicated. All
of the consolidated financial statements of Heftel included or incorporated by
reference in the Forms 10-K and 10-Q filed with the SEC between the date of the
Original Agreement and the Closing Date will be prepared in accordance with
generally accepted accounting principles consistently applied (except, as to the
quarterly financials, for normal year-end adjustments), and will present fairly
the financial position, results of operations and changes in financial position
of Heftel and its consolidated subsidiaries as of the dates and for the periods
indicated.

(f) BROKERS. No broker, finder, investment banker or other Person
is or will be, in connection with Merger, entitled to any brokerage, finder's or
other fee or compensation based on any arrangement or agreement made by or on
behalf of Heftel or Heftel Sub and for which Parent, Heftel or Heftel Sub or any
of the Tichenor Companies will have any obligation or liability.

(g) VOTE REQUIRED. The affirmative votes or written consents of
the holders of a majority of the outstanding shares of Heftel Common Stock and
Heftel Sub Common Stock are the only votes of the holders of any class or series
of Heftel or Heftel Sub, respectively, capital stock or other voting securities
necessary to approve the Heftel Proposal.

ARTICLE 5

COVENANTS

5.1 CONDUCT BY PARENT PENDING CLOSING. Subject to Section 8.9(b),
Parent covenants and agrees with Tichenor that, from the date of this Agreement
until the earlier to occur of the termination of this Agreement pursuant to
Section 7 and the Effective Time, without the prior written consent of Tichenor:

<PAGE> 34
(a) Parent will (i) use its reasonable efforts to cause Heftel to
approve and execute the Assignment Agreement and (ii) use its reasonable best
efforts to obtain all required approvals from the FCC in connection with this
Agreement and the transactions contemplated herein.

(b) Parent will not (i) waive the performance by Heftel of any
covenants of Heftel contained in the Tender Offer Agreement, (ii) waive the
satisfaction of any conditions precedent of Parent or Clear Channel Radio, Inc.
to the obligation to close the transactions contemplated by the Tender Offer
Agreement, or (iii) amend any of the covenants, conditions, or termination
provisions contained in the Tender Offer Agreement, in each case without the
prior consent of Tichenor, which consent shall not be unreasonably withheld.

(c) Parent will not engage in any practice or take any action that
would cause, or permit by inaction, any of the representations and warranties
contained in Section 4.1(a), (c) or (d) to become untrue.

5.2 CONDUCT OF BUSINESS BY TICHENOR PENDING CLOSING. Tichenor
covenants and agrees with Parent and, upon consummation of the Assignment
Agreement pursuant to Section 8.9, with Heftel and Heftel Sub, that, from the
date of this Agreement until the Effective Time, each of the Tichenor Companies
will conduct its business only in the ordinary and usual course consistent with
past practices, except as set forth in the DISCLOSURE LETTER. Notwithstanding
the preceding sentence, Tichenor covenants and agrees with Parent and, upon
consummation of the Assignment Agreement pursuant to Section 8.9, with Heftel
and Heftel Sub, that, except as specifically contemplated in this Agreement,
from the date of this Agreement until the Effective Time, without the prior
written consent of Parent (or Heftel subsequent to the consummation of the
Assignment Agreement pursuant to Section 8.9):

(a) None of the Tichenor Companies will (i) amend its certificate
or articles of incorporation or bylaws; (ii) split, combine or reclassify any of
its outstanding capital stock; (iii) except as set forth in the DISCLOSURE
LETTER, declare, set aside or pay any dividends or other distributions (whether
payable in cash, property or securities) with respect to its capital stock; (iv)
issue, sell or agree to issue or sell any securities, including its capital
stock, any rights, options or warrants to acquire its capital stock, or
securities convertible into or exchangeable or exercisable for its capital stock
(other than shares of Tichenor Common Stock issued pursuant to the exercise of
the Tichenor Warrant); (v) except as set forth in the DISCLOSURE LETTER,
purchase, cancel, retire, redeem or otherwise acquire any of its outstanding
capital stock or other securities; (vi) merge or consolidate with, or transfer
all or substantially all of its assets to, another corporation or other business
entity; (vii) liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution); or (viii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.

(b) None of the Tichenor Companies will (i) except as set forth in
the DISCLOSURE LETTER, acquire any corporation, partnership or other business
entity or any interest therein having a transaction value, individually or in
the aggregate, in excess of $15 million; (ii) except as set forth in the
DISCLOSURE LETTER, sell, lease or sublease, transfer or otherwise dispose of or
mortgage, pledge or otherwise encumber any assets that have a value at the time
of such sale, lease, sublease, transfer or disposition in excess of $600,000,
individually, or

<PAGE> 35
$3 million, in the aggregate; (iii) except as set forth in the DISCLOSURE
LETTER, sell, transfer or otherwise dispose of or mortgage, pledge or otherwise
encumber any securities of any other Person (including any capital stock or
other securities in the Tichenor Subsidiaries); (iv) except as set forth in the
DISCLOSURE LETTER, make any material loans, advances or capital contributions
to, or investments in, any Person in excess of $7.5 million in the aggregate
(other than loans or advances made to Tichenor Subsidiaries, or made in the
ordinary course of business and consistent with past practices); (v) apply to
the FCC for any construction permit that would have a Material Adverse Effect on
the current operations of any of the radio stations owned by any of the Tichenor
Companies (individually, a "TICHENOR STATION"); (vi) terminate or fail to renew
any FCC licenses for the Tichenor Stations (the "TICHENOR FCC LICENSES"); (vii)
fail to operate any Tichenor Station in accordance with the Communications Act,
the rules, regulations and policies of the FCC and the terms of the Tichenor FCC
Licenses, which failure would result in a Material Adverse Effect on Tichenor;
(viii) fail to file in a timely manner any applications to renew a Tichenor FCC
License; (ix) enter into any agreement or transaction with any, or modify the
terms of any existing agreement with any, Affiliate; or (x) enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing.

(c) None of the Tichenor Companies, other than with respect to
intercompany transactions, will (i) permit to be outstanding at any time under
the Bank Credit Agreement indebtedness for borrowed money in excess of an
aggregate of $50 million; (ii) except as set forth in the DISCLOSURE LETTER,
incur any indebtedness for borrowed money other than under the Bank Credit
Agreement or the Term Loan; (iii) except as set forth in the DISCLOSURE LETTER,
assume, endorse (other than endorsements of negotiable instruments in the
ordinary course of business), guarantee or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the liabilities or
obligations of any Person other than another Tichenor Company; or (iv) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing.

(d) The Tichenor Companies will operate, maintain and otherwise
deal with their property and assets in accordance with good and prudent business
practices and in accordance with all applicable contracts and agreements and all
applicable laws, rules and regulations, except where any failure would not have
a Material Adverse Effect on Tichenor.

(e) None of the Tichenor Companies will (i) enter into, or
otherwise become liable or obligated under or pursuant to, (A) any employee
benefit, pension or other plan (whether or not subject to ERISA), or (B) any
other stock option, stock purchase, incentive or deferred compensation plans or
arrangements or other fringe benefit plan (other than obligations that are
mandated by the terms of agreements or plans existing as of the date of the
Original Agreement); (ii) except for payments made pursuant to any employee
benefit plan of Tichenor or any plan, agreement or arrangement described in the
DISCLOSURE LETTER, grant, or otherwise become liable for or obligated to pay,
any severance or termination payments, bonuses or increases in compensation or
benefits (other than payments, bonuses or increases that are mandated by the
terms of agreements or plans existing as of the date of the Original Agreement
or that are paid in the ordinary course of business, consistent with past
practices, and not individually or in the aggregate material in amount) to, or
forgive any indebtedness of, any employee or consultant; or (iii) enter into any
contract, agreement, commitment or arrangement to do any of the foregoing.

<PAGE> 36
(f) None of the Tichenor Companies will create, incur, assume or
permit to exist any Lien on any of its assets, except for Permitted
Encumbrances, and except in the ordinary course of business.

(g) The Tichenor Companies will (i) pay all Taxes, assessments and
other governmental charges imposed upon any of their assets or with respect to
their franchises, business, income or assets before any penalty or interest
accrues thereon; (ii) pay all claims (including claims for labor, services,
materials and supplies) that have become due and payable and which by law have
or may become a Lien upon any of their assets prior to the time when any penalty
or fine shall be incurred with respect thereto or any such Lien shall be imposed
thereon; and (iii) comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority,
obtain or take all Governmental Actions necessary in the operation of their
businesses, and comply with and enforce the provisions of all Tichenor Material
Agreements, except where the failure to so comply, obtain, take or enforce will
not have a Material Adverse Effect on Tichenor, including paying, when due, all
rentals, royalties, expenses and other liabilities relating to their businesses
or assets; provided, however, that the Tichenor Companies may contest the
imposition of any such Taxes, assessments and other governmental charges, any
such claim, or the requirements of any applicable law, rule, regulation or order
or any Tichenor Material Agreement if done so in good faith by appropriate
proceedings and if adequate reserves are established in accordance with GAAP or
as may be determined as sufficient by Tichenor's board of directors.

(h) The Tichenor Companies will maintain adequate insurance
consistent with industry practice.

(i) The Tichenor Companies will at all times preserve and keep in
full force and effect their corporate existence and rights and franchises
material to their performance under this Agreement.

(j) Tichenor will not engage in any practice or take any action
that would cause, or permit by inaction, any of the representations and
warranties made by it in Article 3 to become untrue.

(k) Tichenor shall use its reasonable best efforts to obtain all
necessary lender approval required under the Bank Credit Agreement to the
consummation of the Merger or, with the cooperation of Heftel, to refinance such
indebtedness on terms reasonably acceptable to Heftel to the extent that the
parties determine that it is reasonably foreseeable that such approval will not
be forthcoming. Tichenor shall keep Heftel fully informed of the status of
obtaining such consent, or the likelihood of obtaining such refinancing, as the
case may be, promptly upon the occurrence of any material developments relating
thereto.

5.3 CONDUCT OF BUSINESS BY HEFTEL PENDING CLOSING. Heftel covenants
and agrees with Tichenor that, from the date of the consummation of the Heftel
Acquisition until the Effective Time, each of the Heftel Companies will conduct
its business only in the ordinary and usual course consistent with past
practices, except as set forth in the Heftel Disclosure Documents.
Notwithstanding the preceding sentence, Heftel covenants and agrees with
Tichenor

<PAGE> 37
that, except as specifically contemplated in this Agreement, from the date of
the consummation of the Heftel Acquisition until the Effective Time, without the
prior written consent of Tichenor:

(a) Heftel will not (i) amend its certificate of incorporation or
bylaws, except as set forth in the Heftel Proposal; (ii) split, combine or
reclassify any of its outstanding capital stock, except as contemplated by this
Agreement; (iii) except as set forth in the Heftel Disclosure Documents,
declare, set aside or pay any dividends or other distributions (whether payable
in cash, property or securities) with respect to its capital stock; (iv) issue,
sell or agree to issue or sell any securities, including its capital stock, any
rights, options or warrants to acquire its capital stock, or securities
convertible into or exchangeable or exercisable for its capital stock (other
than securities issued pursuant to obligations disclosed in the Tender Offer
Agreement); (v) except pursuant to obligations disclosed in the Tender Offer
Agreement, purchase, cancel, retire, redeem or otherwise acquire any of its
outstanding capital stock or other securities; (vi) merge or consolidate with,
or transfer all or substantially all of its assets to, another corporation or
other business entity; (vii) liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution); or (viii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing, except as set
forth in this Agreement.

(b) The Heftel Companies will not (i) except as set forth in the
Heftel Disclosure Documents, acquire any corporation, partnership or other
business entity or any interest therein having a transaction value, individually
or in the aggregate, in excess of $15 million; (ii) except as set forth in the
Heftel Disclosure Documents, sell, lease or sublease, transfer or otherwise
dispose of or mortgage, pledge or otherwise encumber any assets that have a
value at the time of such sale, lease, sublease, transfer or disposition in
excess of $600,000, individually, or $3 million, in the aggregate; (iii) except
as set forth in the Heftel Disclosure Documents, sell, transfer or otherwise
dispose of or mortgage, pledge or otherwise encumber any securities of any other
Person (including any capital stock or other securities in the Heftel
Subsidiaries); (iv) except as set forth in the Heftel Disclosure Documents, make
any material loans, advances or capital contributions to, or investments in, any
Person in excess of $7.5 million in the aggregate (other than loans or advances
made to the Heftel Subsidiaries, or made in the ordinary course of business and
consistent with past practices); (v) apply to the FCC for any construction
permit that would have a material adverse effect on the current operations of
any of the radio stations owned by Heftel (individually, a "HEFTEL STATION");
(vi) terminate or fail to renew any FCC licenses for the Heftel Stations (the
"HEFTEL FCC LICENSES"); (vii) fail to operate any Heftel Station in accordance
with the Communications Act, the rules, regulations and policies of the FCC and
the terms of the Heftel FCC Licenses, which failure would result in a Material
Adverse Effect on Heftel; (viii) fail to file in a timely manner any
applications to renew a Heftel FCC License; (ix) enter into any agreement or
transaction with any, or modify the terms of any existing agreement with any,
Affiliate; or (x) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing.

(c) Neither Heftel nor any Heftel Subsidiary will, other than with
respect to intercompany transactions, (i) permit to be outstanding at any time
under the Heftel Credit Agreement indebtedness for borrowed money in excess of
an aggregate of $175 million; (ii) except as set forth in the Heftel Disclosure
Documents, incur any indebtedness for borrowed money other than under the Heftel
Credit Agreement; (iii) except as set forth in the Heftel Disclosure Documents,
assume, endorse (other than endorsements of negotiable instruments in

<PAGE> 38
the ordinary course of business), guarantee or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the liabilities or
obligations of any Person other than another Heftel Company; or (v) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing.

(d) Heftel and each Heftel Subsidiary will operate, maintain and
otherwise deal with their property and assets in accordance with good and
prudent business practices and in accordance with all applicable contracts and
agreements and all applicable laws, rules and regulations, except where any
failure would not have a Material Adverse Effect on Heftel.

(e) Neither Heftel nor any Heftel Subsidiary will (i) enter into,
or otherwise become liable or obligated under or pursuant to, (A) any employee
benefit, pension or other plan (whether or not subject to ERISA), or (B) any
other stock option, stock purchase, incentive or deferred compensation plans or
arrangements or other fringe benefit plan (other than obligations mandated by
the terms of agreements or plans existing as of the date of the Original
Agreement); (ii) except for payments made pursuant to any employee benefit plan
of Heftel or any plan, agreement or arrangement in effect as of the date of the
Assignment Agreement and described in the Heftel Disclosure Documents, grant, or
otherwise become liable for or obligated to pay, any severance or termination
payments, bonuses or increases in compensation or benefits (other than payments,
bonuses or increases that are mandated by the terms of agreements or plans
existing as of the date of the Assignment Agreement or that are paid in the
ordinary course of business, consistent with past practices, and not
individually or in the aggregate material in amount) to, or forgive any
indebtedness of, any employee or consultant; or (iii) enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.

(f) Neither Heftel nor any Heftel Subsidiary will create, incur,
assume or permit to exist any Lien on any of its assets, except for Permitted
Encumbrances, and except in the ordinary course of business.

(g) Heftel and each Heftel Subsidiary will (i) pay all Taxes,
assessments and other governmental charges imposed upon any of their assets or
with respect to their franchises, business, income or assets before any penalty
or interest accrues thereon; (ii) pay all claims (including claims for labor,
services, materials and supplies) that have become due and payable and which by
law have or may become a Lien upon any of their assets prior to the time when
any penalty or fine shall be incurred with respect thereto or any such Lien
shall be imposed thereon; and (iii) comply in all material respects with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, obtain or take all Governmental Actions necessary in the
operation of their businesses, and comply with and enforce the provisions of all
Heftel Material Agreements, except where the failure to so comply, obtain, take
or enforce will not have a Material Adverse Effect on Heftel, including paying,
when due, all rentals, royalties, expenses and other liabilities relating to
their businesses or assets; provided, however, the Heftel Companies may contest
the imposition of any such Taxes, assessments and other governmental charges,
any such claim, or the requirements of any applicable law, rule, regulation or
order or any Heftel Material Agreement if done so in good faith by appropriate
proceedings and if adequate reserves are established in accordance with GAAP or
as may be determined as sufficient by Heftel's board of directors.

<PAGE> 39
(h) The Heftel Companies will maintain adequate insurance
consistent with industry practice.

(i) Heftel and each Heftel Subsidiary will at all times preserve
and keep in full force and effect their corporate existence and rights and
franchises material to their performance under this Agreement.

(j) Heftel will not engage in any practice or take any action that
would cause, or permit by inaction, any of the representations and warranties
made by it in Section 4.2 to become untrue.

(k) Heftel shall use its reasonable best efforts to obtain all
necessary lender approval required under the Heftel Credit Agreement to the
consummation of the Merger or, with the cooperation of Tichenor, to refinance
such indebtedness on terms reasonably acceptable to Heftel to the extent that
Heftel determines that it is reasonably foreseeable that such approval will not
be forthcoming. Heftel shall keep Tichenor fully informed of the status of
obtaining such consent, or the likelihood of obtaining such refinancing, as the
case may be, promptly upon the occurrence of any material developments relating
thereto.

5.4 ACCESS TO ASSETS, PERSONNEL AND INFORMATION.

(a) From the date of the Original Agreement until the Effective
Time, Tichenor shall, upon reasonable notice, afford to Parent and the Parent
Representatives, at Parent's sole risk and expense, reasonable access during
normal business hours to any of the assets, books and records, contracts,
executive officers, management employees, representatives, agents and facilities
of the Tichenor Companies and shall, upon request, furnish promptly to Parent
(at Parent's expense) a copy of any file, book, record, contract, permit,
correspondence, or other written information, document or data concerning any of
the Tichenor Companies (or any of their respective assets) that is within the
possession or control of Tichenor. During such period, upon reasonable notice,
Tichenor will make available to a reasonable number of Parent Representatives
adequate office space and facilities at the principal office facility of
Tichenor in Dallas, Texas.

(b) Upon request by Tichenor, Parent shall use its reasonable best
efforts to cause Heftel to afford to Tichenor and the Tichenor Representatives
prior to the consummation of the Assignment Agreement such access to Heftel and
the Heftel Subsidiaries as described in Section 5.4(c) and (e), subject to the
execution of a mutually acceptable confidentiality agreement between Heftel and
Tichenor.

(c) From the date of the consummation of the Assignment Agreement
until the Effective Time, Heftel shall, upon reasonable notice, afford to
Tichenor and the Tichenor Representatives, at Tichenor's sole risk and expense,
reasonable access during normal business hours to any of the assets, books and
records, contracts, management employees, representatives, agents and facilities
of Heftel and the Heftel Subsidiaries and shall, upon request, furnish promptly
to Tichenor (at Tichenor's expense) a copy of any file, book, record, contract,
permit, correspondence, or other written information, document or data
concerning Heftel (or any of its assets) that is within the possession or
control of Heftel. During such period, upon reasonable

<PAGE> 40
notice, Heftel will make available to a reasonable number of Tichenor
Representatives adequate office space and facilities at the principal office
facility of Heftel in Las Vegas, Nevada.

(d) From the date of the Original Agreement until the Effective
Time, Tichenor will fully and accurately disclose, and will cause each of the
Tichenor Subsidiaries to fully and accurately disclose, to Parent and the Parent
Representatives all information that is (i) reasonably requested by Parent or
any of the Parent Representatives, (ii) known to any of the Tichenor Companies
and (iii) relevant in any manner or degree to the value, ownership, use,
operation, development or transferability of the assets of any of the Tichenor
Companies.

(e) From the date of the consummation of the Assignment Agreement
until the Effective Time, Heftel will fully and accurately disclose, and will
cause each of the Heftel Subsidiaries to fully and accurately disclose, to
Tichenor and the Tichenor Representatives all information that is (i) reasonably
requested by Tichenor or any of the Tichenor Representatives, (ii) known to
Heftel and the Heftel Subsidiaries and (iii) relevant in any manner or degree to
the value, ownership, use, operation, development or transferability of the
assets of Heftel and the Heftel Subsidiaries.

(f) From the date of the consummation of the Assignment Agreement
until the Effective Time, Heftel shall (i) furnish to Tichenor, promptly upon
receipt or filing (as the case may be), a copy of each communication between
Heftel and the SEC after such date relating to the Merger or the Registration
Statement and each report, schedule, registration statement or other document
filed by Heftel with the SEC after such date relating to the Merger and (ii)
promptly advise Tichenor of the substance of any oral communications between
Heftel and the SEC relating to the Merger or the Registration Statement.

(g) Tichenor will (and will cause the Tichenor Subsidiaries and
the Tichenor Representatives to) fully cooperate in all reasonable respects with
Parent and the Parent Representatives in connection with Parent's examinations,
evaluations and investigations described in this Section 5.4.

(h) Heftel will (and will cause the Heftel Subsidiaries and the
Heftel Representatives to) fully cooperate in all reasonable respects with
Tichenor and the Tichenor Representatives in connection with Tichenor's
examinations, evaluations and investigations described in this Section 5.4.

(i) Tichenor agrees that it will not (and will cause the Tichenor
Representatives not to), Parent agrees that it will not (and will cause the
Parent Representatives not to), and Heftel agrees that it will not (and will
cause the Heftel Representatives not to), use any confidential information
obtained pursuant to this Section 5.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement and will
maintain the confidential nature of such information.

(j) Notwithstanding anything in this Section 5.4 to the
contrary, (i) Tichenor shall not be obligated under the terms of this Section
5.4 to disclose to Parent or the Parent Representatives, or grant Parent or the
Parent Representatives access to, information that is within Tichenor's
possession or control but subject to a valid and binding confidentiality

<PAGE> 41
agreement with a third party without first obtaining the consent of such third
party, and Tichenor, to the extent reasonably requested by Parent, will use its
reasonable best efforts to obtain any such consent, and (ii) Heftel shall not be
obligated under the terms of this Section 5.4 to disclose to Tichenor or the
Tichenor Representatives, or grant Tichenor or the Tichenor Representatives
access to, information that is within Heftel's possession or control but subject
to a valid and binding confidentiality agreement with a third party without
first obtaining the consent of such third party, and Heftel, to the extent
reasonably requested by Tichenor, will use its reasonable best efforts to obtain
any such consent.

5.5 NO SOLICITATION.

(a) TICHENOR.

(i) Immediately following the execution of this
Agreement, Tichenor will (and will cause each of the Tichenor
Representatives to) terminate any and all existing activities,
discussions and negotiations with third parties (other than
Parent) with respect to any possible transaction involving the
acquisition of the Tichenor Common Stock or the merger or
other business combination of Tichenor with or into any such
third party.

(ii) Tichenor will not (and will cause the Tichenor
Representatives not to) solicit, initiate or knowingly
encourage the submission of, any offer or proposal to acquire
all or any part of the Tichenor Common Stock or all or any
material portion of the assets or business of Tichenor (other
than the transactions contemplated by this Agreement), whether
by merger, purchase of assets, tender offer, exchange offer or
otherwise.

(b) HEFTEL.

(i) Immediately following the consummation of the
Assignment Agreement, Heftel will (and will cause each of the
Heftel Representatives to) terminate any and all existing
activities, discussions and negotiations with third parties
(other than Parent and Tichenor) with respect to any possible
transaction involving the acquisition of the Heftel Common
Stock or the merger or other business combination of Heftel
with or into any such third party.

(ii) Until the earlier to occur of the termination of
this Agreement pursuant to Section 7 and the Effective Time,
Heftel will not (and will cause the Heftel Representatives not
to) solicit, initiate or knowingly encourage the submission
of, any offer or proposal to acquire all or any part of the
Heftel Common Stock or all or any material portion of the
assets or business of Heftel (other than the transactions
contemplated by the Heftel Acquisition or this Agreement),
whether by merger, purchase of assets, tender offer, exchange
offer or otherwise.

5.6 HEFTEL STOCKHOLDERS MEETING. Subject to Section 8.9(b),
Parent shall use its reasonable best efforts to cause Heftel to take all action
necessary in accordance with applicable

<PAGE> 42
law and Heftel's certificate of incorporation and bylaws to convene a meeting of
its stockholders as promptly as practicable after the successful completion of
the Heftel Acquisition for the purpose of voting on the Heftel Proposal. Subject
to the exercise of its fiduciary duties as described in Section 8.9(b), the
board of directors of Heftel shall recommend approval of the Heftel Proposal and
shall take all lawful action to solicit such approval, including timely mailing
the Proxy Statement/Prospectus to the stockholders of Heftel. Notwithstanding
the above, however, the following shall be conditions to the mailing of the
Proxy Statement/Prospectus:

(a) Heftel shall have received an opinion from a nationally
recognized firm of investment bankers or financial advisors selected by Heftel
(which opinion shall be acceptable in form and substance to Heftel) to the
effect that the Merger consideration to be paid by Heftel is fair to the Heftel
stockholders from a financial point of view, and such opinion shall not have
been withdrawn, revoked or modified.

(b) Heftel and Tichenor shall have received a letter from a
nationally recognized firm of independent public accountants, dated as of the
date the Proxy Statement/Prospectus is first mailed to Heftel's stockholders,
addressed to Heftel and Tichenor, in form and substance reasonably satisfactory
to Heftel and Tichenor, in connection with such accountants' review of certain
financial and accounting matters contained in the Proxy Statement/Prospectus and
the Registration Statement.

5.7 TICHENOR SHAREHOLDERS MEETING. Tichenor shall take all
necessary action in accordance with applicable law and its articles of
incorporation and bylaws to convene a meeting of its shareholders as promptly
as practicable after the date hereof for the purpose of voting on a proposal
to approve this Agreement and the Merger.

5.8 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.

(a) Heftel and Tichenor shall cooperate and promptly prepare
the Registration Statement, and Heftel shall file the Registration Statement
with the SEC as soon as practicable after the execution and delivery of the
Assignment Agreement and in any event not later than 45 days after such date.
Heftel shall use its reasonable best efforts, and Tichenor shall cooperate with
Heftel (including furnishing all information concerning Tichenor and the holders
of Tichenor Common Stock as may be reasonably requested by Heftel), to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Heftel shall use its reasonable efforts, and
Tichenor shall cooperate with Heftel to obtain all necessary state securities
laws or "blue sky" permits, approvals and registrations in connection with the
issuance of Heftel Common Stock pursuant to the Merger.

(b) Heftel and Tichenor will cause the Registration Statement
(including the Proxy Statement/Prospectus), at the time it becomes effective
under the Securities Act, to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder.

(c) Tichenor hereby covenants and agrees with Parent and
Heftel that (i) the Registration Statement (at the time it becomes effective
under the Securities Act and at the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material

<PAGE> 43
fact required to be stated therein or necessary to make the statements therein
not misleading (provided, however, that this clause (i) shall apply only to
information contained in the Registration Statement that was supplied by
Tichenor specifically for inclusion therein); and (ii) the Proxy
Statement/Prospectus (at the time it is first mailed to stockholders of Heftel,
at the time of the Heftel Meeting, and at the Effective Time) will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading (provided,
however, that this clause (ii) shall apply only to information contained in the
Registration Statement that was supplied by Tichenor specifically for inclusion
therein). If, at any time prior to the Effective Time, any event with respect to
Tichenor, or with respect to other information supplied by Tichenor specifically
for inclusion in the Registration Statement, occurs and such event is required
to be described in an amendment to the Registration Statement, Tichenor shall
promptly notify Heftel of such occurrence and shall cooperate with Heftel in the
preparation and filing of such amendment. If, at any time prior to the Effective
Time, any event with respect to Tichenor, or with respect to other information
included in the Proxy Statement/Prospectus, occurs and such event is required to
be described in a supplement to the Proxy Statement/Prospectus, such event shall
be so described and such supplement shall be promptly prepared, filed and
disseminated.

(d) Heftel, upon consummation of the Assignment Agreement,
covenants and agrees with Tichenor that (i) the Registration Statement (at the
time it becomes effective under the Securities Act and at the Effective Time)
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (provided, however, that this clause (i) shall not apply
to any information contained in the Registration Statement that was supplied by
Tichenor specifically for inclusion therein); and (ii) the Proxy
Statement/Prospectus (at the time it is first mailed to shareholders of Heftel,
at the time of the Heftel Meeting, and at the Effective Time) will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading (provided,
however, that this clause (ii) shall not apply to any information contained in
the Registration Statement that was supplied by Tichenor specifically for
inclusion therein). If, at any time prior to the Effective Time, any event with
respect to Heftel, or with respect to other information included in the
Registration Statement, occurs and such event is required to be described in an
amendment to the Registration Statement, such event shall be so described and
such amendment shall be promptly prepared and filed. If, at any time prior to
the Effective Time, any event with respect to Heftel, or with respect to other
information supplied by Heftel specifically for inclusion in the Proxy
Statement/Prospectus, occurs and such event is required to be described in a
supplement to the Proxy Statement/Prospectus, Heftel shall promptly notify
Tichenor of such occurrence and shall prepare, file and disseminate such
supplement.

(e) Heftel shall use its reasonable efforts to advise
Tichenor, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective under the Securities Act, the
issuance of any stop order with respect to the Registration Statement, the
suspension of the qualification of the Heftel Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
comments or requests for additional information by the SEC with respect to the
Registration Statement.

<PAGE> 44
5.9 STOCK EXCHANGE LISTING. Heftel shall cause the shares of
Heftel Common Stock to be issued in the Merger to be approved for listing on
Nasdaq, subject to official notice of issuance, prior to the Closing Date.

5.10 ADDITIONAL ARRANGEMENTS. Subject to the terms and conditions
herein provided, each of Parent, Tichenor and Heftel shall take, or cause to be
taken, all action and shall do, or cause to be done, all things necessary,
appropriate or desirable under the HSR Act, the Communications Act and any other
applicable laws and regulations or under applicable governing agreements to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary waivers, consents
and approvals and effecting all necessary registrations and filings. Parent and
Tichenor agree to commence, within 15 days after the date of the Original
Agreement, the filing and approval process with the FCC with respect to the
transactions contemplated by this Agreement. Each of Parent, Tichenor and Heftel
shall use reasonable best efforts to take, or cause to be taken, all action or
shall do, or cause to be done, all things necessary, appropriate or desirable to
cause the covenants and conditions applicable to the transactions contemplated
hereby to be performed or satisfied as soon as practicable, including all
filings and approvals required by the FCC and the Communications Act. If Closing
does not occur within 20 days after the date of the FCC's Final Order, each of
Parent, Heftel and Tichenor agree to request approval from the FCC to extend the
Closing so that the Closing contemplated hereunder will not violate any FCC
rules or regulations. In addition, if any Governmental Authority shall have
issued any order, decree, ruling or injunction, or taken any other action that
would have the effect of restraining, enjoining or otherwise prohibiting or
preventing the consummation of the transactions contemplated hereby, each of
Tichenor and Heftel shall use its reasonable efforts to have such order, decree,
ruling or injunction or other action declared ineffective as soon as
practicable. Nothing contained in this Agreement shall require Parent to take
any action that would result in a violation of Section 203 of the DGCL.

5.11 AGREEMENTS OF AFFILIATES. At least 30 days prior to the

Effective Time, Tichenor shall cause to be prepared and delivered to Heftel a
list identifying all Persons who, at the time of the approval of this Agreement
and the Merger by the shareholders of Tichenor, may be deemed to be "affiliates"
of Tichenor as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act. Tichenor shall use its best efforts to cause each Person who is
identified as an affiliate of Tichenor in such list to execute and deliver to
Heftel, on or prior to the Closing Date, a written agreement, in the form
attached hereto as EXHIBIT 5.11 (if such Person has not executed and delivered
an agreement substantially to the same effect contemporaneously with the
execution of this Agreement). Heftel shall be entitled to place legends as
specified in such agreements on the Heftel Certificates representing any Heftel
Common Stock to be issued to such Persons in the Merger.

5.12 PUBLIC ANNOUNCEMENTS. Prior to the Closing, Tichenor and
Parent (and Heftel after consummation of the Assignment Agreement) will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any press release or make any such public statement prior to
obtaining the approval of the other party; provided, however, that such approval
shall not be required where such release or announcement is required by
applicable law; and provided further, that Tichenor, Parent or Heftel may
respond to inquiries by the press or

<PAGE> 45
others regarding the transactions contemplated by this Agreement, so long as
such responses are consistent with such party's previously issued press
releases.

5.13 NOTIFICATION OF CERTAIN MATTERS. Tichenor shall give prompt
notice to Parent (or Heftel after consummation of the Assignment Agreement) of
(a) any representation or warranty contained in Article 3 being untrue or
inaccurate when made, (b) the occurrence of any event or development that would
cause (or could reasonably be expected to cause) any representation or warranty
contained in Article 3 to be untrue or inaccurate on the Closing Date, or (c)
any failure of Tichenor to comply with or satisfy any covenant, condition, or
agreement to be complied with or satisfied by it hereunder. Parent shall give
prompt notice to Tichenor of (a) any representation or warranty made by Parent
in Section 4.1 being untrue or inaccurate when made, (b) the occurrence of any
event or development that would cause (or could reasonably be expected to cause)
any representation or warranty made by Parent in Section 4.1 to be untrue or
inaccurate on the Closing Date, or (c) any failure of Parent to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by it hereunder. Heftel shall give prompt notice to Tichenor of (a) any
representation or warranty by Heftel contained in Section 4.2 being untrue or
inaccurate when made, (b) the occurrence of any event or development that would
cause (or could reasonably be expected to cause) any representation or warranty
by Heftel contained in Section 4.2 to be untrue or inaccurate on the Closing
Date, or (c) any failure of Heftel to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder.

5.14 PAYMENT OF EXPENSES. Each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby, whether
or not the Merger shall be consummated, except that (a) the fee for filing the
Registration Statement with the SEC shall be borne by Heftel; (b) the costs and
expenses associated with printing the Proxy Statement/Prospectus shall be borne
by Heftel; and (c) the costs and expenses associated with mailing the Proxy
Statement/Prospectus to the stockholders of Heftel, and soliciting the votes of
the stockholders of Heftel, shall be borne by Heftel.

5.15 REGISTRATION RIGHTS AGREEMENT. Heftel, Parent and the
Major Tichenor Shareholders shall enter into a Registration Rights Agreement in
the form attached hereto as EXHIBIT 5.15 (the "REGISTRATION RIGHTS AGREEMENT"),
at the Closing.

5.16 EMPLOYMENT AGREEMENT. Heftel and McHenry T. Tichenor, Jr.
shall enter into an Employment Agreement, in the form attached hereto as EXHIBIT
5.16 (the "EMPLOYMENT AGREEMENT"), at the Closing.

5.17 STOCKHOLDERS AGREEMENT. Heftel and Parent shall enter into
a stockholders Agreement, in the form attached hereto as EXHIBIT 5.17 (the
"STOCKHOLDERS AGREEMENT").

5.18 INDEMNITY AGREEMENT. Heftel shall enter into an Indemnity
Agreement (each, an "INDEMNITY AGREEMENT") in the form of EXHIBIT 5.18 hereto,
with each of Heftel Designees.

<PAGE> 46
5.19 INSURANCE; INDEMNIFICATION.

(a) INSURANCE. Heftel shall cause the Surviving Corporation
to, at or immediately prior to the Effective Time, maintain a six year director
and officer liability insurance run-off policy from the same carrier as the
carrier providing such coverage to Tichenor at the Effective Time and to not
terminate such policy prior to the sixth anniversary of the Effective Time.
Heftel shall use its reasonable best efforts to maintain the director and
officer liability insurance policy for directors and officers of Heftel as in
effect as of the date of the Original Agreement or such other director and
officer liability insurance policy containing terms and coverage reasonably
acceptable to Tichenor and Heftel, and such policy shall remain in full force
and effect immediately following the Effective Time.

(b) INDEMNIFICATION BY PARENT. Parent shall indemnify and hold
harmless (i) Tichenor, (ii) each Person who is, has been at any time prior to
the date of the Original Agreement, or becomes prior to the Effective Time, an
officer or director of any of the Tichenor Companies, and (iii) each Person who
is, has been at any time prior to the date of the Original Agreement or becomes
prior to the Effective Time a shareholder of Tichenor (collectively, the "TENDER
OFFER INDEMNIFIED PARTIES") against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments and amounts paid in
settlement (collectively, "COSTS") in connection with any claim, action, suit,
proceeding or investigation by any Person other than any party hereto, any
Tender Offer Indemnified Party or their respective Affiliates arising out of or
pertaining to acts, omissions, misstatements or omissions of material facts, or
alleged acts or omissions, or alleged misstatements or omissions of material
facts, by Tichenor or by such officer, director or shareholder acting in such
capacity of any of the Tichenor Companies, which acts, omissions, misstatements
or omissions of material facts, relate to the Heftel Acquisition; provided,
however, that Parent shall be under no obligation to indemnify any Tender Offer
Indemnified Party pursuant to this Section 5.19(b) for any Costs resulting from
the gross negligence or willful misconduct of the Tender Offer Indemnified
Party.

(c) INDEMNIFICATION BY HEFTEL. From and after the Effective
Time, Heftel shall indemnify and hold harmless (i) each Person who is, has been
at any time prior to the date of the Original Agreement, or becomes prior to the
Effective time, an officer or director of any of the Tichenor Companies, and
(ii) each Person who is, has been at any time prior to the date of the Original
Agreement or becomes prior to the Effective Time a shareholder of Tichenor
(collectively, the "MERGER INDEMNIFIED PARTIES" and, together with the Tender
Offer Indemnified Parties, the "INDEMNIFIED PARTIES") against all Costs in
connection with any claim, action, suit, proceeding or investigation by any
Person other than any party hereto, any Indemnified Party or their respective
Affiliates arising out of or pertaining to acts, omissions, misstatements or
omissions of material facts, or alleged acts or omissions or alleged
misstatements or omissions of material facts, by him acting in his capacity as
an officer, director or shareholder of any of the Tichenor Companies, which
acts, omissions, misstatements or omissions of material facts, relate to the
Merger or the Proxy Statement/Prospectus; provided, however, that Heftel shall
be under no obligation to indemnify any Merger Indemnified Party pursuant to
this Section 5.19(c) for any Costs resulting from the gross negligence or
willful misconduct of the Merger Indemnified Party or (y) information provided
by the Merger Indemnified Party for inclusion in the Proxy Statement/Prospectus.

<PAGE> 47
(d) INDEMNIFICATION PROCEDURES. The procedures
associated with the indemnification set forth in Sections 5.19(b) and (c) shall
be as follows:

(i) Promptly after receipt by an Indemnified Party of
notice of the commencement of any action, suit or proceeding,
such Indemnified Party shall, if a claim in respect of Section
5.19(b) or (c) is to be made against Parent or Heftel, as the
case may be (the "INDEMNIFYING PARTY"), under this Agreement,
notify the Indemnifying Party of the commencement thereof.
With respect to any such action, suit or proceeding as to
which an Indemnified Party notifies the Indemnifying Party of
the commencement thereof:

(A) Except as otherwise provided below, to the extent
that it may wish, the Indemnifying Party shall be
entitled to assume the defense thereof and to employ
counsel chosen by it. After notice from the
Indemnifying Party to the Indemnified Party of its
election to so assume the defense thereof, the
Indemnifying Party shall not be liable to the
Indemnified Party under this Agreement for any legal
or other expenses subsequently incurred by the
Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation
or as otherwise provided below. The Indemnified Party
shall have the right to employ counsel of his or its
own choosing in such action, suit or proceeding but
the fees and expenses of such counsel incurred after
notice from the Indemnifying Party of assumption by
the Indemnifying Party of the defense thereof shall
be at the expense of the Indemnified Party unless (x)
the employment of counsel by the Indemnified Party
has been specifically authorized by the Indemnifying
Party, such authorization to be conclusively
established by action by disinterested members of the
board of directors of the Indemnifying Party; (y)
representation by the same counsel of both the
Indemnified Party and the Indemnifying Party would,
in the reasonable judgment of either of the
Indemnified Party or the Indemnifying Party, be
inappropriate due to an actual or potential conflict
of interest between the Indemnifying Party and the
Indemnified Party in the conduct of the defense of
such action, such conflict of interest to be
conclusively established by an opinion of counsel to
either the Indemnifying Party or the Indemnified
Party to such effect; or (z) the Indemnifying Party
shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the
fees and expenses of counsel shall be paid by the
Indemnifying Party. Notwithstanding the foregoing, if
an insurance company has supplied directors' and
officers' liability insurance covering an action,
suit or proceeding, then such insurance company shall
employ counsel to conduct the defense of such action,
suit or proceeding unless the Indemnified Party and
the Indemnifying Party reasonably concur in writing
that such counsel is unacceptable.

(B) The Indemnified Party shall cooperate with the
Indemnifying Party in all aspects of the conduct of
the defense of any action and in connection therewith
shall, among other things, make its books, records,
executive

<PAGE> 48
officers, representatives and agents available as
reasonably requested or required by the Indemnifying
Party.

(C) The Indemnifying Party shall not be liable to
indemnify the Indemnified Party under Section 5.19(b)
or (c) for any amounts paid in settlement of any
action or claim effected without its written consent.
The Indemnifying Party may settle any action or claim
without the consent of the Indemnified Party provided
that such settlement would not impose any liability,
penalty or limitation on the Indemnified Party and
that the parties bringing such claim release the
Indemnified Party from all liability relating to such
claim in connection with such settlement. Neither the
Indemnifying Party nor the Indemnified Party shall
unreasonably withhold consent to any proposed
settlement.

(ii) The Indemnifying Party shall not be liable to
make any payment under Sections 5.19(b) or (c) of this
Agreement in connection with any action, suit or proceeding
against the Indemnified Party to the extent the Indemnified
Party has otherwise received payment of the amounts otherwise
payable by the Indemnifying Party hereunder.

(iii)In the event the Indemnifying Party makes any
payment under this Agreement, the Indemnifying Party shall be
subrogated, to the extent of such payment, to all rights of
recovery of the Indemnified Party with respect thereto, and
the Indemnified Party shall execute all agreements,
instruments, certificates or other documents and do or cause
to be done all things necessary or appropriate to secure such
recovery rights to the Indemnifying Party including, without
limitation, executing such documents as shall enable the
Indemnifying Party to bring an action or suit to enforce such
recovery rights.

(iv) The provisions of this Section 5.19 are intended
to be for the benefit of, and shall be enforceable by, the
parties hereto and each Indemnified Party and their respective
Affiliates and each of their respective heirs and
representatives.

5.20 PARENT REGISTRATION RIGHTS AGREEMENT. Heftel and Parent shall
enter into a Registration Rights Agreement in the form attached hereto as
EXHIBIT 5.20 (the "PARENT REGISTRATION RIGHTS AGREEMENT"), at or prior to
Closing, and the Parent Registration Rights Agreement shall be in full force and
effect on the Closing Date.

5.21 FCC APPROVAL. Subject to the terms and conditions herein
provided, Parent and Heftel will use their respective commercially reasonable
efforts to comply with the cross-interest policy of the FCC upon consummation of
the Merger, including taking commercially reasonable steps to reduce Parent's
ownership of the Heftel Common Stock and the New Heftel Class B Common Stock to
331/3% or less of the total number of such shares outstanding at the Effective
Time of the Merger or otherwise taking commercially reasonable steps to comply
with or obtain a waiver from such cross-interest policy of the FCC, provided
that it shall not be considered commercially reasonable efforts of Parent or
Heftel for Parent to take action that would cause

<PAGE> 49
it to incur short-swing profit liability under Section 16(b) of the Exchange
Act. In the event Parent and Heftel have not complied with such or obtained a
waiver from such policy prior to the Effective Time, Parent may place any shares
of New Heftel Class B Common Stock above 33-1/3% of the total number of shares
of Heftel Common Stock and New Heftel Class B Common Stock outstanding at the
Effective Time in a disposition trust for sale thereunder, the terms of which
trust would be subject to FCC approval. Each party hereto agrees and consents to
make certain changes and modifications to any certificate or document,
including, but not limited to, the Second Amended and Restated Certificate of
Incorporation of Heftel, the Registration Rights Agreement, the Employment
Agreement, the Stockholders Agreement, the Indemnity Agreement, the Parent
Registration Rights Agreement and the Assignment Agreement, in order to conform
such documents to the provisions set forth in this Section 5.21.

5.22 COMPOSITION OF THE BOARD OF DIRECTORS. Immediately prior to
the Effective Time, Heftel will take such actions necessary such that five
designees of Tichenor (such designees being herein referred to as the "HEFTEL
DESIGNEES") shall constitute the entire Board of Directors of Heftel immediately
after the Effective Time; provided, that each Heftel Designee shall consent to
his designation and provide Heftel for inclusion in the Proxy
Statement/Prospectus such information concerning himself as is required to
comply with the Securities Act and the rules and regulations promulgated
thereunder.

ARTICLE 6

CONDITIONS

6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:

(a) COMPLETION OF HEFTEL ACQUISITION. Parent shall have
consummated the Heftel Acquisition.

(b) HEFTEL AND HEFTEL SUB BOARD APPROVAL. The boards of
directors of each of Heftel and Heftel Sub shall have approved the Merger and
this Agreement and have executed the Assignment Agreement, and such approval
shall be in full force and effect at the Closing.

(c) SHAREHOLDER APPROVAL. The Merger and this Agreement
shall have been duly and validly approved and adopted by the shareholders of
Tichenor, and the Heftel Proposal shall have been duly and validly approved and
adopted by the shareholders of Heftel and Heftel Sub, all as required by the
TBCA, the DGCL (to the extent necessary to exempt such transactions from the
provisions of Section 203 thereof), Nasdaq and the charter and bylaws of
Tichenor, Heftel and Heftel Sub.

(d) OTHER APPROVALS. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and all filings required to be made prior to the Effective Time with,
and all consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from the FCC or any other Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation

<PAGE> 50
of the transactions contemplated hereby by Tichenor, Parent, Heftel and Heftel
Sub shall have been made or obtained (as the case may be), except where the
failure to obtain such consents, approvals, permits and authorizations would not
be reasonably likely to result in a Material Adverse Effect on Heftel (assuming
the Merger has taken place) or to materially adversely affect the consummation
of the Merger.

(e) SECURITIES LAW MATTERS. The Registration Statement
shall have been declared effective by the SEC under the Securities Act and shall
be effective at the Effective Time, and no stop order suspending such
effectiveness shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend such effectiveness shall have been initiated
and be continuing, and all necessary approvals under state securities laws
relating to the issuance or trading of the Heftel Common Stock to be issued in
the Merger shall have been received.

(f) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall have complied fully with
its obligations under Section 5.9 and, in addition, shall use all reasonable
efforts to have any such decree, ruling, injunction or order vacated, except as
otherwise contemplated by this Agreement.

(G) ACCOUNTANTS' LETTER. Heftel and Tichenor shall have
received a letter from a nationally recognized firm of independent public
accountants, immediately prior to the Effective Date, in form and substance
reasonably satisfactory to Heftel, dated as of the Effective Date and addressed
to Heftel and Tichenor, which letter shall address matters as are customary for
transactions similar to those contemplated in this Agreement.

(h) FCC LICENSES. All FCC licenses, approvals and
authorizations contemplated by this Agreement shall have been granted and shall
have become final (except that the requirement that such licenses, approvals and
authorizations be final may be waived by Heftel and Tichenor).

6.2 CONDITIONS TO OBLIGATIONS OF PARENT, HEFTEL AND HEFTEL SUB.
The obligations of Parent (or Heftel and Heftel Sub upon consummation of the
Assignment Agreement pursuant to Section 8.9) to effect the Merger are subject
to the satisfaction of the following conditions, any or all of which may be
waived in whole or in part by Parent (or Heftel and Heftel Sub, as the case may
be):

(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Tichenor set forth in Article 3 shall be true and correct as
of the Closing Date as though made on and as of that time, and Heftel shall have
received a certificate signed by the chief executive officer or chief financial
officer of Tichenor to such effect; provided, however, that this Section 6.2(a)
shall be deemed to have been satisfied even if such representations and
warranties are not true and correct, unless the failure of any such
representations and warranties to be so true and correct would have a Material
Adverse Effect on Tichenor.

<PAGE> 51
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY TICHENOR.
Tichenor shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date, and Heftel shall have received a certificate signed by the
chief executive officer or chief financial officer of Tichenor to such effect.

(c) LETTERS FROM TICHENOR AFFILIATES. Heftel shall have
received from each Person named in the list referred to in Section 5.11 an
executed copy of the agreement described in Section 5.11.

(d) NO ADVERSE CHANGE. From the date of this Agreement
through the Closing, there shall not have occurred any change in the condition
(financial or otherwise), operations or business of any of the Tichenor
Companies that would have or would be reasonably likely to result in a Closing
Material Adverse Effect on Tichenor.

(e) FAIRNESS OPINION. The fairness opinion described in
Section 5.6(a) shall not have been withdrawn, revoked, or modified.

(f) STOCKHOLDERS AGREEMENT. The Major Tichenor
Shareholders shall have executed the Stockholders Agreement, which shall be in
full force and effect on the Closing Date.

(g) EMPLOYMENT AGREEMENT. McHenry T. Tichenor, Jr.
shall have executed the Employment Agreement, which shall be in full force and
effect on the Closing Date.

(h) WARRANT HOLDER AGREEMENT. The holder of the Tichenor
Warrant and Tichenor shall have executed an agreement, dated as of the date of
the Original Agreement, pursuant to which such holder shall, among other things,
agree (i) neither to exercise (except as set forth in such agreement) nor
transfer the Tichenor Warrant at any time on or prior to the Effective Time and
(ii) to exchange such Tichenor Warrant pursuant to this Agreement, and such
agreement shall be in full force and effect on the Closing Date.

(i) AGREEMENT WITH SHAREHOLDER. Prime II Management,
L.P., a Delaware limited partnership, and PrimeComm, L.P., a Delaware limited
partnership (together, "PRIMECOMM"), shall have executed an agreement, dated the
date of the Original Agreement, pursuant to which PrimeComm, among other things,
consents to the Merger and the Merger Agreement and agrees (a) not to transfer
its Tichenor Common Stock and (b) that its rights and obligations under certain
agreements with Tichenor shall terminate at the Effective Time, and such
agreement shall be in full force and effect on the Closing Date.

(j) DISSENTING SHAREHOLDERS. Holders of not more than
three percent (3%) of any outstanding class of Tichenor capital stock (Tichenor
Common Stock, Tichenor Junior Preferred and Tichenor Senior Preferred) shall
have exercised their right to dissent from the Merger under the TBCA.

(k) HEFTEL ACQUISITION. At least six months and one day
shall have passed subsequent to the consummation of the Heftel Acquisition.

<PAGE> 52
6.3 CONDITIONS TO OBLIGATION OF TICHENOR. The obligation of
Tichenor to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Tichenor:

(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent, Heftel and Heftel Sub set forth in Article 4 shall be
true and correct as of the closing date as though made on and as of that time,
and tichenor shall have received a certificate signed by the chief executive
officer or the chief financial officer of Parent to such effect with regard to
the representations and warranties of Parent contained in Section 4.1 and of
Heftel to such effect with regard to the representations and warranties of
Heftel and Heftel Sub contained in Section 4.2; provided, however, that this
Section 6.3(a) shall be deemed to have been satisfied even if such
representations and warranties are not true and correct, unless the failure of
any such representations and warranties to be so true and correct would have a
Material Adverse Effect on Heftel.

(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY PARENT.
Parent shall have performed in all material respects all covenants and
agreements required to be performed by them under this Agreement at or prior to
the Closing Date, and Tichenor shall have received a certificate signed by the
chief executive officer or the chief financial officer of Parent to such effect.

(C) PERFORMANCE OF COVENANTS AND AGREEMENTS BY HEFTEL AND
HEFTEL SUB. Heftel and Heftel Sub shall have performed in all material respects
all covenants and agreements required to be performed by them under this
Agreement at or prior to the Closing Date, and Tichenor shall have received a
certificate signed by the chief executive officer or the chief financial officer
of Heftel to such effect.

(d) NO ADVERSE CHANGE. From the date of the Original
Agreement through the Closing, there shall not have occurred any change in the
condition (financial or otherwise), operations or business of Heftel that would
have or would be reasonably likely to result in a Closing Material Adverse
Effect on Heftel.

(E) NASDAQ LISTING. The shares of Heftel Common Stock
issuable pursuant to the Merger shall have been authorized for listing on
Nasdaq, subject to official notice of issuance.

ARTICLE 7

TERMINATION

7.1 TERMINATION RIGHTS. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:

(a) Automatically pursuant to Section 8.9;

<PAGE> 53
(b) By mutual written consent of Parent and Tichenor
prior to the consummation of the Assignment Agreement or of Heftel and Tichenor
thereafter;

(c) By either Tichenor or Parent (or Heftel after
consummation of the Assignment Agreement) if (i) the Merger has not been
consummated by March 31, 1997 (provided, however, that the right to terminate
this Agreement pursuant to this clause (i) shall not be available to any party
whose breach of any representation or warranty or failure to perform any
covenant or agreement under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date); (ii) any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable (provided, however, that the right to terminate this Agreement
pursuant to this clause (ii) shall not be available to any party until such
party has used all reasonable efforts to remove such injunction, order or
decree); or (iii) if the Heftel Proposal shall fail to receive the requisite
vote for approval at the Heftel Meeting;

(d) By parent (or Heftel after consummation of the
Assignment Agreement) if (i) there has been a breach of the representations and
warranties made by Tichenor in Article 3 of this Agreement which will have a
Material Adverse Effect on Tichenor (provided, however, that Parent (or Heftel
after consummation of the Assignment Agreement) shall not be entitled to
terminate this Agreement pursuant to this clause (i) unless Parent (or Heftel
after consummation of the Assignment Agreement) has given Tichenor at least 30
days prior notice of such breach, Tichenor has failed to cure such breach within
such 30-day period, and the condition described in Section 6.2(a), other than
the provision thereof relating to the certificate signed by the chief executive
officer or chief financial officer of Tichenor, would not be satisfied if the
Closing were to occur on the day on which Parent (or Heftel after consummation
of the Assignment Agreement) gives Tichenor notice of such termination); or (ii)
Tichenor has failed to comply in any material respect with any of its covenants
or agreements contained in this Agreement and such failure has not been, or
cannot be, cured within a reasonable time after notice and demand for cure
thereof;

(e) By Tichenor if (i) there has been a breach of the
representations and warranties made by Parent in Section 4.1 of this Agreement
which will have a Material Adverse Effect on Tichenor (provided, however, that
Tichenor shall not be entitled to terminate this Agreement pursuant to this
clause (i) unless Tichenor has given Parent at least 30 days prior notice of
such breach, Parent has failed to cure such breach within such 30-day period,
and the condition described in Section 6.3(a), other than the provision thereof
relating to the certificate signed by the chief executive officer or chief
financial officer of Parent, would not be satisfied if the Closing were to occur
on the day on which Tichenor gives Parent notice of such termination); (ii)
there has been a breach of the representations and warranties made by Heftel and
Heftel Sub in Section 4.2 of this Agreement (provided, however, that Tichenor
shall not be entitled to terminate this Agreement pursuant to this clause (i)
unless Tichenor has given Heftel at least 30 days prior notice of such breach,
Heftel has failed to cure such breach within such 30- day period, and the
condition described in Section 6.3(a), other than the provision thereof relating
to the certificate signed by the chief executive officer or chief financial
officer of Heftel, would not be satisfied if the Closing were to occur on the
day on which Tichenor gives Heftel notice of such termination); (iii) Parent,
Heftel or Heftel Sub has failed to comply in any material

<PAGE> 54
respect with any of its respective covenants or agreements contained in this
Agreement, and, in either such case, such breach or failure has not been, or
cannot be, cured within a reasonable time after notice and a demand for cure
thereof; or (iv) if prior to the execution of the Assignment Agreement but
subsequent to the consummation of the Heftel Acquisition, Heftel would have
failed to comply in any material respect with any of its covenants or agreements
under this Agreement had the Assignment Agreement been executed at the time of
such failure to comply, and, in either such case, such breach or failure has not
been, or cannot be, cured within a reasonable time after notice and a demand for
cure thereof;

(f) By Tichenor if, subsequent to the consummation of the
Heftel Acquisition, the aggregate number of shares of Heftel Common Stock owned
by Parent and its Affiliates is more than 90% of the Heftel Common Stock then
outstanding;

(g) By Tichenor if, prior to consummation of the
Assignment Agreement, Heftel breaches any covenant contained in the Tender Offer
Agreement which will result in a Material Adverse Effect on Heftel; and

(h) Automatically upon termination of the Tender Offer
Agreement prior to the consummation of the Heftel Acquisition.

7.2 EFFECT OF TERMINATION. If this Agreement is terminated by
either Tichenor or Parent (or Heftel after consummation of the Assignment
Agreement) pursuant to the provisions of Section 7.1, this Agreement shall
forthwith become void except for, and there shall be no further obligation on
the part of any party hereto or its respective Affiliates, directors, officers,
or shareholders, except pursuant to, the provisions of Sections 5.4(i), 5.14,
5.19(b) and (d), Article 8 and any confidentiality agreement between any of the
parties hereto (which shall continue pursuant to their terms). The parties
acknowledge that the sole and exclusive remedy of any party to this Agreement
with respect to a breach of a representation or warranty contained herein shall
be the right to terminate this Agreement in accordance with and subject to the
provisions of this Section 7; provided, however, that a termination of this
Agreement shall not relieve any party hereto from any liability for damages
incurred as a result of a breach by such party of its covenants hereunder
occurring prior to such termination other than those covenants contained in
Sections 5.1(c), 5.2(j) and 5.3(j), and the provisions of Section 5.13 regarding
notification of inaccuracies with respect to representations and warranties and
the occurrence events or developments that could cause (or could reasonably be
expected to cause) any representation or warranty contained in this Agreement to
be untrue or inaccurate on the Closing Date. Each party hereby covenants never
to institute, directly or indirectly, any action or proceeding of any kind
against any other party hereto based on or arising out of, or in any manner
related to, the breach of a representation or warranty contained herein or the
covenants contained in Sections 5.1(c), 5.2(j) or 5.3(j) or the provisions of
Sections 5.13 referenced in the immediately preceding sentence.

<PAGE> 55
ARTICLE 8

MISCELLANEOUS

8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the consummation of the
Merger.

8.2 AMENDMENT. This Agreement may be amended by the parties
hereto at any time before or after approval of the Merger and this Merger
Agreement by the shareholders of Tichenor; provided, however, that after any
such approval, no amendment shall be made that by law requires further approval
by such shareholders without such further approval. This Agreement may not be
amended except by a written instrument signed on behalf of each of the parties
hereto.

8.3 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and either delivered personally, by
facsimile transmission or by registered or certified mail (postage prepaid and
return receipt requested) and shall be deemed given when received (or, if
mailed, five business days after the date of mailing) at the following addresses
or facsimile transmission numbers (or at such other address or facsimile
transmission number for a party as shall be specified by like notice):

(a) If to Parent: 200 Concord Plaza, Suite 600, San
Antonio, Texas 78216, Attention: Randall T. Mays (facsimile transmission
number: 210-822-2299), with a copy (which shall not constitute notice) to Akin,
Gump, Strauss, Hauer & Feld, L.L.P., NationsBank Plaza, 300 Convent Street,
Suite 1500, San Antonio, TX 78205, Attention: Stephen C. Mount (facsimile
transmission number: 210-224-2035).

(b) If to Tichenor: 100 Crescent Court, Suite 1777,
Dallas, Texas 75201, Attention: McHenry T. Tichenor, Jr. (facsimile transmission
number: (214) 855-8881), with a copy (which shall not constitute notice) to
Michael D. Wortley, Vinson & Elkins L.L.P., 3700 Trammel Crow Center, 2001 Ross
Avenue, Dallas, TX 75201-2975 (facsimile transmission number: 214-220-7716).

8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

8.5 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.

<PAGE> 56
8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the confidentiality agreements and the documents and instruments
delivered by the parties in connection with this Agreement) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; and (b) except as provided in Article 2 and Section 5.19, is solely for
the benefit of the parties hereto and their respective successors, legal
representatives and permitted assigns and does not confer on any other person
any rights or remedies hereunder. Furthermore, Heftel and Heftel Sub shall have
no rights or obligations under this Agreement until such time as the Assignment
Agreement has been consummated.

8.7 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF TEXAS REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

8.8 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that,
should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes this Agreement impossible to perform, in which case this
Agreement shall terminate pursuant to Article 7. Except as otherwise
contemplated by this Agreement, to the extent that a party hereto took an action
inconsistent herewith or failed to take action consistent herewith or required
hereby pursuant to an order or judgment of a court or other competent
Governmental Authority, such party shall not incur any liability or obligation
unless such party breached its obligations under Section 5.9 or did not in good
faith seek to resist or object to the imposition or entering of such order or
judgment.

8.9 ASSIGNMENT.

(a) ASSIGNMENT BY TICHENOR. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
Tichenor (whether by operation of law or otherwise) without the prior written
consent of the other parties.

(b) ASSIGNMENT BY PARENT. Within ten (10) business days
of the consummation of the Heftel Acquisition, Parent shall submit this
Agreement to Heftel and Heftel Sub for approval and execution of an agreement in
the form attached hereto as EXHIBIT 8.9 (the "ASSIGNMENT AGREEMENT") pursuant to
which Heftel and Heftel Sub will agree that the terms and provisions of this
Agreement relating to them shall be binding upon them as if Heftel and Heftel
Sub were original parties to this Agreement. Promptly after such submission, the
board of directors of each of Heftel and Heftel Sub shall, in their own
independent exercise of their respective fiduciary obligations, either approve
the Merger and submit the Heftel Proposal to the stockholders of Heftel for
approval and the Merger and this Agreement to the shareholders of Heftel Sub for
their approval, or reject the Merger, in which case this Agreement shall
terminate without liability to any party hereto except to the extent expressly
otherwise provided herein.

<PAGE> 57
Subject to the boards of directors of Heftel and Heftel Sub exercising their
respective fiduciary obligations with respect to their approval or rejection of
the Merger, the exercise of which shall be made solely by such boards of
directors, Parent shall use its reasonable efforts to cause Heftel and Heftel
Sub to consummate the Merger. Upon execution of the Assignment Agreement by
Heftel and Heftel Sub, all parties hereto shall be deemed to have accepted the
assumption of obligations and rights by Heftel and Heftel Sub and no other
action on the part of any such party is intended to be required; provided that
all parties hereto shall execute such instruments and otherwise provide such
cooperation as shall reasonably be requested by Parent to implement such
assignment. Subject to the foregoing, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns.

8.10 INDEMNIFICATION FOR NEGLIGENCE. THE INDEMNITIES CONTAINED IN
SECTION 5.19(B) AND (C) SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING
THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER
ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT
LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTES OR BY REASON OF
STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED
PARTIES. TO THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN
ACT OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF
INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM
THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF THE INDEMNIFIED PARTY.

8.11 CONFIDENTIALITY AGREEMENTS. Any confidentiality agreement
between any of the parties hereto shall remain in full force and effect
following the execution of this Agreement until terminated as described in
Section 7.2, is hereby incorporated herein by reference and shall constitute a
part of this Agreement for all purposes; provided, however, that any standstill
provisions contained therein will, effective as of the Closing, be deemed to
have been waived to the extent necessary for the parties to consummate the
Merger in accordance with the terms of this Agreement.

8.12 WAIVERS. At any time prior to the Effective Time, the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive performance
of any of the covenants or agreements, or satisfaction of any of the conditions,
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereof shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provisions hereof.

<PAGE> 58
8.13 INCORPORATION. Exhibits and Schedules referred to herein are
attached to and by this reference incorporated herein for all purposes.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

<PAGE> 59
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives, on the date first written
above.

"Tichenor" "Parent"

TICHENOR MEDIA SYSTEM, INC. CLEAR CHANNEL COMMUNICATIONS,
INC.

By:/s/ MCHENRY T. TICHENOR, JR. By:/s/ L. LOWRY MAYS
-------------------------------- --------------------------------
Name: McHenry T. Tichenor, Jr. Name: L. Lowry Mays
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer

56
<PAGE> 60

EXHIBIT 1.1(A)

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

HEFTEL BROADCASTING CORPORATION

1. Name. The name of the Corporation is Heftel Broadcasting
Corporation.

2. Registered Office. The address of its registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.

3. Business. The nature of the business or purpose of the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.

4. Capital Structure.

4.1 Authorized Shares. The total number of shares of
capital stock which the Corporation shall have authority to issue is
105,000,000 shares, consisting of three classes of capital stock:

(a) 50,000,000 shares of Class A Common Stock,
par value $.001 per share (the "Class A Shares");

(b) 50,000,000 shares of Class B Common Stock,
par value $.001 per share (the "Class B Shares" and, together with the Class A
Shares, the "Common Shares"); and

4.2 Designations, Preferences, etc.

(a) Preferred Stock. The Preferred Stock may be
issued in one or more series. The provisions of this Paragraph 4.2 are subject
to the provisions of Paragraph 5.10 hereof. The Corporation's Board of
Directors is authorized, subject to limitations prescribed by law, to provide
for the issuance of the shares of Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, to determine the powers, designations, preferences and relative,
participating, optional or other special rights, including voting rights, and
the qualifications, limitations or restrictions thereof, of each series of
Preferred Stock and may increase or decrease the number of shares within each
such series; provided, however, that the Corporation's Board of Directors may
not decrease the number of
<PAGE> 61
shares within a series to less than the number of shares within such series
that are then outstanding and may not increase the number of shares within a
series above the total number of authorized shares of Preferred Stock for which
the powers, designations, preferences and rights have not otherwise been set
forth herein. The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the following:

(i) The number of shares constituting that series
and the distinctive designation of that series;

(ii) The dividend rate on the shares of that
series, whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of dividends on
shares of that series;

(iii) Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so, the terms of such
voting rights;

(iv) Whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the Board of
Directors shall determine;

(v) Whether or not the shares of that series
shall be redeemable, and if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;

(vi) Whether that series shall have a sinking fund
for the redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund; and

(vii) The rights of the shares of that series in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of payment of
shares of that series.

(b) Common Shares. The designations,
preferences, powers, qualifications and privileges of the Common Shares shall
be as set forth in Article Five below.

5. Common Shares.

5.1 Identical Rights. Except as herein otherwise
expressly provided in this Article Five, all Common Shares shall be identical
and shall entitle the holders thereof to the same rights and privileges.

5.2 Dividends.

(a) When, as, and if dividends are declared by
the Corporation's Board of Directors, whether payable in cash, property,
securities or rights of the Corporation or any other entity, the holders of
Common Shares shall be entitled to share equally in and to receive, in
accordance with the number of Common Shares held by each such holder, all such
dividends,

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except that if dividends are payable in Common Shares, such stock dividends
shall be payable at the same rate on each class of Common Shares and shall be
payable only in Class A Shares to holders of Class A Shares and in Class B
Shares to holders of Class B Shares.

(b) Dividends payable under this Paragraph 5.2
shall be paid to the holders of record of the outstanding Common Shares as
their names shall appear on the stock register of the Corporation on the record
date fixed by the Board of Directors in advance of declaration and payment of
each dividend. Any Common Shares issued as a dividend pursuant to this
Paragraph 5.2 shall, when so issued, be duly authorized, validly issued, fully
paid and non-assessable, and free of all liens and charges. The Corporation
shall not issue fractions of Common Shares on payment of such dividend but
shall issue a whole number of shares to such holder of Common Shares rounded up
or down in the Corporation's sole discretion to the nearest whole number,
without compensation to the stockholder whose fractional share has been rounded
down or from any stockholder whose fractional share has been rounded up.

5.3 Stock Splits. The Corporation shall not in any
manner subdivide (by any stock split, reclassification, stock dividend,
recapitalization or otherwise) or combine the outstanding shares of one class
of Common Shares unless the outstanding shares of all classes of Common Shares
shall be proportionately subdivided or combined.

5.4 Liquidation Rights. Upon any voluntary or
involuntary liquidation, dissolution or winding-up of the affairs of the
Corporation, after payment shall have been made to holders of outstanding
Preferred Stock, if any, of the full amount to which they are entitled pursuant
to this Second Restated Certificate of Incorporation and any resolutions that
may be adopted from time to time by the Corporation's Board of Directors (for
the purpose of fixing the designations, preferences, rights and restrictions of
any series of Preferred Stock), the holders of Common Shares shall be entitled
to share ratably in accordance with the number of Common Shares held by each
such holder, in all remaining assets of the Corporation available for
distribution among the holders of Common Shares, whether such assets are
capital, surplus or earnings. For purposes of this Paragraph 5.4, neither the
consolidation or merger of the Corporation with or into any other corporation
or corporations pursuant to which the stockholders of the Corporation receive
capital stock and/or other securities (including debt securities) of the
acquiring corporation (or of the direct or indirect parent corporation of the
acquiring corporation), nor the sale, lease or transfer by the Corporation of
all or any part of its assets, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation as those terms are used in this
Paragraph 5.4.

5.5 Voting Rights. The holders of the Class A Shares
shall vote on all matters submitted to a vote of the stockholders, with each
Class A Share entitled to one vote. The holders of Class B Shares shall have no
voting rights, except as provided in Paragraph 5.10 and as otherwise provided
by law. The holders of Common Shares are not entitled to cumulate votes in the
election of any directors.

5.6 No Preemptive or Subscription Rights. No holder of
Common Shares shall be entitled to preemptive or subscription rights.

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<PAGE> 63
5.7 Conversion Rights.

(a) Automatic Conversion of Class B Shares. Each
Class B Share shall convert automatically into one fully paid and
non-assessable Class A Share upon its sale, gift or other transfer to a person
or entity other than Clear Channel Communications, Inc., a Texas corporation
("CCC") or an Affiliate of CCC (an "Event of Automatic Conversion"). For
purposes of this Article 5, an "Affiliate of CCC" shall mean (i) any
corporation of which CCC is, directly or indirectly, the beneficial owner of
50% or more of the combined voting power of all classes of equity securities,
(ii) any partnership, joint venture or unincorporated organization for which
CCC possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies, whether through the ownership of
voting securities, by contract or otherwise or (iii) any person or other entity
that controls, is controlled by, or is under common control with CCC.

Notwithstanding anything to the contrary set forth
herein, any holder of Class B Shares may pledge his Class B Shares to a pledgee
pursuant to a bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee without causing an automatic conversion into
Class A Shares. In the event of foreclosure or other similar action by a
pledgee, such pledged Class B Shares shall be converted automatically, without
any act or deed on the part of the Corporation or any other person, into Class
A Shares as provided in this Paragraph 5.7, unless such foreclosure or similar
action is taken by CCC or an Affiliate of CCC.

(b) Automatic Conversion Procedure. Promptly
upon the occurrence of an Event of Automatic Conversion, the holder of Class B
Shares shall surrender the certificate or certificates therefor, duly endorsed
in blank or accompanied by proper instruments of transfer, at the office of the
Corporation, or of any transfer agent for the Class A Shares, and shall give
written notice to the Corporation, at such office: (i) stating that the shares
are being converted pursuant to an Event of Automatic Conversion into Class A
Shares as provided in Paragraph 5.7(a), (ii) specifying the Event of Automatic
Conversion (and, if the occurrence of such event is within the control of the
transferor, stating the transferor's intent to effect an Event of Automatic
Conversion), (iii) identifying the number of Class B Shares being converted,
and (iv) setting out the name or names (with addresses) and denominations in
which the certificate or certificates for Class A Shares shall be issued and
shall include instructions for delivery thereof. Delivery of such notice
together with the certificates representing the Class B Shares shall obligate
the Corporation or its transfer agent to issue and deliver at such stated
address to such stated transferee a certificate or certificates for the number
of Class A Shares to which such transferee is entitled, registered in the name
of such transferee.

To the extent permitted by law, conversion pursuant
to an Event of Automatic Conversion shall be deemed to have been effected as of
the date on which the Event of Automatic Conversion occurred (such time being
the "Conversion Time"). The person entitled to receive the Class A Shares
issuable upon such conversion shall be treated for all purposes as the record
holder of such Class A Shares at and as of the Conversion Time, and the right
of such person as a holder of Class B Shares shall cease and terminate at and
as of the Conversion Time, in each case without regard to any failure by the
holder to deliver the certificates or the notice required by this subparagraph
(b).

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<PAGE> 64
(c) Voluntary Conversion of Class B Shares. Each
Class B Share shall be convertible, at the option of its holder, into one fully
paid and non-assessable Class A Share at any time.

(d) Voluntary Conversion Procedure for Class B
Shares. At the time of a voluntary conversion, the holder of Class B Shares
shall deliver to the office of the Corporation or any transfer agent for the
Class A Shares (i) the certificate or certificates representing the Class B
Shares to be converted, duly endorsed in blank or accompanied by proper
instruments of transfer, and (ii) written notice to the Corporation stating
that such holder elects to convert such share or shares and stating the name
and addresses in which each certificate for Class A Shares is to be issued.
Conversion shall be deemed to have been effected at the close of business on
the date the Corporation received the Class B Shares to be converted and such
notice, and the person exercising such voluntary conversion shall be deemed to
be the holder of record of the number of Class A Shares issuable upon such
conversion at such time. The Corporation shall promptly deliver certificates
evidencing the appropriate number of Class A Shares to the person set forth in
the notice.

(e) Voluntary Conversion of Class A Shares. Each
Class A Share held by CCC or any Affiliate of CCC shall be convertible, at the
option of its holder, into one fully paid and non-assessable Class B Share at
any time.

(f) Voluntary Conversion Procedure for Class A
Shares. At the time of a voluntary conversion, the holder of Class A Shares
shall deliver to the office of the Corporation or any transfer agent for the
Class B Shares (i) the certificate or certificates representing the Class A
Shares to be converted, duly endorsed in blank or accompanied by proper
instruments of transfer, and (ii) written notice to the Corporation stating
that such holder elects to convert such share or shares and stating the name
and addresses in which each certificate for Class B Shares is to be issued.
Conversion shall be deemed to have been effected at the close of business on
the date the Corporation received the Class A Shares to be converted and such
notice, and the person exercising such voluntary conversion shall be deemed to
be the holder of record of the number of Class B Shares issuable upon such
conversion at such time. The Corporation shall promptly deliver certificates
evidencing the appropriate number of Class B Shares to the person set forth in
the notice.

(g) Unconverted Shares. In the event of the
conversion of less than all of the Class B Shares evidenced by a certificate
surrendered to the Corporation in accordance with the procedures of Paragraph
5.7(b) or 5.7(d), the Corporation shall execute and deliver to, or upon the
written order of the holder of such certificate, without charge to such holder,
a new certificate evidencing the number of Class B Shares not converted. In
the event of the conversion of less than all of the Class A Shares evidenced by
a certificate surrendered to the Corporation in accordance with the procedures
of Paragraph 5.7(f), the Corporation shall execute and deliver to, or upon the
written order of the holder of such certificate, without charge to such holder,
a new certificate evidencing the number of Class A Shares not converted.

(h) Reissue of Shares. Class B Shares that are
exchanged for Class A Shares as provided herein shall continue to be authorized
Class B Shares and available for reissue by the Corporation as determined by
the Board of Directors. Class A Shares that are

5
<PAGE> 65
exchanged for Class B Shares as provided herein shall continue to be authorized
Class A Shares and available for reissue by the Corporation as determined by
the Board of Directors.

(i) Reservation. The Corporation hereby reserves
and shall at all times reserve and keep available, out of its authorized and
unissued Class A Shares, for the purposes of effecting conversions, such number
of duly authorized Class A Shares as shall from time to time be sufficient to
effect the conversion of all outstanding Class B Shares. The Corporation
hereby reserves and shall at all times reserve and keep available, out of its
authorized and unissued Class B Shares, for the purposes of effecting
conversions, such number of duly authorized Class B Shares as shall from time
to time be sufficient to effect the conversion of all outstanding Class A
Shares. The Corporation covenants that all the Class A Shares or the Class B
Shares, as the case may be, so issuable shall, when so issued, be duly and
validly issued, fully paid and non-assessable, and free from liens and charges
with respect to the issue.

5.8 Consideration on Merger, Consolidation, etc. In any
merger, consolidation or business combination, the consideration to be received
per share by the holders of Class A Shares and Class B Shares must be identical
for each class of stock, except that in any such transaction in which shares of
common stock are to be distributed, such shares may differ as to voting rights
to the extent that voting rights now differ among the Class A Shares and the
Class B Shares.

5.9 Transfer of Class B Shares. If a holder of Class B
Shares desires to transfer Class B Shares to CCC or an Affiliate of CCC, such
holder shall deliver to the Secretary of the Corporation (a) the certificate or
certificates representing the Class B Shares, duly endorsed in blank or
accompanied by proper instruments of transfer and (b) written notice to the
Corporation stating that such holder elects to transfer such shares and stating
the name and addresses in which each certificate for Class B Shares is to be
issued. Class B Shares shall not be transferred on the books of the
Corporation until all of the conditions set forth in the foregoing clauses (a)
and (b) are satisfied.

5.10 Restrictions and Limitations. So long as CCC and any
Affiliate of CCC collectively own 20% of the outstanding Class A Shares
(calculated as if all Class B Shares owned, or deemed as owned, by CCC and any
Affiliate of CCC had been converted to outstanding Class A Shares), the
Corporation shall not, and shall not permit any subsidiary to, without the vote
or written consent by the holders of a majority of the Class B Shares voting as
a single class, with each Class B Share entitled to one vote:

(a) Effect any sale, lease, assignment, transfer
or other conveyance of all or substantially all of the assets of the
Corporation, or any merger or consolidation involving the Corporation where the
stockholders of the Corporation immediately prior to such merger or
consolidation do not own at least 50% of the capital stock of the surviving
entity immediately thereafter, or any reclassification or any recapitalization,
or any dissolution, liquidation, or winding up of the Corporation;

(b) Authorize, issue, or obligate itself to
issue, any shares of Preferred Stock;

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<PAGE> 66
(c) Make or permit any amendment to the
Corporation's certificate of incorporation, as amended from time to time, that
adversely affects the rights of the holders of Class B Shares;

(d) Declare or pay any non-cash dividends on or
declare or make any other non-cash distribution, direct or indirect, on account
of the Common Shares or set apart any amount other than cash for any such
purpose; or

(e) Make or permit any amendment or modification
to any Article of the Corporation's certificate of incorporation, as amended
from time to time, concerning the Corporation's capital stock, including, but
not limited to, Article Four or Article Five hereof.

6. Existence. The Corporation is to have perpetual existence.

7. Bylaws. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter or repeal the bylaws of the Corporation.

8. Elections, Meetings and Books. Elections of directors need
not be by written ballot unless the bylaws of the Corporation shall so provide.
Meetings of stockholders may be held within or without the State of Delaware,
as the bylaws may provide. The books of the Corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the board of
directors or in the bylaws of the Corporation.

9. Amendment. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Second Amended and
Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.

10. Limitation on Director Liability. No director shall be
personally liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (a)
for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174 of
the Delaware General Corporation Law, or (d) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation, in addition to the limitations on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this Article
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.

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<PAGE> 67
11. Indemnification.

11.1 General. Each person who was or is made a party to
or threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
a grand jury proceeding and an action by the Corporation (individually, a
"Proceeding") by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, excise taxes under the Employee
Retirement Income Security Act of 1974 or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection with the Proceeding (collectively, "Covered Expenses") and such
indemnification shall continue as to the person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that, except as
provided in Paragraph 11.2, the Corporation shall indemnify any such person
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such Proceeding in advance of its final disposition; provided,
however, that if required by the Delaware General Corporation Law, the payment
of such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a Proceeding shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Article or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification
to employees and agents of the Corporation with the same scope and effect as
the foregoing indemnification of directors and officers.

11.2 Failure to Pay Claims. If a claim under Paragraph
11.1 is not paid in full by the Corporation within thirty (30) days after the
Corporation has received a written claim, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition when the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify

8
<PAGE> 68
the claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

11.3 Not Exclusive. The right to indemnification and the
payment of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Article 11 shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of this Second Amended and Restated Certificate of Incorporation,
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

11.4 Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any Covered Expenses, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.

11.5 Definition of the Corporation. As used in this
Article, references to "the Corporation" shall include, in addition to the
resulting or surviving corporation, any constituent corporation absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees
and agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.

11.6 Severability. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each director, officer, employee
and agent of the Corporation as to any Covered Expenses to the fullest extent
permitted by any applicable portion of this Article that shall not have been
invalidated or by any other applicable law.

12. Participation of Non-Citizens. The following provisions are
included for the purpose of ensuring that control and management of the
Corporation remains with loyal citizens of the United States and/or
corporations formed under the laws of the United States or any of the states of
the United States, as required by the Communications Act of 1934, as the same
may be amended from time to time:

12.1 The Corporation shall not issue to "Aliens" (which
term shall include (a) a person who is a citizen of a country other than the
United States; (b) any entity organized under

9
<PAGE> 69
the laws of a government other than the government of the United States or any
state, territory or possession of the United States; (c) a government other
than the government of the United States or of any state, territory or
possession of the United States; and (d) a representative of, or an individual
or entity controlled by, any of the foregoing), either individually or in the
aggregate, in excess of 25% of the total number of shares of capital stock of
the Corporation outstanding at any time and shall seek not to permit the
transfer on the books of the Corporation of any capital stock to any Alien that
would result in Aliens holding in excess of 25% of the total number of shares
of capital stock of the Corporation then outstanding.

12.2 Notwithstanding Paragraph 12.1, no Alien or Aliens
shall be entitled to vote or direct or control the vote of more than 25% of (a)
the total number of shares of capital stock of the Corporation outstanding and
entitled to vote at any time and from time to time, or (b) the total voting
power of all shares of capital stock of the Corporation outstanding and
entitled to vote at any time and from time to time, generally, in the election
of directors.

12.3 The Board of Directors of the Corporation shall have
all powers necessary to implement the provisions of this Article 12.

<PAGE> 1
EXHIBIT 2.5.8

ASSIGNMENT AGREEMENT

THIS ASSIGNMENT AGREEMENT (the "Agreement"), dated as of October 10,
1996, is made by Heftel Broadcasting Corporation, a Delaware corporation
("Heftel"), and Heftel Merger Sub, Inc., a Texas corporation and wholly owned
subsidiary of Heftel ("Heftel Sub").

Recitals

A. Clear Channel Communications, Inc., a Texas corporation ("Parent"),
and Tichenor Media System, Inc., a Texas corporation ("Tichenor"), are parties
to that certain Agreement and Plan of Merger, dated as of July 9, 1996 (the
"Merger Agreement"; capitalized terms used and not otherwise defined herein
shall have the meanings ascribed thereto in the Merger Agreement), pursuant to
which Heftel Sub will be merged with and into Tichenor (the "Merger").

B. Parent has completed the Heftel Acquisition and upon completion
thereof, Parent agreed, pursuant to the terms of the Merger Agreement, to
propose to Heftel and Heftel Sub that such entities agree to be bound by the
terms of the Merger Agreement as they relate to such entities and use its
reasonable efforts to cause the execution of this Agreement by Heftel and
Heftel Sub.

C. Pursuant to the terms of this Agreement, Heftel and Heftel Sub each
desire to become a party to the Merger Agreement as if they were original
parties to the Merger Agreement in accordance with Section 8.9(b) of the Merger
Agreement.

D. The board of directors of each of Heftel and Heftel Sub have
determined that the Merger is in the best interests of Heftel Sub, respectively,
and that it is advisable and in the best interests of each of Heftel and Heftel
Sub to become a party to the Merger Agreement.

E. Accordingly, the board of directors of each of Heftel and Heftel Sub
have approved the Merger Agreement and recommended that their respective
stockholders approve and authorize the Merger Agreement and the Merger.

NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:

Statement of Agreement

1. Assignment and Assumption. Heftel and Heftel Sub hereby agree that,
effective as of the date hereof, the terms and provisions of the Merger
Agreement relating to them shall be binding upon them as if Heftel and Heftel
Sub were original parties to the Merger Agreement. Upon execution of this
Agreement, Heftel and Heftel Sub hereby agree to assume all of the rights and
obligations set forth in the Merger Agreement relating to each of them,
respectively.

<PAGE> 2
2. Captions. The captions and headings used in this Agreement are
for convenience only, do not constitute any part of this Agreement, and shall
be disregarded in construing the language hereof.

3. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF TEXAS REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

4. Further Assurances. From time to time hereafter and without
additional consideration, the parties hereto hereby agree to execute and
deliver, or cause to be executed and delivered, such additional or further
instruments, and otherwise provide such cooperation, as shall reasonably be
requested by any party to the Merger Agreement for the purpose of effectively
carrying out the transactions contemplated by this Agreement.

5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

HEFTEL BROADCASTING CORPORATION

By: /s/ L. LOWRY MAYS
----------------------------
Name: L. Lowry Mays
Title: President and Chief
Executive Officer

HEFTEL MERGER SUB, INC.

By: /s/ L. LOWRY MAYS
--------------------------
Name: L. Lowry Mays
Title: President

-2-

<PAGE> 1

LOAN AGREEMENT

BETWEEN

TMS ASSETS CALIFORNIA, INC.,
AS THE BORROWER

AND

CLEAR CHANNEL COMMUNICATIONS, INC.,
AS THE LENDER

DATED: AS OF JULY 9, 1996

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE 1
GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2
AMOUNT AND TERMS OF LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.02 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.03 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.05 Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.06 Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 3
REPRESENTATIONS AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.01 Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.02 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 4
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.03 Notice of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 5
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 6
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.03 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.04 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.06 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.07 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.09 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.10 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.11 Titles of Articles, Sections and Subsections; References . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.13 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C>
Section 6.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.15 Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Schedule I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1

Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1
1. Corporate Existence and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1
2. Compliance with Laws; No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1
3. Corporate Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1
4. Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1
5. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -1
6. Location of Business and Offices; Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -2
7. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -2
8. Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -2
9. Business Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule I -2

Schedule II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1

Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
1. Negative Pledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
2. Other Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
3. Dividends, Distributions and Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
4. Investments, Loans and Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
5. Nature of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
6. Amendments to Articles of Incorporation and By-laws. . . . . . . . . . . . . . . . . . . . . Schedule II -1
7. Dispositions of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1
8. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II -1

Schedule III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1

Conditions precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1
1. Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1
2. Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1
3. Note and Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1
4. Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1
5. Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1
6. Copy of Sixth Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule III -1

Exhibit A Form of Note
Exhibit B Form of Letter of Credit
</TABLE>

ii
<PAGE> 4
LOAN AGREEMENT

THIS LOAN AGREEMENT is dated as of this 9th day of July, 1996 between
TMS ASSETS CALIFORNIA, INC., a Delaware corporation ("BORROWER"), and CLEAR
CHANNEL COMMUNICATIONS, INC., a Texas corporation (the "LENDER").

RECITALS

A. Borrower desires Lender to make available to Borrower certain
amounts to fund the costs associated with cost of acquisition of the assets
subject of the Asset Purchase Agreement; and

B. Lender is willing to make such financing available to Borrower
upon the terms and subject to the conditions set forth herein.

C Now, therefore, in consideration of the mutual covenants and
agreements herein contained, Borrower and Lender agree as follows:

ARTICLE 1
GENERAL TERMS

Section 1.01 Terms Defined Above. As used in this Agreement, the
terms "Borrower" and "Lender" shall have the meanings indicated above.

Section 1.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:

"Agreement" shall mean this Loan Agreement, as the same may
from time to time be amended or supplemented.

"Asset Purchase Agreement" shall mean that certain Asset
Purchase Agreement dated as of May 3, 1996 between Crescent Communications
L.P., a Delaware limited partnership, and Guarantor, as assigned by Guarantor
to Borrower, as the same has been amended, modified or supplemented prior to
the date hereof.

"Business Day" shall mean a day other than a Saturday, Sunday
or legal holiday for commercial banks under the laws of the State of Texas.

"Commitment" shall mean the obligation pursuant to Section
2.01 of Lender to cause to be issued a letter of credit and upon the drawing of
such letter of credit to make a term loan in the amount drawn on such letter of
credit to Borrower.

"Debt" shall mean, for any Person any of the following: (a)
all obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments; (b) all obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds and similar instruments; (c) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable (other than for borrowed money) arising
in the ordinary course of business of such Person; (d) all obligations under
leases which shall
<PAGE> 5
have been, or should have been, in accordance with generally accepted
accounting principles in effect on the date of this Agreement, recorded as
capital leases in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person otherwise assures a creditor against loss; (e) all Debt
of others secured by a lien on any asset of such Person, whether or not such
Debt is assumed by such Person; and (f) all Debt of others guaranteed by such
Person or upon which such Person is otherwise liable as a partner or otherwise.

"Event of Default" shall mean the occurrence of any of the
events specified in Section 4.01.

"Guarantor" shall mean Tichenor Media System, Inc., a Texas
corporation.

"Guaranty" shall mean that certain Guaranty dated of even date
herewith by Guarantor in favor of Lender, as the same may be amended, modified
or supplemented from time to time.

"Highest Lawful Rate" shall mean the maximum nonusurious
interest rate that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the Note or on other Indebtedness, as
the case may be, under applicable law.

"Indebtedness" shall mean any and all amounts owing or to be
owing by Borrower to Lender in connection with the Note, this Agreement or any
Security Document, and all renewals, extensions and/or rearrangements thereof.

"Loan Documents" shall mean this Agreement, the Note and the
Security Documents, and any other agreement or instrument now or hereafter
given to secure this Agreement and the Note.

"Note" shall mean the promissory note of Borrower evidencing
Borrower's obligations in respect of the Loan and being in the form of Exhibit
A, together with any and all replacements, renewals, extensions for any period,
increases or rearrangements thereof.

"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof, or any
other form of entity.

"Pledge Agreements" shall mean, collectively, that certain
Security Agreement (Stock Pledge) dated of even date herewith by Guarantor in
favor of Lender pursuant to which Guarantor has pledged 100% of the issued and
outstanding shares of stock of Borrower to secure the Indebtedness, as the same
may be amended, modified or supplemented from time to time; and that certain
Security Agreement (Stock Pledge) dated of even date herewith by Borrower in
favor of Lender pursuant to which Borrower has pledged 100% of the issued and
outstanding shares of stock of TLC to secure the Indebtedness, as the same may
be amended, modified or supplemented from time to time.

"Security Documents" shall mean the Guaranty and the Pledge
Agreements.

"Senior Credit Agreement" shall mean that certain Second
Amended and Restated Credit Agreement dated as of August 9, 1994 among
Guarantor, the subsidiaries of Guarantor from time to time signatory thereto,
NationsBank of Texas, N.A., as administrative lender for the lenders, and each
of such lenders, as now or hereafter amended, modified or supplemented.

2
<PAGE> 6
"Senior Creditors" shall mean each of the lenders now or
hereafter signatory to the Senior Credit Agreement.

"TLC" shall mean Tichenor License California, Inc., a
Delaware corporation.

ARTICLE 2
AMOUNT AND TERMS OF LOAN

Section 2.01 Term Loan. Lender agrees on the terms of this Agreement
to cause to be issued an irrevocable, letter of credit having a face amount of
$40,000,000 issued by an investment grade financial institution which permits
Borrower to draw upon presentation a statement that each of the conditions to
closing specified in Section 1.4 of the Asset Purchase Agreement has been
satisfied. Such letter of credit shall otherwise be in substantially the Form
of Exhibit B hereto. Upon (i) a presentation of a draft or demand by Borrower
requesting a draw under the letter of credit and (ii) the financial institution
issuing such letter of credit honoring such presentation, Lender shall be
deemed to have made a loan in the amount of such draft. Such loan by Lender to
Borrower shall be evidenced by the Note, in substantially the form of Exhibit A
hereto.

Section 2.02 Interest Rate.

(a) The outstanding amount of the Note shall bear interest from
the date Borrower makes a draw under the letter of credit referred to in
Section 2.01 until maturity at the following rates:

(i) during the period commencing on the date Borrower makes a draw
under the letter of credit referred to in Section 2.01 and ending on
September 30, 1996, nine percent (9%) per annum;

(ii) during the period commencing on October 1, 1996 and ending on
December 31, 1996, ten percent (10%) per annum;

(iii) during the period commencing on January 1, 1997 and ending on
March 31, 1997, eleven percent (11%) per annum;

(iv) during the period commencing on April 1, 1997 and ending on
June 30, 1997, twelve percent (12%) per annum; and

(v) during the period commencing on July 1, 1997 and ending on
September 30, 1997, thirteen percent (13%) per annum.

(b) Notwithstanding the foregoing, upon the failure of Borrower to
pay to Lender on the date due any amount due and owing under this Agreement,
the Note or the Security Documents, such past due amount shall bear, as
liquidated damages and not as a penalty, additional delay interest at a rate of
2% per annum in excess of the otherwise applicable rate.

(c) Interest shall be payable quarterly on each the first day of
each January, April, July and October, commencing October 1, 1996, and the
maturity date of the Note as set forth in this Section 2.03. Post-default
interest shall be payable on demand.

3
<PAGE> 7
Section 2.03 Repayment. The Note shall be due and payable in full,
together with all accrued interest, on September 30, 1997.

Section 2.04 Prepayments. Borrower may, at its option, prepay the
principal amount of the Note together with all accrued interest at any time in
whole or, from time to time, in part, without premium or penalty.

Section 2.05 Payment Procedure. All payments made by Borrower under
the Note or this Agreement shall be made to Lender, at a bank account described
by Lender in writing to Borrower not less than one Business Day prior to the
date of such payment, in lawful currency of the United States of America in
immediately available funds before 2:00 p.m., Dallas time, on the date that
such payment is required to be made. Any payment received and accepted by
Lender after such time shall be considered for all purposes (including the
calculation of interest, to the extent permitted by law) as having been made on
the next following Business Day.

Section 2.06 Business Days. If the date for any payment hereunder
falls on a day which is not a Business Day, then for all purposes of the Note
and this Agreement the same shall be deemed to have fallen on the next
following Business Day, and such extension of time shall, in such case, be
included in the computation of the payment of interest.

ARTICLE 3
REPRESENTATIONS AND COVENANTS

Section 3.01 Representations. Borrower makes Lender the
representations and warranties contained in Schedule I hereto.

Section 3.02 Covenants. Until the repayment in full of the Note and
all other amounts owing to Lender under this Agreement, Borrower shall comply
with the covenants set forth in Schedule II hereto.

ARTICLE 4
EVENTS OF DEFAULT

Section 4.01 Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:

(a) Borrower shall (i) default in the payment when due of any
principal on the Note or any expenses or other amounts payable hereunder or
under any other Loan Document, or (ii) default in the payment when due of any
interest on the Note and such default shall continue unremedied for a period of
45 days; or

(b) Borrower shall default in the payment when due of any
principal of or interest on any of its other Debt aggregating $100,000 or more
or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur and the result of either
such payment default or event is to cause such Debt to become due prior to its
stated maturity; or

(c) Any representation or warranty made by either Borrower or
Guarantor in Schedule I or in any other Loan Document shall prove to have been
false or misleading as of the time made or furnished in

4
<PAGE> 8
any material respect and such default is not cured for a period of 30 days
after notice thereof to Borrower or Guarantor by Lender; or

(d) Borrower or Guarantor shall default in the performance of any
of their respective obligations under this Agreement or under any Loan Document
and such default shall continue unremedied for a period of 30 days after notice
thereof to Borrower or Guarantor by Lender; or

(e) Any of Guarantor, Borrower or TLC shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become
due, or shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, (v) fail
to controvert in a timely and appropriate manner, or acquiesce in writing to,
any petition filed against it in an involuntary case under the Federal
Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting
any of the foregoing; or

(f) A proceeding or case shall be commenced, without the
application or consent of any of Guarantor, Borrower or TLC, in any court of
competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the like
for it or for all or any substantial part of its assets, or (iii) similar
relief in respect of any of Guarantor, Borrower or TLC under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 90 days; or
(iv) any order for relief against any of Guarantor, Borrower or TLC shall be
entered in an involuntary case under the Federal Bankruptcy Code; or

(g) Guarantor shall default in the payment when due of any
principal of or interest on any of its Debt evidenced by the Senior Credit
Agreement and such payment default shall not be remedied or waived or otherwise
cured within a period of 45 days from the date of default; or any event
specified in the Senior Credit Agreement shall occur and the result of such
event is to cause such Debt to become due prior to its stated maturity; or

(h) A final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate (which is not fully covered by insurance,
subject to customary deductibles) shall be rendered by a court against either
Borrower or TLC and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within 45 days from the date of entry thereof and either Borrower or TLC shall
not, within said period of 45 days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.

Section 4.02 Remedies.

(a) If any Event of Default has occurred and is continuing, other
than under Sections 4.01(e) and (f), then Lender may, by notice to Borrower,
require Borrower to repay the Indebtedness or such part thereof as is specified
in that notice. On receipt of any such notice, Borrower shall immediately repay
the

5
<PAGE> 9
Indebtedness (or that part of the Indebtedness specified in that notice) and all
interest accrued thereon and any other amounts then payable under this
Agreement, the Note and the Security Documents. In connection with any notice
and demand for payment, Borrower waives presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any kind.

(b) If any Event of Default referred to under Sections 4.01(e) and
(f) has occurred and is continuing, then the Indebtedness shall become
automatically immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by Borrower.

Section 4.03 Notice of Events. Upon the occurrence of any Event of
Default, Borrower shall immediately notify Lender by facsimile specifying the
nature of such Event of Default and any steps Borrower is taking to remedy the
same.

ARTICLE 5
CONDITIONS OF LENDING

The obligation of Lender to make any disbursement pursuant to this
Agreement is subject to the conditions set forth in Schedule III.

ARTICLE 6
MISCELLANEOUS

Section 6.01 Expenses. Borrower agrees to pay, and save Lender
harmless against liability for the payment of the costs and expenses, including
reasonable attorneys' and consultants' fees, and all actual costs incurred by
Lender in connection with: recording or filing any of the Loan Documents, the
preservation of rights under any Loan Document, the responding to any default
or Event of Default or enforcing any rights under, and the refinancing,
restructuring or renegotiation following a default of, this Agreement, the Note
or any other Loan Document or in complying with any subpoena or other legal
process served upon Lender in connection with this Agreement or any other Loan
Document, or in any bankruptcy or insolvency case. In addition, Borrower
agrees to reimburse Lender upon demand for all out-of-pocket costs and expenses
(including commitment fees, issuing fees and any other fees assessed by and
expenses reimbursed to the issuing bank) paid or payable by Lender to obtain
the letter of credit referred to in Section 2.05(a).

Section 6.02 Notices. Any notice required or permitted to be given
under or in connection with this Agreement or the Note shall be in writing and
shall be mailed by first class or express mail, postage prepaid, or sent by
telecopy or other similar form of rapid transmission confirmed by mailing (by
first class or express mail, postage prepaid) written confirmation at
substantially the same time as such rapid transmission, or personally delivered
to an officer of the receiving party. All such communications shall be mailed,
sent or delivered,

(a) if to Borrower, to:

TMS Assets California, Inc.
c/o Tichenor Media System, Inc.
100 Crescent Court
Suite 1777

6
<PAGE> 10
Dallas, Texas 75201-6991
Attention: Jeffrey T. Hinson
Facsimile: (214) 855-8881

or to such other address or to such individual's or department's
attention as it may have furnished Lender in writing; or

(b) if to Lender, to:

Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Randall Mays
Facsimile: (210) 822-2299

or to such other address or to such individual's or department's
attention as it may have furnished Borrower in writing.

(c) Any communication so addressed and mailed shall be deemed to
be given when so mailed; and any notice so sent by rapid transmission shall be
deemed to be given when receipt of such transmission is acknowledged, and any
communication so delivered in person shall be deemed to be given when receipted
for by, or actually received by, an authorized officer of Borrower or Lender,
as the case may be.

Section 6.03 Amendments and Waivers. Any provision of this Agreement
or the Note may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by Borrower and Lender.

Section 6.04 Invalidity. In the event that any one or more of the
provisions contained in the Note or this Agreement shall, for any reason, be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of the Note
or this Agreement.

Section 6.05 Successors and Assigns. Neither Borrower nor Lender
shall have the right to assign its rights under this Agreement or any interest
herein.

Section 6.06 Waivers. No failure on the part of Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any
right, power or privilege under this Agreement, the Note or any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement, the Note or any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

Section 6.07 Cumulative Rights. Rights and remedies of Lender under
the Note, this Agreement and the Security Documents shall be cumulative, and
the exercise or partial exercise of any such right or remedy shall not preclude
the exercise of any other right or remedy.

Section 6.08 Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to Lender and the transactions
contemplated hereunder. Accordingly, if such transactions would

7
<PAGE> 11
be usurious under applicable law, then, notwithstanding anything to the
contrary in the Note, this Agreement or otherwise, it is agreed as follows:
(i) the aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or received
under the Note, this Agreement or otherwise in connection with such
transactions shall under no circumstances exceed the maximum amount allowed by
such applicable law, (ii) in the event that the maturity of the Note is
accelerated for any reason, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under applicable
law may never include more than the maximum amount allowed by such applicable
law, and (iii) excess interest, if any, provided for in this Agreement or
otherwise in connection with such transactions shall be canceled automatically
and, if theretofore paid, shall be credited by Lender on the principal amount
of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by
Lender to Borrower). The right to accelerate the maturity of the Note does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lender do not intend to collect any unearned
interest in the event of acceleration. All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of sums included in the
Indebtedness shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the Note until
payment in full so that the rate or amount of interest on account of the
Indebtedness does not exceed the applicable usury ceiling, if any.

Section 6.09 Entire Agreement. THE NOTE, THIS AGREEMENT AND THE
SECURITY DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN LENDER
AND BORROWER AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH
PARTIES RELATING TO THE SUBJECT MATTER HEREOF. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.

Section 6.10 Exhibits and Schedules. The exhibits and schedules
attached to this Agreement are incorporated herein and shall be considered a
part of this Agreement for the purposes stated herein, except that in the event
of any conflict between any of the provisions of any such exhibit or schedule
and the provisions of this Agreement, the provisions of this Agreement shall
prevail.

Section 6.11 Titles of Articles, Sections and Subsections;
References. All titles or headings to articles, sections, subsections or other
divisions of this Agreement or the exhibit hereto are only for the convenience
of the parties and shall not be construed to have any effect or meaning with
respect to the other content of such articles, sections, subsections or other
divisions, such other content being controlling as to the agreement between the
parties hereto. The words "herein," "hereof," "hereunder" and other words of
similar import when used in this Agreement refer to this Agreement as a whole,
and not to any particular article, section or subsection. Any reference herein
to a Section or Subsection shall be deemed to refer to the applicable Section
or Subsection of this Agreement unless otherwise stated herein. Any reference
herein to an exhibit shall be deemed to refer to the applicable exhibit
attached hereto unless otherwise stated herein.

Section 6.12 Governing Law. This Agreement is governed by, and shall
be construed in accordance with, the laws of the State of Texas without giving
effect to the principles thereof relating to conflicts of laws.

Section 6.13 Reinstatement. If at any time any payment made by
Borrower in connection with this Agreement, the Note or the Security Documents
must be returned by Lender or its successors and assigns for any reason, the
obligation to make such payment under this Agreement, the Note or the Security
Documents shall continue to be effective and shall be reinstated.

8
<PAGE> 12
Section 6.14 Counterparts. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

Section 6.15 Subordination. Lender acknowledges that the obligations
of Guarantor in favor of Lender under the Guaranty are subject to the terms set
forth in that certain Subordination Agreement of even date herewith by Lender
and Guarantor in favor of the Senior Creditors. Lender agrees to execute and
deliver such Subordination Agreement to the Senior Creditors.

Section 6.16 Indemnities. Borrower agrees to:

(a) pay and hold Lender harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save Lender harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such taxes; and

(b) INDEMNIFY LENDER, ITS OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS AND AFFILIATES (COLLECTIVELY, THE "INDEMNIFIED
PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST, PROMPTLY UPON DEMAND PAY OR
REIMBURSE EACH OF THEM FOR, AND REFRAIN FROM CREATING OR ASSERTING AGAINST ANY
OF THEM, ANY AND ALL ACTIONS, SUITS, PROCEEDINGS (INCLUDING ANY INVESTIGATIONS,
LITIGATION OR INQUIRIES), CLAIMS, DEMANDS, CAUSES OF ACTION, COSTS, LOSSES,
LIABILITIES, DAMAGES OR EXPENSES OF ANY KIND OR NATURE WHATSOEVER
(COLLECTIVELY, THE "INDEMNITY MATTERS") WHICH MAY BE INCURRED BY OR ASSERTED
AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A
PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY
ACTUAL OR PROPOSED USE BY BORROWER OR TLC OF THE PROCEEDS OF ANY OF THE NOTE OR
LETTER OF CREDIT OR (II) ANY OTHER ASPECT OF THIS AGREEMENT, THE NOTE, THE
LETTER OF CREDIT AND THE OTHER LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION,
THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES
INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY
SUCH ACTION, SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR
INQUIRIES) OR CLAIM, BUT EXCLUDING HEREFROM ALL INDEMNITY MATTERS ARISING
SOLELY BY REASON OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF
LENDER OR ANY OTHER INDEMNIFIED PARTY AND DERIVATIVE CLAIMS FROM SHAREHOLDERS
OF LENDER OR ANY OF ITS SHAREHOLDERS WHETHER OR NOT RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT.

(c) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED
PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR
AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED
PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILFUL
MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT
SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED
BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF THE
INDEMNIFIED PARTY.

9
<PAGE> 13
(d) In the case of any indemnification hereunder, Lender shall
give notice to Borrower of any such claim or demand being made against the
Indemnified Party and Borrower shall have the non-exclusive right to join in
the defense against any such claim or demand.

(e) Borrower's obligations under this Section 6.16 shall survive
any termination of this Agreement and the payment of the Note and shall
continue thereafter in full force and effect. Borrower shall pay any amounts
due under this Section 6.16 within thirty (30) days of the receipt by Borrower
of notice of the amount due.

Section 6.17 Waiver of Jury Trial. BORROWER AND LENDER HEREBY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR TO DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT
AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed by their authorized representatives as of the date first above
written.

TMS ASSETS CALIFORNIA, INC.

By: /s/ Jeffrey T. Hinson
-----------------------------
Name: Jeffrey T. Hinson
Title: Vice President

10
<PAGE> 14
CLEAR CHANNEL COMMUNICATIONS, INC.

By: /s/ Randall Mays
-----------------------------
Name: Randall Mays
Title: Vice President

11
<PAGE> 15
SCHEDULE I
REPRESENTATIONS

1. Corporate Existence and Authority. Each of Borrower and TLC: (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of Delaware; (b) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary; and (c) has all requisite power and authority to
conduct their business as presently conducted and, upon obtaining the consents
referred to in the Asset Purchase Agreement, as proposed to be conducted.

2. Compliance with Laws; No Breach.

(a) Except for the approvals set forth in the Asset Purchase
Agreement as conditions to the closing of the Asset Purchase Agreement,
Borrower has not violated any governmental requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for
the ownership of its properties or the conduct of its business which violation
or failure would have (in the event such violation or failure were asserted by
any Person through appropriate action) a material adverse effect.

(b) Neither the execution and delivery of this Agreement, the Note
or the other Security Documents to which either Borrower or TLC is a party nor
compliance with the terms and provisions thereof will conflict with or result
in a breach of, or require any consent under, the respective charter or by-laws
of either Borrower or TLC, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority, or any
agreement or instrument to which Borrower or TLC is a party or by which
Borrower or TLC is bound other than those consents or waivers which have been
obtained on or before the date hereof.

3. Corporate Action. Borrower is duly authorized and empowered to
execute, deliver and perform the Loan Documents to which it is a party; and
Borrower is duly authorized and empowered to issue the Note. All corporate
action on the Borrower's part requisite for the issuance of the Note and the
due execution, delivery and performance of each Loan Document to which it is a
party has been duly and effectively taken; and this Agreement, the Note and
other Loan Documents to which Borrower is a party constitute valid and binding
obligations of Borrower, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the rights of creditors and to general
principles of equity.

4. Consents. Each of Borrower and TLC has obtained all authorizations,
approvals, orders, licences, permits and consents of, and have made all filings
and registrations with, any Person necessary for the execution, delivery or
performance by it of the Loan Documents to which it is a party, or for the
validity or enforceability thereof; provided that certain consents and
approvals of the Federal Communication Commission (together with any successor
agency thereto the "FCC") may be required in connection with the exercise of
the rights and remedies granted Lender under the Pledge Agreements; and this
Agreement and certain of the Loan Documents should be filed with the FCC
pursuant to FCC rules within the required time period after the date hereof.

5. Use of Proceeds. The proceeds of the drawing of the letter of credit
shall be used by Borrower to purchase the assets identified in the Asset
Purchase Agreement and for no other purpose. Borrower is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose,

Schedule I -1
<PAGE> 16
whether immediate, incidental or ultimate, of buying or carrying margin stock
(within the meaning of Regulations U or X of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of the Loan will be used to
buy or carry any margin stock.

6. Location of Business and Offices; Name. Borrower's principal place of
business and chief executive offices are located at the address stated on the
signature page of this Agreement. Borrower has not, during the last five (5)
years, entered into any contract, agreement, security instrument or other
document using a name other than, or been known by or otherwise used any name
other than, the name used by Borrower herein.

7. Defaults. Neither Borrower nor TLC is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default (in any
respect which would have a material adverse effect) under any material
agreement or other instrument to which it is a party or by which it is bound.

8. Asset Purchase Agreement. Lender has been previously furnished a
true, correct and complete copy of the Asset Purchase Agreement; and except as
disclosed in writing to Lender, there have been no amendments, modifications or
supplements thereto.

9. Business Activities. Each of Borrower and TLC have been recently
incorporated and have carried on no business activities prior to the date of
this Agreement other than executing and delivering assignment and assumption
agreements relating to the Asset Purchase Agreement and the Loan Documents to
which Borrower is a party.

Schedule I -2
<PAGE> 17
SCHEDULE II
COVENANTS

Until the repayment in full of the Note and all other amounts owing to
Lender hereunder, Borrower shall not, and shall not permit TLC to:

1. Negative Pledge. Create, incur, assume or permit to exist any lien,
security interest or encumbrance other than (a) liens in favor of Lender; and
(b) inchoate liens existing by statute or operation of law.

2. Other Debt. Create, incur, assume or permit to exist any Debt other
than: (a) the Note and other indebtedness in favor of Lender; and (b) loans,
advances or extensions of credit, which are subordinated to the Note and the
other obligations of Borrower hereunder pursuant to a subordination agreement,
in form and substance reasonably satisfactory to Lender, made by Guarantor to
Borrower, in accordance with the Senior Credit Agreement, not to exceed
$8,000,000 in the aggregate.

3. Dividends, Distributions and Redemptions. Declare or pay any
dividend, purchase, redeem or otherwise acquire for value any of its capital
stock now or hereafter outstanding, return any capital to its stockholders, or
make any distribution of its assets to its stockholders, or permit it to
purchase or otherwise acquire for value any stock (including, without
limitation, any options, warrants or other rights to acquire shares of capital
stock) of Borrower.

4. Investments, Loans and Advances. Directly or indirectly, make or
permit to remain outstanding any loans or advances to or investments in any
Person, other than: (a) investments, loans or advances acquired under the
Asset Purchase Agreement; (b) accounts receivable arising in the ordinary
course of business; (c) deposits maturing within one year from the date of
creation thereof with any other bank or trust company which is organized under
the laws of the United States or any state thereof; and (d) investments by
Borrower in TLC.

5. Nature of Business. Allow any material change to be made in the
character of the business as carried on as of the date of this Agreement or,
following their acquisition pursuant to the Asset Purchase Agreement, any
change in the radio broadcast business of KSOL-FM or KYLZ-FM as presently
conducted.

6. Amendments to Articles of Incorporation and By-laws. Amend, modify or
supplement in any respect its articles or certificate of incorporation or
by-laws.

7. Dispositions of Assets. Sell, lease, abandon or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets or otherwise sell assets of the radio broadcast
business of KSOL-FM or KYLZ-FM, other than in the ordinary course of business
of such stations as currently being conducted..

8. Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including, but not limited to, the lease, purchase, sale or
exchange of property or the rendering of services) with any of its affiliates
other than the loans, advances or extensions of credit described in paragraph 1
of this Schedule II. All transactions with affiliates must be in the ordinary
course of business of Borrower or TLC and upon fair and reasonable terms no
less favorable than Borrower or TLC could obtain, or could become entitled to,
in an arm's length transaction with a Person which was not an affiliate.

Schedule II -1
<PAGE> 18
9. Use of Proceeds. Borrower will not permit the proceeds of the drawing
under the letter of credit to be used for any purpose other than the purpose
permitted by paragraph 5 of Schedule I.

10. Mergers and Acquisitions. Neither Borrower nor TLC will, directly or
indirectly, (a) enter into any agreement to acquire, or acquire, any radio
station(s) except as contemplated by the Asset Purchase Agreement, (b) enter
into any agreement to acquire, or acquire, all or any substantial portion of
the assets or stock of, or interest in, any Person, (c) merge or consolidate
with any Person, or (d) liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).

Schedule II -2
<PAGE> 19
SCHEDULE III
CONDITIONS PRECEDENT

The obligation of Lender deliver the letter of credit under this
Agreement hereunder is subject to its receipt of the following documents, each
of which shall be satisfactory to Lender in form and substance:

1. Corporate Documents. Certificates of the Secretary or Assistant
Secretary of each of Guarantor and Borrower setting forth (i) resolutions of
its board of directors in form and substance satisfactory to Lender with
respect to the authorization of the Note, this Agreement and the other Loan
Documents to which each is a party; (ii) the officers of each (y) who are
authorized to sign this Agreement, the Note, and the other Loan Documents to
which it is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the other Loan Documents to which it is a
party and the transactions contemplated hereby and thereby, (iii) specimen
signatures of the officers so authorized, and (iv) the articles or certificate
of incorporation and the bylaws of each of Guarantor and Borrower, certified as
being true and complete. Lender may conclusively rely on such certificate
until it receives notice in writing from Borrower or Guarantor to the contrary.

2. Good Standing. Certificates of the appropriate state agencies with
respect to the valid existence and good standing of Guarantor, Borrower and
TLC.

3. Note and Loan Documents. This Agreement and the Note, duly completed
and executed; and each of the following Loan Documents, duly completed and
executed in sufficient number of counterparts, in recordable form, for
recording purposes, as applicable:

(i) the Guaranty Agreement;
(ii) the Pledge Agreement by Guarantor relating to the stock of
Borrower, together with a stock powers executed in blank;
(iii) the Pledge Agreement by Borrower relating to the stock of TLC,
together with a stock powers executed in blank; and
(iv) UCC-1 Financing Statements to the collateral described in
clauses (ii) and (iii).

4. Asset Purchase Agreement. A copy of the executed Asset Purchase
Agreement, certified as true, correct and complete.

5. Legal Opinion. A legal opinion in form and substance satisfactory to
the Lender.

6. Copy of Sixth Amendment. A copy of the executed Sixth Amendment to the
Senior Credit Facility.

7. Officers' Certificate. A certificate of each of Borrower and
Guarantor setting forth (i) the representations and warranties made in this
Agreement and the other Loan Documents shall be true and correct and (ii) no
Event of Default or event which, with the passage of time or the giving of
notice or both, would become an Event of Default, shall have occurred and be
continuing.

8. Agreement and Plan of Merger. The Agreement and Plan of Merger shall
have been executed and delivered by all parties thereto.

Schedule III -1
<PAGE> 20
EXHIBIT A

FORM OF NOTE

$40,000,000.00 July 9, 1996

FOR VALUE RECEIVED, TMS ASSETS CALIFORNIA, INC., a Delaware
corporation ( "Borrower"), hereby promises to pay to the order of CLEAR CHANNEL
COMMUNICATIONS, INC., a Texas corporation ("Lender"), the principal sum of
Forty Million and No/100 Dollars ($40,000,000.00) in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in that certain Loan Agreement dated of even date
herewith between Borrower and Lender (the "Loan Agreement"), and to pay
interest on the unpaid principal amount of such loan in like money and funds as
provided in the Loan Agreement.

This Note is issued pursuant to the Loan Agreement and is entitled to
the benefits provided for in the Loan Agreement and the Loan Documents. The
Loan Agreement provides for the acceleration of the maturity of this Note upon
the occurrence of certain events of default specified therein.

THIS NOTE (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND
ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS, OTHER THAN THE CONFLICT OF LAWS RULES THEREOF.

TMS ASSETS CALIFORNIA, INC.

By:
--------------------------------
Name:
Title:

Exhibit A-1
<PAGE> 21

NOTE

$40,000,000.00 July 9, 1996

TMS ASSETS CALIFORNIA, INC.

By: /s/ Jeffrey T. Hinson
---------------------------
Name: Jeffrey T. Hinson
Title: Vice President

<PAGE> 1

GUARANTY

Dated as of July 9, 1996

TICHENOR MEDIA SYSTEM, INC.,
as Guarantor

in favor of

CLEAR CHANNEL COMMUNICATIONS, INC.

THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER ARE
SUBJECT TO THE TERMS SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT OF EVEN
DATE HEREWITH BY CLEAR CHANNEL COMMUNICATIONS, INC. AND TICHENOR MEDIA SYSTEM,
INC. IN FAVOR OF NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER AND EACH
OF THE LENDERS REFERRED TO THEREIN.

<PAGE> 2
GUARANTY

This Guaranty (as amended, modified or supplemented from time to time,
this "Guaranty"), dated effective as of July 9, 1996, is made by TICHENOR MEDIA
SYSTEM, INC., a Texas corporation ("Guarantor"), in favor of CLEAR CHANNEL
COMMUNICATIONS, INC., a Texas corporation ("Lender").

RECITALS

A. TMS Assets California, Inc., a California corporation
("Borrower"), and Lender have entered into that certain Loan Agreement dated of
even date herewith (said Loan Agreement, as amended, modified or supplement
from time to time, the "Loan Agreement") pursuant to which Lender has agreed to
cause to be issued a letter of credit in the face amount of $40,000,000, and
upon the draw on such letter of credit, to loan such amount as may be drawn
thereunder to Borrower, such loan being evidenced by that certain promissory
note of even date herewith in the original principal amount of $40,000,000
issued by Borrower to Lender (the "Note"). Capitalized terms not defined
herein shall have the meaning ascribed such term in the Loan Agreement.

B. Borrower is a direct wholly owned subsidiary of Guarantor.

C. In order to induce Lender to enter into the Loan Agreement and
to cause to be issued such letter of credit and to lend money to Borrower as
described above, the Guarantor has agreed to enter into this Guaranty.

D. The guaranties provided in this Guaranty are reasonably
expected to benefit, directly or indirectly, the Guarantor. Further, it is in
the best interest of the Guarantor to provide the guaranties set forth
hereunder, and such guaranties are necessary or convenient to the conduct,
promotion or attainment of the business of the Guarantor and are also necessary
or convenient to the conduct, promotion or attainment of the business of other
directly or indirectly wholly-owned Subsidiaries of the Guarantor.

NOW, THEREFORE, in consideration of the premises and in order to
induce Lender to enter into the Loan Agreement, the Guarantor hereby agrees as
follows:

ARTICLE I
GUARANTY

Section 1.01 Guaranty. The Guarantor hereby unconditionally
guarantees to Lender the punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of the Note and all other payment obligations of
Borrower now or hereafter existing under the Loan Agreement and the other Loan
Documents, including pre-petition and post-petition interest in the event of a
bankruptcy of Borrower (all of indebtedness and payment obligations being
referred to herein as the "Obligations").

Section 1.02 Guaranty Absolute. This Guaranty is an absolute,
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection. The Guarantor guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Agreement. The liability of
the Guarantor under this Guaranty shall be absolute and unconditional
irrespective of:

(a) any lack of validity or enforceability of the Loan Agreement,
the Note or any other Loan Document or instrument relating thereto for any
reason whatsoever, including without limitation the fact that the Obligations
or any part thereof exceed the amount permitted by law, the act of creating the
Obligations

1
<PAGE> 3
or any part thereof is ultra vires, the officers or representatives executing
the documents or otherwise creating the Obligations acted in excess of their
authority, the Obligations violate applicable usury laws, Borrower has valid
defenses, claims or offsets (whether at law, in equity or by agreement) which
render the Obligations wholly or partially uncollectible from Borrower, the
creation, performance or repayment of the Obligations (or the execution,
delivery and performance of any document or instrument representing part of the
Obligations or executed in connection with the Obligations, or given to secure
the repayment of the Obligations) are illegal, uncollectible, legally
impossible or unenforceable, or the Loan Agreement or other documents or
instruments pertaining to the Obligations have been forged or otherwise are
irregular or not genuine or authentic;

(b) any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of the terms of the Loan Agreement, the Note, any
Loan Document or the rights of the Lender with respect thereto;

(c) any change in the time, manner or place of performance or
payment of, or in any other term of, the Obligations, any increase in the
amount of the Obligations or any other amendment, modification, supplement,
extension or waiver of or any consent to departure from the Loan Agreement or
any Loan Document;

(d) the existence of, or any release or amendment or waiver of or
consent to departure from, any other guaranty, for all or any of the
Obligations;

(e) any adjustment, indulgence, forbearance, waiver, departure or
compromise that might be granted or given by Lender or any other Person
primarily or contingently liable on the Obligations;

(f) any release of Borrower or any other Person now or hereafter
liable for the payment of the Obligations or any part thereof, or taking or
accepting of any other security, collateral or guaranty, or other assurance of
payment, for all or any part of the Obligations, or any sale, release,
surrender, exchange, subordination, deterioration, waste, loss or impairment of
any collateral or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Obligations;

(g) the failure of Lender to exercise diligence or reasonable care
in the preservation, protection, enforcement, sale or other handling or
treatment of all or any part of such collateral or security, other than the
gross negligence or wilful misconduct of Lender;

(h) the fact that any collateral, security interest or lien
contemplated or intended to be given, created or granted as security for the
repayment of the Obligations shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other security interest
or lien; or

(i) any other action taken or omitted to be taken with respect to
the Loan Agreement, the Obligations, or the security and collateral therefor,
whether or not such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Obligations pursuant to
the terms hereof; it being the unambiguous and unequivocal intention of
Guarantor that Guarantor shall be obligated to pay the Obligations when due,
notwithstanding any occurrence, circumstance, event, action, or omission
whatsoever, whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the full and final
payment and satisfaction of the Obligations.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by Lender for any reason, including, without limitation,
the insolvency, bankruptcy or reorganization of Borrower or otherwise, all as
though such payment had not been made, and, in such event, Guarantor will pay
to Lender an amount equal to any such payment that has been rescinded or
returned. This Guaranty shall be absolute and unconditional

2
<PAGE> 4
notwithstanding the occurrence of any event or the existence of any other
circumstances which might constitute a defense available to a guarantor or
Borrower or a legal or equitable discharge of a surety or guarantor except
indefeasible payment in full of the Obligations. The provisions of this
paragraph will survive any release or termination of this Guaranty.

Section 1.03 Waiver. Except as otherwise set forth herein, the
Guarantor hereby waives, to the extent permitted by law, promptness, diligence,
notice of acceptance and any other notice with respect to any of the
Obligations and this Guaranty and any requirement that Lender protect, secure,
perfect or insure any collateral or exhaust any right or take any action
against Borrower or any other person or any collateral. Guarantor waives any
defense arising by reason of any disability, lack of corporate authority or
power, or other defense of Borrower or any other guarantor of the Obligations,
and shall remain liable hereon regardless of whether Borrower or any other
guarantor be found not liable thereon for any reason. To the fullest extent
permitted by applicable law, Guarantor hereby expressly waives presentment,
demand, notice of non-payment, protest and notice of protest and dishonor,
notice of default, notice of intent to accelerate the maturity and notice of
acceleration of the maturity and any other notice in connection with the
Obligations. Guarantor waives any right to require Lender to proceed against
Borrower, enforce its rights against any other guarantor of the Obligations,
have Borrower joined with Guarantor in any suit arising out of this Guaranty
and/or the Obligations, or pursue any other remedy in its powers whatsoever.
Until the Obligations shall have been paid in full, Guarantor shall have no
right of subrogation, and waives any right to enforce any remedy which Lender
now has or may hereafter have against Borrower and waives the benefit of any
right to participate in any security now or hereafter held by Lender.

Section 1.04 Subordination of Guaranty. The provisions of this
Guaranty and the obligations of Guarantor are subject to the terms set forth in
that certain Subordination Agreement of even date herewith by Lender and
Guarantor in favor of the Senior Creditors (the "Subordination Agreement").
For purposes of this Guaranty, "Senior Creditors" shall mean NationsBank of
Texas, N.A., as administrative lender for the lenders now or hereafter
signatory to that certain Second Amended and Restated Credit Agreement dated as
of August 9, 1994, as now or hereafter amended, modified or supplemented, and
each of such lenders.

Section 1.05 Maturity of Obligations; Payment. Guarantor agrees that
if the maturity of the Obligations is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
without demand or notice to Guarantor. Subject to the terms of the
Subordination Agreement, Guarantor will, forthwith upon notice from Lender of
Borrower's failure to pay the Obligations at maturity, pay to Lender the amount
due and unpaid by Borrower and guaranteed hereby. The failure of Lender to
give this notice shall not in any way release Guarantor hereunder.

Section 1.06 Lender's Expenses. If Guarantor fails to pay the
Obligations after notice from Lender of Borrower's failure to pay any
Obligations at maturity, and if Lender obtains the services of an attorney for
collection of amounts owing by Guarantor hereunder, or obtaining advice of
counsel in respect of its rights under this Guaranty, or if suit is filed to
enforce this Guaranty, or if proceedings are had in any bankruptcy,
receivership or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing by Guarantor
hereunder is collected through such proceedings, Guarantor agrees to pay to
Lender all court costs and its reasonable attorneys' fees.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES

Section 2.01 Representations and Warranties. In order to induce
Lender to accept this Guaranty, Guarantor represents and warrants to Lender
(which representations and warranties will survive the creation of the
Obligations and any extension of credit thereunder) that:

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<PAGE> 5
(a) The Guarantor's guaranty pursuant to this Guaranty reasonably
may be expected to benefit, directly or indirectly, Guarantor.

(b) Guarantor is a corporation duly organized, legally existing
and in good standing under the laws of the State of Texas, and is duly
qualified as a foreign corporation in all jurisdictions in which the nature of
the business conducted by it makes such qualification necessary and where
failure to so qualify would have a material adverse effect.

(c) Guarantor is duly authorized and empowered to execute, deliver
and perform this Guaranty and all corporate action on Guarantor's part
requisite for the due execution, delivery and performance of this Guaranty has
been duly and effectively taken.

(d) This Guaranty constitutes valid and binding obligations of
Guarantor, enforceable in accordance with its terms, except that enforcement
may be subject to any applicable bankruptcy, insolvency or similar laws
generally affecting the enforcement of creditors' rights and general principles
of equity.

(e) This Guaranty will not violate any provisions of Guarantor's
articles of incorporation, bylaws, or any material contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which Guarantor is
subject other than any contract or agreement for which consents, waivers or
amendments have been obtained.

(f) Guarantor's execution, delivery and performance of this
Guaranty does not require the consent or approval of any other Person which has
not been obtained, including, without limitation, any regulatory authority or
governmental body of the United States or any state thereof or any political
subdivision of the United States or any state thereof which consent has not
been obtained.

(g) The Guarantor hereby represents that (i) it is not insolvent
as of the date hereof and will not be rendered insolvent as a result of this
Guaranty, (ii) it is not engaged in business or a transaction, or about to
engage in a business or a transaction, for which any property or assets
remaining with such Guarantor is unreasonably small capital, and (iii) it does
not intend to incur, or believe it will incur, debts that will be beyond its
ability to pay as such debts mature.

(h) Neither Lender nor any other person has made any
representation, warranty or statement to the Guarantor in order to induce the
Guarantor to execute this Guaranty.

ARTICLE 3
MISCELLANEOUS

Section 3.01 Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the parties hereto.

Section 3.02 Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier
communication) and mailed, telecopied or delivered, to the Guarantor at its
address specified on the signature page hereto, or the Lender at its address
specified in the Loan Agreement.

Section 3.03 No Waiver; Cumulative Rights and Remedies. No failure
on the part of Lender to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any

4
<PAGE> 6
other right. Each of the rights and remedies herein provided are cumulative
and not exclusive of any rights and remedies provided by law or in any other
documents.

Section 3.04 Execution in Counterparts. This Guaranty may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

Section 3.05 Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Texas, without giving
effect to principles of conflicts of laws thereof.

Section 3.06 Entire Agreement. THIS GUARANTY AND THE SUBORDINATION
AGREEMENT EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN LENDER AND
GUARANTOR RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ALL
PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

Section 3.07 Waiver of Jury Trial. GUARANTOR AND LENDER HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR TO DEFEND ANY RIGHTS UNDER
THIS GUARANTY, THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, THE LOAN AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.

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<PAGE> 7
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

TICHENOR MEDIA SYSTEM, INC.

By: /s/ Jeffrey T. Hinson
----------------------------
Name: Jeffrey T. Hinson
Title: Chief Financial Officer and
Treasurer

Address of Guarantor:

Tichenor Media System, Inc.
100 Crescent Court
Suite 1777
Dallas, Texas 75201-6991
Attention: Jeffrey T. Hinson
Facsimile: (214) 855-8881

<PAGE> 1
EXHIBIT 10.15

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as
of August 1, 1995, between HEFTEL BROADCASTING CORPORATION, a Delaware
corporation (the "Employer"), and JOHN T. KENDRICK (the "Executive").

The Employer wishes to employ the Executive, and the Executive
wishes to accept such employment, on the terms and conditions set forth in this
Agreement.

Accordingly, the Employer and the Executive hereby agree as
follows:

1. Employment. Effective August 1, 1995 (the "Effective Date"),
the Employer hereby employs the Executive and the Executive hereby accepts
employment by the Employer on the terms hereinafter set forth.

2. Term.

2.1 The initial term of the Executive's employment hereunder
shall commence on the Effective Date and continue until the third anniversary of
the Effective Date (the "Initial Term").

2.2 At the end of the Initial Term, this Agreement shall
automatically be extended for an additional one year period, unless the Employer
gives written notice to the Executive no less than six months prior to the end
of the Initial Term.

2.3* In the event (a) any person or group of persons acting in
concert acquires, by contract or otherwise, the ability to elect a majority of
the board of directors of the Employer or the ability to vote shares of stock
having 50% or more of the voting power of the Employer, (b) Mr. Cecil Heftel
ceases to serve as the Chairman and Co-Chief Executive Officer of the Employer,
or (c) Mr. Carl Parmer ceases to serve as the Co-Chief Executive Officer and
President of the Employer (the matters referred to in clauses (a), (b) and (c)
are referred to herein as a "Change in Control"), this Agreement shall automati-
cally be extended for a three-year period commencing on the date the Change in
Control occurs. Notwithstanding the foregoing, a change in control shall not be
deemed to have occurred upon a change of the voting trustees under the Amended
and Restated Voting Trust dated July 5, 1994, as amended. * A,B and C must all
happen before a change in control is deemed to occur.

2.4 Notwithstanding Sections 2.1, 2.2 and 2.3, this Agreement
may be terminated in accordance with the provisions of Section 9.

<PAGE> 2
2.5 The Initial Term and any additional terms of employment
under Sections 2.2 and 2.3 collectively are referred to herein as the "Term."

3. Executive's Position, Duties and Authority.

3.1 The Executive shall serve as Senior Vice President and
Chief Financial Officer of the Employer and shall have such powers and duties as
may from time to time be prescribed by either Co-Chief Executive Officer of the
Company, the Board of Directors of the Company or the Bylaws of the Company.

3.2 Should the Executive be appointed as a director and/or
officer of one or more of the Employer's subsidiaries or parent, he shall serve
in such position(s) without additional remuneration.

4. Full-time Services. The Executive's services hereunder shall be
performed on a full-time basis and in a diligent and competent fashion to the
best of the Executive's abilities. The Executive shall not undertake outside
employment, business or charitable activities that require more than minimal
amounts of the Executive's time without the consent of the Employer.

5. Living Arrangements. The Employer requires the Executive to
relocate to Las Vegas, Nevada. In connection with such relocation, the Employer
shall reimburse the Executive up to $65,000 for costs of relocating to Las
Vegas. At the option of the Executive, the Employer shall pay such costs (up to
$65,000) directly to third-parties.

6. Compensation.

6.1 The Executive's base salary (the "Salary") for services to
the Company for the following years during the Term shall be as follows:

(a) First Year - $180,000;

(b) Second Year - $190,000; and

(c) Third Year and each year thereafter - the amount
determined by the Employer; provided, however, the annual salary for each year
shall not be less than the annual salary for the prior year adjusted to reflect
any increase in the CPI from the first day of such prior year to the first day
of the then current year. For purposes hereof, "CPI" shall mean the Consumer
Price Index for all urban consumers for Los Angeles- Anaheim-Riverside
(1982-1984 = 100), All Items.

The Salary shall be payable in accordance with the Employer's normal payroll
policies.

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<PAGE> 3
6.2 From time to time during the Term, the Employer may pay,
in addition to the Salary, a bonus for services rendered by the Executive to the
Employer hereunder; provided, however, the Executive shall be entitled to
receive the following minimum bonuses during the Term:

(a) First Year - $35,000;

(b) Second Year - $45,000; and

(c) Third Year and each year thereafter - the amount
determined by the Employer; provided, however, the minimum bonus for each year
shall not be less than the minimum bonus for the prior year adjusted to reflect
any increase in the CPI from the first day of the prior year to the first day of
the then current year.

Such bonus, if any, shall be payable at such time as the Employer, in the
exercise of its sole discretion, shall determine; provided, however, the minimum
bonus shall be payable on or before the last day of each year during the Term.

7. Expenses. The Executive shall be entitled to receive
reimbursement for all reasonable business expenses incurred by him (which have
been approved by his supervisor) upon presentation of expense statements or
vouchers or such other supporting information as the Employer may reasonably
require of the Executive.

8. Vacation and Other Benefits. The Executive shall be
entitled to paid vacation in accordance with the Employer's policies for its
senior executives. During the Term, the Executive shall be eligible to
participate in any bonus, pension or profit-sharing plan or program of the
Employer now existing or established hereafter, in accordance with and to the
extent that he is eligible under the general provisions thereof. The Executive
shall also be eligible to participate in any group life insurance,
hospitalization, medical, health and accident, disability or similar plan or
program of the Employer, now existing or established hereafter, in accordance
with and to the extent that he is eligible under the general provisions thereof,
and the Employer shall pay all monthly premiums in excess of $100 for providing
such insurance to Executive's wife and children. During the Term, the Employer
shall reimburse the Executive for all reasonable costs associated with the
operation and maintenance of an automobile to be furnished by the Executive, and
the Employer shall reimburse the Executive for dues for a membership in one
country club in Las Vegas, Nevada.

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<PAGE> 4
9. Termination.

9.1 This Agreement shall terminate by delivery of written
notice to the Executive, upon the occurrence of any of the following events:

(i) Any act or omission by the Executive constituting
fraud, negligence, wilful misconduct or embezzlement in connection with
Executive's employment by the Employer;

(ii) Executive's indictment of a crime constituting a
felony or conviction by, or entry of a plea of guilty or nolo contendere in, a
court of competent jurisdiction of a crime constituting a felony;

(iii) Any act or omission by the Executive in connection
with his employment by the Employer causing a material adverse effect on the
business of the Employer or jeopardizing any FCC license for a radio station
owned by the Employer or any of its direct or indirect subsidiaries or joint
ventures;

(iv) subject to Section 9.2, the failure by Executive to
perform his duties or obligations hereunder or under any of the Company's
policies or procedures which is not cured within 15 business days following
written notice of such failure from the Employer to the Executive;

(v) unlawful drug use;

(vi) Executive receiving payments or gifts in excess of
$250.00 from advertisers for Executive's own benefit; or

(vii) Executive committing a crime of moral turpitude.

This Agreement may also be terminated by mutual agreement of the parties.

9.2 If the Executive shall be unable with reasonable
accommodations provided by the Employer to perform his duties hereunder by
reason of a physical or mental disability, whether totally or partially, his
failure so to perform his duties will not be grounds for termination of his
employment by the Employer pursuant to Section 9.1; provided, however, should
the period of such disability exceed 45 days, or if on 50% or more of the normal
working days throughout three (3) consecutive months the Executive is unable to
perform his duties fully due to such disability, then the Employer may terminate
the Executive's employment hereunder by delivery of written notice to the
Executive.

9.3 Upon the death of the Executive, this Agreement shall
terminate.

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<PAGE> 5
9.4 The Executive may terminate his employment hereunder
voluntarily upon 45 days' prior notice to the Employer. Such termination shall
be effective as of the date specified in such notice (which shall not be less
than 30 business days after the delivery of such notice).

9.5 Upon termination of this Agreement or Executive's
employment hereunder pursuant to Section 9.1, 9.2, 9.3 or 9.4, all compensation
and benefits payable by the Employer hereunder shall be immediately terminated;
provided, however, the Executive shall be entitled to receive a lump sum payment
in an amount equal to the sum of (a) any unpaid Salary and other benefits in
respect of the period through the date of termination and (b) the minimum bonus
payable under Section 6.2 pro-rated based on the number of days elapsed from the
beginning of the year of the Term during which the termination occurred until
the date of termination. Notwithstanding the foregoing, the Executive or his
estate, as the case may be, shall also be entitled to receive any payments under
any applicable life or disability insurance plans and any other benefit plans.
Such payments, if any, shall be made at the time and in accordance with the
terms and conditions of such plans.

9.6 Should the Employer terminate this Agreement for reasons
other than those specified in Section 9.1, 9.2 or 9.3 herein, Executive shall be
entitled to receive, as liquidated damages, the sum of the following:

(a) A lump sum payment equal to the unpaid Salary through
the date of termination;

(b) On the last day of each year during the period
commencing on the date of termination and ending on the later of (i) the one
year anniversary of the date of termination or (ii) the end of the Term (the
"Period"), an amount equal to the minimum bonus payable under Section 6.2 for
the year in which the termination occurs; provided, however, the Employer, in
its sole discretion, may pay at any time the present value of the total of such
amounts;

(c) The Salary in effect on the date of termination for
the Period, which shall be payable in accordance with the Employer's normal
payroll policies; provided, however, the Employer, in its sole discretion, may
pay in a lump sum the present value of the total amount payable for the Period;
and

(d) Monthly premiums payable for allowing Executive and
his family to participate, under the Comprehensive Omnibus Budget Reconciliation
Act of 1985, in the Employer's group medical plans in the same manner, including
coverage, as they participated on the date of termination less the portion of
the premiums which Executive was paying on the termination date. These premiums
shall be payable for the shorter of the Period or

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<PAGE> 6
the maximum COBRA continuation coverage period mandated by law and shall be paid
directly to the applicable insurance company.

For purposes of calculating present values hereunder, the interest rate shall be
assumed to equal the prime rate published in the Wall Street Journal. Other than
amounts payable under this Section, the Executive shall not be entitled to any
payments from the Employer as a result of a termination of this Agreement by the
Employer for reasons other than those specified in Section 9.1, 9.2 or 9.3
hereof.

10. Deductions and Withholdings. All amounts payable or which
become payable under any provision of this Agreement shall be subject to any
deductions authorized by the Executive and any deductions and withholdings
required by law.

11. Confidentiality. Executive acknowledges that the Employer holds
as confidential certain information, material and knowledge respecting the
intimate and confidential affairs of the Employer in the various phases of its
business, including, but not limited to, trade secrets, techniques, marketing
plans, strategy, forecasts, advertiser lists and mailing lists ("Proprietary
Information"). The Executive hereby agrees as follows:

11.1 All Proprietary Information shall be the sole property of
the Employer and its assigns. The Executive hereby assigns to the Employer any
rights he may have or acquire in all Proprietary Information during his
performance of services hereunder.

11.2 The Executive represents that his performance of all the
terms of this Agreement as an employee of the Employer does not and will not
breach any agreement to keep in confidence proprietary information of others
acquired by him in confidence or in trust prior to his employment. The Executive
has not entered into, and agrees that he will not enter into, any agreement,
either written or oral, in conflict with this Section 11.

11.3 The Executive agrees not to disclose to any person, other
than in furtherance of the Employer's business, or use, other than in the
Employer's business, any Proprietary Information, either during or after his
employment or the termination of this Agreement, except with the express written
permission of either Co-Chief Executive Officer of the Employer. The Executive
understands that information and materials received in confidence by the
Executive from third parties either within or outside of the Employer with
regard to the business of the Employer is included within the meaning of this
Section 11. Upon termination of his employment, the Executive agrees not to make
copies of written Proprietary Information and the Executive agrees to return all
written Proprietary Information to the Employer.

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<PAGE> 7
12. Non-Solicitation. The Executive agrees that for a one-year
period beginning on the date the employment of the Executive hereunder ceases
(such date is referred to herein as the "Termination Date"), he will not,
directly or indirectly, (a) induce any advertiser or customer of the Employer or
its successors to patronize any business similar to the business conducted by
the Employer on the Termination Date; (b) request or advise any customer,
advertiser or supplier of the Employer or its successors to withdraw, curtail or
cancel such customer's, advertiser's or supplier's business with the Employer or
its successors; (c) disclose to any other person or entity the names or
addresses of any of the customers or advertisers of the Employer or its
successors; or (d) induce or encourage any employee to terminate his or her
relationship with the Employer.

13. Notices. Unless applicable law requires a different method of
giving notice, any and all notices, demands or other communications required or
desired to be given hereunder by either party shall be in writing. Assuming that
the contents of a notice meet the requirements of the specific paragraph of this
Agreement which mandates the giving of that notice, a notice shall be validly
given or made to another party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, or if
transmitted by telegraph, telecopy or other electronic written transmission
device or if sent by overnight courier service, and if addressed to the
applicable party as set forth below. If such notice, demand or other
communication is served personally, service shall be con clusively deemed made
at the time of such personal service. If such notice, demand or other
communication is given by mail ser vice shall be conclusively deemed made
seventy-two (72) hours after the deposit thereof in the United States mail. If
such notice, demand or other communication is given by overnight courier, or
electronic transmission, service shall be conclu sively deemed made at the time
of confirmation of delivery. The addresses for the parties are as follows:

If to the Employer:

Heftel Broadcasting Corporation
6767 West Tropicana Avenue
Las Vegas, Nevada 89103
Attention: Mr. Carl Parmer
Telecopier No.: (702) 248-1097

with a copy to:

Jeffer, Mangels, Butler & Marmaro
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attention: Bruce P. Jeffer, Esq.
Telecopier No.: (310) 203-0567

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<PAGE> 8
If to the Executive:

To the address of the
Executive on personnel
records of the Employer.

14. General.

14.1 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California.

14.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

14.3 Entire Agreement. This Agreement including the Exhibits
attached hereto sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, between the parties, except as
specifically provided herein.

14.4 Successors and Assigns. This Agreement, and the
Executive's rights and obligations hereunder, may not be assigned by the
Executive, except that the Executive may designate pursuant to Section 14.6 one
or more beneficiaries to receive any amounts that would otherwise be payable
hereunder to Executive's estate. This Agreement shall be binding on any
successor to the Employer, whether by merger, acquisition of substantially all
of the Employer's assets or otherwise, as fully as if such successor were a
signatory hereto and the Employer shall cause such successor to, and such
successor shall, expressly assume the Employer's obligations hereunder. The term
"Employer," as used in this Agreement, shall include all such successors.

14.5 Amendments; Waivers. This Agreement may not be changed,
modified or amended except in a writing signed by the Executive and the
Employer. No waiver of any provision or requirement hereof shall be effective
unless made in writing by the party entitled to the benefits of the provision or
requirement being waived. The failure of a party at any time or times to require
performance of any provision thereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver by a party of the breach of
any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be construed as a
further continuing waiver of any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.

14.6 Beneficiaries. Whenever this Agreement provides for any
payment to the Executive's estate, such payment

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<PAGE> 9
may be made instead to such beneficiary or beneficiaries as the Executive may
have designated in a writing filed with the Employer. The Executive shall have
the right to revoke any such designation and to redesignate a beneficiary or
beneficiaries by written notice to the Employer (and to any applicable insurance
company) to such effect.

14.7 Arbitration.

(a) All disputes between the parties hereunder, other than
injunctive relief, shall be submitted to arbitration in accordance with this
Section.

(b) Within five (5) days after notice of submitting the
applicable issue to arbitration (the "Arbitration Notice") is given by a party
(the "Initial Period"), each party shall designate three arbitrators in priority
from one to three, who are currently available for arbitration of disputes in
Las Vegas, Nevada, as a potential arbitrator. Any arbitrator designated by both
parties shall be selected as the arbitrator pursuant to this subsection. If both
parties designate more than one arbitrator, then the arbitrator with the highest
common priority shall be selected. In the event that no arbitrator has been
designated by both parties, within five (5) days after the expiration of the
Initial Period, each party will designate three additional arbitrators. In the
event that the parties are unable to agree upon an arbitrator with ten (10) days
after delivery of the Arbitration Notice, the parties agree to accept an
arbitrator selected by the American Arbitration Association. If a party fails to
submit a list of three arbitrators within any five (5) day designation period,
the arbitration shall be conducted solely by the arbitrator with the highest
priority designated by the other party.

(c) The parties agree to apportion the fees charged by the
arbitrator and other costs of the arbitration (other than attorneys' fees)
equally between them.

(d) The parties agree to request that the arbitrator
appointed pursuant to the procedure agreed upon above shall, as soon as
reasonably practicable after his or her appointment, and after consultation with
the parties, set an arbitration date of no later than ten days after his or her
appointment. If the arbitrator is unable to conduct the arbitration during such
ten day period then the parties shall select a new arbitrator in accordance with
Section 14.7(b).

(e) The arbitration shall be conducted pursuant to the
rules of the American Arbitration Association, as then in effect; provided,
however, no discovery shall be allowed and the arbitrator shall not entitled to
award punitive or exemplary damages. The parties agree that a final order from
the arbitrator relating to any arbitration shall be rendered on or before the
tenth day after submission of each side's arguments,

-9-

<PAGE> 10
unless circumstances not within the control of either party make rendering of
such an order by this date impossible.

(f) The decision of the arbitrator shall be binding upon
all parties and no appeal may be taken therefrom. The decision of the arbitrator
shall be enforced and honored by the parties hereto without the necessity of
confirmation by a court, but the parties hereto expressly reserve the right to
seek such confirmation in accordance with the laws of the State of California.

(g) The arbitration shall be conducted in Las Vegas,
Nevada.

14.8 Remedies. Upon a breach of either Section 11 or 12
hereof by the Executive, the Employer shall be entitled to injunctive relief,
both pendente lite and permanently, without posting a bond or other security or
proving actual damages, in addition to any other remedy it may have at law.

IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.

HEFTEL BROADCASTING CORPORATION

By /s/ Carl Parmer
---------------------------------
Name: Carl Parmer
------------------------------
Title: President
----------------------------

/s/ John T.Kendrick
-----------------------------------
JOHN T. KENDRICK

-10-

<PAGE> 11

<PAGE> 1
EXHIBIT 11

COMPUTATION OF PER SHARE EARNINGS

<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
PRIMARY
Weighted average
shares outstanding 10,294,967 10,010,564 4,568,525
Net effect of dilutive stock
options - based
on the treasury stock
method using
average market price -- 794,782 816,154
------------ ------------ -----------
Total 10,294,967 10,805,346 5,384,678
------------ ------------ -----------

Net income (loss) $(46,605,812) $ 3,692,578 $ 465,894
============ ============ ===========
Subtract $0.08 cumulative
preferred stock dividends (22,823) (26,850) (183,674)
------------ ------------ -----------
Total (46,628,635) $ 3,665,728 $ 282,220
============ ============ ===========

Per-share amount $ (4.53) $ 0.34 $ 0.05
============ ============ ===========

FULLY DILUTED (Notes 1 and 2)

Weighted average shares outstanding 10,294,967 10,010,564 4,568,525
Net effect of dilutive stock
options - based on the treasury
stock method using the
year-end market price, if
higher than average market price -- 820,335 939,010
------------ ------------ -----------
Total 10,294,967 10,830,899 5,507,535
============ ============ ===========

Net income (loss) $(46,605,812) $ 3,692,578 $ 465,894
Subtract $0.08 cumulative
preferred stock dividends (22,823) (20,138) (183,674)
------------ ------------ -----------
Total $(46,628,635) $ 3,672,440 $ 282,220
============ ============ ===========

Per-share amount $ (4.53) $ 0.34 $ 0.05
============ ============ ===========
</TABLE>

- ------------------

Notes

(1) For fiscal 1994 and 1995, the per share amounts are the same under
primary and fully diluted computations even though the number of
weighted average shares outstanding differs.

(2) For fiscal 1996, a net loss was incurred, therefore the effect of
common stock equivalents is anti-dilutive.

<PAGE> 1
EXHIBIT 21
SUBSIDIARIES

HBC Broadcasting Texas, Inc.
HBC Chicago, Inc.
HBC Florida, Inc.
HBC-Las Vegas, Inc.
HBC New York, Inc.
HBC Texas, Inc.
Heftel Broadcasting Texas, L.P.
Heftel GP Texas, Inc.
KCYT-FM License Corp.
KECS-FM License Corp.
KESS-AM License Corp.
KESS-TV License Corp.
KHCK-FM License Corp.
KICI-AM License Corp.
KICI-FM License Corp.
KLSQ-AM License Corp.
KLVE-FM License Corp.
KMRT-AM License Corp.
KTNQ-AM License Corp.
KTNQ/KLVE, Inc.
La Oferta, Inc.
License Corp. No. 1
License Corp. No. 2
Mi Casa Publications, Inc.
Spanish Coast-to-Coast Ltd.
The Tower Company, Inc.
WADO-AM License Corp.
WGLI-AM License Corp.
WLXX-AM License Corp.
WPAT-AM License Corp.
WQBA-AM License Corp.
WQBA-FM License Corp.

<PAGE> 1
EXHIBIT 23

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-05887) pertaining to the Heftel Broadcasting
Corporation Stock Option Plan of our report dated November 7, 1996, with respect
to the consolidated financial statements of Heftel Broadcasting Corporation
included in the Annual Report (Form 10-K) for the year ended September 30, 1996.

ERNST & YOUNG LLP

Los Angeles, California
December 20, 1996

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-1060) of Heftel Broadcasting Corporation and in the related
Prospectus of our report dated November 7, 1996, with respect to the
consolidated financial statements of Heftel Broadcasting Corporation included in
this Annual Report (Form 10-K) for the year ended September 30, 1996.

ERNST & YOUNG LLP

Los Angeles, California
December 20, 1996

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1996 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS AND CASH FLOWS FOR THE TWELVE MONTHS ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 5,131,960
<SECURITIES> 0
<RECEIVABLES> 17,015,323
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,159,515
<PP&E> 26,855,898
<DEPRECIATION> 7,019,970
<TOTAL-ASSETS> 165,751,126
<CURRENT-LIABILITIES> 15,991,159
<BONDS> 0
0
0
<COMMON> 11,548
<OTHER-SE> 12,089,841
<TOTAL-LIABILITY-AND-EQUITY> 165,751,126
<SALES> 71,732,032
<TOTAL-REVENUES> 71,732,032
<CGS> 0
<TOTAL-COSTS> 59,108,246
<OTHER-EXPENSES> 49,177,061
<LOSS-PROVISION> 1,657,860
<INTEREST-EXPENSE> 11,240,835
<INCOME-PRETAX> (36,553,275)
<INCOME-TAX> (65,000)
<INCOME-CONTINUING> (36,618,275)
<DISCONTINUED> (9,987,537)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,605,812)
<EPS-PRIMARY> (4.94)
<EPS-DILUTED> 0

</TABLE>