-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5jcoqoZz4fLiowpZq4EmtqnT0x1AM4t2MXhAxcDImA2U/6/H9gleC72e9cwGMZh S4IQL+5M8kjy42uF6xXlTw== 0001035704-03-000396.txt : 20030612 0001035704-03-000396.hdr.sgml : 20030612 20030612153904 ACCESSION NUMBER: 0001035704-03-000396 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20030612 GROUP MEMBERS: CLEAR CHANNEL COMMUNICATIONS INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: XM SATELLITE RADIO HOLDINGS INC CENTRAL INDEX KEY: 0001091530 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 541878819 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-57011 FILM NUMBER: 03742213 BUSINESS ADDRESS: STREET 1: 1500 ECKINGTON PL NE CITY: WASHINGTON STATE: DC ZIP: 20002 BUSINESS PHONE: 2023804000 MAIL ADDRESS: STREET 1: 1500 ECKINGTON PL NE CITY: WASHINGTON STATE: DC ZIP: 20002 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CLEAR CHANNEL INVESTMENTS INC CENTRAL INDEX KEY: 0001080208 IRS NUMBER: 911883551 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 200 EAST BASSE ROAD CITY: SAN ANTONIO STATE: TX ZIP: 78209 BUSINESS PHONE: 2108222828 MAIL ADDRESS: STREET 1: 200 EAST BASSE ROAD CITY: SAN ANTONIO STATE: TX ZIP: 78209 SC 13D/A 1 d06727a2sc13dza.txt AMENDMENT NO. 2 TO SCHEDULE 13D PAGE 1 OF 14 PAGES SCHEDULE 13D CUSIP NO. 983759 10 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. 2)* XM Satellite Radio Holdings Inc. -------------------------------- (Name of Issuer) Class A Common Stock, $0.01 Par Value Per Share ----------------------------------------------- (Title of Class of Securities) 983759 10 1 ------------------------------------ (CUSIP Number) Clear Channel Investments, Inc. 200 East Basse Road San Antonio, Texas 78209 (210) 822-2828 -------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 28, 2003 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ] . Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Continued on following page(s) Page 1 of 14 Pages CUSIP NO. 983759 10 1 PAGE 2 OF 14 PAGES - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Clear Channel Investments, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ] IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Nevada - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER: 8,329,877 shares NUMBER OF SHARES --------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 0 shares OWNED BY EACH --------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER: 8,329,877 shares PERSON WITH --------------------------------------------- 10 SHARED DISPOSITIVE POWER: 0 shares - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,329,877 shares - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 983759 10 1 PAGE 3 OF 14 PAGES - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Clear Channel Communications, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ] IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Texas - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER: 0 shares NUMBER OF SHARES ---------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 0 shares OWNED BY EACH ---------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER: 0 shares PERSON WITH ---------------------------------------- 10 SHARED DISPOSITIVE POWER: 0 shares - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 shares - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP NO. 983759 10 1 PAGE 4 OF 14 PAGES ITEM 1. SECURITY AND ISSUER This Amendment No. 1 to Schedule 13D filed by Clear Channel Investments, Inc., a Nevada corporation ("CCI"), and Clear Channel Communications, Inc., a Texas Corporation ("Clear Channel" and, collectively with CCI, the "Reporting Person"), relates to the Class A common stock (the "Class A Common Stock"), par value $0.01 per share, of XM Satellite Radio Holdings Inc. (the "Issuer"). The Schedule 13D is amended as follows: ITEM 2. IDENTITY AND BACKGROUND The business address of the Reporting Person is 200 East Basse Road, San Antonio, Texas 78209. CCI is a wholly-owned subsidiary of Clear Channel Communications, Inc. ("Clear Channel"), and is primarily engaged in the business of making strategic investments. Clear Channel is primarily engaged in the media business. CCI and Clear Channel are both located at 200 East Basse Road, San Antonio, Texas 78209. Schedule I to this Amendment No. 1 lists each executive officer and director of CCI and Clear Channel. Neither CCI, Clear Channel nor, to the best of the Reporting Person's knowledge, any of the executive officers or directors of CCI or Clear Channel, has during the last five years been convicted in a proceeding (excluding traffic violations and similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. CCI is a corporation formed under the laws of the state of Nevada, and Clear Channel is a corporation formed under the laws of the state of Texas. To the best knowledge of the Reporting Person, all of CCI's and Clear Channel's executive officers and directors are United States citizens, with the exception of Roger Parry who is a citizen of the United Kingdom. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. No change. ITEM 4. PURPOSE OF TRANSACTION On or about January 28, 2003, CCI entered into a Second Amended and Restated Shareholders and Noteholders Agreement, a Second Amended and Restated Registration Rights Agreement, an Amended and Restated Director Designation Agreement, a Clear Channel Director Designation Agreement and a Voting Agreement, all as more fully described in Item 6, in connection with several concurrent debt and equity financing transactions involving the Issuer and both new and old debt and equity investors of the Issuer. On June 5, 2003, CCI and Bear, Stearns International Limited ("Bear Stearns") entered into a variable forward sale agreement (the "Letter Agreement") pursuant to which Bear Stearns agreed to pay CCI an amount equal to 84.02% of the product of (1) the number of shares of Class A Common Stock sold by Bear Stearns, up to a maximum of 8,329,877 shares, during a period of up to 90 days (the "Execution Period") and (2) the greater of (a) $11.8628 and (b) (i) the weighted average of the net economic sale price of the shares of Class A Common Stock sold by Bear Stearns during the Execution Period, less (ii) (A) 0.50 multiplied by the excess of such net economic sale price over $12.62 minus (B) 0.25 multiplied by the excess of such net economic sale price over $13.62. In return, CCI agreed to deliver to Bear Stearns on approximately the 14th calendar day preceding the 54 CUSIP NO. 983759 10 1 PAGE 5 OF 14 PAGES month anniversary of the last of the sales by Bear Stearns, the 60 month anniversary of the last of the sales by Bear Stearns, and the 14th calendar day following the 66 month anniversary of the last of the sales by Bear Stearns a number of shares of Class A Common Stock dependent on the highest ask price for the Issuer's Class A Common Stock at each such time, but no more than 8,329,877 shares in the aggregate; provided, however, that CCI has the right to elect to settle the transactions in cash in lieu of delivering such shares. The references in this Item 4 to the Second Amended and Restated Shareholders and Noteholders Agreement, the Second Amended and Restated Registration Rights Agreement, the Amended and Restated Director Designation Agreement, the Clear Channel Director Designation Agreement and the Voting Agreement, and the description contained in this Item 4 of the transactions contemplated by the Letter Agreement, are qualified in their entirety by reference to the full text of the foregoing documents, which is incorporated herein by reference. CCI holds its interest in the Issuer for investment purposes. CCI intends to continuously review its position in the Issuer and, depending on future evaluations of the business prospects of the Issuer and on other developments, including but not limited to general economic and business conditions and stock market conditions, CCI may retain or from time to time increase its holdings or dispose of all or a portion of its holdings in the Issuer, subject to any restrictions on its ability to do so. Other as than described above, the Reporting Person currently has no plan or proposals which relate to, or may result in, any of the matters listed in Items 4(a)-(j) of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF ISSUER By virtue of the Amended and Restated Director Designation Agreement described in the response to Item 6, which currently contains certain voting agreements formerly contained in the Amended and Restated Shareholders Agreement (as currently amended, the Second Amended and Restated Shareholders and Noteholders Agreement described in the response to Item 6), and the fact that CCI is a wholly-owned subsidiary of Clear Channel, CCI may be deemed to be a part of a group (within the meaning of Section 13(d) of the Exchange Act) that is composed of the following entities: (1) Clear Channel; (2) Madison Dearborn Capital Partners III, L.P. ("M-D Capital Partners"), Madison Dearborn Special Equity III, L.P. ("M-D Special Equity"), and Special Advisors Fund I, L.L.C. ("Special Advisors," and, together with M-D Capital Partners and M-D Special Equity, "Madison Dearborn"); (3) AEA XM Investors I LLC, AEA XM Investors II LLC, AEA XM Investors IA LLC and AEA XM Investors IIA LLC (collectively, "AEA"); (4) American Honda Motor Co., Inc. ("Honda"); and (5) Hughes Electronic Corporation ("Hughes"). CCI and Clear Channel expressly disclaim beneficial ownership of the shares of Class A Common Stock held by Madison Dearborn, AEA, Honda or Hughes, and the filing of this amendment to Schedule 13D by the Reporting Person shall not be construed as an admission by CCI or Clear Channel that either is, for purposes of Section 13(d) of the Exchange Act, the beneficial owner of any of the shares of Class A Common Stock held by Madison Dearborn, AEA, Honda or Hughes. Based solely upon the Issuer's Form 8-K filed with the SEC on June 3, 2003 (the "Form 8-K"), the Reporting Person believes that it along with Madison Dearborn, AEA, Honda and Hughes beneficially owned the number of shares of Class A Common Stock set forth in the table below, on an as-converted basis, constituting in each case that percentage of the Class A Common Stock outstanding on May 6, 2003, as set forth in the table below. The Issuer's Series A convertible preferred stock, par value $0.01 per share (the "Series A Convertible Preferred Stock"), is convertible into Class A Common Stock on a one-for-one basis. As of March 31, 2003 the Series C convertible redeemable preferred stock, par value $.01 per share (the "Series C Preferred Stock"), was convertible into Class A Common Stock at a conversion price of $9.11 per share. The 10% senior secured discounted convertible notes due 2009 (the "Notes") are convertible into Class A Common Stock at a conversion price of $3.18 per share. CUSIP NO. 983759 10 1 PAGE 6 OF 14 PAGES
Name of Beneficial Owner Number of Shares Percentage - ------------------------ ---------------- ---------- CCI 8,329,877 6.9% AEA 10,671,345 8.2% MADISON DEARBORN 9,495,159 7.5% HONDA 22,964,767 16.0% HUGHES 18,618,590 14.1%
On October 8, 1999, CCI acquired from the Issuer in a private placement 8,089,877 shares of Class A Common Stock upon conversion of $75,000,000 principal amount (plus accrued interest) of a convertible subordinated note previously issued to CCI by the Issuer, at a conversion price of approximately $9.52 per share, and (2) on October 8, 1999, CCI acquired 240,000 shares of the Issuer's Class A Common Stock in the Issuer's initial public offering, at a purchase price of $12.00 per share, the initial public offering price of the Class A Common Stock. CCI has the sole power to vote or direct the vote and the sole power to dispose or direct the disposition of the shares of Class A Common Stock it beneficially owns. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that on August 8, 2000, AEA XM Investors I LLC ("AEA XM I") acquired 6,689 shares of the Issuer's Series C Preferred Stock at a purchase price of $1,000 per share, and on August 8, 2000 AEA XM Investors II LLC ("AEA XM II") acquired 53,131 shares of the Issuer's Series C Preferred Stock at a purchase price of $1,000 per share. Based solely on AEA's Schedule 13D filed with the SEC, as amended, the Reporting Person believes that: (1) AEA XM I holds of record and therefore directly beneficially owns and has the sole direct power to vote 6,689 shares of Series C Preferred Stock (the "AEA XM I Reported Shares"); (2) AEA Investors Inc. ("AEA Investors") and AEA XM Investors Inc. ("AEA XM Investors") have the indirect power to vote the AEA XM I Reported Shares; (3) AEA XM I has the sole direct power to dispose of the AEA XM I Reported Shares; (4) AEA Investors and AEA XM Investors have the indirect power to dispose of the AEA XM I Reported Shares; (5) AEA XM II holds of record and therefore directly beneficially owns and has the sole direct power to vote 53,131 shares of Series C Preferred Stock (the "AEA XM II Reported Shares"); (6) AEA Investors and AEA XM Investors have the indirect power to vote the AEA XM II Reported Shares; (7) AEA XM II has the sole direct power to dispose of the AEA XM II Reported Shares; and (8) AEA Investors and AEA XM Investors have the indirect power to dispose of the AEA XM II Reported Shares. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that on January 28, 2003 AEA XM Investors IA LLC ("AEA XM IA") acquired $838,645.50 in initial value of Notes, and on January 28, 2003 AEA XM Investors IIA LLC ("AEA XM IIA") acquired $6,861,354.50 in initial value of Notes. Based solely on AEA's Schedule 13D filed with the SEC, as amended, the Reporting Person believes that: (1) AEA XM IA holds of record $838,645.50 in initial value of Notes and therefore directly beneficially owns and has the sole direct power to vote shares of Class A Common Stock issuable upon conversion thereof (the "AEA XM IA Reported Shares"); (2) AEA Investors and AEA XM Investors have the indirect power to vote the AEA XM IA Reported Shares; (3) AEA XM IA has the sole direct power to dispose of the AEA XM IA Reported Shares; (4) AEA Investors and AEA XM Investors have the indirect power to dispose of the AEA XM IA Reported Shares; (5) AEA XM IIA holds of record $6,861,354.50 in initial value of Notes and therefore directly beneficially owns and has the sole direct power to vote shares of Class A Common Stock issuable upon conversion thereof (the "AEA XM IIA Reported Shares"); (6) AEA Investors and AEA XM Investors have the indirect power to vote the AEA XM IIA Reported Shares; (7) AEA XM IIA has the sole direct power to dispose of the AEA XM IIA Reported Shares; and (8) AEA Investors and AEA XM Investors have the indirect power to dispose of the AEA XM IIA Reported Shares. Based solely upon the information set forth in the Form 8-K, the Reporting Person believes that AEA (including AEA CUSIP NO. 983759 10 1 PAGE 7 OF 14 PAGES Investors and AEA XM Investors) beneficially owned as of May 6, 2003, 10,671,345 shares of Class A Common Stock. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that: (1) on October 8, 1999, M-D Capital Partners acquired from the Issuer in a private placement 2,622,200 shares of Class A Common Stock upon conversion of $24,310,000 principal amount (plus accrued interest) of convertible subordinated notes previously issued to M-D Capital Partners by the Issuer, at a conversion price of approximately $9.52 per share; (2) on October 8, 1999, M-D Capital Partners acquired 80,000 shares of the Issuer's Class A Common Stock in the Issuer's initial public offering, at a purchase price of $12.00 per share, the initial public offering price of the Class A Common Stock; and (3) on August 8, 2000, M-D Capital Partners acquired 48,914 shares of the Issuer's Series C Preferred Stock at a purchase price of $1,000 per share. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that: (1) on October 8, 1999, M-D Special Equity acquired from the Issuer in a private placement 58,247 shares of Class A Common Stock upon conversion of $540,000 principal amount (plus accrued interest) of convertible subordinated notes previously issued to M-D Special Equity by the Issuer, at a conversion price of approximately $9.52 per share; and (2) on August 8, 2000, M-D Special Equity acquired 1,086 shares of the Issuer's Series C Preferred Stock at a purchase price of $1,000 per share. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that on October 8, 1999, Special Advisors acquired from the Issuer in a private placement 16,179 shares of Class A Common Stock upon conversion of $150,000 principal amount (plus accrued interest) of convertible subordinated notes previously issued to Special Advisors by the Issuer, at a conversion price of approximately $9.52 per share. Based solely upon the information contained in the Form 8-K, the Reporting Person believes that Madison Dearborn beneficially owns as of May 6, 2003, 9,495,159 shares of the Class A Common Stock. Based solely on information contained in Madison Dearborn's Schedule 13D filed with the SEC, as amended, the Reporting Person believes that dispositive and voting powers of the securities owned by Madison Dearborn III, L.P., which is the sole general partner of M-D Capital, M-D Special Equity and Special Advisors, are shared by Madison Dearborn Partners, LLC ("MDP") and an advisory committee of limited partners of MDP. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that on August 8, 2000, Honda acquired 50,000 shares of the Issuer's Series C Preferred Stock at a purchase price of $1,000 per share. Based solely on information provided by the Issuer, the Reporting Person believes that on January 28, 2003 Honda acquired $50,000,000 in initial value of Notes. Based solely upon the information contained in the Form 8-K, the Reporting Person believes that Honda beneficially owns as of May 6, 2003, 22,964,767 shares of the Class A Common Stock. Based solely on information contained in Honda's Schedule 13D filed with the SEC, as amended, the Reporting Person believes that Honda has the sole power to vote or to direct the vote and sole power to dispose or to direct the disposition of the Class A Common Stock it beneficially owns. Based solely upon the information set forth in the Issuer's Registration Statement, filed June 13, 2000, and on other available data, the Reporting Person believes that: (1) on October 8, 1999, each of General Motors Corporation ("GM") and DIRECTV Enterprises, LLC ("DIRECTV") acquired from the Issuer in a private placement 5,393,252 shares of the Issuer's Series A Convertible Preferred Stock upon conversion of $50,000,000 principal amount (plus accrued interest) of convertible subordinated notes previously issued to each of GM and DIRECTV by the Issuer, at a conversion price of approximately $9.52 per share; (2) on October 8, 1999, each of GM and DIRECTV acquired 160,000 shares of the Issuer's Class A Common Stock in the Issuer's initial public offering at a purchase price of $12.00 per share, the initial public offering price of the Class A Common Stock; CUSIP NO. 983759 10 1 PAGE 8 OF 14 PAGES and (3) on August 8, 2000, DIRECTV acquired 20,000 shares of the Series C Preferred Stock at a purchase price of $1,000 per share. Based solely on information provided by the Issuer, the Reporting Person believes that on January 28, 2003, Hughes acquired $10,000,000 in initial value of Notes. Based solely upon the information set forth in the Form 8-K, the Reporting Person believes that Hughes beneficially owns as of May 6, 2003 18,618,590 shares of Class A Common Stock. Based solely on available data, the Reporting Person believes that Hughes has the sole power to vote or direct the vote, and the sole power to dispose or direct the disposition of, the shares of Class A Common Stock it beneficially owns. Except for the transaction reported in this Statement pursuant to the terms of the Letter Agreement, CCI and Clear Channel have not engaged in any other transactions in the Issuer's Class A Common Stock within the past 60 days. The Reporting Person does not know of any other person that has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Class A Common Stock of the Issuer beneficially owned by CCI. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SECURITIES OF THE ISSUER Letter Agreement See Item 4 with respect to the Letter Agreement. Second Amended and Restated Shareholders and Noteholders Agreement CCI entered into a Second Amended and Restated Shareholders and Noteholders Agreement dated January 28, 2003 among the Issuer and certain shareholders and noteholders. The agreement provides for observation rights for CCI (as well as for certain other investors) at meetings of the Issuer's Board of Directors. These observation rights, as well as operational and involvement rights as set forth in the Operational Assistance Agreement dated as of June 7, 1999, between Clear Channel and XM Satellite Radio Inc., is conditioned on CCI retaining in excess of 5% of the Issuer's outstanding common stock on an as-converted basis or the full amount of its original investment in the Issuer. The agreement also provides for approval rights for certain holders of the Notes and of holders of the GM senior secured convertible notes due 2009 (the "GM Notes") for certain fundamental actions of the Issuer, including, among other things, charter amendments, stock issuances, debt incurrences, asset sales, dissolution and affiliate transactions. The agreement grants a right of first offer for all parties if the Issuer engages in a private sale of its capital stock in an amount of $25 million or more. The agreement provides antidilution protection for the holders of the Series C Preferred Stock and the holders of the Notes and the GM Notes. Second Amended and Restated Registration Rights Agreement CCI entered into a Second Amended and Restated Registration Rights Agreement dated January 28, 2003 among the Issuer and certain shareholders and noteholders. The agreement provides for the following demand registrations for shares of Class A Common Stock, in each case provided that the request is made for at least $10 million of registerable shares (with the exception of the demand registrations described in clause (v) below): (i) one demand registration, exercisable by each of CCI and certain other shareholders of the Issuer; (ii) two demand registrations, exercisable by certain holders of the Series C Preferred Stock holding 20% of the Series C Preferred Stock constituting registerable shares; (iii) two demand registrations, exercisable by certain holders of the Notes (and certain other specified parties) holding 25% of the Class A Common Stock held by or issuable to such parties; (iv) two demand registrations, exercisable by GM; (v) one demand CUSIP NO. 983759 10 1 PAGE 9 OF 14 PAGES registration, exercisable by each of Hughes and Rare Medium Group, Inc.; and (vi) one demand registration within 90 days of a change of control, exercisable by certain holders of the Series C Preferred Stock holding 20% of the Series C Preferred Stock constituting registerable shares. Parties to the agreement holding $10 million worth of shares of Class A Common Stock on an as-converted basis may also request up to five shelf registrations, only two of which may be underwritten without the Issuer's consent. The agreement further provided for the Issuer to file a single shelf registration for, among other things, shares of Class A Common Stock issuable upon conversion of the Notes, and a single shelf registration statement for certain shares of Class A Common Stock issuable to GM. The Issuer filed the former shelf registration, which also registered shares held by other shareholders, including those held by CCI, on February 4, 2003. Finally, the agreement provides unlimited piggyback registration rights for all parties except in certain cases, such as high yield debt offerings. Director Designation Agreements CCI and certain other investors entered into an Amended and Restated Director Designation Agreement dated February 1, 2003 with the Issuer, pursuant to which the number of directors of the Issuer was set at a minimum of seven and CCI, as well as certain other investors, were each granted a nominee to the Issuer's Board of Directors for such time as, in the case of CCI, it retained in excess of 5% of the Issuer's outstanding common stock on an as-converted basis or the full amount of its original investment in the Issuer. Each party to the agreement agreed to vote its shares in favor of the other parties' nominees. The agreement terminates as to certain parties, beginning with CCI, if the combined voting power of the parties exceeds 50%. CCI, Madison Dearborn and AEA, if necessary, are dropped from the agreement in that order until the voting power of the remaining parties falls to 50% or less. Pursuant to this agreement, Randall T. Mays, Executive Vice President/Chief Financial Officer of CCI and Clear Channel, is a member of the Issuer's Board of Directors. In addition, the Issuer and CCI are parties to a Clear Channel Director Designation Agreement dated as of January 28, 2003, which provides that, so long as CCI retains in excess of 5% of the Issuer's outstanding common stock on an as-converted basis or the full amount of its original investment in the Issuer, if CCI ceases to be a party to the Director Designation Agreement, the Issuer will take all measures necessary to ensure that CCI's Board designee remains on the Issuer's Board of Directors. Voting Agreement CCI and certain parties named therein have entered into a Voting Agreement in connection with the transactions contemplated by the Note Purchase Agreement, as amended, dated December 21, 2002 by and among the Issuer, XM Satellite Radio, Inc. and certain investors named therein. Neither CCI nor Clear Channel is a party to the Note Purchase Agreement. Each of the parties to the Voting Agreement agreed to vote all shares of Class A Common Stock of the Issuer it holds on the record date in favor of an amendment to the Issuer's charter to increase the number of authorized shares of Class A Common Stock to 600,000,000 (the "Charter Amendment"). In connection therewith, certain parties thereto gave irrevocable proxies to Black Bear Fund II, L.L.C. to vote such person's shares of capital stock in accordance with the foregoing. The Charter Amendment was approved at a special meeting of the Issuer's shareholders on March 27, 2003 and the Voting Agreement terminated at such time. CUSIP NO. 983759 10 1 PAGE 10 OF 14 PAGES The summary descriptions contained in this Item 6 of the foregoing documents are qualified in their entirety by reference to the full text of such documents which are incorporated by reference herein Other than as described herein or the Schedule 13D, to the Reporting Person's knowledge, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of the Issuer including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 99(a) Letter Agreement, dated as of June 5, 2003, between Clear Channel Investments, Inc. and Bear, Stearns International Limited. 99(b) Second Amended and Restated Shareholders and Noteholders Agreement, dated as of January 28, 2003, by and among XM Satellite Radio Holdings Inc. and certain shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). 99(c) Second Amended and Restated Registration Rights Agreement, dated as of January 28, 2003, by and among XM Satellite Radio Holdings Inc. and certain shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). 99(d) Amended and Restated Director Designation Agreement, dated as of February 1, 2003, by and among XM Satellite Radio Holdings Inc. and the shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Annual Report on Form 10-Q for Quarter ended March 31, 2003 filed with the SEC on May 15, 2003). 99(e) Clear Channel Director Designation Agreement, dated as of January 28, 2003, among XM Satellite Radio Holdings Inc. and Clear Channel Investments, Inc. (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). 99(f) Voting Agreement, dated as of December 21, 2002, among the shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). CUSIP NO. 983759 10 1 PAGE 11 OF 14 PAGES SIGNATURES After reasonable inquiry and to the best of its knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct. Date: June 12, 2003 CLEAR CHANNEL INVESTMENTS, INC. By: /s/ Randall T. Mays -------------------------------------- Name: Randall T. Mays Title: Executive Vice President/ Chief Financial Officer CLEAR CHANNEL COMMUNICATIONS, INC. By: /s/ Randall T. Mays -------------------------------------- Name: Randall T. Mays Title: Executive Vice President/ Chief Financial Officer CUSIP NO. 983759 10 1 PAGE 12 OF 14 PAGES SCHEDULE I Name, business address and present principal occupation or employment of the directors and executive officers of Clear Channel: Directors L. Lowry Mays Chairman of the Board and Chief Executive Officer 200 East Basse Road San Antonio, Texas 78209 Thomas O. Hicks Vice Chairman Chairman of the Board and Chief Executive Officer of Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Alan D. Feld Attorney in the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1700 Pacific Avenue, 41st Floor Dallas, Texas 75021 Perry J. Lewis Heartland Industrial Partners 55 Railroad Avenue Greenwich, Connecticut 06830 Mark P. Mays President/Chief Operating Officer 200 East Basse Road San Antonio, Texas 78209 Randall T. Mays Executive Vice President/Chief Financial Officer 200 East Basse Road San Antonio, Texas 78209 B. J. McCombs Private Investor 755 E. Mulberry Ave., Suite 600 San Antonio, Texas 78212 Phyllis B. Riggins Retired Managing Director and Group Head -- Media/Telecommunication of Banc of America Securities (and its predecessors) global corporate and investment banking Bluffview Capital, L.P. 100 Crescent Court, Suite 500 Dallas, Texas 75201 CUSIP NO. 983759 10 1 PAGE 13 OF 14 PAGES Theodore H. Strauss Managing Director of Bear, Stearns & Co., Inc. 300 Crescent Court, Suite 200 Dallas, Texas 75201 J.C. Watts Chairman of JC Watts Companies 1000 Wilson Blvd., Suite 950 Arlington, Virginia 22209 John H. Williams Retired Senior Vice President of Everen Securities, Inc. P.O. Box 9514 Ft. Worth, Texas 76147-0514 Executive Officers who are not Directors Brian Becker Chairman/Chief Executive Officer - Clear Channel Entertainment 2000 West Loop South, Suite 1300 Houston, Texas 77027 Herbert W. Hill, Jr. Senior Vice President/Chief Accounting Officer 200 East Basse Road San Antonio, Texas 78209 Juliana F. Hill Senior Vice President/Finance 200 East Basse Road San Antonio, Texas 78209 John Hogan Chief Executive Officer - Clear Channel Radio 200 East Basse Road San Antonio, Texas 78209 Paul Meyer President/Chief Executive Officer - Clear Channel Outdoor 2850 East Camelback Road, Suite 300 Phoenix, Arizona 85016 William Moll President - Clear Channel Television 200 East Basse Road San Antonio, Texas 78209 Roger Parry Chief Executive Officer - Clear Channel International 33 Golden Square London WIR 3PA CUSIP NO. 983759 10 1 PAGE 14 OF 14 PAGES Kenneth E. Wyker Senior Vice President, General Counsel and Secretary 200 East Basse Road San Antonio, Texas 78209 Name, business address and present principal occupation or employment of the directors and executive officers of CCI: Directors L. Lowry Mays Chairman of the Board and Chief Executive Officer 200 East Basse Road San Antonio, Texas 78209 Mark P. Mays President/Chief Operating Officer 200 East Basse Road San Antonio, Texas 78209 Randall T. Mays Executive Vice President/Chief Financial Officer 200 East Basse Road San Antonio, Texas 78209 Executive Officers who are not Directors Herbert W. Hill, Jr. Senior Vice President/Chief Accounting Officer 200 East Basse Road San Antonio, Texas 78209 Juliana F. Hill Senior Vice President/Finance 200 East Basse Road San Antonio, Texas 78209 Kenneth E. Wyker Senior Vice President, General Counsel and Secretary 200 East Basse Road San Antonio, Texas 78209 Exhibit Index
Exhibit Number Description ------- ----------- 99(a) Letter Agreement, dated as of June 5, 2003, between Clear Channel Investments, Inc. and Bear, Stearns International Limited. 99(b) Second Amended and Restated Shareholders and Noteholders Agreement, dated as of January 28, 2003, by and among XM Satellite Radio Holdings Inc. and certain shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). 99(c) Second Amended and Restated Registration Rights Agreement, dated as of January 28, 2003, by and among XM Satellite Radio Holdings Inc. and certain shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). 99(d) Amended and Restated Director Designation Agreement, dated as of February 1, 2003, by and among XM Satellite Radio Holdings Inc. and the shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Annual Report on Form 10-Q for Quarter ended March 31, 2003 filed with the SEC on May 15, 2003). 99(e) Clear Channel Director Designation Agreement, dated as of January 28, 2003, among XM Satellite Radio Holdings Inc. and Clear Channel Investments, Inc. (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003). 99(f) Voting Agreement, dated as of December 21, 2002, among the shareholders and noteholders named therein (incorporated by reference to the exhibits to the Issuer's Current Report on Form 8-K filed with the SEC on January 29, 2003).
EX-99.(A) 3 d06727a2exv99wxay.txt LETTER AGREEMENT BEAR STEARNS BEAR, STEARNS INTERNATIONAL LIMITED ONE CANADA SQUARE LONDON E14 5AD, ENGLAND TEL: 0207-516-6390 FAX: 0207-516-6805 REGULATED BY FSA DATE: June 5, 2003 TO: Clear Channel Investments, Inc. 200 E. Basse Road San Antonio, TX 78209 ATTENTION: Randall Mays TELEPHONE: 1.210.822.2828 FACSIMILE: 1.210.822.2299 FROM: Derivatives Documentation TELEPHONE: 212-272-2711 FACSIMILE: 212-272-9857 SUBJECT: Equity Derivatives Confirmation REFERENCE NUMBER: NY24591 The purpose of this letter agreement is to confirm the terms and conditions of the Transaction entered into on the Trade Date specified below (the "Transaction") between Bear, Stearns International Limited ("Bear Stearns") and Clear Channel Investments, Inc. ("Counterparty"). This letter agreement constitutes the sole and complete "Confirmation," as referred to in the Master Agreement specified below, with respect to this Transaction. 1. The parties agree to negotiate, execute and deliver an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency--Cross Border) (the "Form Master Agreement"), together with the schedule thereto and any other related documents, each in form and substance as the parties shall in good faith agree (collectively, the "Executed Master Agreement"). In addition, the parties agree that until execution and delivery of the Executed Master Agreement, a Form Master Agreement, shall be deemed to have been executed and delivered by the parties on the Trade Date of the first transaction that by its terms is intended to be governed by a Master Agreement. All provisions contained in, or incorporated by reference to, the Form Master Agreement or the Executed Master Agreement (as applicable, the "Master Agreement") shall govern the Transaction referenced in this Confirmation, except as expressly modified below. This Confirmation, together with all of the other documents confirming any and all Transactions entered into between us (regardless of which branch, if any, either of us has acted through) that by their terms are intended to be governed by a Master Agreement, shall supplement, form a part of and be subject to the Master Agreement. This Confirmation is subject to and incorporates the 2000 ISDA Definitions (the "Definitions") and the 2002 Equity Derivatives Definitions (the "2002 Definitions"), each as published by ISDA. Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 2 of 11 In the event of any inconsistency between this Confirmation and the Definitions, the 2002 Definitions or the Master Agreement, this Confirmation shall prevail. In the event of any inconsistency between the portion of this Confirmation embodied in this letter agreement and the portion of this Confirmation embodied in a Transaction Supplement (as defined below), the Transaction Supplement shall prevail. 2. The terms of the particular Transaction to which this Confirmation relates are as follows GENERAL TERMS: Trade Date: June 5, 2003 Seller: Counterparty Buyer: Bear Stearns Shares: Class A Common Stock, USD 0.01 par value, of XM Satellite Holdings Inc., currently trading under the ticker symbol "XMSR". Number of Shares: As specified in the Transaction Supplement (as described below) Since there are three Valuation Dates, NOTE THAT THIS IS A PER-VALUATION-DATE FIGURE WHICH REPRESENTS ONE THIRD OF THE TOTAL NUMBER OF SHARES FOR ALL VALUATION DATES. Forward Price: Not applicable Prepayment: Applicable Prepayment Amount: 84.02% of the product of (a) the Number of Shares and (b) the Execution Price specified in the Final Transaction Supplement (defined below) The portion of the Prepayment Amount shall be reduced by all amounts previously disbursed as described under "Transaction Supplements and Determination of Terms" below. Prepayment Dates: The third Exchange Business Day following the last day of the Execution Period (defined below) Portions of the Prepayment Amount shall be disbursed prior to the Prepayment Date, as described under "Transaction Supplements and Determination of Terms" below. Forward Floor Price: 100% of the Execution Price specified in the Final Transaction Supplement Forward Cap Price: 131.34% of the Execution Price specified in the Final Transaction Supplement Exchange: The NASDAQ National Market System
Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 3 of 11 Related Exchange(s): All Exchanges Clearance Systems: The Depository Trust Company (DTC) Knock-in Event: Not Applicable Calculation Agent: Bear Stearns VALUATION TIME: Valuation Time: The Scheduled Closing Time Valuation Dates: The 14th calendar day preceding the 54 month anniversary of the last day of the Execution Period, the 60 month anniversary of the last day of the Execution Period and the 14th calendar day following the 66 month anniversary of the last day of the Execution Period. SETTLEMENT TERMS: Physical Settlement: To be determined per "Settlement Method Election". Settlement Currency: USD Relevant Price: The highest ask price quoted as of the Valuation Time on the relevant Valuation Date, as the case may be, (or the last such prices quoted immediately before the Valuation Time) without regard to quotations that "lock" or "cross" the dealer exchange or dealer quotation system. Settlement Date: The day that falls one Settlement Cycle following the relevant Valuation Date (or, if such date is not a Clearance System Business Day, the next following Clearance System Business Day) Settlement Method Election: Applicable (subject to the obligation of the Seller to post cash Collateral in accordance with the Collateral Provisions below). Electing Party: Seller Settlement Method Election Date: The fifth Scheduled Trading Day preceding the related Valuation Date Default Settlement Method: Physical Settlement SETTLEMENT TERMS IF CASH SETTLEMENT IS APPLICABLE: Settlement Price: The Relevant Price Relevant Price: The same as the Relevant Price if Physical Settlement were applicable Cash Settlement Payment Date: Three Currency Business Days after the relevant Valuation Date
Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 4 of 11 DIVIDENDS: Extraordinary Dividend: Any dividend in excess of USD 0.00 per Share Excess Dividend Amount: Ex Amount Dividend Period: The period from but excluding the Trade Date to and including the relevant Valuation Date SHARE ADJUSTMENTS: Method of Adjustments: Calculation Agent Adjustment; provided, however, that adjustments may be made to account for changes in volatility, expected dividends, stock loan rate and liquidity relative to the relevant Share but only in respect of Potential Adjustment Events of the types described in Sections 11.2(e)(ii)(A) and 11.2(e)(ii)(B) of the 2002 Definitions and events of the types described in Sections 11.2(e)(vi) and 11.2(e)(vii) to the extent analogous to either of the foregoing. . CONSEQUENCES FOR MERGER EVENTS: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Cancellation and Payment (provided that if the Merger Date occurs prior to the 6 month anniversary of the last day of the Execution Period, Modified Calculation Agent Adjustment will apply) Share-for-Combined: Component Adjustment Determining Party: Buyer Tender Offer: Applicable CONSEQUENCES OF TENDER OFFERS: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Cancellation and Payment (provided that if the Tender Offer Date occurs prior to the 6 month anniversary of the last day of the Execution Period, Modified Calculation Agent Adjustment will apply) Share-for-Combined: Component Adjustment Determining Party: Buyer Nationalization, Insolvency or Delisting: Cancellation and Payment (provided that if the Announcement Date for the relevant event occurs prior to the 6 month anniversary of the last day of the Execution Period, Modified Calculation Agent Adjustment will apply) Determining Party: Buyer
Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 5 of 11 ADDITIONAL DISRUPTION EVENTS: Change in Law: Applicable (provided that if the relevant event occurs prior to the 6 month anniversary of the last day of the Execution Period, Inapplicable) Failure to Deliver: Applicable Insolvency Filing: Applicable (provided that if the relevant event occurs prior to the 6 month anniversary of the last day of the Execution Period, Inapplicable) Loss of Stock Borrow: Applicable Maximum Stock Loan Rate: 0 (zero) Hedging Party: Buyer Determining Party: Buyer Non-Reliance: Applicable Agreements and Acknowledgements Regarding Applicable Hedging Activities: Additional Acknowledgements: Applicable
TRANSACTION SUPPLEMENTS AND DETERMINATION OF TERMS: Certain of the economic terms of this Transaction will be embodied in Transaction Supplements issued from time to time by Bear Stearns to Counterparty. Each of these Transaction Supplements shall, upon issuance thereof by Bear Stearns be incorporated herein by reference, and shall be deemed to supersede all prior Transaction Supplements. Counterparty shall be bound by the terms of such Transaction Supplement, unless such Transaction Supplement is inconsistent with the agreements between the parties intended to be memorialized thereby and Counterparty notifies Bear Stearns of that fact within one Business Day of the receipt by Counterparty of such Transaction Supplement. A form of Transaction Supplement is attached hereto as Exhibit A. The final Transaction Supplement (the "Final Transaction Supplement"), which shall embody the final terms of the Transaction, shall be issued following the end of the Execution Period specified below, and shall represent the final written agreement of Bear Stearns with the Counterparty setting forth the final terms of this Transaction. Each Transaction Supplement shall be issued daily during the Execution Period to Mr. Hamlet Newsom, Mr. Brian Coleman and such additional person(s) as the Seller may direct. The Number of Shares to be specified in the Transaction Supplement represents one third (reflecting the multiple Valuation Dates) of the number of Shares introduced into the market by Bear Stearns during the Execution Period, which shall equal the Maximum Base Amount. In the case of any Transaction Supplement other than the Final Transaction Supplement, this will represent all Shares sold through the "As of" date specified on the Transaction Supplement. In the case of the Final Transaction Supplement, this will represent all Shares sold throughout the Execution Period. The Execution Price to be specified in the Transaction Supplement represents the greater of (a) USD 11.8628 and (b) (i) the weighted average of the net economic sale price of Shares sold by Bear Stearns during the Execution Period, less (ii) (A) 0.50 multiplied by the excess of such net economic sale price over USD 12.62 minus (B) 0.25 multiplied by the excess of such net economic sale price over USD 13.62. In the case of any Transaction Supplement other than the Final Transaction Supplement, this will be based on all Shares sold through the "As of" date specified Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 6 of 11 on the Transaction Supplement. In the case of the Final Transaction Supplement, this will be based on all Shares sold throughout the Execution Period (which shall equal the Maximum Base Amount). The parties hereto hereby agree that they shall enter into this Transaction with respect to the Maximum Base Amount specified below based on the net economic execution price of sales of the Shares effected by Bear Stearns over the Execution Period specified below. The Maximum Base Amount will be 8,329,877. The Execution Period will be the period from and including the Trade Date to and including the date on which Bear Stearns has effected sales of Shares in number equal to the Maximum Base Amount (which shall in any event occur prior to the 90th calendar day after the Trade Date). The last day of the Execution Period will be specified in the Final Transaction Supplement. On each Wednesday (or, if such day is not a Currency Business Day, the next following Currency Business Day) commencing Wednesday, June 18, 2003 and ending on the Wednesday immediately preceding the final day of the Execution Period, Bear Stearns shall disburse a portion of the Prepayment Amount equal to 84.02% of the product of (a) USD 11.8628 and (b) the number of Shares introduced by Bear Stearns into the market in the period (i) commencing on the Trade Date and ending on Friday, June 13, 2003 (in the case of the disbursement on Wednesday, June 18, 2003) or (ii) the calendar week ending on the Friday immediately preceding the disbursement date (for any other disbursement date). The Prepayment Amount payable on the Prepayment Date shall be reduced by all prior disbursements of the Prepayment Amount. ADDITIONAL REPRESENTATIONS OF THE COUNTERPARTY. The Counterparty represents and warrants to Bear Stearns (which representation and warranty will be deemed repeated at all times during the period from and including the Trade Date to and including the final Settlement Date) that: (a) the Shares pledged as Collateral under this Transaction and any Shares delivered to the Purchaser hereunder in connection with this Transaction are not and shall not be subject to any condition to or restriction on the ability of the holder thereof to freely sell, assign or otherwise transfer such Shares, including any contractual restriction, requirement for receipt of approval, limitations on the status of transferees, deliveries of certifications, opinions or other documents (other than a stock power or like instrument of transfer), or requirement of registration or prospectus delivery other than pursuant to Rule 144 under the Securities Act of 1933, as amended, or any successor rule, regulation or provision ("Rule 144"); (b) for purposes of determining the holding period under Rule 144, the Shares pledged as Collateral under this Transaction were acquired and fully paid for by the Counterparty not less than a period of one year prior to the date of this Confirmation; (c) during the three-month period preceding the Trade Date (i) the Counterparty has not sold any Shares or any securities convertible into Shares, (ii) no Shares (or securities convertible into Shares) which were donated by the Counterparty within one year preceding the Trade Date have been sold for the account of the donee thereof, (iii) no Shares (or securities convertible into Shares) which were placed into a trust by the Counterparty as settlor within one year preceding the Trade Date have been sold, and (iv) no other Shares (or securities convertible into Shares) have been "sold" within the meaning of Rule 144(e). No default in any obligation of the Counterparty secured by Shares (or securities convertible into Shares) has occurred during the two-year period preceding the Trade Date. The Counterparty has not agreed with any person (natural or legal) to act in concert for the purpose of selling Shares or any securities convertible into Shares; Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 7 of 11 (d) the Counterparty is not, as of the Trade Date and any date on which a Settlement Method Election is made, in possession of any material non-public information with respect to the Issuer; and (e) as of the Trade Date, the Counterparty had a valid business purpose for entering into this Transaction, and the Transaction was consistent with the Counterparty's overall investment strategy. ADDITIONAL COVENANTS OF THE COUNTERPARTY RELATING TO THE TRANSACTION. The Counterparty agrees that during the Execution Period it shall not (a) sell any Shares (or securities convertible into Shares) or (b) agree with any person (natural or legal) to act in concert for the purpose of selling Shares or any securities convertible into Shares. The Counterparty agrees that it shall file the Forms 144 referred to below with the United States Securities and Exchange Commission in accordance with the procedures set out in Rule 144. ADDITIONAL COVENANT OF BEAR STEARNS. Bear Stearns initial sales into the market during the Execution Period pursuant to "Transaction Supplements and Determination of Terms" above will comport with the manner of sale requirements of Rule 144. ADDITIONAL REPRESENTATION OF BEAR STEARNS. To the best of Bear Stearns's knowledge and belief, the Issuer is in compliance with its filing requirements for purposes of Rule 144. ADDITIONAL DOCUMENTS TO BE DELIVERED. The Counterparty shall deliver to Bear Stearns (a) on the Trade Date, a copy of a Form 144 indicating that it intends to enter into this Transaction in respect of a number of Shares to the Maximum Base Amount and (b) promptly following the issuance of the Final Transaction Supplement, an amended Form 144 reflecting that it has entered into this Transaction in respect of number of Shares equal to the Base Amount. COLLATERAL PROVISIONS. (a) On or before the Local Business Day following the Trade Date, Counterparty shall deliver to and at all times during the Execution Period maintain with Bear Stearns as collateral Shares in number equal to the Maximum Base Amount. At all times after the Execution Period, Counterparty shall deliver to and at all times maintain with Bear Stearns as collateral Shares in number equal to the maximum number of Shares thereafter deliverable hereunder (as such amount may be from time to time adjusted in accordance herewith). (b) These Collateral Provisions shall be deemed a security agreement, and shall be governed by the laws of the State of New York, without giving effect to the conflicts or choice of law provisions thereof. The Counterparty hereby grants a first priority continuing security interest in all Collateral provided hereunder (including cash Collateral provided under (f) below) and in any and all substitutions therefor, proceeds thereof and distributions thereon. These Collateral Provisions constitute a Credit Support Document and the failure by a party to deliver or return Collateral in accordance with these Collateral Provisions (if such failure is not remedied on or before the Local Business Day after notice of such failure is given to such party) shall constitute an Event of Default for purposes of Section 5(a)(iii) of the Master Agreement with respect to such party. For purposes of these Collateral Provisions, the term "Local Business Day" shall have the meaning given such term in the Master Agreement, except that references to a payment in clause (b) thereof will be deemed to include a delivery or return of Collateral hereunder. No interest shall be paid on any cash collateral, whether consisting of cash dividends or cash Collateral provided under (f) below. Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 8 of 11 (c) Any Collateral to be held pursuant to these Collateral Provisions shall be maintained subject to the Bear Stearns Standard Terms and Conditions (the "Customer Agreement"). (d) Counterparty agrees that Bear Stearns or any of its affiliates may borrow, repledge, use in its own business and rehypothecate the Shares pledged by Counterparty as Collateral on terms determined by Bear Stearns. (e) As a condition precedent to the right of the Seller to elect that Cash Settlement apply, the Seller shall post on the Settlement Method Election Date cash Collateral (which shall be Collateral for purposes of these Collateral Provisions) in an amount determined by Bear Stearns in its sole discretion, unless the amount required exceeds 25% of the prevailing value of the Shares (multiplied by the Number of Shares), in which case such amount must have been determined by Bear Stearns in its reasonable discretion. Such shall be in addition to the Share collateral and Share proceeds (including dividends) required to be posted hereunder. AGENCY. Counterparty acknowledges that Bear, Stearns & Co. Inc. ("BS&C") has acted as agent for Counterparty solely for the purposes of arranging this Transaction with its Affiliate, Bear Stearns. This Confirmation is being provided by BS&C in such capacity. Upon your written request, BS&C will furnish you with the time at which this Transaction was entered into. ADDITIONAL PROVISIONS Non-Reliance. Each party represents to the other party that (a) it has not received and is not relying upon any legal, tax, regulatory, accounting or other advice (whether written or oral) of the other party regarding this Transaction, other than representations expressly made by that other party in this Confirmation and in the Master Agreement and (b) in respect of this Transaction, (i) it has the capacity to evaluate (internally or through independent professional advice) this Transaction and has made its own decision to enter into this Transaction and (ii) it understands the terms, conditions and risks of this Transaction and is willing to assume (financially and otherwise) those risks. Counterparty acknowledges that Bear Stearns has advised Counterparty to consult its own tax, accounting and legal advisors in connection with this Transaction evidenced by this Confirmation and that the Counterparty has done so. Eligible Contract Participant. Each party represents that it constitutes an "eligible contract participant" as such term is defined in Section 1(a)12 of the Commodity Exchange Act, as amended. Payment Date Netting. The parties agree that subparagraph (ii) of Section 2(c) of the Master Agreement will not apply to any Transactions that are or will be governed by the Master Agreement. Thus all amounts payable on the same date in the same currency in respect of all Transactions shall be netted. Governing Law. The laws of the State of New York, without reference to the choice or conflicts of law principles thereof. Termination Currency. USD shall be the Termination Currency. Transfer. Bear Stearns may transfer its rights and obligations under this Transaction, in whole or in part, to any of its Affiliates without Counterparty's consent. Measure of Damages. Second Method and Loss shall apply. Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 9 of 11 Contact information. For purposes of the Master Agreement (unless otherwise specified in the Executed Master Agreement), the addresses for notice to the parties shall be: (a) Counterparty Clear Channel Investments, Inc. 200 East Basse Road San Antonio, Texas 78209 Attention: Finance Department Fax: 210.822.2299 With a copy to: Clear Channel Communications, Inc. 200 East Basse Road San Antonio, Texas 78209 Attention: Legal Department Fax: 210.832.3428 (b) Bear Stearns: Bear, Stearns International Limited One Canada Square London, England Attention: Legal Department with a copy to: Bear, Stearns & Co. Inc. 245 Park Avenue New York, New York 10167 Attention: Kevin T. Robik This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Bear Stearns a facsimile of the fully-executed Confirmation to 212-272-9857. For inquiries regarding U.S. Transactions, please contact ROBIN BLACK by telephone at 212-272-6345. For all other inquiries please contact ORLAITH O'DEA by telephone at 353-1-402-6220. Originals will be provided for your execution upon your request. Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 10 of 11 We are very pleased to have executed this Transaction with you and we look forward to completing other transactions with you in the near future. Very truly yours, BEAR, STEARNS INTERNATIONAL LIMITED By: /s/ Jonathon Jacoby ---------------------------------- Name: Jonathon Jacoby Title: Authorized Signatory Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date. CLEAR CHANNEL INVESTMENTS, INC. By: /s/ Juliana F. Hill ---------------------------------- Name: Juliana F. Hill Title: Senior Vice President-Finance Reference Number: NY24591 Clear Channel Investments, Inc. June 5, 2003 Page 11 of 11 EXHIBIT A--FORM OF TRANSACTION SUPPLEMENT TRANSACTION SUPPLEMENT TO: Clear Channel Investments, Inc. ("Counterparty") FROM: Bear, Stearns International Limited ("Bear Stearns") DATE: As of [DATE] THIS TRANSACTION SUPPLEMENT IS [NOT] THE FINAL TRANSACTION SUPPLEMENT. This is a Transaction Supplement as described in the letter agreement between Bear Stearns and Counterparty dated as of June 5, 2003. It embodies certain of the economic terms of this Transaction described in that letter agreement. This Transaction Supplement shall, upon its issuance by Bear Stearns be incorporated into the letter agreement by reference, and shall be deemed to supersede all prior Transaction Supplements. For purposes of the letter agreement, this Transaction Supplement specifies the following economic terms: Transaction Supplement Date: [TRANSACTION SUPPLEMENT DATE] Number of Shares: [NUMBER OF SHARES] Shares (NOTE THAT THIS IS A PER-VALUATION-DATE FIGURE WHICH REPRESENTS ONE THIRD OF THE TOTAL NUMBER OF SHARES FOR ALL VALUATION DATES) Execution Price: USD [EXECUTION PRICE] Final Date of Execution Period [To be specified in the Final Transaction Supplement] COUNTERPARTY SHALL BE BOUND BY THE TERMS OF THIS TRANSACTION SUPPLEMENT, UNLESS THIS TRANSACTION SUPPLEMENT IS INCONSISTENT WITH THE AGREEMENTS BETWEEN THE PARTIES INTENDED TO BE MEMORIALIZED HEREBY AND COUNTERPARTY NOTIFIES BEAR STEARNS OF THAT FACT WITHIN ONE BUSINESS DAY OF THE RECEIPT BY COUNTERPARTY OF THIS TRANSACTION SUPPLEMENT. -----END PRIVACY-ENHANCED MESSAGE-----