-----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, RchvenDWzXHC6dknGo33VU+xzQoiVPr4DJuBmRefmWatA/tYqHcf8H8CoZdwNLRY Pq9w1+ZXrA/V4qhLeGK4sw== 0000950134-97-008632.txt : 19971117 0000950134-97-008632.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950134-97-008632 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPSTAR BROADCASTING PARTNERS INC CENTRAL INDEX KEY: 0001026516 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 752672663 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-25263 FILM NUMBER: 97722162 BUSINESS ADDRESS: STREET 1: 600 CONGRESS AVE STREET 2: SUITE 1400 CITY: AUSTIN STATE: TX ZIP: 78701 BUSINESS PHONE: 5124046380 MAIL ADDRESS: STREET 1: 600 CONGRESS AVE STREET 2: SUITE 1400 CITY: AUSTIN STATE: TX ZIP: 78701 10-Q 1 FORM 10-Q FOR QUARTER ENDED 09/30/97 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From to Commission file number 333-25683 CAPSTAR BROADCASTING PARTNERS, INC. (Exact name of registrant as specified in its charter) DELAWARE 75-2672663 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 CONGRESS AVENUE SUITE 1400 AUSTIN, TEXAS 78701 (Address of principal executive offices) (Zip Code)
(512) 404-6840 (Registrant's telephone number, including area code) 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 such filing requirements for the past 90 days. Yes [X] No [ ] AT NOVEMBER 7, 1997, 279,632,180 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE, AND NO SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE, OF CAPSTAR BROADCASTING PARTNERS, INC. (THE "REGISTRANT") WERE OUTSTANDING. ================================================================================ 2 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q
PAGE NUMBER ------ PART I -- FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of September 30, 1997 (unaudited) and December 31, 1996......................... 2 Consolidated Statements of Operations for the three months ended September 30, 1997 and 1996 (unaudited)............. 3 Consolidated Statements of Operations for the nine months ended September 30, 1997 and 1996 (unaudited)............. 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 (unaudited)...... 5 Consolidated Statement of Stockholder's Equity for the nine months ended September 30, 1997 (unaudited)............... 6 Notes to Consolidated Financial Statements (unaudited)...... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 18 PART II -- OTHER INFORMATION Item 2 Changes in Securities....................................... 27 Item 6. Exhibits and Reports on Form 8-K............................ 27
1 3 ITEM 1. FINANCIAL STATEMENTS. CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------- ------------ (UNAUDITED) (NOTE) (RESTATED)* Current assets: Cash and short term cash investments...................... $ 11,477,120 $ 9,820,861 Accounts receivable, net of allowance for doubtful accounts of $1,633,627 and $838,081 at September 30, 1997 and December 31, 1996, respectively............... 50,120,710 17,249,395 Note receivable........................................... 1,524,995 -- Refundable income taxes................................... -- 1,111,940 Prepaid expenses and other current assets................. 3,298,426 600,206 ------------ ------------ Total current assets.............................. 66,421,251 28,782,402 ------------ ------------ Property and equipment, net................................. 96,678,150 29,325,524 FCC licenses, goodwill and other intangible assets, net..... 684,535,106 294,650,605 Deposits and other assets................................... 9,368,573 3,499,655 ------------ ------------ Total assets...................................... $857,003,080 $356,258,186 ============ ============ LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Current portion of long-term debt and capital lease obligations............................................ $ 3,501,707 $ 3,936,317 Accounts payable and accrued expenses..................... 19,105,996 8,637,058 Accrued interest.......................................... 8,120,427 1,846,682 Income taxes payable...................................... 1,938,359 -- Due to Parent............................................. 32,423,393 536,738 ------------ ------------ Total current liabilities......................... 65,089,832 14,956,795 ------------ ------------ Long-term debt and capital lease obligations, net of current portion................................................... 462,842,130 187,233,972 Deferred income taxes....................................... 73,208,868 37,233,863 ------------ ------------ Total liabilities................................. 601,140,880 239,424,141 ------------ ------------ Commitments and contingencies Redeemable preferred stock, aggregate liquidation preference of $103,386,301 and $27,052,500 at September 30, 1997 and December 31, 1996, respectively........................... 95,070,957 23,097,788 ------------ ------------ Stockholder's equity: Class A Common Stock, $.01 par value, 360,000,000 shares authorized, 279,632,180 and 94,155,000 shares issued and outstanding at September 30, 1997 and December 31, 1996, respectively........................................... 2,796,322 941,550 Class B Common Stock, convertible into Class A Common Stock, $.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 1997 and December 31, 1996, respectively........................ -- -- Additional paid-in capital................................ 206,898,294 105,828,975 Stock subscriptions receivable............................ (2,484,779) (2,090,024) Accumulated deficit....................................... (45,227,685) (9,426,613) Unearned compensation..................................... -- (1,518,120) ------------ ------------ 139,702,407 93,735,768 Receivables from stockholders............................. (1,190,909) -- ------------ ------------ Total stockholder's equity........................ 160,791,243 93,735,768 ------------ ------------ Total liabilities and stockholder's equity........ $857,003,080 $356,258,186 ============ ============
- --------------- Note: The consolidated balance sheet at December 31, 1996 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. * Restated from previously released consolidated financial information to reflect the July 1997 merger with GulfStar Communications, Inc., which has been accounted for in a manner similar to a pooling-of-interests. The accompanying notes are an integral part of the consolidated financial statements. 2 4 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
PREDECESSOR ------------- FOR THE THREE MONTHS ENDED ------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- ------------- (RESTATED)* Gross broadcast revenue..................................... $ 54,101,151 $21,938,614 Less: agency commissions.................................... (2,850,810) (2,000,387) Net broadcast revenue..................................... 51,250,341 19,938,227 Operating expenses: Programming, technical and news........................... 8,411,833 4,032,623 Sales and promotion....................................... 14,643,354 5,858,108 General and administrative................................ 7,676,934 3,657,910 Direct programmed music and entertainment................. 3,880,232 -- Corporate expenses.......................................... 4,274,920 1,687,055 Corporate expenses: non-cash stock option compensation...... 4,127,420 -- Depreciation and amortization............................... 7,648,450 1,514,765 ------------ ----------- Operating income............................................ 587,198 3,187,766 Other expense: Interest expense.......................................... (12,660,510) (4,409,586) Other expenses net........................................ (7,606,421) (998,924) ------------ ----------- Loss before benefit for income taxes and extraordinary loss...................................................... (19,679,733) (2,220,744) Benefit for income taxes.................................... -- (1,145,794) ------------ ----------- Loss before extraordinary item.............................. (19,679,733) (1,074,950) Extraordinary item, loss on early extinguishment of debt.... (2,325,929) (1,203,761) ------------ ----------- Net loss.................................................... (22,005,662) (2,278,711) Dividends and accretion on preferred stocks................. -- (555,251) ------------ ----------- Net loss attributable to common stock....................... $(22,005,662) $(2,833,962) ============ ===========
- --------------- * Restated from previously released consolidated financial information to reflect the July 1997 merger with GulfStar Communications, Inc., which has been accounted for in a manner similar to a pooling-of-interests. The accompanying notes are an integral part of the consolidated financial statements. 3 5 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
PREDECESSOR ------------- FOR THE NINE MONTHS ENDED ------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- ------------- (RESTATED)* Gross broadcast revenue..................................... $125,949,358 $ 55,659,982 Less: agency commissions.................................... (9,542,946) (4,974,086) ------------ ------------ Net broadcast revenue..................................... 116,406,412 50,685,896 Operating expenses: Programming, technical and news........................... 19,916,085 10,405,877 Sales and promotion....................................... 32,157,976 14,921,703 General and administrative................................ 18,713,772 9,559,771 Direct programmed music and entertainment................. 7,973,192 -- Corporate expenses.......................................... 9,092,831 2,720,066 Corporate expenses: non-cash stock option compensation...... 8,247,140 -- Depreciation and amortization............................... 16,526,286 3,890,126 ------------ ------------ Operating income............................................ 3,779,130 9,188,353 Other income (expense): Interest expense.......................................... (32,500,695) (12,032,544) Other expenses, net....................................... (4,155,353) (2,497,893) ------------ ------------ Loss before benefit for income taxes and extraordinary loss...................................................... (32,876,918) (5,134,264) Benefit for income taxes.................................... -- 857,332 ------------ ------------ Loss before extraordinary item.............................. (32,876,918) (4,276,932) Extraordinary item, loss on early extinguishment of debt.... (2,924,154) (1,203,761) ------------ ------------ Net loss.................................................... (35,801,072) (5,480,693) Dividends and accretion on preferred stocks................. -- (555,251) ------------ ------------ Net loss attributable to common stock....................... $(35,801,072) $ (6,035,944) ============ ============
- --------------- * Restated from previously released consolidated financial information to reflect the July 1997 merger with GulfStar Communications, Inc., which has been accounted for in a manner similar to a pooling-of-interests. The accompanying notes are an integral part of the consolidated financial statements. 4 6 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
PREDECESSOR -------------- FOR THE NINE MONTHS ENDED ------------------------------- SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- -------------- (RESTATED)* Net cash (used in)/provided by operating activities......... $ 1,772,308 $ 1,783,721 Cash flows from investing activities: Purchase of property and equipment........................ (8,620,395) (1,428,281) Proceeds on sale of assets................................ 50,669,464 -- Deferred acquisition and intangible costs................. (2,590,437) (3,860,238) Acquisitions of stations and companies, net of cash acquired............................................... (426,262,581) (44,961,462) Other investing activities, net........................... (87,172) (66,256) ------------- ------------ Net cash used in investing activities............. (386,891,121) (50,316,237) ------------- ------------ Cash flows from financing activities: Repurchase of common stock................................ (175,000) -- Proceeds from issuance of common stock.................... 115,790,737 Net proceeds from issuance of common and preferred stocks, net.................................................... 95,018,921 34,704,452 Proceeds from issuance of debt............................ 385,766,599 18,700,000 Proceeds from borrowings under revolving debt facility.... -- 5,547,309 Payment of debt issuance costs............................ (16,009,993) (781,170) Repayment of amounts borrowed............................. (169,583,673) (13,210,226) Principal repayments on capital lease obligations......... (9,747) (48,142) Payment of merger and aborted IPO costs................... (6,864,925) (1,007,297) Dividends paid............................................ (12,365,000) -- ------------- ------------ Net cash provided by financing activities......... 391,567,919 43,904,926 ------------- ------------ Net increase (decrease) in cash and short term cash investments............................................... 6,449,106 (4,627,590) Cash and short term cash investments, beginning of period... 5,028,014 11,111,538 ------------- ------------ Cash and short term cash investments, end of period......... $ 11,477,120 $ 6,483,948 ============= ============ Supplemental disclosure of cash flow information: Cash payments during the year for: Interest............................................... $ 6,808,510 $ 3,655,775 ============= ============ Taxes.................................................. $ 191,243 $ 112,049 ============= ============
- --------------- * Restated from previously released consolidated financial information to reflect the July 1997 merger with GulfStar Communications, Inc., which has been accounted for in a manner similar to a pooling-of-interests. The accompanying notes are an integral part of the consolidated financial statements. 5 7 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
CLASS A CLASS B ADDITIONAL STOCK RECEIVABLES COMMON COMMON PAID-IN SUBSCRIPTIONS ACCUMULATED UNEARNED FROM STOCK STOCK CAPITAL RECEIVABLE DEFICIT COMPENSATION STOCKHOLDERS ---------- --------- ------------ ------------- ------------ ------------ ------------ Balance at January 1, 1997 (Restated)*............... $ 941,550 $ -- $105,828,975 $(2,090,024) $(9,426,613) $(1,518,120) $ -- Repurchase and cancellation of Class A Common Stock..................... (1,750) -- (173,250) -- -- -- -- Issuance of Class A Common Stock..................... 1,674,704 -- 99,507,157 (299,625) -- -- (1,596,364) Issuance of Class B Common Stock..................... -- 181,818 19,818,182 -- -- -- -- Issuance of Class A Common Stock in exchange for Class B Common Stock...... 181,818 (181,818) -- -- -- Payments received on receivables from stockholders.............. -- -- -- -- -- 405,455 Dividends to Parent......... -- -- (12,365,000) -- -- -- Payments received or submitted stock........... -- -- -- 35,534 -- -- -- Accrued interest or subscriptions receivable................ -- -- 130,664 (130,664) -- -- -- Dividends and accretion on Preferred Stock........... -- -- (5,131,035) -- -- -- -- Compensation expense........ -- -- 4,661,460 -- -- 1,518,120 -- Redemption of Preferred Stock..................... -- -- (5,378,859) -- -- -- -- Net loss.................... -- -- -- -- (35,801,072) -- -- ---------- --------- ------------ ----------- ------------ ----------- ----------- Balance at September 30, 1997...................... $2,796,322 $ -- $206,898,294 $(2,484,779) $(45,227,685) $ -- $(1,190,909) ========== ========= ============ =========== ============ =========== =========== TOTAL STOCKHOLDER'S EQUITY ------------- Balance at January 1, 1997 (Restated)*............... $ 93,735,768 Repurchase and cancellation of Class A Common Stock..................... (175,000) Issuance of Class A Common Stock..................... 99,285,872 Issuance of Class B Common Stock..................... 20,000,000 Issuance of Class A Common Stock in exchange for Class B Common Stock...... -- Payments received on receivables from stockholders.............. 405,455 Dividends to Parent......... (12,365,000) Payments received or submitted stock........... 35,534 Accrued interest or subscriptions receivable................ -- Dividends and accretion on Preferred Stock........... (5,131,035) Compensation expense........ 6,179,580 Redemption of Preferred Stock..................... (5,378,859) Net loss.................... (35,801,072) ------------ Balance at September 30, 1997...................... $160,791,243 ============
- --------------- * Restated from previously released consolidated financial information to reflect the July 1997 merger with GulfStar Communications, Inc., which has been accounted for in a manner similar to a pooling-of-interest. The accompanying notes are an integral part of the consolidated 6 8 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (UNAUDITED) NOTE 1 -- BASIS OF PRESENTATION Information with respect to the three and nine months ended September 30, 1997 and 1996 is unaudited. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim consolidated financial statements contain all adjustments consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 1997, are not necessarily indicative of the results that may be expected for the year ended December 31, 1997, or for any other interim period. The consolidated financial statements include the accounts of Capstar Broadcasting Partners, Inc. and its direct and indirect wholly-owned subsidiaries (the "Company"). The direct wholly-owned subsidiary of the Company is Capstar Radio Broadcasting Partners, Inc. (formerly named Commodore Media, Inc.) ("Capstar Radio"). Capstar Broadcasting Corporation ("Capstar Broadcasting") owns all of the outstanding common stock of the Company. In July 1997, the Company acquired GulfStar Communications, Inc. ("GulfStar"). GulfStar and the Company are under common control, and accordingly, this acquisition has been accounted for in a manner similar to a pooling of interests. All consolidated financial data and footnote information of the Company, including the Company's previously issued consolidated financial statements for the periods presented in this Form 10-Q, have been restated to include the historical financial information of GulfStar in accordance with generally accepted accounting principles. Certain amounts have been reclassified in the September 30, 1996 consolidated financial statements to conform to the current period classifications. NOTE 2 -- RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 129, "Disclosure of Information About Capital Structure." SFAS No. 129 consolidates the existing disclosure requirements to disclose certain information about an entity's capital structure. The statement is effective for periods ending after December 15, 1997. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Restated Information," which establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997. 7 9 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Management does not believe the implementation of SFAS No. 130 and No. 131 will have a material effect on its consolidated financial statements. NOTE 3 -- CONSUMMATED ACQUISITIONS AND DISPOSITIONS (THROUGH SEPTEMBER 30, 1997) In January 1997, the Company acquired substantially all of the assets of Triple Communications of CC, Inc., the owner of radio station KNCN-FM in Corpus Christi, Texas. The purchase price was approximately $3.0 million in cash. In February 1997, the Company acquired substantially all of the assets of South Plain Broadcasting Company, Inc., the owner of radio stations KZII(FM) and KFYO(AM) in Lubbock, Texas. The purchase price was approximately $3.0 million in cash. In February 1997, the Company acquired substantially all of the assets of J.Thomas Development of N.M., Inc., et. al., owners of radio stations KTRA-FM and KDAG-FM in Farmington, New Mexico, KCQL-AM in Aztec, New Mexico and KKFG-FM, Bloomfield, New Mexico. The purchase price was approximately $3.0 million in cash and $2.0 million in the form of a note. In February 1997, the Company acquired Osborn Communications Corporation ("Osborn"), subsequently renamed Southern Star Communications, Inc. ("Southern Star"). Osborn owned and operated or provided services to 18 stations (12 FM and 6 AM). The purchase price of the acquisition was $118.8 million payable in cash totaling $117 million and 1,636,361 shares of common stock (having a deemed value of $1.10 per share). In April 1997, the Company acquired substantially all of the assets Taylor Communications Corporation's two radio stations (one FM and one AM) in the Tuscaloosa, Alabama market. The stations were managed by Osborn pursuant to a local marketing agreement ("LMA") since December 1996. The purchase price of the acquisition was approximately $1.0 million. In April 1997, the Company acquired substantially all of the assets of City Broadcasting Co., Inc. (the "City Acquisition"), the owner and operator of two radio stations (one FM and one AM), for approximately $3.0 million, EZY Com, Inc., (the "EZY Acquisition"), the owner and operator of two radio stations (one FM and one AM) for approximately $5.0 million and Roper Broadcasting, Inc. (the "Roper Acquisition"), the owner and operator of one FM station for approximately $4.0 million (the City Acquisition, EZY Acquisition and the Roper Acquisition are collectively referred to as the "Space Coast Acquisitions"). The radio stations acquired in the Space Coast Acquisitions serve the Melbourne-Titusville-Cocoa, Florida Market. In April 1997, the Company sold substantially all of the assets of three radio stations (two FM and one AM) in the Ft. Myers, Florida market. The sale price was approximately $11.0 million. In May 1997, the Company acquired all of the outstanding capital stock of Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners and operators of three radio stations (one FM and two AM) in the Huntsville, Alabama market. The purchase price of the acquisition was approximately $24.5 million. In May 1997, the Company acquired substantially all of the assets of Fort Smith FM, Inc., the owner and operator of two radio stations (one FM and one AM) in Fort Smith, Arkansas. The purchase price was approximately $3.3 million. In May 1997, the Company acquired substantially all of the assets of Texarkana Broadcasting, Inc., the owners and operators of two FM radio stations in Texarkana, Texas. The purchase price was approximately $4.0 million. In June 1997, Capstar Broadcasting executed an agreement with GulfStar whereby in July 1997, Capstar Broadcasting acquired GulfStar through a merger (the "GulfStar Merger") pursuant to which 8 10 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) each share of GulfStar's outstanding preferred and common stock was converted into the right to receive shares of common stock of Capstar Broadcasting having a deemed value of approximately $113.0 million, subject to a conversion ratio calculated based on the relative value of Capstar Broadcasting and GulfStar, principally determined by utilizing projected broadcast cash flows for the year ending December 31, 1998. The Company also repaid approximately $119.5 million of GulfStar's indebtedness, which was funded with the proceeds of the Preferred Stock Offering (as hereinafter defined), the Hicks Muse GulfStar Equity Investment (as hereinafter defined) and the Capstar BT Equity Investment (as hereinafter defined). Subsequently, Capstar Broadcasting contributed the surviving entity in the GulfStar Merger through the Company to Capstar Radio (collectively with the GulfStar Merger, the "GulfStar Transaction"). In July 1997, the Company acquired substantially all of the assets of Community Pacific Broadcasting Company L.P. ("Community Pacific"), the owner and operator of 11 radio stations (six FM and five AM) in four markets located in the Western United States and Iowa, including Anchorage, Alaska, Modesto and Stockton, California, and Des Moines, Iowa. The purchase price was approximately $35.0 million. In July 1997, the Company acquired substantially all of the assets of Cavalier Communications L.P., the owner and operator of five radio stations (four FM and one AM) in the Roanoke/Lynchburg, Virginia market. The purchase price was approximately $8.3 million. In August 1997, the Company acquired substantially all of the assets of McForhun, Inc. and Livingston, Inc., the owners and operators of two radio stations (one FM and one AM) in the Baton Rouge, Louisiana market. The purchase price was approximately $7.4 million. In August 1997, Benchmark Communications Radio Limited Partnership, L.P. ("Benchmark") became an indirect wholly-owned subsidiary of the Company through a series of mergers and stock purchases (the "Benchmark Acquisition"). Benchmark owns and operates 31 radio stations (21 AM and 10 AM) in 10 markets in the Southeastern United States, including Dover, Delaware, Salibury-Ocean City, Maryland, Montgomery, Alabama, Shreveport, Louisiana, Jackson, Mississippi, Statesville, North Carolina, Columbia, South Carolina, Greenville, South Carolina, Roanoke-Lynchburg, Virginia and Westchester, Virginia markets. The purchase price was approximately $189.7 million. Due to FCC ownership limits, the four stations acquired in the Jackson, Mississippi market were sold in October 1997, as discussed in Note 4. In August 1997, the Company acquired substantially all of the assets of The Madison Radio Group, the owner and operator of six radio stations (four FM and two AM) in the Madison, Wisconsin market. The purchase price was approximately $41.1 million. In August 1997, the Company acquired substantially all of the assets of Emerald City Radio Partners, L.P. used or useful in the operation of radio station WNOK-FM. The purchase price of the acquisition was approximately $10.0 million. In August 1997, the Company acquired all of the capital stock of radio station KIOC-FM, in Beaumont, Texas. The purchase price was approximately $2.7 million. In September 1997, the Company sold all of the outstanding capital stock of Bryan Broadcasting Operating Company, Inc., an indirect wholly-owned subsidiary of the Company ("BBOC"). BBOC owns and operates three radio stations (two FM and one AM) in Bryan-College Station, Texas. The sales price was approximately $600,000. In September 1997, the Company acquired substantially all of the assets of WRIS, Inc., the owner and operator of an FM radio station in the Salem, Virginia market. The purchase price was approximately $3.1 million. 9 11 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In September 1997, the Company acquired substantially all of the assets of Booneville Broadcasting Company and Arklahoma Communications Company (collectively, "Booneville"), the owners and operators of an FM radio station in the Fort Smith, Arkansas market. The purchase price for Booneville was approximately $1.5 million. In September 1997, the Company sold substantially all of the assets of radio station WJBR-FM in Wilmington, Delaware. The sales price was approximately $40.0 million. For financial statement purposes, all of the acquisitions described above, except for the GulfStar Merger, were accounted for using the purchase method of accounting, with the purchase price allocated to the assets acquired (principally intangible assets) and the liabilities assumed based on their estimated fair values at the dates of acquisition. Certain of the recent transactions are based on preliminary estimates of the fair value of the net assets acquired and subject to final adjustment. The excess purchase price over the estimated fair value of the net assets acquired has been recorded as FCC licenses and goodwill. The assets and liabilities of these acquisitions and the results of their operations and cash flows for the period from the date of acquisition are included in the accompanying consolidated financial statements. Unaudited proforma results of the Company for the aforementioned acquisitions and dispositions which were completed during the nine months ended September 30, 1997, as if they were purchased or sold on January 1, 1996 are as follows:
NINE MONTHS ENDED ------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- ------------- (DOLLARS IN THOUSANDS) Net revenue................................................. $154,409 $145,581 ======== ======== Loss before extraordinary item.............................. $(26,466) $(39,868) ======== ======== Net loss before dividend and accretion on preferred stock... $(27,839) $(43,398) ======== ========
NOTE 4 -- PENDING ACQUISITIONS AND DISPOSITION (AS OF SEPTEMBER 30, 1997) In January 1997, the Company agreed to acquire substantially all of the assets of Commonwealth Broadcasting of Arizona, L.L.C. ("Commonwealth"). Commonwealth owns and operates three radio stations (two FM and one AM) in Yuma, Arizona. The purchase price will equal approximately $5.3 million payable in cash. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $262,500. The Company anticipates that the acquisition will be consummated in January 1998. In March 1997, the Company acquired an option to acquire substantially all of the assets of Noalmark Broadcasting Corporation used or held for use in the operation of two radio stations (one FM and one AM) in Longview, Texas. The purchase price will equal approximately $2.4 million, payable in cash, of which $1.0 million was paid in cash by the Company on the date of the agreement and the Company has agreed to make payments at the closing under two noncompete agreements in an aggregate amount equal to $800,000. In most circumstances, the option payment is not refundable. The Company may exercise its option, in its sole discretion, on or before March 2000. The Company and Noalmark entered into an LMA in connection with the two stations, pursuant to which the Company provides certain sales, programming and marketing services for the stations. In June 1997, the Company agreed to acquire substantially all of the assets of Quass Broadcasting Company ("Quass"). Quass owns and operates three radio stations (two FM and one AM). The purchase price will equal approximately $14.9 million payable in cash. The Company has secured its 10 12 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $750,000. Subsequent to September 30, 1997, Quass has entered into an LMA, with a third party, in connection with the AM station referred to above. The Company anticipates that the acquisition will be consummated in January 1998. In June 1997, the Company entered into an agreement to acquire all of the outstanding preferred stock, common stock and common stock equivalents of Patterson Broadcasting, Inc. ("Patterson"). The purchase price will equal approximately $215.0 million payable in cash. The Company secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $10 million. Patterson owns and operates 39 radio stations (25 FM and 14 AM) in the Savannah, Georgia; Allentown and Harrisburg, Pennsylvania; Fresno, California; Honolulu, Hawaii; Battle Creek and Grand Rapids, Michigan; Reno, Nevada; Springfield, Illinois; and Pensacola, Florida markets. FCC approval is pending and the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has not yet terminated. The U.S. Department of Justice has raised an issue with the Company regarding the number of radio stations that the Company will own in the Allentown-Bethlehem, Pennsylvania area upon completion of the acquisition. In order to resolve this matter, the Company has agreed with the U.S. Department of Justice to dispose of two radio stations to be acquired from Patterson in the Allentown-Bethlehem, Pennsylvania area. The Company has already signed an agreement with Clear Channel Communications, Inc. to dispose of these stations. The Company anticipates that the acquisition will be consummated in February 1998. In June 1997, the Company agreed to acquire substantially all of the assets of Grant Radio Group, L.L.C. ("Grant"). Grant owns and operates one FM radio station in Tuscaloosa, Alabama. The purchase price will equal approximately $3.2 million payable in cash. The Company has secured its obligation to consummate the acquisition by placing into escrow cash in the amount of $160,000. The Company anticipates that the acquisition will be consummated in December 1997. In June 1997, the Company agreed to acquire substantially all of the assets of Knight Radio, Inc., Knight Communications Corporation and Knight Broadcasting of New Hampshire, Inc. (collectively, "Knight Quality"). Knight Quality owns and operates eight radio stations (five FM and three AM) in various markets including Portsmouth-Rochester and Manchester, New Hampshire, Burlington, Vermont and Worcester, Massachusetts. The purchase price will equal approximately $55 million payable in cash. The Company anticipates that the acquisition will be consummated in January 1998. In July 1997, the Company agreed to acquire substantially all the assets used or useful in the operation of radio station KEPG-FM in Victoria, Texas. The purchase price will equal approximately $32,500 payable in cash. There is pending litigation not involving the Company regarding the FCC license for this radio station which may affect the Company's ability to consummate the acquisition. The Company can not predict when this matter will be resolved. In August 1997, the Company agreed to acquire all of the assets of KOSO, Inc. used or held for use in the operation of radio station KOSO-FM, in Patterson, California. The purchase price will equal approximately $6.8 million. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $400,000. The Company expects the acquisition to be consummated in January 1998. In August 1997, the Company agreed to acquire all of the assets of KRNA, Inc. used or held for use in the operation of a radio station in Iowa City, Iowa. The purchase price will equal approximately $7.0 million. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $350,000. The Company expects the acquisition to be consummated in January 1998. 11 13 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In August 1997, the Company agreed to acquire all of the assets of KRNA, Inc. used or held for use in the operation of a radio station KXMX-FM, in Cedar Rapids, Iowa. The purchase price will equal approximately $3.1 million. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $155,000. The Company expects the acquisition to be consummated in January 1998. In September 1997, the Company agreed to acquire all of the assets of East Penn Broadcasting Company, Inc., a Delaware corporation, used or held for use in the operation of an AM radio station in Allentown, Pennsylvania. The purchase price will equal approximately $2.1 million, with approximately $1.0 million payable in cash at closing and approximately $1.0 million in an unsecured promissory note payable to seller. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $155,000. The Company currently provides certain sales and marketing services to this station pursuant to a Joint Sales Agreement. The Company expects the acquisition to be consummated in January 1998. In September 1997, the Company agreed to acquire all of the assets of McCarthy Wireless, Inc., a California corporation, used or held for use in the operation of radio stations KNCQ-FM in Redding, California, KEWB-FM in Anderson, California and KEGR-FM in Red Bluff, California. The purchase price will equal approximately $6.5 million payable in cash. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $325,000. The Company expects the acquisition to be consummated in January 1998. In October 1997, the Company acquired substantially all of the assets of Ameron Broadcasting, Inc., the owner and operator of three radio stations (two FM and one AM) in the Birmingham, Alabama market. The purchase price for the assets of Ameron was approximately $31.5 million in cash. In October 1997, the Company acquired substantially all of the assets of Griffith Broadcasting, Inc., the owner and operator of three FM radio stations in the Huntsville, Alabama market. The purchase price was approximately $5.4 million in cash. In October 1997, the Company acquired substantially all of the assets of American General Media of Texas, Inc., the owner and operator of one FM radio station in the Lubbock, Texas market. The purchase price was approximately $3.2 million in cash. In October 1997, the Company acquired substantially all of the assets of KLAW Broadcasting, Inc., the owner and operator of two FM radio stations in Lawton, Oklahoma market. The purchase price was approximately $2.2 million in cash. In October 1997, the Company acquired substantially all of the assets of KJEM-FM, the owner and operator of one FM radio station in the Fayetteville, Arkansas market. The purchase price was approximately $1.8 million in cash. In October 1997, the Company agreed to acquire all of the assets of Big Chief Broadcasting Co., an Arkansas corporation, used or held for use in the operation of radio stations KTCS-AM/FM in Ft. Smith, Arkansas. The purchase price will equal approximately $9.0 million payable in cash. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $450,000. The closing is to be held after the consent of the FCC to assign the broadcast license, and the Company expects the acquisition to be consummated in January 1998. In October 1997, the Company agreed to acquire all of the assets of Class Act of Texas, Inc., a Texas corporation, used or held for use in the operation of radio stations KTBQ-FM and KSFA-AM in Lufkin, Texas. The purchase price will equal approximately $700,000 payable in cash. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the 12 14 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) amount of $50,000. FCC approval is pending. The Company expects the acquisition to be consummated in January 1998. In October 1997, the Company entered into an agreement to sell substantially all of the assets of four stations (two FM and two AM) in the Jackson, Mississippi market to Clear Channel Radio, Inc. for approximately $20.0 million. In October 1997, the Company agreed to acquire all of the assets of radio station WMHS (FM) in the Montgomery, Alabama market from Joan Reynolds d/b/a Bradley Broadcasting Associates. Currently, the Company is operating WMHS (FM) under a LMA. The purchase price for WMHS (FM) is approximately $2.0 million. The Company expects the acquisition to be consummated in January 1998. In November 1997, the Company agreed to acquire substantially all of the assets of KETQ Radio, Inc. used or held for use in the operation of two radio stations (one FM and one AM) in the Texarkana, Texas/Arkansas market. The purchase price will equal approximately $640,000. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $30,000. The Company and KETQ Radio, Inc. expect to file an application with the FCC for approval to transfer control of such radio stations to the Company in November 1997. The Company expects the acquisition to be consummated in the first quarter of 1998. In November 1997, the Company agreed to acquire substantially all of the assets of Americom II used or held for use in the operation of three radio stations (two FM and one AM) in the Fresno, California market. The purchase price will approximate $21.0 million. The Company has secured its obligation to consummate the acquisition by placing into escrow a letter of credit in the amount of $1.05 million. The Company and Americom II expect to file an application with the FCC for approval to transfer control of such radio stations to the Company in November 1997. The Company expects the acquisition to be consummated in the first quarter of 1998. In November 1997, the Company agreed to exchange substantially all of the assets used or useful in the Company's operation of three radio stations (two FM and one AM) in the Reno, Nevada market for substantially all of the assets used in Americom Las Vegas Limited Partnership's operation of a FM radio station in the Fresno, California market. The three stations to be exchanged by the Company will be acquired from Patterson Broadcasting, Inc. in February 1998. The Company has secured its obligation to consummate the exchange by placing into escrow a letter of credit in the amount of $300,000. The Company and Americom Las Vegas Limited Partnership expect to file an application with the FCC for approval to transfer control of the radio stations in November 1997. The Company expects the exchange to be consummated in the first quarter of 1998. The agreement with Americom II and the agreement with Americom Las Vegas Limited Partnership are conditioned upon the simultaneous consummation of the other agreement. In November 1997, the Company sold substantially all of the assets of radio station KASH-AM in Anchorage, Alaska to Chinook Concert Broadcasting, Inc. The selling price was approximately $135,000 in cash. In November 1997, the Company acquired substantially all of the assets of COMCO Broadcasting, Inc. ("COMCO"), the owner and operator of six radio stations (four FM and two AM) in the Anchorage and Fairbanks, Alaska markets. The purchase price was approximately $6.7 million in cash. As part of the Company's ongoing acquisition strategy, the Company is continually evaluating certain other potential acquisition opportunities. As of November 13, 1997, the Company has entered into 11 separate nonbinding letters of intent to acquire and/or exchange substantially all of the assets of the respective potential sellers used or useful in the operations of each seller's radio stations, each of 13 15 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) which is subject to various conditions, including the ability of the Company to enter into a definitive agreement to acquire such assets. No assurances can be given that definitive agreements will be entered into to acquire such assets or that such acquisitions will be consummated. NOTE 5 -- LONG TERM DEBT On February 20, 1997, in connection with the acquisition of Osborn, the Company issued $277.0 million in aggregate principal amount at maturity of its 12 3/4% Senior Discount Notes due 2009. The Capstar Notes were issued at a substantial discount from their aggregate principal amount at maturity under an Indenture dated as of February 20, 1997 (the "Indenture"), between the Company and U.S. Trust Company of Texas, N.A., as trustee, generating gross proceeds to the Company of approximately $150.3 million. On September 12, 1997, the Company exchanged its 12 3/4% Senior Discount Notes due 2009 (the "Capstar Notes"), which were registered under the Securities Act of 1933 (the "Securities Act"), for all of the outstanding 12 3/4% Senior Discount Notes due 2009 previously issued on February 20, 1997. The terms of the Capstar Notes are identical in all material respects to the discount notes issued on February 20, 1997, except that the Capstar Notes do not bear restrictive legends restricting the transfer thereof. The Capstar Notes are general unsecured senior obligations of the Company, which will mature on February 1, 2009. No interest will accrue on the Capstar Notes prior to February 1, 2002. Thereafter, interest on the Capstar Notes will accrue at an annual rate of 12 3/4% and will be payable semi-annually in cash on February 1 and August 1 each year, commencing on August 1, 2002 to holders of record on the immediately preceding January 15 and July 15. The Capstar Notes are redeemable at the option of the Company, in whole or in part, at any time and from time to time on or after February 1, 2002 at the redemption prices set forth in the Indenture, plus, without duplication, accrued and unpaid interest to the redemption date. In addition, prior to February 1, 2001, the Company, at its option, may use the net cash proceeds of one or more Public Equity Offerings (as defined in the Indenture) or Major Asset Sales (as defined in the Indenture) to redeem up to 25% of the aggregate principal amount at maturity of the Capstar Notes at a redemption price of 112.75%; provided, however, that after any such redemption, there is outstanding at least 75% of the original aggregate principal amount at maturity of the Capstar Notes. On June 17, 1997, Capstar Radio issued (the "Capstar Radio Notes Offering") $200.0 million in aggregate principal amount of its 9 1/4% Senior Subordinated Notes due 2007. The proceeds from the issuance of such subordinated notes were used to finance acquisitions by the Company during the quarter ended September 30, 1997. On September 16, 1997, the Company exchanged its 9 1/4% Senior Subordinated Notes due 2007 (the "1997 Notes"), which were registered under the Securities Act, for all of the outstanding 9 1/4% Senior Subordinated Notes due 2007 previously issued on June 17, 1997. The terms of the 1997 Notes are identical in all material respects to the subordinated notes issued on June 17, 1997, except that the 1997 Notes do not bear restrictive legends restricting the transfer thereof. The 1997 Notes, which mature on July 1, 2007, are general unsecured obligations of Capstar Radio and rank pari passu in right of payment to Capstar Radio's 13 1/4% Senior Subordinated Notes due 2003 (the "1995 Notes"). Interest on the 1997 Notes is payable semi-annually on January 1 and July 1 of each year, commencing on January 1, 1998. The 1997 Notes are redeemable at the option of Capstar Radio, in whole or in part, on or after July 1, 2002, at the redemption prices set forth in the indenture governing the 1997 Notes, plus accrued and unpaid interest to the date of redemption. In addition, prior to July 1, 2001, Capstar Radio may, at its option, redeem up to 25% of the aggregate principal amount of the 1997 Notes originally issued with the net cash proceeds of one or more Public Equity Offerings or Major Asset Sales (both as defined in the indenture governing the 1997 Notes), at the redemption prices set forth in the indenture; provided, however, that after any such redemption there is outstanding at least 75% of the aggregate principal amount of the 1997 Notes originally issued. 14 16 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On February 20, 1997, the Company and Capstar Radio, as borrower, entered into a credit facility (the "Former Credit Facility") with various banks and Bankers Trust Company, as administrative agent, which consisted of a $50.0 million revolving loan facility. On August 12, 1997, the Company amended and restated the Former Credit Facility (the "Credit Facility"). The Credit Facility consists of a $200.0 million revolving loan facility, and an additional $150 million of multiple advancing term loans subject to future commitment availability from the banks party to the Credit Facility. $75.0 million of the revolving loan facility is available to Capstar Radio for the issuance of letters of credit. Indebtedness under the Credit Facility is collateralized by the grant of a first priority perfected pledge of Capstar Radio's assets, including, without limitation, the capital stock of its subsidiaries. The Company, Capstar Broadcasting and all of the direct and indirect subsidiaries of the Company (other than Capstar Radio) have guaranteed the Credit Facility, which guarantees have been collateralized by grants of a first priority perfected pledge of substantially all of their assets, including Capstar Broadcasting's pledge of capital stock of the Company and the Company's pledge of the capital stock of Capstar Radio. Borrowings under the Credit Facility bear interest at floating rates and require interest payments on varying dates depending on the interest rate option selected by Capstar Radio. All loans outstanding under the Credit Facility will mature in 2004. As of November 12, 1997, a principal balance of $72.2 million (excluding $19.9 million of outstanding letters of credit) was outstanding under the Credit Facility and approximately $106.7 million would have been available for borrowing thereunder. NOTE 6 -- STOCKHOLDER'S EQUITY On February 20, 1997, the Company issued 31,634,527 shares of Class A Common Stock, par value $0.1 per share ("Class A Common Stock"), of the Company and 18,181,818 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"), of the Company to affiliates of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse") at a purchase price of $1.10 per share. The proceeds were used in part to fund the acquisition of Osborn and to retire existing indebtedness of Capstar Radio and Osborn. In addition, on February 20, 1997, the Company exchanged 1,636,361 shares of Class A Common Stock having a deemed value of $1.8 million for shares of common stock of Osborn as part of the purchase price of the acquisition of Osborn and contributed its interest in Osborn to Capstar Radio. Additionally, the Company issued 1,327,272 shares of Class A Common Stock to related parties in exchange for cash and receivables totaling $1.4 million. The Company issued 2,727,272 and 909,091 shares of Class A Common Stock at a purchase price of $1.10 per share in April and June 1997, respectively. The proceeds of the sales of common stock of the Company are to be used in future acquisitions and for general corporate purposes. On June 17, 1997, the Company issued (the "Preferred Stock Offering") 1,000,000 shares of its 12% Senior Exchangeable Preferred Stock. All of the proceeds from the Preferred Stock Offering were used to finance the GulfStar Merger. On September 12, 1997, the Company exchanged its 12% Senior Exchangeable Preferred Stock (the "Senior Exchangeable Preferred Stock"), which was registered under the Securities Act, for all of the outstanding 12% Senior Exchangeable Preferred Stock previously issued on June 17, 1997. The terms of the Senior Exchangeable Preferred Stock are identical in all material respects to the preferred stock issued on June 17, 1997, except that the Senior Exchangeable Preferred Stock does not bear restrictive legends restricting the transfer of such stock. Dividends on the Senior Exchangeable Preferred Stock accumulate from the date of issuance and are payable semi-annually, commencing January 1, 1998, at a rate per annum of 12% of the liquidation preference per share. Dividends may be paid, at the Company's option, on any dividend payment date occurring on or prior to July 1, 2002 either in cash or in additional shares of the Senior Exchangeable Preferred Stock. The liquidation preference of the Senior Exchangeable Preferred Stock is $100.00 per share. The Senior Exchangeable Preferred Stock is redeemable at the Company's option, in whole or in 15 17 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) part at any time on or after July 1, 2002, at the redemption prices set forth in the Certificate of Designation governing the Senior Exchangeable Preferred Stock, plus, without duplication, accumulated and unpaid dividends to the date of redemption. In addition, subject to certain exceptions, prior to July 1, 2001, the Company may, at its option, redeem the Senior Exchangeable Preferred Stock with the net cash proceeds from one or more Public Equity or Major Asset Sales (both as defined in the Certificate of Designation governing the Senior Exchangeable Preferred Stock), at the redemption prices set forth in the Certificate of Designation, plus, without duplication, accumulated and unpaid dividends to the redemption date. Effective June 20, 1997, Capstar Broadcasting acquired all of the issued and outstanding common stock of the Company in exchange for common stock of Capstar Broadcasting. In July 1997, the Company received payments on receivables from stockholders of approximately $405,000. In recording the July 1997 GulfStar acquisition (see "Item 1. Financial Statements -- Note 4"), the Company recorded $6.1 million in compensation expense and $5.4 million relating to the premium paid for the redemption of GulfStar's preferred stock. In September 1997, the Company declared and paid to Capstar Broadcasting cash dividends totaling approximately $12.4 million relating to the proceeds from the disposition of four stations in the Wilmington, Delaware and Bryan, Texas markets. NOTE 7 -- DIRECT PROGRAMMED MUSIC AND ENTERTAINMENT The Company, through Southern Star distributes programmed music (primarily MUZAK) in certain markets in the southeast. Revenue and costs associated with the distribution of the programmed music are included in gross broadcast revenue and direct programmed music and entertainment, respectively, in the 1997 consolidated statement of operations from the date of the acquisition in February 1997. NOTE 8 -- EXTRAORDINARY ITEM On February 20, 1997, in connection with the financing of the acquisition of Osborn, the Company repaid its outstanding loan balance (including principal and interest) under the senior credit facility (the "AT&T Credit Facility") of Capstar Radio with AT&T Commercial Finance Corporation and recognized an extraordinary loss of approximately $598,000 as a result of a prepayment penalty. In July 1997 and in connection with the GulfStar merger, the Company recorded a loss on repurchase of GulfStar's preferred stock of approximately $5.4 million and an extraordinary loss on early extinguishment of certain GulfStar debt of approximately $2.3 million. 16 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion of the consolidated financial condition and results of operations of the Company should be read in conjunction with the consolidated financial statements and related notes thereto. All consolidated financial data and footnote information of the Company, including the Company's previously issued consolidated financial statements for the periods discussed herein have been restated to include the historical financial information of GulfStar. The following discussion contains certain forward-looking statements that reflect the Company's current views with respect to future events and financial performance and involve risks and uncertainties. The words "anticipate," "believe," "expect," "plan," "intend," "estimate," "project," "will," "could," "may" and similar expressions are intended to identify forward looking statements. The Company's actual results could differ materially and adversely from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to leverage, the need for additional funds, consummation of the pending acquisitions, integration of the recently completed acquisitions, the ability of the Company to achieve certain cost savings, the ability of the Company to compete effectively, the management of growth, the introduction of new technology, changes in the regulatory environment, the popularity of radio as a broadcasting and advertising medium and changing consumer tastes. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. THE COMPANY As of September 30, 1997, the Company currently owns and operates, provides programming to or sells advertising on behalf of 165 radio stations located in 43 markets. This represents growth from June 3, 1997 of 95 radio stations and 25 markets. Following completion of the pending acquisitions and the pending dispositions, the Company will own and operate, provide programming to or sell advertising on behalf of 245 radio stations located in 61 markets. The performance of a radio station group, such as the Company, is customarily measured by its ability to generate Broadcast Cash Flow. "Broadcast Cash Flow" is defined as operating income before corporate expenses, non-cash stock option compensation expense and depreciation and amortization. Although Broadcast Cash Flow is not a measure of performance calculated in accordance with generally accepted accounting principles ("GAAP"), the Company believes that Broadcast Cash Flow is accepted by the broadcasting industry as a generally recognized measure of performance and is used by analysts who report publicly on the performance of broadcasting companies. Nevertheless, this measure should not be considered in isolation or as a substitute for operating income, net income, net cash provided by operating activities or any other measure for determining the Company's operating performance or liquidity which is calculated in accordance with GAAP. The primary source of the Company's revenue is the sale of advertising time on its radio stations. The Company's most significant station operating expenses are employee salaries and commissions, programming expenses and advertising and promotional expenditures. The Company strives to control these expenses by working closely with local station management. The Company's revenues are primarily affected by the advertising rates its radio stations can obtain in the face of competition from radio and other media. The Company's advertising rates are in large part based on a station's ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by Arbitron (an independent rating service) on a quarterly basis. Because audience ratings in local markets are crucial to a station's financial success, the Company endeavors to develop strong listener loyalty. The Company believes that the diversification of formats on its stations helps to insulate it from the effects of changes in the musical tastes of the public in any particular format. The number of advertisements that can be broadcast without jeopardizing listening levels (and the resulting ratings) is limited in part by the format of a particular station. The Company's 17 19 stations strive to maximize revenue by constantly managing the number of commercials available for sale and adjusting prices based upon local competitive conditions. In the broadcasting industry, radio stations often utilize trade (or barter) agreements which exchange advertising time for goods or services (such as travel or lodging), instead of for cash. The Company seeks to minimize its use of such agreements. The Company's advertising contracts are generally short-term. Advertising revenue is either from local advertising or national advertising. To generate national advertising sales, the Company engages independent advertising sales representatives that specialize in national sales for each of its stations. The radio broadcasting industry is highly competitive and the Company's stations are located in highly competitive markets. The financial results of each of the Company's stations are dependent to a significant degree upon its audience ratings and its share of the overall advertising revenue within the station's geographic market. Each of the Company's stations competes for audience share and advertising revenue directly with over FM and AM radio stations, as well as with other media, including newspapers and television, within their respective markets. The Company's audience ratings and market share are subject to change, and any adverse change in audience rating and market share in any particular market could have a material and adverse effect on the Company's net revenues. Although the Company competes with other radio stations with comparable programming formats in most of its markets, if another station in the market were to convert its programming format to a format similar to one of the Company's radio stations, if a new radio station were to adopt a competitive format, or if an existing competitor were to strengthen its operations, the Company's stations could suffer a reduction in ratings or advertising revenue and could require increased promotional and other expenses. In addition, certain of the Company's stations compete, and in the future other stations may compete, with groups of stations in a market operated by a single operator. As a result of the Telecommunication Act of 1996 (the "Telecom Act") the radio broadcasting industry has become increasingly consolidated, resulting in the existence of radio broadcasting companies which are significantly larger, with greater financial resources, than the Company. Furthermore, the Telecom Act will permit other radio broadcasting companies to enter the markets in which the Company operates or may operate in the future. Although the Company believes that each of its stations is able to compete effectively in its market, there can be no assurance that any of the Company's stations will be able to maintain or increase current audience ratings and advertising revenue market share. The Company's stations also compete with other advertising media such as newspapers, television, magazines, billboard advertising, transit advertising and direct mail advertising. Radio broadcasting is also subject to competition from new media technologies that are being developed or introduced, such as the delivery of audio programming by cable television systems or the introduction of digital audio broadcasting. The Company cannot predict the effect, if any, which these technologies may have on the radio broadcasting industry. The Company's revenues vary throughout the year. As is typical in the radio broadcasting industry, the Company's first calendar quarter generally produces the lowest revenues for the year, and the fourth calendar quarter generally produces the highest revenues for the year. The Company's radio operating results in any period may be affected by the incurrence of advertising and promotion expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods. The Company anticipates that the second and third quarters will reflect the highest revenues from the Company's concert promotion activities. Because the Company has incurred substantial indebtedness for its acquisitions for which it has significant debt service requirements, and because the Company has significant charges for stock option compensation, dividends and accretion on preferred stock and depreciation and amortization expense related to the fixed assets and intangibles acquired in its acquisitions, the Company expects that it will report net losses attributable to common stock for the foreseeable future, which losses may be greater than those historically experienced by the Company. 18 20 RESULTS OF OPERATIONS The Company's consolidated financial statements tend not to be directly comparable from period to period due to acquisition and disposition activity. The major acquisitions in 1997, all of which have been accounted for using the purchase method of accounting, except for the GulfStar Merger, and major dispositions were as follows: In January 1997, the Company acquired substantially all of the assets of Triple Communications of CC, Inc., the owner of radio station KNCN-FM in Corpus Christi, Texas. The purchase price was approximately $3.0 million in cash. In February 1997, the Company acquired substantially all of the assets of South Plain Broadcasting Company, Inc., the owner of radio stations KZII(FM) and KFYO(AM) in Lubbock, Texas. The purchase price was approximately $3.0 million in cash. In February 1997, the Company acquired substantially all of the assets of J.Thomas Development of N.M., Inc., et. al., owners of radio stations KTRA-FM and KDAG-FM in Farmington, New Mexico, KCQL-AM in Aztec, New Mexico and KKFG-FM, Bloomfield, New Mexico. The purchase price was approximately $3.0 million in cash and $2.0 million in the form of a note. In February 1997, the Company acquired Osborn Communications Corporation ("Osborn"), subsequently renamed Southern Star Communications, Inc. ("Southern Star"). Osborn owned and operated or provided services to 18 stations (12 FM and 6 AM). The purchase price of the acquisition was $118.8 million payable in cash totaling $117 million and 1,636,361 shares of common stock (having a deemed value of $1.10 per share). In April 1997, the Company acquired substantially all of the assets Taylor Communications Corporation's two radio stations (one FM and one AM) in the Tuscaloosa, Alabama market. The stations were managed by Osborn pursuant to a local marketing agreement ("LMA") since December 1996. The purchase price of the acquisition was approximately $1.0 million. In April 1997, the Company acquired substantially all of the assets of City Broadcasting Co., Inc. (the "City Acquisition"), the owner and operator of two radio stations (one FM and one AM), for approximately $3.0 million, EZY Com, Inc., (the "EZY Acquisition"), the owner and operator of two radio stations (one FM and one AM) for approximately $5.0 million and Roper Broadcasting, Inc. (the "Roper Acquisition"), the owner and operator of one FM station for approximately $4.0 million (the City Acquisition, EZY Acquisition and the Roper Acquisition are collectively referred to as the "Space Coast Acquisitions"). The radio stations acquired in the Space Coast Acquisitions serve the Melbourne-Titusville-Cocoa, Florida Market. In April 1997, the Company sold substantially all of the assets of three radio stations (two FM and one AM) in the Ft. Myers, Florida market. The sale price was approximately $11.0 million. In May 1997, the Company acquired all of the outstanding capital stock of Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners and operators of three radio stations (one FM and two AM) in the Huntsville, Alabama market. The purchase price of the acquisition was approximately $24.5 million. In May 1997, the Company acquired substantially all of the assets of Fort Smith FM, Inc., the owner and operator of two radio stations (one FM and one AM) in Fort Smith, Arkansas. The purchase price was approximately $3.3 million. In May 1997, the Company acquired substantially all of the assets of Texarkana Broadcasting, Inc., the owners and operators of two FM radio stations in Texarkana, Texas. The purchase price was approximately $4.0 million. In June 1997, Capstar Broadcasting executed an agreement with GulfStar whereby in July 1997, Capstar Broadcasting acquired GulfStar through a merger (the "GulfStar Merger") pursuant to which each share of GulfStar's outstanding preferred and common stock was converted into the right to receive shares of common stock of Capstar Broadcasting having a deemed value of approximately 19 21 $113.0 million, subject to a conversion ratio calculated based on the relative value of Capstar Broadcasting and GulfStar, principally determined by utilizing projected broadcast cash flows for the year ending December 31, 1998. The Company also repaid approximately $119.5 million of GulfStar's indebtedness, which was funded with the proceeds of the Preferred Stock Offering (as hereinafter defined), the Hicks Muse GulfStar Equity Investment (as hereinafter defined) and the Capstar BT Equity Investment (as hereinafter defined). Subsequently, Capstar Broadcasting contributed the surviving entity in the GulfStar Merger through the Company to Capstar Radio (collectively with the GulfStar Merger, the "GulfStar Transaction"). In July 1997, the Company acquired substantially all of the assets of Community Pacific Broadcasting Company L.P. ("Community Pacific"), the owner and operator of 11 radio stations (six FM and five AM) in four markets located in the Western United States and Iowa, including Anchorage, Alaska, Modesto and Stockton, California, and Des Moines, Iowa. The purchase price was approximately $35.0 million. In July 1997, the Company acquired substantially all of the assets of Cavalier Communications L.P., the owner and operator of five radio stations (four FM and one AM) in the Roanoke/Lynchburg, Virginia market. The purchase price was approximately $8.3 million. In August 1997, the Company acquired substantially all of the assets of McForhun, Inc. and Livingston, Inc., the owners and operators of two radio stations (one FM and one AM) in the Baton Rouge, Louisiana market. The purchase price was approximately $7.4 million. In August 1997, Benchmark Communications Radio Limited Partnership, L.P. ("Benchmark") became an indirect wholly-owned subsidiary of the Company through a series of mergers and stock purchases (the "Benchmark Acquisition"). Benchmark owns and operates 31 radio stations (21 AM and 10 AM) in 10 markets in the Southeastern United States, including Dover, Delaware, Salibury-Ocean City, Maryland, Montgomery, Alabama, Shreveport, Louisiana, Jackson, Mississippi, Statesville, North Carolina, Columbia, South Carolina, Greenville, South Carolina, Roanoke-Lynchburg, Virginia and Westchester, Virginia markets. The purchase price was approximately $189.7 million. Due to FCC ownership limits, the four stations acquired in the Jackson, Mississippi market were sold in October 1997. See "Item 1. Financial Statements -- Note 4." In August 1997, the Company acquired substantially all of the assets of The Madison Radio Group, the owner and operator of six radio stations (four FM and two AM) in the Madison, Wisconsin market. The purchase price was approximately $41.1 million. In August 1997, the Company acquired substantially all of the assets of Emerald City Radio Partners, L.P. used or useful in the operation of radio station WNOK-FM. The purchase price of the acquisition was approximately $10.0 million. In August 1997, the Company acquired all of the capital stock of radio station KIOC-FM, in Beaumont, Texas. The purchase price was approximately $2.7 million. In September 1997, the Company sold all of the outstanding capital stock of Bryan Broadcasting Operating Company, Inc., an indirect wholly-owned subsidiary of the Company ("BBOC"). BBOC owns and operates three radio stations (two FM and one AM) in Bryan-College Station, Texas. The sales price was approximately $600,000. In September 1997, the Company acquired substantially all of the assets of WRIS, Inc., the owner and operator of an FM radio station in the Salem, Virginia market. The purchase price was approximately $3.1 million. In September 1997, the Company acquired substantially all of the assets of Booneville Broadcasting Company and Arklahoma Communications Company (collectively, "Booneville"), the owners and operators of an FM radio station in the Fort Smith, Arkansas market. The purchase price for Booneville was approximately $1.5 million. 20 22 In September 1997, the Company sold substantially all of the assets of radio station WJBR-FM in Wilmington, Virginia. The sales price was approximately $40.0 million. The following table sets forth certain consolidated summary data of the Company for the three months ended September 30, 1997 and 1996:
PREDECESSOR ------------- FOR THE THREE MONTHS ENDED ------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- ------------- OPERATING DATA: Net broadcast revenue................................... $ 51,250,341 $19,938,227 Station operating expenses.............................. 34,612,353 13,548,641 Corporate expenses...................................... 4,274,920 1,687,055 Corporate expenses: non-cash stock option compensation......................................... 4,127,420 -- Depreciation and amortization........................... 7,648,450 1,514,765 Operating income........................................ 587,198 3,187,766 Interest expense........................................ 12,660,510 4,409,586 Net loss attributable to common stock................ $(22,005,662) $(2,833,962) OTHER DATA: Broadcast cash flow(1).................................. $ 16,637,988 $ 6,389,586 Broadcast cash flow margin.............................. 32.5% 32.0% EBITDA(2)............................................... $ 8,235,648 $ 4,702,531
- --------------- (1) Broadcast cash flow consists of operating income before corporate expenses, non-cash stock option compensation expense and depreciation and amortization. (2) EBITDA consists of operating income before depreciation and amortization. Three Months Ended September 30, 1997 Compared to Three Months Ended September 30, 1996 Net Broadcast Revenue. Net broadcast revenue increased $31.3 million or 157.0% to $51.2 million for the three months ended September 30, 1997 from $20.0 million for the three months ended September 30, 1996. Net broadcast revenue increases are a result of the continuing acquisitions of the Company through September 30, 1997. Net revenue included from the operations purchased in connection with the Osborn Acquisition for the period July 1, 1997 through September 30, 1997 comprised $12.6 million of the increase. Station Operating Expenses. Station operating expenses increased $21.1 million or 155.5% to $34.6 million for the three months ended September 30, 1997 from $13.5 million for the three months ended September 30, 1996. The increase is primarily attributable to additional operating expenses of the operations purchased in connection with the Osborn Acquisition of $8.8 million. Broadcast Cash Flow. As a result of the factors described above, broadcast cash flow increased approximately $10.2 million or 160.4% to $16.6 million for the three months ended September 30, 1997 from $6.4 million for the three months ended September 30, 1996. The broadcast cash flow margin was 32.5% for the three months ended September 30, 1997 compared to 32.0% for the three months ended September 30, 1996. Corporate Expenses. Corporate expenses, including non-cash stock compensation, increased approximately $6.7 million or 398.0% to approximately $8.4 million for the three months ended September 30, 1997 from approximately $1.7 million for the three months ended September 30, 1996. This increase was primarily due to the corporate offices of the Company which opened in October 1996 and the additional corporate expense associated with the Osborn and other radio station operations. During the three months ended September 30, 1997 the Company developed an estimate of the fair value of certain outstanding stock options. Based upon this estimate and the applicable vesting 21 23 periods, the Company recognized approximately $4.1 million of non-cash stock option compensation expense. EBITDA. As a result of the factors described above, EBITDA increased approximately $3.5 million or 75.1% to $8.2 million for the three months ended September 30, 1997 from $4.7 million for the three months ended September 30, 1996. The EBITDA margin for the three months ended September 30, 1997 was 16.1% compared to 23.6% for the three months ended September 30, 1996. Other Operating Expenses. Depreciation and amortization increased $6.1 million to $7.6 million for the three months ended September 30, 1997 from approximately $1.5 million for the three months ended September 30, 1996 primarily due to the various acquisitions consummated during 1996 and 1997. Operating Income. As a result of the factors described above, the Company's results for the three months ended September 30, 1997 reflected an operating income of approximately $600,000 compared to $3.1 million for the three months ended September 30, 1996. Interest Expense. Interest expense increased approximately $8.3 million or 187.1% to $12.7 million for the three months ended September 30, 1997 from $4.4 million for the three months ended September 30, 1996. The increase is primarily attributable to additional borrowings under the Company's credit facility to fund the Company's acquisitions. Net Loss Attributable to Common Stock. As a result of the factors described above, net loss attributable to common stock increased approximately $19.2 million to $22.0 million for the three months ended September 30, 1997 from $2.8 million for the three months ended September 30, 1996. The following table sets forth certain consolidated summary data of the Company for the nine months ended September 30, 1997 and 1996:
PREDECESSOR ------------- FOR THE NINE MONTHS ENDED ------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- ------------- OPERATING DATA: Net broadcast revenue..................................... $116,406,412 $50,685,896 Station operating expenses................................ 78,761,025 34,887,351 Corporate expenses........................................ 9,092,831 2,720,066 Corporate expenses: non-cash stock option compensation.... 8,247,140 -- Depreciation and amortization............................. 16,526,286 3,890,126 Operating income.......................................... 3,779,130 9,188,353 Interest expense.......................................... 32,500,695 12,032,544 Net loss attributable to common stock.................. $(35,801,072) $(6,035,944) OTHER DATA: Broadcast cash flow(1).................................... $ 37,645,387 $15,798,545 Broadcast cash flow margin................................ 32.3% 31.2% EBITDA(2)................................................. $ 20,305,416 $13,078,479
- --------------- (1) Broadcast cash flow consists of operating income before corporate expenses, non-cash stock option compensation expense and depreciation and amortization. (2) EBITDA consists of operating income before depreciation and amortization. 22 24 Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30, 1996 Net Broadcast Revenue. Net broadcast revenue increased $65.7 million or 129.7% to $116 million for the nine months ended September 30, 1997 from $50.7 million for the nine months ended September 30, 1996. Net broadcast revenue included from the operations purchased in connection with the Osborn Acquisition for the period February 21, 1997 through September 30, 1997 comprised $27.4 million of the increase. Station Operating Expenses. Station operating expenses increased $43.9 million or 125.9% to $79.0 million for the nine months ended September 30, 1997 from $34.9 million for the nine months ended September 30, 1996. The increase is primarily attributable to (i) additional operating expenses of the operations purchased in connection with the acquisition of Osborn of $19.7 million, and (ii) station operating expenses of the radio station acquisitions and the JSAs and LMAs which contributed $5.1 million of the increase. Broadcast Cash Flow. As a result of the factors described above, broadcast cash flow increased approximately $21.8 million or 138.3% to $37.6 million for the nine months ended September 30, 1997 from $15.8 million for the nine months ended September 30, 1996. The broadcast cash flow margin was 32.3% for the nine months ended September 30, 1997 compared to 31.2% for the nine months ended September 30, 1996. The broadcast cash flow provided from the acquisition of Osborn accounted for approximately $7.7 million of the increase; the broadcast cash flow margin from these operations was 28.1%. The inclusion of broadcast cash flows from the remaining acquisitions and LMAs accounts for approximately $2.3 million of the increase. Corporate Expenses. Corporate expenses, including non-cash stock compensation, increased approximately $13.0 million or 476.5% to approximately $17.3 million for the nine months ended September 30, 1997 from approximately $2.7 million for the nine months ended September 30, 1996. This increase was primarily due to the corporate offices of the Company which opened in October 1996 and the additional corporate expense associated with the Osborn and other radio station operations. During the nine months ended September 30, 1997, the Company developed an estimate of the fair value of certain outstanding stock options. Based upon this estimate and the applicable vesting periods, the Company recognized approximately $8.2 million of non-cash stock option compensation expense. EBITDA. As a result of the factors described above, EBITDA increased approximately $7.2 million or 55.3% to $20.3 million for the nine months ended September 30, 1997 from $13.1 million for the nine months ended September 30, 1996. The EBITDA margin for the nine months ended September 30, 1997 was 17.4% compared to 25.8% for the nine months ended September 30, 1996. Other Operating Expenses. Depreciation and amortization increased $12.6 million to $16.5 million for the nine months ended September 30, 1997 from approximately $3.9 million for the nine months ended September 30, 1996 primarily due to the various acquisitions consummated during 1996 and 1997. Operating Income. As a result of the factors described above, the Company's results for the nine months ended September 30, 1997 reflected an operating income of $3.8 million compared to $9.2 million for the nine months ended September 30, 1996. Interest Expense. Interest expense increased approximately $20.5 million or 170.1% to $32.5 million for the nine months ended September 30, 1997 from $12.0 million for the nine months ended September 30, 1996. The increase is primarily attributable to additional borrowings under the Company's credit facility to fund the Company's acquisitions. Net Loss Attributable to Common Stock. As a result of the factors described above, net loss attributable to common stock increased approximately $29.8 million to $35.8 million for the nine months ended September 30, 1997 from $6.0 million for the nine months ended September 30, 1996. 23 25 LIQUIDITY AND CAPITAL RESOURCES Pursuit of the Company's acquisition strategy has required a significant portion of the Company's capital resources. See "Item 1. Financial Statements -- Notes 3 and 4." As a result of the financing of its acquisitions, the Company has a substantial amount of long-term indebtedness, and for the foreseeable future, the Company will use a large percentage of its cash to make payments under the Credit Facility, the Capstar Notes, the 1995 Notes and the 1997 Notes. In October 1996, the Company assumed the 1995 Notes in connection with the acquisition of Capstar Radio. The 1995 Notes are limited in aggregate principal amount to $76.8 million and bear interest at a rate of 13 1/4% per annum, of which only 7 1/2% is payable in cash up to May 1, 1998. Beginning on May 1, 1998, the 1995 Notes will bear cash interest at a rate of 13 1/4% per annum until maturity. The 1995 Notes require semi-annual cash interest payments on each May 1 and November 1 of $2.9 million through May 1, 1998, and $5.2 million from November 1, 1998, until maturity. On February 20, 1997, the Company issued the Capstar Notes at a substantial discount to their aggregate principal amount at maturity of $277.0 million. The Capstar Notes generated gross proceeds of approximately $150.3 million and pay no cash interest until August 1, 2002. Accordingly, the carrying value will increase through accretion until August 1, 2002. Thereafter, interest will be payable semi-annually, in cash, on February 1 and August 1 of each year. On June 17, 1997, Capstar Radio issued the 1997 Notes. Interest on the 1997 Notes is payable semi-annually on January 1 and July 1 of each year, commencing on January 1, 1998, at a rate of 9 1/4% per annum. The 1997 Notes mature on July 1, 2007. The Company entered into the Credit Facility in August 1997, which provides for, among other things, borrowings of up to $200.0 million under a revolving credit facility. Borrowings under the Credit Facility bear interest at floating rates and require interest payments on varying dates depending on the interest rate option selected by Capstar Radio. As of November 12, 1997, a principal balance of $72.2 million (excluding $19.9 million of outstanding letters of credit) was outstanding under the Credit Facility and approximately $106.7 million would have been available for borrowing thereunder. In addition to debt service, the Company's principal liquidity requirements will be for working capital and general corporate purposes, including capital expenditures, which are not expected to be material in amount, and to consummate its pending acquisitions and, as appropriate opportunities arise, to acquire additional radio stations. The Company intends to fund the aggregate purchase price for its pending acquisitions with borrowings under the Credit Facility and a combination of indebtedness of Capstar Broadcasting, Capstar Radio and/or the Company and/or capital stock of Capstar Broadcasting or its subsidiaries. The Company anticipates that it will fund the pending acquisitions with indebtedness, rather than capital stock, to the fullest extent then permitted under the debt incurrence covenants contained in the indentures governing the Capstar Notes, the 1995 Notes, the 1997 Notes and the Company's 12% Subordinated Exchange Debentures due 2009, the Certificate of Designation governing the Senior Exchangeable Preferred Stock and the Credit Facility. The Company has not determined the terms of any such indebtedness or capital stock. The Company's ability to make such borrowings and issue such indebtedness and capital stock will depend upon many factors, including, but not limited to, the Company's success in operating and integrating its radio stations and the condition of the capital markets at the times of consummation of its pending acquisitions. No assurances can be given that such financings can be consummated on terms considered to be favorable by management or at all. Management believes that the proceeds from the commitment by Hicks, Muse, Tate & Furst Equity Fund III, L.P. ("HM Fund III") and its affiliates to invest an additional $50.0 million in equity of Capstar Broadcasting (for which Capstar Broadcasting has committed to issue capital stock in exchange therefor) and cash from operating activities, together with available revolving credit borrowings under the Credit Facility, should be sufficient to permit the Company to fund its operations and meet its obligations under the agreements governing its existing indebtedness. The Company may require financing for additional future acquisitions, if any, and there can be no assurance that it would be able to obtain such financing for on terms considered to be favorable by management. Management evaluates potential acquisition opportunities on an on-going basis and has 24 26 had, and continues to have, preliminary discussions concerning the purchase of additional stations. The Company expects that in connection with the financing of future acquisitions, it may consider disposing of stations in its markets. Net cash provided by operating activities was $1.8 million and $1.8 million for the nine-month periods ended September 30, 1997 and 1996, respectively. Net cash used in investing activities was $386.9 million and $50.3 million for the nine-month periods ended September 30, 1997 and 1996, respectively. Net cash provided by financing activities was $391.6 million and $43.9 million for the nine-month periods ended September 30, 1997 and 1996, respectively. These cash flows primarily reflect the borrowings, capital contributions and expenditures for station acquisitions and dispositions and includes the effects of the acquisition of Capstar Radio in October 1996. EXTRAORDINARY ITEM In connection with the acquisition of Osborn, the Company repaid the AT&T Credit Facility. The repayment of the AT&T Credit Facility resulted in a prepayment penalty in the amount of $598,000, which was reported as an extraordinary item. In July 1997 and in connection with the GulfStar Merger, the Company recorded a loss on repurchase of GulfStar's preferred stock of approximately $5.4 million and an extraordinary loss on early extinguishment of certain GulfStar debt of approximately $2.3 million. RECENT ACCOUNTING PRONOUNCEMENTS In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Restated Information," which establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997. Management does not believe the implementation of SFAS No. 130 and No. 131 will have a material effect on its consolidated financial statements. 25 27 PART II -- OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES. On September 12, 1997, the Company exchanged its 12% Senior Exchangeable Preferred Stock (the "New Senior Exchangeable Preferred Stock"), which was registered under the Securities Act of 1933, for all of the outstanding 12% Senior Exchangeable Preferred Stock previously sold on June 17, 1997 (the "Original Senior Exchangeable Preferred Stock") in reliance on Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder. The terms of the New Senior Exchangeable Preferred Stock are identical in all material respects to the Original Senior Exchangeable Preferred Stock, except that the New Senior Exchangeable Preferred Stock does not bear restrictive legends restricting the transfer of such stock. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.1 -- Amendment No. 11 to Indenture, dated as of April 21, 1995, among Capstar Radio Broadcasting Partners, Inc. ("Capstar Radio"), IBJ Schroeder Bank & Trust Company, as Trustee, and the guarantors named therein, governing Capstar Radio's 13 1/4% Senior Subordinated Notes due 2003.* 10.1 -- Agreement and Plan of Merger dated June 16, 1997, by and among GulfStar Communications, Inc., Capstar Broadcasting Corporation ("Capstar Broadcasting"), CBC-GulfStar Merger Sub, Inc. and the stockholders listed therein. (1) 10.2 -- First Amendment to Employment Agreement dated February 14, 1997, effective July 1, 1997, among the Registrant, Capstar Broadcasting and R. Steven Hicks.* 10.3 -- Employment Agreement dated July 1, 1997, between Capstar Broadcasting and Paul D. Stone. (1) 10.4 -- Employment Agreement dated July 1, 1997, between Capstar Broadcasting and William S. Banowsky, Jr. (1) 10.5 -- Not used. 10.6 -- Employment Agreement dated September 22, 1997, between Capstar Broadcasting and Steven Dinetz.* 10.7 -- Employment Agreement dated September 22, 1997, between Capstar Broadcasting and Eric W. Neumann.* 27 -- Financial Data Schedule.*
- --------------- * Filed herewith. (1) Incorporated by reference to the Registrant's Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-25683), dated July 8, 1997. (b) Reports on Form 8-K During the quarter ended September 30, 1997, the following reports on Form 8-K were filed: Current Report on Form 8-K/A dated May 1, 1997, relating to the Company's acquisition of Dixie Broadcasting, Inc. and Radio WBHP, Inc. Item 7 was reported. Current Report on Form 8-K dated July 8, 1997, relating to the Company's acquisition of GulfStar Communications, Inc. and Community Pacific Broadcasting, L.P. Items 2 and 7 were reported. 26 28 Current Report on Form 8-K/A dated July 8, 1997, relating to the Company's acquisition of GulfStar Communications, Inc. and Community Pacific Broadcasting, L.P. Item 7 was reported. Current Report on Form 8-K dated August 6, 1997, relating to the Company's acquisition of Benchmark Communications Radio Limited Partnership. Items 2 and 7 were reported. 27 29 SIGNATURES Pursuant to the requirements 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. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ PAUL D. STONE ---------------------------------- Paul D. Stone Executive Vice President Date: November 14, 1997 28 EX-4.1 2 AMENDMENT TO THE INDENTURE 1 EXHIBIT 4.1 ================================================================================ CAPSTAR RADIO BROADCASTING PARTNERS, INC., AS ISSUER, THE PARTIES LISTED ON THE SIGNATURE PAGES HERETO AS GUARANTORS, AS GUARANTORS, AND IBJ SCHRODER BANK & TRUST COMPANY, AS TRUSTEE ------------------------- AMENDMENT NO. 11 DATED AS OF AUGUST 16, 1997 TO THE INDENTURE DATED AS OF APRIL 21, 1995 ------------------------- $76,808,000 13 1/4% SENIOR SUBORDINATED NOTES DUE 2003 ================================================================================ 2 AMENDMENT NO. 11, dated as of August 16, 1997 ("Amendment No. 11"), to the INDENTURE, dated as of April 21, 1995, as amended (the "Indenture"), among CAPSTAR RADIO BROADCASTING PARTNERS, INC., a Delaware corporation, as Issuer (the "Company"), the parties listed on the signature pages hereto as Guarantors (each individually, a "Guarantor" and collectively, the "Guarantors"), and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation, as Trustee (the "Trustee"). Each party agrees for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company's 13 1/4% Senior Subordinated Notes due 2003 (the "Notes") to amend, pursuant to Section 8.01(4) of the Indenture, the Indenture as follows: 1. Benchmark Communications Holdings, Inc., a Delaware corporation ("Benchmark Holdings"), is a wholly- owned subsidiary of the Company, and is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Benchmark Holdings delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, Benchmark Holdings shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include Benchmark Holdings. 2. Each of Radioco I, Inc., a Maryland corporation ("Radioco I"), Radioco II, Inc., a Maryland corporation ("Radioco II"), and BC Funds Holdings Co., Inc., a Maryland corporation ("BC Holdings") (collectively, the "Benchmark Holding Subsidiaries"), is a wholly-owned subsidiary of Benchmark Holdings and indirect subsidiary of the Company, and is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Each Benchmark Holding Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Benchmark Holdings Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Benchmark Holding Subsidiary. 3. Benchmark Communications Radio Limited Partnership, a Maryland limited partnership ("Benchmark Communications"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Benchmark Holdings is the general partner and Radioco I and Radioco II are the limited partners of Benchmark Communications. Benchmark Communications delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, Benchmark Communications shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include Benchmark Communications. 4. Benchmark Jackson, L.L.C., a Delaware limited liability company ("Benchmark Jackson"), is a wholly- owned subsidiary of Benchmark Communications and an indirect subsidiary of the Company, and is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Benchmark Jackson delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, Benchmark Jackson shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include Benchmark Jackson. -1- 3 5. Each of Benchmark Radio Acquisition Fund I Limited Partnership, a Maryland limited partnership ("Fund I"), Benchmark Radio Acquisition Fund IV Limited Partnership, a Maryland limited partnership ("Fund IV"), Benchmark Radio Acquisition Fund VII Limited Partnership, a Maryland limited partnership ("Fund VII"), and Benchmark Radio Acquisition Fund VIII Limited Partnership, a Maryland limited partnership ("Fund VIII") (collectively, the "Benchmark Fund I-IV Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Benchmark Communications is the general partner and BC Holding is the limited partner of each of the Benchmark Fund I-IV Subsidiaries. Each Benchmark Fund I-IV Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Benchmark Fund I-IV Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Benchmark Fund I-IV Subsidiary. 6. Each of Benchmark Radio Acquisition Fund IX Limited Partnership, a Maryland limited partnership and Benchmark Radio Acquisition Fund XI Limited Partnership, a Maryland limited partnership, (collectively, the "Benchmark Fund IX-XI Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Benchmark Communications is the general partner and Country Heartlines, Inc., a Delaware corporation, is the limited partner of each of the Benchmark Fund IX-XI Subsidiaries. Each Benchmark Fund IX-XI Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Benchmark Fund IX-XI Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Benchmark Fund IX-XI Subsidiary. 7. Each of WDOV License Limited Partnership, a Maryland limited partnership, WDSD License Limited Partnership, a Maryland limited partnership, and WSRV License Limited Partnership, a Maryland limited partnership (collectively, the "Fund I Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Fund I is the general partner and Benchmark Communications is the limited partner of each of the Fund I Subsidiaries. Each Fund I Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Fund I Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Fund I Subsidiary. 8. Each of Benchmark Radio Acquisition Fund V Limited Partnership, a Maryland limited partnership ("Fund V"), WDOV License Limited Partnership, a Maryland limited partnership, WDSD License Limited Partnership, a Maryland limited partnership, and WSRV License Limited Partnership, a Maryland limited partnership (collectively, the "Fund IV Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Fund IV is the general partner and Benchmark Communications is the limited partner of each of the Fund IV Subsidiaries. Each Fund IV Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Fund IV Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Fund IV Subsidiary. -2- 4 9. Each of WCOS(AM) License Limited Partnership, a Maryland limited partnership, WCOS-FM License Limited Partnership, a Maryland limited partnership, WHKZ License Limited Partnership, a Maryland limited partnership, and WVOC License Limited Partnership, a Maryland limited partnership (collectively, the "Fund V Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Fund V is the general partner and Benchmark Communications is the limited partner of each of the Fund V Subsidiaries. Each Fund V Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each FundV Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Fund V Subsidiary. 10. Congaree Broadcasters, Inc., a South Carolina corporation ("Congaree"), is a wholly-owned subsidiary of Fund V and an indirect subsidiary of the Company, and is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Congaree delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, Congaree shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include Congaree. 11. WJMZ License Limited Partnership, a Maryland limited partnership (the "Fund VII Subsidiary"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Fund VII is the general partner and Benchmark Communications is the limited partner of the Fund VII Subsidiary. The Fund I Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, the Fund I Subsidiary shall be deemed a party to the Indenture by virtue of their execution of its Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include the Fund I Subsidiary. 12. Each of Benchmark Greenville, L.L.C., a Delaware limited liability company ("Benchmark Greenville") and Country Heartlines, a Delaware corporation (collectively, the "Fund VII Direct Subsidiaries"), is a wholly-owned subsidiary of Fund VII and indirect subsidiary of the Company, and is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Each Fund VII Direct Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Fund VII Direct Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Fund VII Direct Subsidiary. 13. Each of WESC(AM) License Limited Partnership, a Maryland limited partnership, WESC-FM License Limited Partnership, a Maryland limited partnership, and WFNQ License Limited Partnership, a Maryland limited partnership (collectively, the "Benchmark Greenville Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Benchmark Greenville is the general partner and Benchmark Communications is the limited partner of each of the Benchmark Greenville Subsidiaries. Each Benchmark Greenville Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Benchmark Greenville Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this -3- 5 Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Benchmark Greenville Subsidiary. 14. Each of WUSQ License Limited Partnership, a Maryland limited partnership, WNTW License Limited Partnership, a Maryland limited partnership, WYYD License Limited Partnership, a Maryland limited partnership, WROV(AM) License Limited Partnership, a Maryland limited partnership, and WROV-FM License Limited Partnership, a Maryland limited partnership (collectively, the "Fund VIII Subsidiaries"), is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. Fund VIII is the general partner and Benchmark Communications is the limited partner of each of the Fund I Subsidiaries. Each Fund I Subsidiary delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, each Fund VIII Subsidiary shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include each Fund VIII Subsidiary. 15. Benchmark Radio Acquisition Fund VI LC, a Maryland limited liability company ("LC"), is a wholly-owned subsidiary of Fund VIII and indirect subsidiary of the Company, and is a Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the Indenture. LC delivers herewith the Guarantee attached as Exhibit A to this Amendment No. 11 pursuant to the provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations of the Company under the Indenture. For all purposes of the Indenture, LC shall be deemed a party to the Indenture by virtue of its execution of this Amendment No. 11 and the defined term the "Guarantor" contained in Article 1.01 of the Indenture shall be deemed to include LC. 16. This Amendment No. 11 supplements the Indenture and shall be a part and subject to all the terms thereof. Except as supplemented hereby, the Indenture and the Securities issued thereunder shall continue in full force and effect. 17. This Amendment No. 11 may be executed in counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 18. THIS AMENDMENT NO. 11 SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION). 19. The Trustee shall not be responsible for any recital herein as such recitals shall be taken as statements of the Company, or the validity of the execution by the Guarantor of the Amendment No. 11. The Trustee makes no representation as to the validity or sufficiency of this Amendment No. 11. -4- 6 IN WITNESS WHEREOF, the parties have caused this Amendment No. 11 to the Indenture to be duly executed and attested as of the date and year first written above. CAPSTAR RADIO BROADCASTING PARTNERS, INC. By: /s/ WILLIAM S. BANOSWKY, JR. --------------------------------- William S. Banowsky, Jr. Executive Vice President ATTEST: /s/ KATHY ARCHER - --------------------------------- Kathy Archer Assistant Secretary GUARANTORS: ATLANTIC STAR COMMUNICATIONS, INC. CAPSTAR ACQUISITION COMPANY, INC. COMMODORE MEDIA OF DELAWARE, INC COMMODORE MEDIA OF PENNSYLVANIA, INC. COMMODORE MEDIA FLORIDA, INC. COMMODORE MEDIA OF KENTUCKY, INC. COMMODORE MEDIA OF NORWALK, INC. COMMODORE MEDIA OF WESTCHESTER, INC. DANBURY BROADCASTING, INC PACIFIC STAR COMMUNICATIONS, INC. CENTRAL STAR COMMUNICATIONS, INC. By: /s/ WILLIAM S. BANOWSKY, JR. --------------------------------- William S. Banowsky, Jr. Vice President ATTEST: /s/ KATHY ARCHER - --------------------------------- Kathy Archer Assistant Secretary 7 SOUTHERN STAR COMMUNICATIONS, INC. ATLANTIC CITY BROADCASTING CORP. O.C.C., INC. BREADBASKET BROADCASTING CORPORATION SOUTHEAST RADIO HOLDING CORP. HOUNDSTOOTH BROADCASTING CORPORATION SNG HOLDINGS, INC. OSBORN ENTERTAINMENT ENTERPRISES CORPORATION ORANGE COMMUNICATIONS, INC. MOUNTAIN RADIO CORPORATION LADNER COMMUNICATIONS HOLDING CORP. RKZ TELEVISION, INC. YELLOW BRICK RADIO CORPORATION ASHEVILLE BROADCASTING CORP. CORKSCREW BROADCASTING CORPORATION DAYTONA BEACH BROADCASTING CORP. RAINBOW BROADCASTING CORPORATION GREAT AMERICAN EAST, INC. NELSON BROADCASTING CORPORATION SHORT BROADCASTING CORPORATION JAMBOREE IN THE HILLS, INC BEATRICE BROADCASTING CORP. CURREY BROADCASTING CORPORATION OSBORN SOUND AND COMMUNICATIONS CORP. WAITE BROADCASTING CORP. AMERON BROADCASTING CORPORATION WNOK ACQUISITION COMPANY, INC. DIXIE BROADCASTING, INC. RADIO WBHP, INC. By: /s/ WILLIAM S. BANOWSKY, JR. --------------------------------- William S. Banowsky, Jr. Vice President ATTEST: /s/ KATHY ARCHER - --------------------------------- Kathy Archer Assistant Secretary 8 MOUNTAIN LAKES BROADCASTING, L.L.C. By: Dixie Broadcasting, Inc., its Member By: /s/ WILLIAM S. BRONOWSKY, JR. ---------------------------- William S. Banowsky, Jr. Vice President ATTEST: /s/ KATHY ARCHER - ---------------------------- Kathy Archer Assistant Secretary By: Radio WBHP, Inc., its Member By: /s/ WILLIAM S. BRONOWSKY, JR. ---------------------------- William S. Banowsky, Jr. Vice President ATTEST: /s/ KATHY ARCHER - ---------------------------- Kathy Archer Assistant Secretary WILMINGTON WJBR-FM, L.L.C. By: Commodore Media of Delaware, Inc., its Manager By: /s/ WILLIAM S. BRONOWSKY, JR. ---------------------------- William S. Banowsky, Jr. Vice President ATTEST: /s/ KATHY ARCHER - ---------------------------- Kathy Archer Assistant Secretary 9 MUSIC HALL CLUB, INC. By: /s/ LARRY ANDERSON ---------------------------------- Larry Anderson President ATTEST: /s/ NANCY ANDERSON - ---------------------------- Nancy Anderson Secretary and Treasurer 10 GULFSTAR COMMUNICATIONS, INC. GULFSTAR COMMUNICATIONS HOLDINGS, INC. GULFSTAR COMMUNICATIONS MANAGEMENT, INC. GULFSTAR COMMUNICATIONS BEAUMONT, INC. GULFSTAR COMMUNICATIONS LUFKIN, INC. GULFSTAR COMMUNICATIONS PORT ARTHUR, INC. GULFSTAR COMMUNICATIONS TEXARKANA, INC. GULFSTAR COMMUNICATIONS TYLER, INC. GULFSTAR COMMUNICATIONS VICTORIA, INC. GULFSTAR COMMUNICATIONS BATON ROUGE, INC. BATON ROUGE BROADCASTING COMPANY, INC. GULFSTAR COMMUNICATIONS CORPUS CHRISTI, INC. GULFSTAR COMMUNICATIONS WACO, INC. GULFSTAR COMMUNICATIONS ARKANSAS, INC. GULFSTAR COMMUNICATIONS NEW MEXICO, INC. GULFSTAR COMMUNICATIONS KILLEEN, INC. GULFSTAR COMMUNICATIONS LUBBOCK, INC. SONANCE WACO OPERATING COMPANY, INC. BRYAN BROADCASTING OPERATING COMPANY, INC. GULFSTAR COMMUNICATIONS OKLAHOMA, INC. GULFSTAR COMMUNICATIONS BEAUMONT LICENSEE, INC. GULFSTAR COMMUNICATIONS LUFKIN LICENSEE, INC. GULFSTAR COMMUNICATIONS PORT ARTHUR LICENSEE, INC. GULFSTAR COMMUNICATIONS TEXARKANA LICENSEE, INC. GULFSTAR COMMUNICATIONS TYLER LICENSEE, INC. GULFSTAR COMMUNICATIONS VICTORIA LICENSEE, INC. GULFSTAR COMMUNICATIONS BATON ROUGE LICENSEE, INC. GULFSTAR COMMUNICATIONS CORPUS CHRISTI LICENSEE, INC. GULFSTAR COMMUNICATIONS WACO LICENSEE, INC. GULFSTAR COMMUNICATIONS ARKANSAS LICENSEE, INC. GULFSTAR COMMUNICATIONS NEW MEXICO LICENSEE GULFSTAR COMMUNICATIONS KILLEEN LICENSEE, INC. GULFSTAR COMMUNICATIONS LUBBOCK LICENSEE, INC. GULFSTAR COMMUNICATIONS OKLAHOMA LICENSEE, INC. 11 SONANCE WACO LICENSE SUBSIDIARY, INC. BRYAN BROADCASTING LICENSE SUBSIDIARY, INC. By: /s/ WILLIAM S. BANOWSKY, JR. ---------------------------------- William S. Banowsky, Jr. Vice President ATTEST /s/ KATHY ARCHER - --------------------------- Kathy Archer Assistant Secretary 12 BENCHMARK COMMUNICATIONS HOLDINGS, INC. RADIOCO I, INC. RADIOCO II, INC. BC FUNDS HOLDINGS, INC. CONGAREE BROADCASTERS, INC. COUNTRY HEARTLINES, INC. By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary 13 BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP By: Benchmark Communications Holdings, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /S/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary BENCHMARK JACKSON, L.L.C. By: Benchmark Communications Radio Limited Partnership, its Member By: Benchmark Communications Holdings, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary 14 BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP BENCHMARK RADIO ACQUISITION FUND IX LIMITED PARTNERSHIP BENCHMARK RADIO ACQUISITION FUND XI LIMITED PARTNERSHIP By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc. its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. --------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - --------------------------------- Kathy Archer Assistant Secretary 15 WDOV LICENSE LIMITED PARTNERSHIP WDSD LICENSE LIMITED PARTNERSHIP WSRV LICENSE LIMITED PARTNERSHIP By: Benchmark Radio Acquisition Fund I Limited Partnership, its General Partner By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holding, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. --------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - --------------------------------- Kathy Archer Assistant Secretary 16 BENCHMARK RADIO ACQUISITION FUND V LIMITED PARTNERSHIP WOSC LICENSE LIMITED PARTNERSHIP WKOC LICENSE LIMITED PARTNERSHIP WWFG LICENSE LIMITED PARTNERSHIP By: Benchmark Radio Acquisition Fund IV Limited Partnership, its General Partner By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. --------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - --------------------------------- Kathy Archer Assistant Secretary 17 WCOS (AM) LICENSE LIMITED PARTNERSHIP WCOS-FM LICENSE LIMITED PARTNERSHIP WHKZ LICENSE LIMITED PARTNERSHIP WVOC LICENSE LIMITED PARTNERSHIP By: Benchmark Radio Acquisition Fund V Limited Partnership, its General Partner By: Benchmark Radio Acquisition Fund IV Limited Partnership, its General Partner By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc. its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------ Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------ Kathy Archer Assistant Secretary 18 WJMZ LICENSE LIMITED PARTNERSHIP By: Benchmark Radio Acquisition Fund VII Limited Partnership, its General Partner By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc. its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary 19 BENCHMARK GREENVILLE, L.L.C. By: Benchmark Radio Acquisition Fund VII Limited Partnership, its Member By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holding, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary 20 WESC(AM) LICENSE LIMITED PARTNERSHIP WESC-FM LICENSE LIMITED PARTNERSHIP WFNQ LICENSE LIMITED PARTNERSHIP By: Benchmark Greenville, L.L.C., its General Partner By: Benchmark Radio Acquisition Fund VII Limited Partnership, its Member By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary 21 WUSQ LICENSE LIMITED PARTNERSHIP WNTW LICENSE LIMITED PARTNERSHIP WYYD LICENSE LIMITED PARTNERSHIP WROV(AM) LICENSE LIMITED PARTNERSHIP WROV-FM LICENSE LIMITED PARTNERSHIP By: Benchmark Radio Acquisition Fund VIII Limited Partnership, its General Partner By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ------------------------------- Kathy Archer Assistant Secretary 22 BENCHMARK RADIO ACQUISITION FUND VI LC By: Benchmark Radio Acquisition Fund VIII Limited Partnership, its General Partner By: Benchmark Communications Radio Limited Partnership, its General Partner By: Benchmark Communications Holdings, Inc., its General Partner By: /s/ WILLIAM S. BANOWSKY, JR. -------------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President ATTEST /s/ KATHY ARCHER - ----------------------- Kathy Archer Assistant Secretary 23 IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By: -------------------------------- Name: ------------------------------ Title: ----------------------------- ATTEST: - ----------------------------------- Name: ------------------------------ Title: ----------------------------- EX-10.2 3 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT 1 EXHIBIT 10.2 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT (the "First Amendment") to the Employment Agreement, dated as of February 14, 1997, between Capstar Broadcasting Partners, Inc., a Delaware corporation ("Capstar Partners") and R. Steven Hicks (the "Employment Agreement"), is entered into effective July 1, 1997, by and among the Company, R. Steven Hicks, and Capstar Broadcasting Corporation, a Delaware Corporation ("Capstar Broadcasting"). RECITALS: WHEREAS, the stockholders of Capstar Partners effected an exchange of all shares of Capstar Partners for all shares of Capstar Broadcasting (the "Exchange"); WHEREAS, as a result of the Exchange, Capstar Partners become a wholly-owned subsidiary of Capstar Broadcasting; WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated June 16, 1997, among Capstar Broadcasting, GulfStar Communications, Inc., a Delaware corporation ("GulfStar"), CBC-GulfStar Merger Sub, Inc., a Delaware corporation ("Mergeco"), and the securityholders listed therein, GulfStar merged with and into Mergeco with Mergeco being the surviving corporation (the "Merger"); WHEREAS, concurrently herewith, R. Steven Hicks' employment agreement with GulfStar has been terminated; WHEREAS, in connection with the Exchange and the Merger, the parties to the Employment Agreement desire to amend the Employment Agreement as provided herein; and WHEREAS, any capitalized term used herein, and not otherwise defined herein, shall have the meaning set forth in the Employment Agreement. AGREEMENTS: NOW, THEREFORE, in consideration of the foregoing and the agreements herein contained, the parties hereto covenant and agree as follows: 1. As of and after the date hereof, Capstar Partners shall not be a party to the Employment Agreement. All references in the Employment Agreement to Capstar Partners shall hereby be deemed, as of and after the date hereof, to refer to Capstar Broadcasting for all purposes. 2 2. Capstar Broadcasting hereby assumes and agrees to perform and discharge all of the Capstar Partners' duties and obligations under the Employment Agreement that are to be performed after the date hereof. 3. The first sentence of Section 2(b)(i) shall be amended and restated in its entirety to read as follows: During the term of the Executive's employment, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid in accordance with the customary payroll practices of the Company, at least equal to $500,000. 4. The first sentence of Section 2(b)(ix) shall be amended and restated in its entirety to read as follows: In addition to any benefits the Executive may receive pursuant to paragraph 2(b)(iii), as may be determined appropriate by the Board of Directors of the Company, the Company may, from time to time, grant Executive stock options (the "Executive Options") exercisable for shares of capital stock of the Company and subject to the terms of this Agreement, such Executive Options shall have such terms and provisions as may be determined appropriate by the Board of Directors of the Company. Any such Executive Options will be granted under the Company's 1997 Stock Option Plan (the "Stock Option Plan"). 5. Except as herein specifically amended or supplemented, the Employment Agreement shall continue in full force and effect in accordance with its terms. 6. This First Amendment may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. [Remainder of page intentionally left blank] 2 3 IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment as of the date first written above. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- William S. Banowsky, Jr. Executive Vice President CAPSTAR BROADCASTING CORPORATION By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- William S. Banowsky, Jr. Executive Vice President /s/ R. STEVEN HICKS --------------------------------------- R. Steven Hicks EX-10.6 4 EXECUTIVE EMPLOYMENT AGREEMENT OF STEPHEN DINETZ 1 EXHIBIT 10.6 EXECUTIVE EMPLOYMENT AGREEMENT THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 22nd day of September, 1997 by and between Capstar Broadcasting Corporation, a Delaware corporation (together with its successors and assigns permitted hereunder, the "Company"), and Steven Dinetz (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the bests interests of the Company and its stockholders to employ the Executive on the terms and conditions set forth herein. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. EMPLOYMENT PERIOD. Subject to Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, in accordance with the terms and provisions of this Agreement, for the period commencing as of the date of this Agreement and ending on December 31, 2001 (the "Employment Period"); provided, however, that commencing on December 31, 2001 and on each anniversary of such date occurring thereafter, the Employment Period shall automatically be extended for one additional year unless at least six months prior to the ensuing expiration date (but no more than 12 months prior to such expiration date), the Company or the Executive shall have given written notice that it or he, as applicable, does not wish to extend this Agreement (a "Non-Renewal Notice"). The term "Employment Period", as utilized in this Agreement, shall refer to the Employment Period as so automatically extended. 2. TERMS OF EMPLOYMENT. (a) Position and Duties. (i) During the term of the Executive's employment, the Executive shall serve as Executive Vice President and the Chief Operating Officer of the Company and, in so doing, shall report to the Chief Executive Officer. The Executive shall have (A) supervision and control over, and responsibility for, the day-to-day operations of the radio broadcasting stations owned by the Company and its subsidiaries, (B) such other powers and duties (including holding officer positions with the Company and one or more subsidiaries of the Company, including the officer positions of President and Chief Operating Officer of Capstar Broadcasting Partners, Inc. and Capstar Radio Broadcasting Partners, Inc.) as may from time to time be prescribed by the Board, and (C) such other powers and duties as are reasonable and customary for an Executive Vice President and the Chief Operating Officer of an enterprise comparable to the Company. (ii) During the term of the Executive's employment, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his business time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully, effectively and efficiently such responsibilities. During 2 the term of Executive's employment it shall not be a violation of this Agreement for the Executive to (1) serve on corporate, civic or charitable boards or committees, (2) deliver lectures or fulfill speaking engagements and (3) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. (b) Compensation. (i) Base Salary. During the term of the Executive's employment, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid in accordance with the customary payroll practices of the Company, equal to $450,000. Commencing on July 1, 1998, and on each subsequent July 1 as long as the Executive remains an employee of the Company (each such July 1 being herein referred to as an "Adjustment Date"), the Annual Base Salary of the Executive shall be increased by an amount equal to five percent (5%) of the then current Annual Base Salary or such greater amount as the Board in its discretion may determine appropriate. The result of such increase to the then current Annual Base Salary shall constitute the Executive's Annual Base Salary commencing on the Adjustment Date then at hand and continuing until the next Adjustment Date. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. (ii) Bonuses. The Executive shall be entitled to receive a cash bonus (the "Initial Bonus") in the amount of $55,342 for the period from September 22, 1997 through December 31, 1997. The Initial Bonus shall be payable in a lump sum to the Executive within thirty days after December 31, 1997. The Executive shall also be entitled to receive a cash bonus (the "Second Bonus") in the amount of $200,000 for the period from January 1, 1998 through December 31, 1998. The Second Bonus shall be payable in a lump sum to the Executive within thirty days after December 31, 1998 For each fiscal year of the Company after 1998, the Board shall approve a budget which shall include, among other things, a target for EBITDA of the Company for that year. If the revenues and net income for a fiscal year of the Company equal or exceed the target for EBITDA as set forth in the budget, as evidenced by a schedule prepared by the Company (and approved by the Board) based on the audited income statement of the Company for such fiscal year, then, in addition to the Annual Base Salary, the Executive shall be awarded an annual performance bonus in such amount, if any, as shall be determined appropriate by the Board. At the election of the Board, the bonus (other than the Initial Bonus) shall be payable on the first day of the first calendar month after such audited income statement is delivered to the Board or shall be payable in monthly payments, as nearly equal as practicable, payable on the first day of such first calendar month and on the first day of each calendar month thereafter occurring during the remainder of the fiscal year next succeeding the fiscal year with respect to which the bonus is payable. For purposes of this Agreement, "EBITDA" shall have the meaning set forth in the Indenture dated as of February 20, 1997, as it may be amended from time to time, between Capstar Broadcasting Partners, Inc., a Delaware corporation ("Capstar Partners"), and U.S. Trust Company of Texas, N.A., a national banking association, as trustee, which governs Capstar Partners' 12 3/4% Senior Discount Notes due 2009. 2 3 (iii) Incentive, Savings and Retirement Plans. During the term of the Executive's employment, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other executives of the Company ("Investment Plans"). (iv) Welfare Benefit Plans. During the term of the Executive's employment, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs ("Welfare Plans") provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other executives of the Company. (v) Automobile Allowance. During the term of the Executive's employment, the Executive shall be entitled to receive a monthly automobile allowance equal to $850, which shall be paid monthly in accordance with the customary practices of the Company. (vi) Perquisites. During the term of the Executive's employment, the Executive shall be entitled to receive (in addition to the benefits described above) such perquisites and fringe benefits appertaining to his position in accordance with any practice established by the Board. (vii) Expenses. During the term of the Executive's employment, the Executive shall be entitled to receive prompt reimbursement for all reasonable employment expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company. (viii) Vacation and Holidays. During the term of the Executive's employment, the Executive shall be entitled to paid vacation and paid holidays in accordance with the plans, policies, programs and practices of the Company for its executive officers. (ix) Stock Options. In addition to any benefits the Executive may receive pursuant to paragraph 2(b)(iii), as may be determined appropriate by the Board, the Company may, from time to time, grant Executive stock options (the "Executive Options") exercisable for shares of capital stock of the Company and subject to the terms of this Agreement, such Executive Options shall have such terms and provisions as may be determined appropriate by the Board. Any such Executive Options will be granted under the Company's 1997 Stock Option Plan or a successor plan of the Company (the "Stock Option Plan"). (x) Country Club. During the term of the Executive's employment, the Company shall pay (1) the initiation fee (up to $15,000) for the Executive to join a country club in the Austin, Texas area, and (2) the Executive's regular monthly dues at such club. 3 4 3. TERMINATION OF EMPLOYMENT. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give to the Executive written notice in accordance with Section 11(b) of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's inability to perform his duties and obligations hereunder for a period of 180 consecutive days due to mental or physical incapacity as determined by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause or Board Termination. The Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, "Cause" shall mean (i) a breach by the Executive of the Executive's obligations under Section 2(a) (other than as a result of physical or mental incapacity) which constitutes a continued material nonperformance by the Executive of his obligations and duties thereunder, as reasonably determined by the Board, and which is not remedied within 30 days after receipt of written notice from the Company specifying such breach, (ii) commission by the Executive of an act of fraud upon, or willful misconduct toward, the Company, as reasonably determined by a majority of the disinterested members of the Board (neither the Executive nor members of his family being deemed disinterested for this purpose) after a hearing by the Board following ten days' notice to the Executive of such hearing, (iii) a material breach by the Executive of Section 6 or Section 9, (iv) the conviction of the Executive of any felony (or a plea of nolo contendere thereto); (v) Financial Cause; or (vi) the failure of the Executive to carry out, or comply with, in any material respect any directive of the Board consistent with the terms of this Agreement, which is not remedied within 30 days after receipt of written notice from the Company specifying such failure. For purposes of this Agreement, "Financial Cause" shall mean the failure by the Company to meet at least 90% of its budgeted EBITDA, as approved by the Board, for the prior fiscal year. For purposes of this Agreement, a "Board Determination" shall mean a determination by the Board (which is evidenced by one or more written resolutions to such effect) (i) to terminate the Executive's employment during the Employment Period based upon the Board's dissatisfaction with the manner in which the Executive has performed his obligations and duties under Section 2(a) and (ii) that Cause does not exist as a basis for such termination. For purposes of this Agreement, "without Cause" shall mean a termination by the Company of the Executive's employment during the Employment Period pursuant to a Board Determination or for any other reason other than a termination based upon Cause, death or Disability. (c) Good Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason or without Good Reason; provided, however, that the Executive agrees not to terminate his employment for Good Reason unless (i) the Executive 4 5 has given the Company at least 30 days' prior written notice of his intent to terminate his employment for Good Reason, which notice shall specify the facts and circumstances constituting Good Reason, and (ii) the Company has not remedied such facts and circumstances constituting Good Reason within such 30-day period. For purposes of this Agreement, "Good Reason" shall mean: (i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(a) or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive (without limiting the foregoing, the Company and the Executive agree that the delegation of the authority, duties or responsibilities of the Executive to another person or persons, including any committee, shall be deemed to be an action by the Company which results in a material diminution in the Executive's position, authority, duties, or responsibilities as contemplated by Section 2(a)), provided, however, that Good Reason may not be asserted by the Executive under this clause (i) of Section 3(c) after a Non-Renewal Notice has been given by either the Company or the Executive; (ii) any termination or material reduction of a material benefit under any Investment Plan or Welfare Plan in which the Executive participates unless (1) there is substituted a comparable benefit that is economically substantially equivalent to the terminated or reduced benefit prior to such termination or reduction or (2) benefits under such Investment Plan or Welfare Plan are terminated or reduced with respect to all employees previously granted benefits thereunder; (iii) any failure by the Company to comply with any of the provisions of Section 2(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iv) any failure by the Company to comply with and satisfy Section 8(c), provided that such successor has received at least ten days prior written notice from the Company or the Executive of the requirements of Section 8(c); or (v) without limiting the generality of the foregoing, any material breach by the Company or any of its subsidiaries or other affiliates (as defined below) of (1) this Agreement or (2) any other agreement between the Executive and the Company or any such subsidiary or other affiliate. As used in this Agreement, "affiliate" means, with respect to a person, any other person controlling, controlled by or under common control with the first person; the term "control," and correlative terms, means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a person; and "person" means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. 5 6 (d) Notice of Termination. Any termination by the Company for Cause or without Cause, or by the Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 3(d), as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause, the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be. 4. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for either Cause or Disability or the Executive shall terminate his employment for Good Reason, and the termination of the Executive's employment in any case is not due to his death or Disability: (i) The Company shall pay to the Executive in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (1) the sum of the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid and any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay ("Accrued Obligations"); (2) the sum of two times the Executive's then current Annual Base Salary; and (3) any amount arising from Executive's participation in, or benefits under, any Investment Plans ("Accrued Investments"), which amounts shall be payable in accordance with the terms and conditions of such Investment Plans. (ii) Except as otherwise provided in Section 4(d), the Executive (and members of his family) shall be entitled to continue their participation in the Company's Welfare Plans for a period of 24 months from the Date of Termination. (iii) Notwithstanding the terms or conditions of any Executive Option or other similar stock option, stock appreciation right or similar agreements between the Company and the Executive, the Executive shall vest, as of the Date of Termination, in all rights under such 6 7 agreements (i.e., Executive Options that would otherwise vest after the Date of Termination) and thereafter shall be permitted to exercise any and all such rights until the earlier to occur of (x) the expiration of such Executive Option, stock option, stock appreciation right or similar agreement pursuant to its terms or (y) 5:00 p.m., Dallas, Texas time, on the 90th day after the Date of Termination; provided, however, the provisions of this clause (iii) of this Section 4(a) shall not apply to a termination of the Executive's employment during the Employment Period that is made by the Company pursuant to a Board Determination. (b) Death or Disability. If the Executive's employment is terminated by reason of the Executive's death or Disability during the Employment Period, the Company shall pay to his legal representatives (i) in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (A) an amount equal to the Executive's then current Annual Base Salary; and (B) the Accrued Obligations; and (ii) the Accrued Investments which shall be payable in accordance with the terms and conditions of the Investment Plans. In addition, except as otherwise provided in Section 4(d), the members of the Executive's family shall be entitled to continue their participation in the Company's Welfare Plans for a period of 12 months after the Date of Termination. Further, notwithstanding the terms or conditions of any Executive Options, stock option, stock appreciation right or similar agreements between the Company and the Executive, the Executive shall vest, as of the Date of Termination, in all rights under such agreements (i.e., Executive Options, stock options that would otherwise vest after the Date of Termination) and thereafter his legal representatives shall be permitted to exercise any and all such rights until the earlier to occur of (x) the expiration of such Executive Option, stock option, stock appreciation right or similar agreement pursuant to its terms or (y) the first anniversary of the Date of Termination. The Company shall have no further payment obligations to the Executive or his legal representatives under this Agreement. (c) Cause; Other than for Good Reason. If the Executive's employment shall be terminated by the Company for Cause (other than Financial Cause) or by the Executive without Good Reason during the Employment Period, the Company shall have no further payment obligations to the Executive other than for payment of Accrued Obligations, Accrued Investments (which shall be payable in accordance with the terms and conditions of the Investment Plans), and the continuance of benefits under the Company's Welfare Plans to the Date of Termination. If the Executive's employment shall be terminated by the Company for Financial Cause, the Company shall have no further payment obligations to the Executive other than the continuance of benefits under the Company's Welfare Plans to the Date of Termination and for payment to the Executive in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (1) Accrued Obligations; (2) one half of the Executive's then current Annual Base Salary; and (3) Accrued Investments (which amounts shall be payable in accordance with the terms and conditions of the Investment Plans). (d) If pursuant to the terms and provisions of the Company's Welfare Plans the Executive (or members of his family) are not eligible to participate in the Company's Welfare Plans because the Executive is no longer an employee of the Company, then the Company may fulfill its obligations under clause (ii) of Section 4(a) or Section 4(b), as applicable, by either providing to the 7 8 Executive (or his legal representatives), or reimbursing the Executive (or his legal representatives) for the costs of, benefits substantially similar to the benefits provided by the Company to its senior management under its Welfare Plans as such may from time to time exist after the Date of Termination. 5. FULL SETTLEMENT, MITIGATION. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. Neither the Executive nor the Company shall be liable to the other party for any damages in addition to the amounts payable under Section 4 arising out of the termination of the Executive's employment prior to the end of the Employment Period; provided, however, that the Company shall be entitled to seek damages for any breach of Sections 6, 7 or 9 or criminal misconduct. 6. CONFIDENTIAL INFORMATION. (a) The Executive acknowledges that the Company and their affiliates have trade, business and financial secrets and other confidential and proprietary information (collectively, the "Confidential Information"). As defined herein, Confidential Information shall not include (i) information that is generally known to other persons or entities who can obtain economic value from its disclosure or use and (ii) information required to be disclosed by the Executive pursuant to a subpoena or court order, or pursuant to a requirement of a governmental agency or law of the United States of America or a state thereof or any governmental or political subdivision thereof; provided, however, that the Executive shall take all reasonable steps to prohibit disclosure pursuant to subsection (ii) above. (b) The Executive agrees (i) to hold such Confidential Information in confidence and (ii) not to release such information to any person (other than Company employees and other persons to whom the Company has authorized the Executive to disclose such information and then only to the extent that such Company employees and other persons authorized by the Company have a need for such knowledge). (c) The Executive further agrees not to use any Confidential Information for the benefit of any person or entity other than the Company. 7. SURRENDER OF MATERIALS UPON TERMINATION. Upon any termination of the Executive's employment, the Executive shall immediately return to the Company all copies, in whatever form, of any and all Confidential Information and other properties of the Company and their affiliates which are in the Executive's possession, custody or control. 8. SUCCESSORS. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws 8 9 of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 9. NON-COMPETITION. (a) The term of Non-Competition (herein so called) shall be for a term beginning on the date hereof and continuing until (i) if this Agreement is terminated during the Employment Period by either the Company or the Executive for any reason, the first anniversary of the Date of Termination or (ii) if the Employment Period expires by reason of a Non-Renewal Notice, the last day of the Employment Period. (b) During the term of Non-Competition, the Executive will not (other than for the benefit of the Company pursuant to this Agreement) directly or indirectly, individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venturer, agent, equity owner or in any capacity whatsoever, (i) engage in any radio broadcasting business that transmits a primary or city-grade signal within a Metro Survey Area (as currently defined by The Arbitron Company in its Radio Markets Reports) in which a station directly operated by the Company OR ANY OF ITS AFFILIATES transmits a primary or city-grade signal (1), with respect to the term of Non- Competition that is during the Executive's employment, during such term of employment, and (2), with respect to the term of Non-Competition that is after the term of the Executive's employment, on the Date of Termination (all such areas being collectively called the "Geographic Area") (a "Competing Business"), (ii) hire, attempt to hire, or contact or solicit with respect to hiring any employee of the Company OR ANY OF ITS AFFILIATES, or (iii) divert or take away any customers or suppliers of the Company OR ANY OF ITS AFFILIATES in the Geographic Area. Notwithstanding the foregoing, the Company agrees that the Executive may own less than five percent of the outstanding voting securities of any publicly traded company that is a Competing Business so long as the Executive does not otherwise participate in such competing business in any way prohibited by the preceding clause. As used in this Section 9(b) (and in Section 6), "Company" shall include the Company and any of its subsidiaries OR AFFILIATES. (c) During the term of Non-Competition, the Executive will not use the Executive's access to, knowledge of, or application of Confidential Information to perform any duty for any Competing Business; it being understood and agreed to that this Section 9(c) shall be in addition to and not be construed as a limitation upon the covenants in Section 9(b) hereof. 9 10 (d) The Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Company's proprietary information, plans and services and to protect the other legitimate business interests of the Company. 10. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this Agreement shall not prohibit or restrict the Executive's entitlement to full participation in the executive compensation, employee benefit and other plans or programs in which executives of the Company are eligible to participate. 11. MISCELLANEOUS. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. Whenever the terms "hereof", "hereby", "herein", or words of similar import are used in this Agreement they shall be construed as referring to this Agreement in its entirety rather than to a particular section or provision, unless the context specifically indicates to the contrary. Any reference to a particular "Section" or "paragraph" shall be construed as referring to the indicated section or paragraph of this Agreement unless the context indicates to the contrary. The use of the term "including" herein shall be construed as meaning "including without limitation." This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Steven Dinetz Capstar Broadcasting Corporation 600 Congress Avenue, Suite 1400 Austin, Texas 78701 If to the Company: Capstar Broadcasting Corporation c/o Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attn: Lawrence D. Stuart, Jr. or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such 10 11 provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. (d) The Company agrees to attempt to obtain and maintain a director's and officer's liability insurance policy during the term of the Executive's employment covering the Executive on commercially reasonable terms, and the amount of coverage shall be reasonable in relation to the Executive's position and responsibilities hereunder; provided, however, that such coverage may be reduced or eliminated to the extent that the Company reduces or eliminates coverage for its directors and executives generally. (e) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (f) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (g) The Executive acknowledges that money damages would be both incalculable and an insufficient remedy for a breach of Section 6 or 9 by the Executive and that any such breach would cause the Company irreparable harm. Accordingly, the Company, in addition to any other remedies at law or in equity it may have, shall be entitled, without the requirement of posting of bond or other security, to equitable relief, including injunctive relief and specific performance, in connection with a breach of Section 6 or 9 by the Executive. (h) The provisions of this Agreement constitute the complete understanding and agreement between the parties with respect to the subject matter hereof. (i) This Agreement may be executed in two or more counterparts. (j) In the event any dispute or controversy arises under this Agreement and is not resolved by mutual written agreement between the Executive and the Company within 30 days after notice of the dispute is first given, then, upon the written request of the Executive or the Company, such dispute or controversy shall be submitted to arbitration to be conducted in accordance with the rules of the American Arbitration Association. Judgment may be entered thereon and the results of the arbitration will be binding and conclusive on the parties hereto. Any arbitrator's award or finding or any judgment or verdict thereon will be final and unappealable. All parties agree that venue for arbitration will be in Dallas, Texas, and that any arbitration commenced in any other venue will be 11 12 transferred to Dallas, Texas, upon the written request of any party to this Agreement. All arbitrations will have three individuals acting as arbitrators: one arbitrator will be selected by the Executive, one arbitrator will be selected by the Company, and the two arbitrators so selected will select a third arbitrator. Any arbitrator selected by a party will not be affiliated, associated or related to the party selecting that arbitrator in any matter whatsoever. The decision of the majority of the arbitrators will be binding on all parties. The Company shall be responsible for paying its own and the Executive's attorneys fees, costs and other expenses pertaining to any such arbitration and enforcement regardless of whether an arbitrator's award or finding or any judgment or verdict thereon is entered against the Executive. The Company shall promptly (and in no event after ten days following its receipt from the Executive of each written request therefor) reimburse the Executive for his reasonable attorneys fees, costs and other expenses pertaining to any such arbitration and the enforcement thereof. (k) Sections 6 and 9 of this Agreement shall survive the termination of this Agreement. 12 13 IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written. EXECUTIVE /s/ STEVEN DINETZ ----------------------------------- Steven Dinetz CAPSTAR BROADCASTING CORPORATION /s/ PAUL D. STONE ----------------------------------- By: Paul D. Stone Title: Executive Vice President EX-10.7 5 EXECUTIVE EMPLOYMENT AGREEMENT-ERIC W. NEWMANN 1 EXHIBIT 10.7 EXECUTIVE EMPLOYMENT AGREEMENT THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 22nd day of September, 1997 by and between Capstar Broadcasting Corporation, a Delaware corporation (together with its successors and assigns permitted hereunder, the "Company"), and Eric W. Neumann (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stockholders to employ the Executive on the terms and conditions set forth herein. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. EMPLOYMENT PERIOD. Subject to Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, in accordance with the terms and provisions of this Agreement, for the period commencing as of the date of this Agreement and ending on December 31, 2001 (the "Employment Period"); provided, however, that commencing on December 31, 2001 and on each anniversary of such date occurring thereafter, the Employment Period shall automatically be extended for one additional year unless at least six months prior to the ensuing expiration date (but no more than 12 months prior to such expiration date), the Company or the Executive shall have given written notice that it or he, as applicable, does not wish to extend this Agreement (a "Non-Renewal Notice"). The term "Employment Period", as utilized in this Agreement, shall refer to the Employment Period as so automatically extended. 2. TERMS OF EMPLOYMENT. (a) Position and Duties. (i) During the term of the Executive's employment, the Executive shall serve as Senior Vice President of the Company and, in so doing, shall report to the Chief Operating Officer. The Executive shall have supervision and control over, and responsibility for, such management and operational functions of the Company currently assigned to such positions, and shall have such other powers and duties (including holding officer positions with the Company and one or more subsidiaries of the Company, including the officer positions of Senior Vice President of Capstar Broadcasting Partners, Inc. and Capstar Radio Broadcasting Partners, Inc.) as may from time to time be prescribed by the Board and/or the Chief Operating Officer, so long as such powers and duties are reasonable and customary for a Senior Vice President of an enterprise comparable to the Company. (ii) During the term of the Executive's employment, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his business time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully, effectively and efficiently such responsibilities. During the term of Executive's employment it shall not be a violation of this Agreement for the Executive to (1) serve on corporate, civic or charitable boards or committees, (2) deliver lectures or fulfill 2 speaking engagements and (3) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. (b) Compensation. (i) Base Salary. During the term of the Executive's employment, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid in accordance with the customary payroll practices of the Company, equal to $185,000. The Board in its discretion may at any time increase the amount of the Annual Base Salary to such greater amount as it may determine appropriate. The result of any such increase to the then current Annual Base Salary shall constitute the Executive's Annual Base Salary commencing on the date such increase is duly authorized by the Board. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as such may be so increased. (ii) Bonuses. The Executive shall be entitled to receive a cash bonus (the "Initial Bonus") in the amount of $15,219 for the period from September 22, 1997 through December 31, 1997. The Initial Bonus shall be payable in a lump sum to the Executive within thirty days after December 31, 1997. For each fiscal year of the Company, the Board shall approve a budget which shall include, among other things, a target for the revenues and net income of the Company for that year. If the revenues and net income for a fiscal year of the Company equal or exceed the targets for such revenues and net income as set forth in the budget, as evidenced by the audited income statement of the Company for such fiscal year, then, in addition to the Annual Base Salary, the Executive shall be awarded an annual performance bonus in such amount, if any, as shall be determined appropriate by the Board. At the election of the Board, the Bonus shall be payable on the first day of the first calendar month after such audited income statement is delivered to the Board or shall be payable in monthly payments, as nearly equal as practicable, payable on the first day of such first calendar month and on the first day of each calendar month thereafter occurring during the remainder of the fiscal year next succeeding the fiscal year with respect to which the bonus is payable. (iii) Incentive, Savings and Retirement Plans. During the term of the Executive's employment, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other executives of the Company ("Investment Plans"). (iv) Welfare Benefit Plans. During the term of the Executive's employment, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs ("Welfare Plans") provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other executives of the Company. 2 3 (v) Perquisites. During the term of the Executive's employment, the Executive shall be entitled to receive (in addition to the benefits described above) such perquisites and fringe benefits appertaining to his position in accordance with any practice established by the Board. (vi) Expenses. During the term of the Executive's employment, the Executive shall be entitled to receive prompt reimbursement for all reasonable employment expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company. (vii) Vacation and Holidays. During the term of the Executive's employment, the Executive shall be entitled to paid vacation and paid holidays in accordance with the plans, policies, programs and practices of the Company for its executive officers. (viii) Stock Options. In addition to any benefits the Executive may receive pursuant to paragraph 2(b)(iii), as may be determined appropriate by the Board, the Company may, from time to time, grant Executive stock options (the "Executive Options") exercisable for shares of capital stock of the Company and subject to the terms of this Agreement, such Executive Options shall have such terms and provisions as may be determined appropriate by the Board. Any such Executive Options will be granted under the Company's 1997 Stock Option Plan or a successor plan of the Company (the "Stock Option Plan"). (ix) Automobile Allowance. During the term of the Executive's employment, the Executive shall be entitled to receive a monthly automobile allowance equal to $850, which shall be paid monthly in accordance with the customary practices of the Company. 3. TERMINATION OF EMPLOYMENT. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give to the Executive written notice in accordance with Section 11(b) of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's inability to perform his duties and obligations hereunder for a period of 180 consecutive days due to mental or physical incapacity as determined by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause or Board Termination. The Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, "Cause" shall mean (i) a breach by the Executive of the Executive's obligations under Section 2(a) (other than as a result of physical or mental incapacity) which constitutes a continued 3 4 material nonperformance by the Executive of his obligations and duties thereunder, as reasonably determined by the Board, and which is not remedied within 30 days after receipt of written notice from the Company specifying such breach, (ii) commission by the Executive of an act of fraud upon, or willful misconduct toward, the Company, as reasonably determined by a majority of the disinterested members of the Board (neither the Executive nor members of his family being deemed disinterested for this purpose) after a hearing by the Board following ten days' notice to the Executive of such hearing, (iii) a material breach by the Executive of Section 6 or Section 9, (iv) the conviction of the Executive of any felony (or a plea of nolo contendere thereto); or (v) the failure of the Executive to carry out, or comply with, in any material respect any directive of the Board consistent with the terms of this Agreement, which is not remedied within 30 days after receipt of written notice from the Company specifying such failure. For purposes of this Agreement, a "Board Determination" shall mean a determination by the Board (which is evidenced by one or more written resolutions to such effect) (i) to terminate the Executive's employment during the Employment Period based upon the Board's dissatisfaction with the manner in which the Executive has performed his obligations and duties under Section 2(a) and (ii) that Cause does not exist as a basis for such termination. For purposes of this Agreement, "without Cause" shall mean a termination by the Company of the Executive's employment during the Employment Period pursuant to a Board Determination or for any other reason other than a termination based upon Cause, death or Disability. (c) Good Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason or without Good Reason; provided, however, that the Executive agrees not to terminate his employment for Good Reason unless (i) the Executive has given the Company at least 30 days' prior written notice of his intent to terminate his employment for Good Reason, which notice shall specify the facts and circumstances constituting Good Reason, and (ii) the Company has not remedied such facts and circumstances constituting Good Reason within such 30- day period. For purposes of this Agreement, "Good Reason" shall mean: (i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(a) or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive (without limiting the foregoing, the Company and the Executive agree that the delegation of the authority, duties or responsibilities of the Executive to another person or persons, including any committee, shall be deemed to be an action by the Company which results in a material diminution in the Executive's position, authority, duties, or responsibilities as contemplated by Section 2(a)), provided, however, that Good Reason may not be asserted by the Executive under this clause (i) of Section 3(c) after a Non-Renewal Notice has been given by either the Company or the Executive; (ii) any termination or material reduction of a material benefit under any Investment Plan or Welfare Plan in which the Executive participates unless (1) there is substituted a comparable benefit that is economically substantially equivalent to the terminated or reduced 4 5 benefit prior to such termination or reduction or (2) benefits under such Investment Plan or Welfare Plan are terminated or reduced with respect to all employees previously granted benefits thereunder; (iii) any failure by the Company to comply with any of the provisions of Section 2(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iv) any failure by the Company to comply with and satisfy Section 8(c), provided that such successor has received at least ten days prior written notice from the Company or the Executive of the requirements of Section 8(c); or (v) without limiting the generality of the foregoing, any material breach by the Company or any of its subsidiaries or other affiliates (as defined below) of (1) this Agreement or (2) any other agreement between the Executive and the Company or any such subsidiary or other affiliate. As used in this Agreement, "affiliate" means, with respect to a person, any other person controlling, controlled by or under common control with the first person; the term "control," and correlative terms, means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a person; and "person" means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. (d) Notice of Termination. Any termination by the Company for Cause or without Cause, or by the Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 3(d), as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause, the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be. 5 6 4. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for either Cause or Disability or the Executive shall terminate his employment for Good Reason, and the termination of the Executive's employment in any case is not due to his death or Disability: (i) The Company shall pay to the Executive in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (1) the sum of the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid and any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay ("Accrued Obligations"); (2) the sum of two times the Executive's then current Annual Base Salary; and (3) any amount arising from Executive's participation in, or benefits under, any Investment Plans ("Accrued Investments"), which amounts shall be payable in accordance with the terms and conditions of such Investment Plans. (ii) Except as otherwise provided in Section 4(d), the Executive (and members of his family) shall be entitled to continue their participation in the Company's Welfare Plans for a period of 24 months from the Date of Termination. (iii) Notwithstanding the terms or conditions of any Executive Option or other similar stock option, stock appreciation right or similar agreements between the Company and the Executive, the Executive shall vest, as of the Date of Termination, in all rights under such agreements (i.e., Executive Options that would otherwise vest after the Date of Termination) and thereafter shall be permitted to exercise any and all such rights until the earlier to occur of (x) the expiration of such Executive Option, stock option, stock appreciation right or similar agreement pursuant to its terms or (y) 5:00 p.m., Dallas, Texas time, on the 90th day after the Date of Termination; provided, however, the provisions of this clause (iii) of this Section 4(a) shall not apply to a termination of the Executive's employment during the Employment Period that is made by the Company pursuant to a Board Determination. (b) Death or Disability. If the Executive's employment is terminated by reason of the Executive's death or Disability during the Employment Period, the Company shall pay to his legal representatives (i) in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (A) an amount equal to the Executive's then current Annual Base Salary; and (B) the Accrued Obligations; and (ii) the Accrued Investments which shall be payable in accordance with the terms and conditions of the Investment Plans. In addition, except as otherwise provided in Section 4(d), the members of the Executive's family shall be entitled to continue their participation in the Company's Welfare Plans for a period of 12 months after the Date of Termination. Further, notwithstanding the terms or conditions of any Executive Options, stock option, stock appreciation right or similar agreements between the Company and the Executive, the Executive shall vest, as of the Date of Termination, in all rights under such agreements (i.e., Executive Options, stock options that would otherwise vest after the Date of Termination) and thereafter his legal representatives shall be permitted to exercise any and all such rights until the earlier to occur of (x) the expiration of such Executive Option, stock option, stock appreciation right 6 7 or similar agreement pursuant to its terms or (y) the first anniversary of the Date of Termination. The Company shall have no further payment obligations to the Executive or his legal representatives under this Agreement. (c) Cause; Other than for Good Reason. If the Executive's employment shall be terminated by the Company for Cause or by the Executive without Good Reason during the Employment Period, the Company shall have no further payment obligations to the Executive other than for payment of Accrued Obligations, Accrued Investments (which shall be payable in accordance with the terms and conditions of the Investment Plans), and the continuance of benefits under the Welfare Plans to the Date of Termination. (d) If pursuant to the terms and provisions of the Company's Welfare Plans the Executive (or members of his family) are not eligible to participate in the Company's Welfare Plans because the Executive is no longer an employee of the Company, then the Company may fulfill its obligations under clause (ii) of Section 4(a) or Section 4(b), as applicable, by either providing to the Executive (or his legal representatives), or reimbursing the Executive (or his legal representatives) for the costs of, benefits substantially similar to the benefits provided by the Company to its senior management under its Welfare Plans as such may from time to time exist after the Date of Termination. 5. FULL SETTLEMENT, MITIGATION. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. Neither the Executive nor the Company shall be liable to the other party for any damages in addition to the amounts payable under Section 4 arising out of the termination of the Executive's employment prior to the end of the Employment Period; provided, however, that the Company shall be entitled to seek damages for any breach of Sections 6, 7 or 9 or criminal misconduct. 6. CONFIDENTIAL INFORMATION. (a) The Executive acknowledges that the Company and their affiliates have trade, business and financial secrets and other confidential and proprietary information (collectively, the "Confidential Information"). As defined herein, Confidential Information shall not include (i) information that is generally known to other persons or entities who can obtain economic value from its disclosure or use and (ii) information required to be disclosed by the Executive pursuant to a subpoena or court order, or pursuant to a requirement of a governmental agency or law of the United States of America or a state thereof or any governmental or political subdivision thereof; provided, however, that the Executive shall take all reasonable steps to prohibit disclosure pursuant to subsection (ii) above. (b) The Executive agrees (i) to hold such Confidential Information in confidence and (ii) not to release such information to any person (other than Company employees and other persons to whom the Company has authorized the Executive to disclose such information and then 7 8 only to the extent that such Company employees and other persons authorized by the Company have a need for such knowledge). (c) The Executive further agrees not to use any Confidential Information for the benefit of any person or entity other than the Company. 7. SURRENDER OF MATERIALS UPON TERMINATION. Upon any termination of the Executive's employment, the Executive shall immediately return to the Company all copies, in whatever form, of any and all Confidential Information and other properties of the Company and their affiliates which are in the Executive's possession, custody or control. 8. SUCCESSORS. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 9. NON-COMPETITION. (a) The term of Non-Competition (herein so called) shall be for a term beginning on the date hereof and continuing until (i) if this Agreement is terminated during the Employment Period by either the Company or the Executive for any reason, the first anniversary of the Date of Termination or (ii) if the Employment Period expires by reason of a Non-Renewal Notice, the last day of the Employment Period. (b) During the term of Non-Competition, the Executive will not (other than for the benefit of the Company pursuant to this Agreement) directly or indirectly, individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venturer, agent, equity owner or in any capacity whatsoever, (i) engage in any radio broadcasting business that transmits a primary or city-grade signal within a Metro Survey Area (as currently defined by The Arbitron Company in its Radio Markets Reports) in which a station directly operated by the Company transmits a primary or city-grade signal (1), with respect to the term of Non-Competition that is during the Executive's employment, during such term of employment, and (2), with respect to the 8 9 term of Non-Competition that is after the term of the Executive's employment, on the Date of Termination (all such areas being collectively called the "Geographic Area") (a "Competing Business"), (ii) hire, attempt to hire, or contact or solicit with respect to hiring any employee of the Company, or (iii) divert or take away any customers or suppliers of the Company in the Geographic Area. Notwithstanding the foregoing, the Company agrees that the Executive may own less than five percent of the outstanding voting securities of any publicly traded company that is a Competing Business so long as the Executive does not otherwise participate in such competing business in any way prohibited by the preceding clause. As used in this Section 9(b) (and in Section 6), "Company" shall include the Company and any of its subsidiaries. (c) During the term of Non-Competition, the Executive will not use the Executive's access to, knowledge of, or application of Confidential Information to perform any duty for any Competing Business; it being understood and agreed to that this Section 9(c) shall be in addition to and not be construed as a limitation upon the covenants in Section 9(b) hereof. (d) The Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Company's proprietary information, plans and services and to protect the other legitimate business interests of the Company. 10. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this Agreement shall not prohibit or restrict the Executive's entitlement to full participation in the executive compensation, employee benefit and other plans or programs in which executives of the Company are eligible to participate. 11. MISCELLANEOUS. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. Whenever the terms "hereof", "hereby", "herein", or words of similar import are used in this Agreement they shall be construed as referring to this Agreement in its entirety rather than to a particular section or provision, unless the context specifically indicates to the contrary. Any reference to a particular "Section" or "paragraph" shall be construed as referring to the indicated section or paragraph of this Agreement unless the context indicates to the contrary. The use of the term "including" herein shall be construed as meaning "including without limitation." This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. 9 10 (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Eric W. Neumann Capstar Broadcasting Corporation 600 Congress Avenue, Suite 1400 Austin, Texas 78701 If to the Company: Capstar Broadcasting Corporation c/o Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attn: Lawrence D. Stuart, Jr. or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. (d) The Company agrees to attempt to obtain and maintain a director's and officer's liability insurance policy during the term of the Executive's employment covering the Executive on commercially reasonable terms, and the amount of coverage shall be reasonable in relation to the Executive's position and responsibilities hereunder; provided, however, that such coverage may be reduced or eliminated to the extent that the Company reduces or eliminates coverage for its directors and executives generally. (e) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (f) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. 10 11 (g) The Executive acknowledges that money damages would be both incalculable and an insufficient remedy for a breach of Section 6 or 9 by the Executive and that any such breach would cause the Company irreparable harm. Accordingly, the Company, in addition to any other remedies at law or in equity it may have, shall be entitled, without the requirement of posting of bond or other security, to equitable relief, including injunctive relief and specific performance, in connection with a breach of Section 6 or 9 by the Executive. (h) The provisions of this Agreement constitute the complete understanding and agreement between the parties with respect to the subject matter hereof. (i) This Agreement may be executed in two or more counterparts. (j) In the event any dispute or controversy arises under this Agreement and is not resolved by mutual written agreement between the Executive and the Company within 30 days after notice of the dispute is first given, then, upon the written request of the Executive or the Company, such dispute or controversy shall be submitted to arbitration to be conducted in accordance with the rules of the American Arbitration Association. Judgment may be entered thereon and the results of the arbitration will be binding and conclusive on the parties hereto. Any arbitrator's award or finding or any judgment or verdict thereon will be final and unappealable. All parties agree that venue for arbitration will be in Dallas, Texas, and that any arbitration commenced in any other venue will be transferred to Dallas, Texas, upon the written request of any party to this Agreement. All arbitrations will have three individuals acting as arbitrators: one arbitrator will be selected by the Executive, one arbitrator will be selected by the Company, and the two arbitrators so selected will select a third arbitrator. Any arbitrator selected by a party will not be affiliated, associated or related to the party selecting that arbitrator in any matter whatsoever. The decision of the majority of the arbitrators will be binding on all parties. The Company shall be responsible for paying its own and the Executive's attorneys fees, costs and other expenses pertaining to any such arbitration and enforcement regardless of whether an arbitrator's award or finding or any judgment or verdict thereon is entered against the Executive. The Company shall promptly (and in no event after ten days following its receipt from the Executive of each written request therefor) reimburse the Executive for his reasonable attorneys fees, costs and other expenses pertaining to any such arbitration and the enforcement thereof. (k) Sections 6 and 9 of this Agreement shall survive the termination of this Agreement. 11 12 IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written. EXECUTIVE /s/ ERIC W. NEUMANN -------------------------------------- Eric W. Neumann CAPSTAR BROADCASTING CORPORATION /s/ WILLIAM S. BANOWSKY, JR. -------------------------------------- By: William S. Banowsky, Jr. Title: Executive Vice President EX-27 6 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 11,477,120 0 51,754,337 1,633,627 0 66,421,251 103,308,498 6,630,347 857,003,080 65,089,832 462,842,130 95,070,957 0 2,796,322 157,994,921 857,003,080 0 116,406,412 0 77,965,479 38,021,610 795,546 32,500,695 (32,876,918) 0 (32,876,918) 0 (2,924,154) 0 (35,801,072) 0 0
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