-----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, UZkiSVBP0F2yin/jtonmYyL5uWyQp7WF0z4CoK0p/GRBN8Fwct3RLL9M2hDVpQOs YP9ILyntucDDt3gyzMqlcQ== 0000950134-97-003599.txt : 19970513 0000950134-97-003599.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950134-97-003599 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19970509 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAR CHANNEL COMMUNICATIONS INC CENTRAL INDEX KEY: 0000739708 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 741787539 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-25497 FILM NUMBER: 97599940 BUSINESS ADDRESS: STREET 1: 200 CONCORD PLAZA STREET 2: SUITE 600 CITY: SAN ANTONIO STATE: TX ZIP: 78216 BUSINESS PHONE: 2108222828 MAIL ADDRESS: STREET 2: 200 CONCORD PLAZA SUITE 600 CITY: SAN ANTONIO STATE: TX ZIP: 78216 S-3/A 1 AMENDMENT TO FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1997 REGISTRATION NO. 333-25497 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT Under The Securities Act of 1933 --------------------- CLEAR CHANNEL COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) 200 CONCORD PLAZA, SUITE 600 SAN ANTONIO, TEXAS 78216 (210) 822-2828 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------------- TEXAS 74-1787539 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.)
--------------------- L. LOWRY MAYS CLEAR CHANNEL COMMUNICATIONS, INC. 200 CONCORD PLAZA, SUITE 600 SAN ANTONIO, TEXAS 78216 (210) 822-2828 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- COPIES TO: STEPHEN C. MOUNT STEPHEN A. RIDDICK AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. PIPER & MARBURY L.L.P. 1500 NATIONSBANK PLAZA 36 SOUTH CHARLES STREET 300 CONVENT STREET BALTIMORE, MARYLAND 21201 SAN ANTONIO, TEXAS 78205
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------------- CALCULATION OF REGISTRATION FEE ================================================================================================================== PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE - ------------------------------------------------------------------------------------------------------------------ Common Stock...................... 385,932 $47.375 $18,283,528 $5,540 ==================================================================================================================
(1) The Registrant has previously registered and paid the appropriate filing fee for 10,614,068 shares of Common Stock. (2) Pursuant to Rule 457(c), the offering price and registration fee are computed on the basis of the average of the high and low prices of the Common Stock, as reported by the New York Stock Exchange on May 2, 1997. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION MAY 9, 1997 10,000,000 SHARES [CLR CH LOGO] [CLEAR CHANNEL COMMUNICATIONS, INC.]
COMMON STOCK --------------------- Of the 10,000,000 shares of Common Stock offered hereby (the "Offering"), 4,093,790 shares are being sold by Clear Channel Communications, Inc. (the "Company") and 5,906,210 shares are being sold by certain selling shareholders named herein (the "Selling Shareholders"). See "Selling Shareholders." The Company will not receive any of the proceeds from the sale of Common Stock by the Selling Shareholders. The Common Stock of the Company is traded on the New York Stock Exchange under the symbol "CCU". On May 8, 1997, the last reported sale price of the Common Stock was $48.00 per share. See "Price Range of Common Stock." --------------------- SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ================================================================================================================== PRICE UNDERWRITING PROCEEDS PROCEEDS TO TO DISCOUNTS AND TO SELLING PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2) - ------------------------------------------------------------------------------------------------------------------ Per Share.............. - ------------------------------------------------------------------------------------------------------------------ Total(3)............... ==================================================================================================================
(1) See "Underwriting" for information relating to the indemnification of the Underwriters. (2) Before deducting expenses payable by the Company and the Selling Shareholders estimated at $500,000. (3) The Company has granted to the Underwriters a 30-day option to purchase up to 1,000,000 additional shares of Common Stock solely to cover over-allotments, if any. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions, and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting." --------------------- The shares of Common Stock are offered by the several Underwriters, subject to prior sale, when, as and if delivered to and accepted by them, and subject to the right of the Underwriters to reject any order in whole or in part. It is expected that delivery of the Common Stock will be made at the offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about , 1997. ALEX. BROWN & SONS INCORPORATED CREDIT SUISSE FIRST BOSTON FURMAN SELZ GOLDMAN, SACHS & CO. LEHMAN BROTHERS MONTGOMERY SECURITIES SALOMON BROTHERS INC THE DATE OF THIS PROSPECTUS IS , 1997 3 [ARTWORK] IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NEW YORK STOCK EXCHANGE IN ACCORDANCE WITH RULE 103 UNDER REGULATION M. SEE "UNDERWRITING." CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING". 2 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including notes thereto, appearing in the documents incorporated by reference into this Prospectus. All information set forth herein has been adjusted to reflect five-for-four stock splits effected in February 1992, February 1993, and February 1994, and two-for-one stock splits effected in November 1995 and December 1996. Unless the context otherwise requires, references herein to the "Company" are to Clear Channel Communications, Inc. and its consolidated subsidiaries, and references herein to "Eller Media" are to Eller Media Corporation and its consolidated subsidiaries prior to the consummation of the Eller Media Acquisition (as hereinafter defined). Unless otherwise indicated, the information in this Prospectus assumes no exercise of the Underwriters' over-allotment option. See "Underwriting." THE COMPANY The Company, which began operations in 1972, is a diversified media company that currently owns or programs 112 radio stations and 18 television stations in 28 domestic markets and is one of the largest domestic outdoor advertising companies based on its total advertising display inventory of approximately 50,000 display faces in 15 major metropolitan markets. In addition, the Company owns a 50% equity interest in the Australian Radio Network Pty. Ltd. ("ARN"), which operates ten radio stations in Australia, a one-third equity interest in the New Zealand Radio Network, which operates 52 radio stations throughout New Zealand, and a 32.3% equity interest in Heftel Broadcasting Corporation (Nasdaq:HBCCA) ("Heftel"), a leading domestic Spanish-language broadcaster which operates 38 radio stations in 11 domestic markets. The Company currently has acquisitions pending for 19 radio stations, including 8 stations which the Company currently programs and/or sells air time under Local Marketing Agreements ("LMA") or Joint Sales Agreements ("JSA"), in 6 domestic markets. After completion of the pending acquisitions, the Company will own or program 123 radio stations. The 38 AM and 74 FM radio stations currently owned or programmed by the Company are principally located in the South, Southeast, Southwest, Northeast and Midwest. These radio stations employ a wide variety of programming formats, such as News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The 18 television stations currently owned or programmed by the Company are located in the South, Southeast, Northeast and Midwest. Seven of these television stations are affiliated with the FOX television network; seven are affiliated with the UPN television network; one is affiliated with the ABC television network; one is affiliated with the NBC television network; and two are affiliated with the CBS television network. Additionally, the Company operates five radio networks serving Oklahoma, Texas, Iowa, Kentucky and Virginia. In 1996, the Company derived approximately 62% of its net broadcasting revenue from radio operations and approximately 38% from television operations. The Company, through its recent acquisition of Eller Media, is one of the largest domestic outdoor advertising companies with a total advertising display inventory of approximately 50,000 display faces. The Company provides outdoor advertising services in 15 major metropolitan markets. The Company currently has both outdoor advertising and broadcasting assets in seven domestic markets, as well as in five additional domestic markets currently served by Heftel. The markets in which the Company now provides outdoor advertising services represent approximately 22% of the total U.S. population and approximately 50% of the rapidly growing U.S. Hispanic population. The Company now has a significant presence in eight of the ten largest U.S. Hispanic markets, including Los Angeles, Miami, Chicago and San Antonio. See "Business -- Outdoor Advertising." The Company's successful operating strategies and acquisition track record, combined with its diversity of radio and television stations in terms of markets and formats, have enabled the Company to achieve consistent growth in revenue and cash flow. Since 1992, the Company has achieved compounded annual growth rates of approximately 43% in net revenue, approximately 52% in 3 5 broadcast cash flow (defined as station operating income before depreciation, amortization and corporate expenses) and approximately 58% in after-tax cash flow (defined as net income before unusual items plus depreciation, amortization of intangibles -- including non-consolidated affiliates -- and deferred taxes). COMPANY STRATEGY The Company's overall strategy is to assist its customers in marketing their products and services in the most effective and cost-efficient manner possible. As such, the Company has worked to assemble assets that it believes are most suited for this purpose. While the Company has traditionally focused on radio and television broadcasting, it has recently added outdoor advertising assets to its holdings through its acquisition of Eller Media. The Company plans to use its further diversified collection of assets, along with the operating expertise of its management, to continue to generate healthy internal growth. The Company believes it can augment this internal growth with the opportunistic acquisition of additional media assets. Such potential acquisitions will be evaluated based on their strategic value to the Company. The Company believes that additional acquisitions that meet the Company's criteria will add revenue and cash flow to its results and improve the performance of the Company's existing assets. Historically, the Company has been able to generate significant returns for its investors while maintaining financial flexibility through the prudent use of leverage. The Company believes that this prudent use of leverage has also contributed to the Company's relatively low cost of capital. The Company believes that focusing on its clients' goals, creating a sales-intensive operating organization, and maintaining a conservative financial position are aspects of its operating strategy which are more effective in combination than they would be independently. The Company believes that the potential exists for cooperation between its various business segments and that it can help its customers market their products and services more effectively and efficiently by offering greater flexibility in the choice of media outlets for marketing messages. The Company is now able to offer additional advertising solutions for its customers in those markets where it operates radio and television stations and outdoor advertising displays. Additionally, the Company intends to use its various business segments to cross-promote one another when possible. In this way, the Company believes that its combination of assets will allow it to offer greater value to its customers. Broadcast Strategy. The Company's broadcast strategy is to identify and acquire under-performing stations on favorable terms and to utilize management's extensive operating experience to improve the performance of such stations as well as its existing stations through effective programming, reduction of costs and aggressive promotion, marketing and sales. In addition, the Company employs a marketing strategy that emphasizes direct sales to local customers rather than through advertising agencies and other intermediaries. The Company believes that this focus has enabled its stations to achieve market revenue shares exceeding their audience shares. The Company's radio strategy is to assemble and operate a cluster of radio stations in each of its principal markets. The Company believes that by controlling a larger share of the total advertising inventory in a particular market, it can offer advertisers attractive packages of advertising options. The Company also believes that its cluster approach will allow it to operate its stations with more highly skilled local management teams and eliminate duplicative operating and overhead expenses. The Company's television strategy is to own and program one station in each of its markets and to program an additional station under an LMA in each such market. In seven of its television markets, the Company already programs an additional television station under an LMA. Outdoor Advertising Strategy. The Company's outdoor advertising strategy is to expand its market presence in the outdoor advertising business and improve its operating results by (i) managing the advertising rates and occupancy levels of its displays to maximize market revenues; (ii) attracting new categories of advertisers to the outdoor medium through significant 4 6 investments in sales and marketing resources; (iii) increasing focus on local advertising sales; (iv) constructing new displays and upgrading its existing displays; (v) taking advantage of technological advances which increase both sales force productivity and production department efficiency; and (vi) acquiring additional displays in its existing markets and expanding into additional markets where the Company already has a broadcasting presence as well as the country's largest media markets and their surrounding regional areas. The Company believes this strategy enhances its ability to effectively respond to advertisers' needs. To support this outdoor advertising operating strategy, the Company has decentralized its operating structure related to outdoor advertising in order to place authority, autonomy and accountability at the market level and provide local management with the tools necessary to oversee sales, display development, administration and production and to identify suitable acquisition candidates. The Company also maintains a fully-staffed sales and marketing office in New York which services national outdoor advertising accounts and supports the Company's local sales force in each market. The Company believes that one of its strongest competitive advantages is its unique blend of highly experienced corporate and local market management. RECENT DEVELOPMENTS ELLER MEDIA CORPORATION On April 10, 1997, the Company acquired approximately 93% of the then outstanding stock of Eller Media for a total consideration of approximately $623 million, consisting of approximately $325 million in cash and 6,643,637 shares of Common Stock (approximately $298 million in Common Stock based on a price per share of approximately $44.8625 per share) (the "Eller Media Acquisition"). Immediately following the consummation of the Eller Media Acquisition, the Company retired approximately $417 million of Eller Media's outstanding bank debt through borrowings under the Company's credit facility (the "Credit Facility"). In addition, the Company issued options (with an estimated fair value of approximately $51 million) to purchase 1,468,182 shares of the Company's Common Stock in connection with the assumption of Eller Media's outstanding stock options. The Company also agreed to issue 147,858 shares of Common Stock pursuant to certain phantom stock plan obligations assumed by the Company as part of the Eller Media Acquisition. The holders of the approximately 7% of the then outstanding capital stock of Eller Media not purchased by the Company have the right to require the Company to acquire such stock for 1,081,469 shares of the Company's Common Stock until April 10, 2002. From and after April 10, 2004 (or before such date upon the occurrence of certain events), the Company will have the right to acquire this minority interest stake in Eller Media for 1,081,469 shares of its Common Stock. For the twelve month period ended December 31, 1996, Eller Media had net revenues, operating cash flow and an operating cash flow margin of $237 million, $91 million and 38.5%, respectively. On April 29, 1997, Karl Eller, the Chief Executive Officer of Eller Media, was appointed to the Board of Directors of the Company. Karl Eller will remain with the Company to run Eller Media as a subsidiary of the Company. Mr. Eller's existing employment contract, which has approximately two and one-half years until expiration, will remain in place. In addition, Mr. Eller and other members of the Eller Media management team have a significant stake in the Company's stock options through the conversion of existing Eller Media stock options into options to purchase the Company's Common Stock. Following the consummation of the Eller Media Acquisition, the Company became one of the largest domestic outdoor advertising companies with total advertising display inventory of approximately 50,000 display faces. It now provides outdoor advertising services in 15 major metropolitan markets. The Company currently has both outdoor advertising and broadcasting assets in seven domestic markets, as well as in five additional domestic markets currently served by Heftel. The markets in which the Company now provides outdoor advertising services represent approximately 22% of the total U.S. population and approximately 50% of the rapidly growing U.S. Hispanic 5 7 population. The Company now has a significant presence in eight of the ten largest U.S. Hispanic markets, including Los Angeles, Miami, Chicago and San Antonio. See "Business -- Outdoor Advertising." HEFTEL BROADCASTING CORPORATION On February 14, 1997, the Company's nonconsolidated affiliate, Heftel, the largest domestic Spanish language radio broadcasting company, completed a merger with Tichenor Media System, Inc. ("Tichenor"), then the third largest Spanish language radio broadcasting company. Following the merger, Heftel owned or programed 38 radio stations in 11 markets, including stations in each of the top ten Hispanic markets. The Company's total ownership interest in Heftel was reduced to approximately 32.3% of the total outstanding common stock of Heftel (voting and non-voting) following the issuance of 4.8 million shares of voting common stock by Heftel in a public offering, the sale by the Company of 350,000 shares of Heftel's common stock in such public offering and the issuance of approximately 5.6 million shares of Heftel's voting common stock to former Tichenor shareholders and warrant holders. In the merger, all of the Company's voting common stock of Heftel and shares of Tichenor's common stock owned by the Company were converted into shares of convertible nonvoting common stock of Heftel in order to comply with the cross-interest policy of the Federal Communications Commission (the "FCC"). OTHER COMPLETED ACQUISITIONS Since December 31, 1996, the Company completed the acquisition of 13 additional radio stations for approximately $91.5 million and acquired a 50% equity interest in a company which owns a radio station in the Czech Republic for approximately $1.0 million. The Company has also acquired a broadcasting license for approximately $1.0 million. Eller Media or the Company have completed the acquisition of 380 display faces for approximately $27.6 million. These acquisitions include: - -In January 1997, the Company acquired WZZU-FM in Raleigh, North Carolina from Ceder Raleigh Limited Partnership for approximately $7.5 million. - -In January 1997, the Company acquired WQMF-FM in Louisville, Kentucky from Otting Broadcasting, Inc. and PAO Communications, Inc. for approximately $13.5 million. - -In February 1997, the Company acquired WVTI-FM (formerly WAKX-FM) in Grand Rapids, Michigan from Pathfinder Communications Corporation for approximately $4.1 million. - -In February 1997, the Company acquired KHOM-FM in Houma, Louisiana from KHOM Associates, LLP for approximately $6.9 million. - -In February 1997, the Company acquired the FCC license of KJOJ-AM in Conroe, Texas from Family Group Enterprises, Inc. for approximately $1.0 million. The broadcasting assets other than the FCC license were acquired in May 1996 as part of the acquisition of USRadio, Inc. - -In March 1997, the Company's 80% owned subsidiary, Radio Enterprises, Inc., completed the purchase of WQBK-FM, WQBJ-FM, WXCR-FM and WQBK-AM in Albany, New York from Maximum Media Inc. and DJAMedia Inc. for approximately $7.5 million. - -In March 1997, the Company acquired WOKY-AM and WMIL-FM in Milwaukee, Wisconsin from Chancellor Radio Broadcasting Company for approximately $41 million. - -In April 1997, the Company acquired WOLZ-FM, WKII-AM and WFSN-FM in Ft. Myers, Florida from Corkscrew Broadcasting Corporation for approximately $11 million. - -In May 1997, the Company acquired a 50% equity interest in Radio Bonton, a.s., which owns an FM radio station in the Czech Republic from Bonton, a.s. for approximately $1.0 million. - -Since January 1, 1997, Eller Media or the Company have purchased 380 display faces in 20 transactions for an aggregate of approximately $27.6 million, including the issuance of a promissory note 6 8 in the principal amount of $9.5 million convertible into approximately 1% of the outstanding stock of Eller Media. These display faces are located in eight existing markets. PENDING ACQUISITIONS Since December 31, 1996, the Company has entered into definitive agreements to purchase 14 additional radio stations for approximately $69.5 million. Each of these acquisitions is subject to the approval of certain governmental authorities, including the FCC, the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "Antitrust Division"), and other closing conditions. There can be no assurance that such acquisitions will be consummated or, if consummated, the terms thereof. Pending acquisitions include: - -In February 1997, the Company entered into a definitive agreement to acquire WDUR-AM, WFXC-FM and WFXK-FM in Raleigh, North Carolina from WFXC-FM and WDUR-AM, Inc. and Pinnacle Corp. for approximately $20 million. - -In March 1997, the Company entered into a definitive agreement to acquire WKSJ-FM, WKSJ-AM, WMXC-FM, WDWG-FM, WRKH-FM and WNTM-AM in Mobile, Alabama from Capitol Broadcasting Company, L.L.C. for approximately $24 million. - -In April 1997, the Company entered into a definitive agreement to acquire KMVK-FM, KSSN-FM and KOLL-FM in Little Rock, Arkansas from Triathlon Broadcasting of Little Rock, Inc., for approximately $20 million. - -In April 1997, the Company entered into a definitive agreement to acquire WMFX-FM and WOIC-AM in Columbia, South Carolina from Emerald City Radio Partners, L.P. for approximately $5.5 million. The Company has its principal executive offices at 200 Concord Plaza, Suite 600, San Antonio, Texas 78216 (telephone: 210-822-2828). FIRST QUARTER RESULTS On April 28, 1997, the Company announced the results of its operations during the first quarter of 1997. The Company reported that after tax cash flow increased 83% to $29,440,000 or $.38 per share compared to $16,079,000 or $.23 per share for the same quarter in 1996. Net broadcasting revenue increased 58% to $98,289,000 as a result of improvement in existing station operations and the operations of additional stations acquired in 1996 and the first quarter of 1997. Station operating income before depreciation and amortization increased 47% to $35,234,000 compared to $23,978,000 for the same quarter in 1996. Net income increased 22% to $7,599,000 or $.10 per share compared to $6,238,000 or $.09 per share for the first quarter of 1996. THE OFFERING Common Stock to be offered by the Company....... 4,093,790 shares Common Stock to be offered by the Selling Shareholders.................................... 5,906,210 shares Common Stock to be outstanding after the Offering........................................ 88,017,920 shares(1) Use of proceeds................................. To repay indebtedness under the Credit Facility New York Stock Exchange symbol.................. CCU - --------------- (1) Excludes 2,966,449 shares of Common Stock currently issuable upon exercise of options to purchase shares of the Company's Common Stock at prices ranging from $3.26 to $43.45 per share and 147,858 shares of Common Stock issuable pursuant to phantom stock plan obligations assumed by the Company as part of the Eller Media Acquisition. 7 9 SUMMARY FINANCIAL INFORMATION (In thousands, except per share amounts)
PRO FORMA YEAR ENDED DECEMBER 31, ELLER MEDIA ----------------------- ACQUISITION 1992 1993 1994 1995 1996 1996(2) ------- -------- -------- -------- -------- ----------- STATEMENT OF OPERATIONS DATA(1): Net revenue........................... $84,485 $121,118 $178,053 $250,059 $351,739 $588,771 Operating expenses.................... 55,812 78,925 105,380 137,504 198,332 340,171 Depreciation and amortization......... 12,253 17,447 24,669 33,769 45,790 109,954 ------- -------- -------- -------- -------- -------- Operating income before corporate expenses............................ 16,420 24,746 48,004 78,786 107,617 138,646 Corporate expenses.................... 2,890 3,464 5,100 7,414 8,527 18,731 ------- -------- -------- -------- -------- -------- Operating income...................... 13,530 21,282 42,904 71,372 99,090 119,915 Interest expense...................... (4,739) (5,390) (7,669) (20,752) (30,080) (75,777) Other income (expense)................ (1,217) (196) 1,161 (803) 2,230 (4,491) ------- -------- -------- -------- -------- -------- Income before income taxes............ 7,574 15,696 36,396 49,817 71,240 39,647 Income taxes.......................... 3,281 6,573 14,387 20,292 28,386 24,104 ------- -------- -------- -------- -------- -------- Income before equity in net income (loss) of, and other income from nonconsolidated affiliates.......... 4,293 9,123 22,009 29,525 42,854 15,543 Equity in net income (loss) of, and other income from, nonconsolidated affiliates.......................... -- -- -- 2,489 (5,158) (5,158) ------- -------- -------- -------- -------- -------- Net income............................ $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 37,696 $ 10,385 ======= ======== ======== ======== ======== ======== Net income per common share........... $ .07 $ .15 $ .32 $ .46 $ .50 $ .13 ======= ======== ======== ======== ======== ======== Weighted average common shares and common share equivalents outstanding......................... 59,320 62,202 69,326 70,201 74,649 82,484 ======= ======== ======== ======== ======== ======== After-tax cash flow(3)................ $17,147 $ 26,638 $ 46,866 $ 71,140 $107,318 $144,171 ======= ======== ======== ======== ======== ======== After-tax cash flow per share(4)............................ $ .29 $ .43 $ .68 $ 1.01 $ 1.44 $ 1.75 ======= ======== ======== ======== ======== ========
DECEMBER 31, ------------ AS ADJUSTED 1992 1993 1994 1995 1996 1996(5) ------- -------- -------- -------- -------- ----------- BALANCE SHEET DATA: Cash and cash equivalents....... $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 16,701 $ 17,574 Total assets.................... 146,993 227,577 411,594 563,011 1,324,711 2,494,888 Long-term debt, net of current maturities.................... 97,000 87,815 238,204 334,164 725,132 1,272,863 Shareholders' equity............ 31,055 98,343 130,533 163,713 513,431 1,051,440
8 10 - --------------- (1) The comparability of results of operations is affected by acquisitions consummated in each of the periods presented. (2) Gives effect to the Eller Media Acquisition as if such acquisition had been consummated on January 1, 1996 and excludes Eller Media's extraordinary loss on debt extinguishment (net of tax benefit) of $4,537,000. The pro forma financial information is based on a preliminary purchase price allocation and does not give effect to any other completed or pending acquisition. (3) Defined as net income before unusual items plus depreciation, amortization of intangibles (including non-consolidated affiliates) and deferred taxes. After-tax cash flow is presented here not as a measure of operating results and does not purport to represent cash provided by operating activities. After-tax cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. (4) Defined as after-tax cash flow divided by weighted average common shares and common share equivalents outstanding. (5) As adjusted to give effect to the Eller Media Acquisition as if such acquisition had been consummated on December 31, 1996 and to give effect to the Offering and the application of the estimated net proceeds therefrom of $189,321,000 (assuming a public offering price of $48.00 per share). The pro forma financial information is based on a preliminary purchase price allocation and does not give effect to any other completed or pending acquisition. 9 11 RISK FACTORS Prospective purchasers of the Common Stock should consider carefully the factors set forth below, as well as the other information contained in this Prospectus. SIGNIFICANT SHAREHOLDERS Upon completion of the Offering, the two principal shareholders of the Company, L. Lowry Mays, Chairman, Chief Executive Officer and a Director of the Company, and B.J. McCombs, a Director of the Company, collectively will own beneficially approximately 29.3% of the outstanding shares of Common Stock (or approximately 29.0% if the Underwriters' over-allotment option is exercised in full). As a result, Messrs. Mays and McCombs will be able to exert significant influence over the outcome of elections of the Company's directors and other matters requiring the vote or consent of the shareholders of the Company. The Company, L. Lowry Mays and B.J. McCombs are parties to a Buy-Sell Agreement (the "Repurchase Agreement") restricting the disposition of shares of Common Stock owned by Messrs. Mays and McCombs. See "Description of Capital Stock -- Repurchase Agreement." DEPENDENCE ON KEY PERSONNEL The Company believes that its success will continue to be dependent upon its ability to attract and retain skilled managers and other personnel, including its Chairman and Chief Executive Officer, L. Lowry Mays. The Company has entered into an employment agreement expiring in 2001 with Mr. Mays and other employment agreements expiring at various times with key personnel. The Company does not maintain a key man life insurance policy on Mr. Mays. FINANCIAL LEVERAGE After giving effect to the sale of the Common Stock offered hereby and the application of the estimated net proceeds therefrom (assuming a public offering price of $48.00 per share) and the Eller Media Acquisition, the Company would have had, at December 31, 1996, borrowings under its then existing credit facility of approximately $1,261,683,000 and shareholders' equity of $1,051,440,000. The Company has borrowed and expects to continue borrowing to finance acquisitions of broadcasting and other media-related and outdoor advertising properties and for other corporate purposes. On April 10, 1997, in connection with the Eller Media Acquisition, the Company amended its Credit Facility increasing the amount it may borrow to $1,750,000,000 at floating rates (currently LIBOR plus 0.50%). In connection with pending acquisitions, the Company may incur $84.8 million of additional indebtedness prior to the application of the proceeds of the Offering if all such acquisitions are consummated. The Company will use the proceeds from the Offering to repay debt previously drawn under its Credit Facility. The Company will have sufficient funds under the Credit Facility to consummate all of the pending acquisitions contemplated herein. Future acquisitions of radio and television stations and other media-related and outdoor advertising properties effected in connection with the implementation of the Company's acquisition strategy are expected to be financed from increased borrowings under the Credit Facility, other debt or equity financings and cash flow from operations. See "-- Risk of Acquisition Strategy; Capital Requirements." Because of the amount of the Company's indebtedness, a significant portion of the Company's operating income is required for debt service. The Company's leverage could make it vulnerable to an increase in interest rates or a downturn in the operating performance of its radio and television stations or in general economic conditions. The Credit Facility contains certain financial and operational covenants and other restrictions with which the Company must comply, including limitations on capital expenditures, the incurrence of additional indebtedness, payment of cash dividends, and requirements to maintain certain financial ratios. See "Dividend Policy". 10 12 GOVERNMENT REGULATION Broadcasting. The domestic broadcasting industry is subject to extensive federal regulation which, among other things, requires approval by the FCC for the issuance, renewal, transfer and assignment of broadcasting station operating licenses and limits the number of broadcasting properties the Company may acquire. The Telecommunications Act of 1996 (the "1996 Act"), which became law on February 8, 1996, creates significant new opportunities for broadcasting companies but also creates uncertainties as to how the FCC and the courts will enforce and interpret the 1996 Act. The Company's business will continue to be dependent upon acquiring and maintaining broadcasting licenses issued by the FCC, which are issued for a maximum term of eight years. Although it is rare for the FCC to deny a renewal application, there can be no assurance that future renewal applications will be approved, or that renewals will not include conditions or qualifications that could adversely affect the Company's operations. Moreover, governmental regulations and policies may change over time and there can be no assurance that such changes would not have a material adverse impact upon the Company's business, financial condition and results of operations. For example, the FCC currently is considering whether to revise its policy with regard to television LMAs and there can be no guarantee that the Company will be able to program stations under existing LMAs for the remainder of their current terms, extend existing LMAs beyond their current terms, or to enter into LMAs in other markets in which the Company owns and operates television stations. Outdoor Advertising. Outdoor advertising displays are subject to governmental regulation at the federal, state and local levels. These regulations, in some cases, limit the height, size, location and operation of billboards and, in limited circumstances, regulate the content of the advertising copy displayed on the billboards. Some governmental regulations prohibit the construction of new billboards or the replacement, relocation, enlargement or upgrading of existing structures. Some cities, including two within the Company's existing markets (Houston and San Francisco), have adopted amortization ordinances under which, after the expiration of a specified period of time, billboards must be removed at the owner's expense and without payment of compensation. Ordinances requiring the removal of billboards without compensation, whether through amortization or otherwise, are being challenged in various state and federal courts with conflicting results. The Houston ordinance has been the subject of litigation for over five years and is currently not being enforced. The Company believes that its operations will not be materially affected by the Houston amortization ordinance even if it is enforced, as a substantial portion of the Company's Houston inventory consists of bulletins and 30-sheet posters located near federal highways where the Highway Beautification Act of 1965 would require just compensation in the event of any required removal. The Company's operations have not been materially affected by the San Francisco amortization ordinances since its signs conform to effective ordinances and state law currently prevents effectiveness of other ordinances which require removal of signs without compensation. There can be no assurance that the Company will be successful in negotiating acceptable arrangements in circumstances in which its displays are subject to removal or amortization, and what effect, if any, such regulations may have on the Company's operations. In addition, the Company is unable to predict what additional regulations may be imposed on outdoor advertising in the future. Legislation regulating the content of billboard advertisements has been introduced in Congress from time to time in the past. Changes in laws and regulations affecting outdoor advertising at any level of government could have a material adverse effect on the Company. Tobacco Advertising. On a pro forma basis, approximately 5% of the Company's 1996 net revenues were derived from tobacco advertising. In August 1996, the U.S. Food and Drug Administration ("FDA") issued final regulations governing certain marketing practices in the tobacco industry, including a prohibition of tobacco product billboard advertisements within 1,000 feet of schools and playgrounds and a requirement that all tobacco product advertisements on billboards be in black and white and contain only text. These regulations, which were due to become effective in August 1997, were challenged recently by members of the tobacco and advertising industry in a law 11 13 suit brought in North Carolina federal district court. In that case, the court upheld the authority of the FDA to regulate tobacco products by limiting access of such products to persons under 18 years of age and by requiring tobacco manufacturers to label such products in accordance with FDA regulations. Nevertheless, the court struck down the FDA restrictions on the promotion and advertising of tobacco products. Both industry and the FDA are planning to appeal this decision, and it is unclear what action an appellate court will take in this matter. Regardless of whether the FDA is found to have jurisdiction over tobacco promotion and advertising, and thus have the ability to place limits on billboard advertising, it is possible that the FTC may take regulatory action in this area. The FTC has wide-ranging authority over advertising practices, and it is within their regulatory authority to investigate unfair and deceptive trade practices, including advertising, pertaining to FDA-regulated products. Although it has not done so in the past, because of increasing regulatory and political pressure it is possible that the FTC may take action to limit the content and placement of outdoor advertising, including, without limitation, the content and placement of outdoor advertising relating to the sale of tobacco products to children. Outdoor advertising of tobacco products also may be affected by city or state regulations. For example, in 1995, the Court of Appeals for the Fourth Circuit upheld the validity of a Baltimore city ordinance prohibiting the placement of outdoor advertisements of cigarettes in publicly visible locations, such as billboards, signboards and sides of buildings. Subsequently, the United States Supreme Court declined to review an appeal of this case. Following the Baltimore ordinance, the City Council of New York City has introduced legislation to ban outdoor tobacco advertising near schools and other locations where children are likely to assemble. Also, a local council in Anne Arundel County, Maryland recently has voted to ban most tobacco billboard advertising. It is likely that other city or state governments will pass similar ordinances or statutes to limit outdoor advertising of tobacco products in the future. In addition to the decisions mentioned above, it recently has been reported that certain cigarette manufacturers who are defendants in numerous class action suits throughout the U.S. have proposed an out of court settlement with respect to such suits that is likely to include restrictions on billboard advertising by these and other cigarette manufacturers. It has been reported that, as a result of settlement negotiations, the tobacco industry will agree to a complete ban on all outdoor advertising, such as on billboards, in stadiums, and in store window displays. There can be no assurance as to the effect of these regulations, potential legislation or settlement discussions on the Company's business and on its net revenues and financial position. A reduction in billboard advertising by the tobacco industry would cause an immediate reduction in the Company's direct revenue from such advertisers and would simultaneously increase the available space on the existing inventory of billboards in the outdoor advertising industry. This could in turn result in a lowering of outdoor advertising rates in each of the Company's outdoor advertising markets or limit the ability of industry participants to increase rates for some period of time. Any regulatory change or settlement agreement restricting the Company's or the tobacco industry's ability to utilize outdoor advertising for tobacco products could have a material adverse effect on the Company. Environmental. As the owner, lessee or operator of various real properties and facilities, the Company is subject to various federal, state and local environmental laws and regulations. Historically, compliance with such laws and regulations has not had a material adverse effect on the Company's business. There can be no assurance, however, that compliance with existing or new environmental laws and regulations will not require the Company to make significant expenditures in the future. 12 14 ANTITRUST MATTERS An important element of the Company's growth strategy involves the acquisition of additional radio stations and other media-related and outdoor advertising properties, many of which are likely to require preacquisition antitrust review by the FTC and the Antitrust Division. Following passage of the 1996 Act, the Antitrust Division has become more aggressive in reviewing proposed acquisitions of radio stations and radio station networks, particularly in instances where the proposed acquiror already owns one or more radio stations in a particular market and the acquisition involves another radio station in the same market. Recently, the Antitrust Division has obtained consent decrees requiring radio station divestitures in a particular market based on allegations that acquisitions would lead to unacceptable concentration levels. There can be no assurance that the Antitrust Division or the FTC will not seek to bar the Company from acquiring additional radio or television stations or other media-related and outdoor advertising properties in any market where the Company already has a significant position. RISK OF ACQUISITION STRATEGY; CAPITAL REQUIREMENTS The Company intends to pursue growth through the opportunistic acquisition of broadcasting companies, radio and television station groups, individual radio and television stations, outdoor advertising companies and outdoor advertising display faces. The Company routinely reviews potential acquisitions. Although no definitive agreements have been reached regarding any such potential material acquisitions, except as described in this Prospectus, it is likely that the Company will continue to experience significant expansion in the future. As a result, the Company's management will be required to effectively manage a rapidly expanding and significantly larger portfolio of broadcasting and outdoor advertising properties. The Company's acquisition strategy involves numerous other risks, including difficulties in the integration of operations and systems, the diversion of management's attention from other business concerns and the potential loss of key employees of acquired companies or stations. There can be no assurance such acquisitions will benefit the Company. The consummation of domestic broadcasting acquisitions, including all pending acquisitions, requires FCC approval with respect to the transfer of the broadcast license of the acquired station. There can be no assurance that the FCC will approve pending or future acquisitions, or that the Company will be able to consummate such acquisitions. The Company will face competition from other broadcasting and outdoor advertising companies for available acquisition opportunities. In addition, if the prices sought by sellers of broadcasting and outdoor advertising properties continue to rise, the Company may find fewer acceptable acquisition opportunities. In addition, the purchase price of possible acquisitions could require additional debt or equity financing on the part of the Company. See "-- Financial Leverage." Additional indebtedness could increase the Company's leverage and make the Company more vulnerable to economic downturns and may limit its ability to withstand competitive pressures. Additional equity financing could result in dilution to the purchasers of the Common Stock offered hereby. There can be no assurance that the Company will have sufficient capital resources to complete acquisitions, that acquisitions can be completed on terms acceptable to the Company or that any acquisitions that are completed can be integrated successfully into the Company. INTEGRATION OF THE BUSINESS OF THE COMPANY AND ELLER MEDIA The Eller Media Acquisition involves the integration of two companies that have previously operated independently. There can be no assurance that the Company will successfully integrate the operations of Eller Media with those of the Company or that all of the benefits expected from such integration will be realized. Any delays or unexpected costs incurred in connection with such integration could have an adverse effect on the Company's business, operating results or financial position. Additionally, there can be no assurance that the operations, management and personnel of 13 15 the two companies will be compatible or that the Company will not experience the loss of key personnel. There can be no assurance that such integration will not adversely affect the operations of the Company. COMPETITION; BUSINESS RISKS The Company's three business segments are in highly competitive businesses. The Company's radio and television stations and outdoor advertising properties compete for audiences and advertising revenues with other radio and television stations and outdoor advertising companies, as well as with other media, such as newspapers, magazines, cable television, and direct mail, within their respective markets. Audience ratings and market shares are subject to change and any adverse change in a particular market could have a material adverse effect on the Company's revenue in that market. Future operations are further subject to many variables which could have an adverse effect upon the Company's financial performance. These variables include economic conditions, both general and relative to the broadcasting industry; shifts in population and other demographics; the level of competition for advertising dollars; fluctuations in operating costs; technological changes and innovations; changes in labor conditions; and changes in governmental regulations and policies and actions of federal regulatory bodies. Although the Company believes that each of its business segments is able to compete effectively in its respective markets, there can be no assurance that the Company will be able to maintain or increase its current audience ratings and advertising revenues. NEW TECHNOLOGIES The FCC is considering ways to introduce new technologies to the radio broadcast industry, including satellite and terrestrial delivery of digital audio broadcasting and the standardization of available technologies which significantly enhance the sound quality of AM broadcasts. The Company is unable to predict the effect any such new technology will have on the Company's financial condition or results of operations. On April 3, 1997, the FCC announced that it had adopted rules that will allow television broadcasters to provide digital television ("DTV") to consumers. The FCC also adopted a table of allotments for DTV, which will provide eligible existing broadcasters with a second channel on which to provide DTV service. The allotment plan is based on the use of channels 2-51, although the "core" DTV spectrum will be between channels 2-46 or 7-51. Ultimately, the FCC plans to recover the channels currently used for analog broadcasting and will decide at a later date the use of the spectrum ultimately recovered. Television broadcasters will be allowed to use their channels according to their best business judgment. Such uses can include multiple standard definition program channels, data transfer, subscription video, interactive materials, and audio signals, although broadcasters will be required to provide a free digital video programming service that is at least comparable to today's analog service. Broadcasters will not be required to air "high definition" programming or, initially, to simulcast their analog programming on the digital channel. Affiliates of ABC, CBS, NBC and FOX in the top 10 television markets will be required to be on the air with a digital signal by May 1, 1999. Affiliates of those networks in markets 11-30 will be required to be on the air with a digital signal by November 1, 1999, and remaining commercial broadcasters within five years. The FCC stated that broadcasters will remain public trustees and that it will issue a notice to determine the extent of broadcasters' future public interest obligations. The Company will incur considerable expense in the conversion to DTV and the Company is unable to predict the extent or timing of consumer demand for any such DTV services. SHARES ELIGIBLE FOR FUTURE SALE The 10,000,000 shares of Common Stock sold in the Offering will be freely tradeable without restriction or further registration under the Securities Act of 1933, as amended (the "1933 Act"), unless acquired by "affiliates" (as defined in Rule 144 promulgated by the Securities and Exchange Commission under the 1933 Act ("Rule 144)). Beginning 90 days after the date of this Prospectus, approximately 14,539,919 shares of Common Stock owned by L. Lowry Mays and approximately 14 16 11,262,936 shares of Common Stock owned by B. J. McCombs will be eligible for sale in the public market, although they will remain subject to certain limitations imposed on affiliates under Rule 144. See "Shares Eligible For Future Sale." FORWARD-LOOKING STATEMENTS This Prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act. Discussions containing such forward-looking statements may be found in the material set forth under "Summary" and "The Company," as well as within the Prospectus generally. In addition, when used in this Prospectus, the words "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially from those described in the forward-looking statements as a result of the risk factors set forth herein and the matters set forth in the Prospectus generally. 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 cautions the reader, however, that this list of risk factors may not be exhaustive. 15 17 CAPITALIZATION The following table sets forth the current portion of long-term debt and capitalization of the Company as of December 31, 1996, pro forma to give effect to the Eller Media Acquisition and as adjusted to give effect to the Eller Media Acquisition and the consummation of the Offering at an assumed price of $48.00 per share.
DECEMBER 31, 1996 --------------------------------------------- ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2) ---------- ------------ ----------------- (DOLLARS IN THOUSANDS) Current portion of long-term debt....... $ 1,479 $ 1,479 $ 1,479 ========== ========== ========== Credit Facility(3)...................... $ 717,175 $1,451,004 $1,261,683 Other long-term debt.................... 7,957 11,180 11,180 Shareholders' equity: Preferred Stock, $1.00 par value, 2,000,000 shares authorized, no shares issued and outstanding...... -- -- -- Common Stock, $.10 par value, 100,000,000 shares authorized, 76,992,078 shares issued and outstanding, (87,729,505 shares as adjusted)(4)....................... 7,699 8,363 8,773 Additional paid-in capital.............. 398,622 746,646 935,557 Retained earnings....................... 106,055 106,055 106,055 Other equity............................ 1,226 1,226 1,226 Cost of shares (26,878) held in treasury.............................. (171) (171) (171) ---------- ---------- ---------- Total shareholders' equity............ 513,431 862,119 1,051,440 ---------- ---------- ---------- Total capitalization.......... $1,238,563 $2,324,303 $2,324,303 ========== ========== ==========
- --------------- (1) Pro forma to give effect to the Eller Media Acquisition as if such acquisition had been consummated on December 31, 1996. (2) As adjusted to give effect to the Eller Media Acquisition as if such acquisition had been consummated on December 31, 1996 and to the Offering and the application of the estimated net proceeds therefrom of $189,321,000 (at an assumed offering price of $48.00 per share). (3) The Company incurred $91,500,000 in additional indebtedness subsequent to December 31, 1996 that was related to acquisitions other than the Eller Media Acquisition and may incur additional indebtedness of up to $84,800,000 in connection with various pending acquisitions. (4) On May 2, 1997, the Company filed an amendment to the Company's articles of incorporation increasing the number of authorized shares of Common Stock from 100,000,000 shares to 150,000,000 shares. DIVIDEND POLICY The Company currently expects to retain its earnings for the development and expansion of its business. Any future decision by the Board of Directors to pay cash dividends will depend upon, among other factors, the Company's earnings, financial position and capital requirements. The Company's Credit Facility limits the Company's ability to pay dividends, other than dividends payable wholly in capital stock of the Company. 16 18 USE OF PROCEEDS The net proceeds to the Company from the sale of the 4,093,790 shares of Common Stock offered by the Company hereby, after deducting underwriting discounts and commissions and the estimated expenses of the Offering, are estimated to be $189,321,000 (at an assumed offering price of $48.00 per share). All of such net proceeds received by the Company will be used to repay borrowings outstanding under its $1.75 billion Credit Facility. As of May 8, 1997, a total of approximately $1,496,650,000 in borrowings was outstanding under the Credit Facility and the effective interest rate thereon was approximately 6.2%. Borrowings under the Credit Facility have been used to finance, in part, the Eller Media Acquisition and the other acquisitions discussed in this Prospectus. Borrowings under the Credit Facility, which must be paid in full by September 2003, currently bear interest at a floating rate based on the LIBOR plus 0.50%. Upon repayment of such borrowings, the amount repaid will become immediately available to the Company for re-borrowing under the Credit Facility, subject to the satisfaction of certain conditions. The Company expects that amounts available for re-borrowing under the Credit Facility as a result of the application of the net proceeds of the Offering, together with additional amounts that become available for borrowing under the Credit Facility, will be used to finance the pending acquisitions discussed in this Prospectus. Future acquisitions of radio and television stations and other media-related properties effected in connection with the implementation of the Company's acquisition strategy are expected to be financed from increased borrowings under the Credit Facility, other debt or equity financings and cash flow from operations. The Company will not receive any of the proceeds from the sale of shares by the Selling Shareholders. PRICE RANGE OF COMMON STOCK The Company's Common Stock is listed on the New York Stock Exchange ("NYSE") under the symbol "CCU." The following table sets forth, for the periods indicated, the high and low closing sale prices per share (as adjusted for all stock splits to date) as reported on the NYSE.
HIGH LOW ------ ------ YEAR ENDED DECEMBER 31, 1995: First Quarter............................................. $15.13 $12.53 Second Quarter............................................ 17.38 13.44 Third Quarter............................................. 20.44 15.41 Fourth Quarter............................................ 22.06 18.13 YEAR ENDED DECEMBER 31, 1996: First Quarter............................................. $29.13 $20.50 Second Quarter............................................ 43.00 27.00 Third Quarter............................................. 44.56 36.56 Fourth Quarter............................................ 44.38 31.00 YEAR ENDED DECEMBER 31, 1997: First Quarter............................................. $49.63 $34.25 Second Quarter (through May 8, 1997)...................... 49.50 42.75
On March 1, 1997, there were approximately 6,400 shareholders of record of the Company's Common Stock. 17 19 SELECTED FINANCIAL INFORMATION The selected financial information presented below for the five years ended December 31, 1996 has been derived from the consolidated financial statements of the Company, which have been audited by Ernst & Young LLP, independent auditors. The pro forma financial information presents results of operations of the Company as if the Eller Media Acquisition had been consummated on January 1, 1996. The pro forma information is unaudited and is not necessarily indicative of the results of operations of the Company had such acquisition occurred at the beginning of such period or of the Company's results of operations for any future periods. The following selected financial information should be read in conjunction with the consolidated financial statements and notes thereto of the Company, the pro forma financial statements of the Company and Eller Media and the consolidated financial statements and notes thereto of Eller Media, all of which are incorporated herein by reference. SELECTED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA YEAR ENDED DECEMBER 31, ELLER MEDIA ----------------------- ACQUISITION 1992 1993 1994 1995 1996 1996 (2) -------- -------- -------- -------- -------- ----------- STATEMENT OF OPERATIONS DATA(1): Net revenue............ $ 84,485 $121,118 $178,053 $250,059 $351,739 $588,771 Operating expenses..... 55,812 78,925 105,380 137,504 198,332 340,171 Depreciation and amortization........ 12,253 17,447 24,669 33,769 45,790 109,954 -------- -------- -------- -------- -------- -------- Operating income before corporate expenses............ 16,420 24,746 48,004 78,786 107,617 138,646 Corporate expenses..... 2,890 3,464 5,100 7,414 8,527 18,731 -------- -------- -------- -------- -------- -------- Operating income....... 13,530 21,282 42,904 71,372 99,090 119,915 Interest expense....... (4,739) (5,390) (7,669) (20,752) (30,080) (75,777) Other income (expense)........... (1,217) (196) 1,161 (803) 2,230 (4,491) -------- -------- -------- -------- -------- -------- Income before income taxes............... 7,574 15,696 36,396 49,817 71,240 39,647 Income taxes........... 3,281 6,573 14,387 20,292 28,386 24,104 -------- -------- -------- -------- -------- -------- Income before equity in net income (loss) of, and other income from nonconsolidated affiliates.......... 4,293 9,123 22,009 29,525 42,854 15,543 Equity in net income (loss) of, and other income from, nonconsolidated affiliates.......... -- -- -- 2,489 (5,158) (5,158) -------- -------- -------- -------- -------- -------- Net income............. $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 37,696 $ 10,385 ======== ======== ======== ======== ======== ======== Net income per common share............... $ .07 $ .15 $ .32 $ .46 $ .50 $ .13 ======== ======== ======== ======== ======== ======== Weighted average common shares and common share equivalents outstanding......... 59,320 62,202 69,326 70,201 74,649 82,484 ======== ======== ======== ======== ======== ======== After-tax cash flow(3)............. $ 17,147 $ 26,638 $ 46,866 $ 71,140 $107,318 $144,171 ======== ======== ======== ======== ======== ======== After-tax cash flow per share(4)............ $ .29 $ .43 $ .68 $ 1.01 $ 1.44 $ 1.75 ======== ======== ======== ======== ======== ========
18 20
DECEMBER 31, AS ------------ ADJUSTED 1992 1993 1994 1995 1996 1996 (5) -------- -------- -------- -------- ---------- ---------- BALANCE SHEET DATA: Cash and cash equivalents...... $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 16,701 $ 17,574 Current assets...... 24,844 38,191 53,945 70,485 113,164 160,438 Property, plant and equipment -- net.............. 48,017 67,750 85,318 99,885 147,838 654,060 Total assets........ 146,993 227,577 411,594 563,011 1,324,711 2,494,888 Current liabilities...... 10,073 26,125 27,679 36,005 43,462 91,838 Long-term debt, net of current maturities....... 97,000 87,815 238,204 334,164 725,132 1,272,863 Shareholders' equity........... 31,055 98,343 130,533 163,713 513,431 1,051,440
- --------------- (1) The comparability of results of operations is affected by acquisitions consummated in each of the periods presented. (2) Gives effect to the Eller Media Acquisition as if such acquisition had been consummated on January 1, 1996 and excludes Eller Media's extraordinary loss on debt extinguishment (net of tax benefit) of $4,537,000. The pro forma financial information is based on a preliminary purchase price allocation and does not give effect to any other completed or pending acquisition. (3) Defined as net income before unusual items plus depreciation, amortization of intangibles (including non-consolidated affiliates) and deferred taxes. After-tax cash flow is presented here not as a measure of operating results and does not purport to represent cash provided by operating activities. After-tax cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. (4) Defined as after-tax cash flow divided by weighted average common shares and common share equivalents outstanding. (5) As adjusted to give effect to the Eller Media Acquisition as if such acquisition had been consummated on December 31, 1996 and to give effect to the Offering and the application of the estimated net proceeds therefrom of $189,321,000 (assuming a public offering price of $48.00 per share). The pro forma financial information is based on a preliminary purchase price allocation and does not give effect to any other completed or pending acquisition. 19 21 BUSINESS The Company consists of three principal business segments -- radio broadcasting, television broadcasting and outdoor advertising. Currently, the radio segment includes 101 stations for which the Company is the licensee and 11 stations for which the Company programs and/or sells air time under LMAs or JSAs. These 112 stations operate in 27 different markets. The radio segment also operates five networks. Assuming all pending acquisitions are consummated (which include 8 stations for which the Company programs and/or sells air time under LMAs or JSAs), the Company will own or program 123 radio stations in 28 markets. The television segment includes 11 television stations for which the Company is the licensee and 7 stations programmed under LMAs. These 18 stations operate in 11 different markets. The outdoor advertising segment has an advertising display inventory of approximately 50,000 display faces and provides outdoor advertising in 15 major metropolitan markets. INDUSTRY SEGMENTS Selected historical financial information relating to radio and television broadcasting for 1994, 1995 and 1996 is presented in the following table:
YEAR ENDED DECEMBER 31, -------------------------------------------- 1994 1995 1996 ------------ ------------ ------------ RADIO Net broadcasting revenue................... $ 95,862,834 $144,244,066 $217,189,250 Station operating expenses................. 64,148,412 87,530,942 126,627,982 Depreciation............................... 5,664,700 6,973,801 8,916,495 Amortization of intangibles................ 6,659,726 13,007,026 18,839,820 ------------ ------------ ------------ Station operating income................... $ 19,389,996 $ 36,732,297 $ 62,804,953 ============ ============ ============ TELEVISION Net broadcasting revenue................... $ 82,189,748 $105,815,314 $134,549,604 Station operating expenses................. 41,231,654 49,973,531 71,703,668 Depreciation............................... 6,974,404 8,406,025 10,419,895 Amortization of intangibles................ 5,369,710 5,382,030 7,613,554 ------------ ------------ ------------ Station operating income................... $ 28,613,980 $ 42,053,728 $ 44,812,487 ============ ============ ============ CONSOLIDATED Net broadcasting revenue................... $178,052,582 $250,059,380 $351,738,854 Station operating expenses................. 105,380,066 137,504,473 198,331,650 Depreciation............................... 12,639,104 15,379,826 19,336,390 Amortization of intangibles................ 12,029,436 18,389,056 26,453,374 ------------ ------------ ------------ Station operating income................... $ 48,003,976 $ 78,786,025 $107,617,440 ============ ============ ============
Selected historical financial information related to the outdoor advertising segment for Eller Media for 1996 is presented in the following table:
YEAR ENDED DECEMBER 31, 1996* ----------------- Net revenue............................. $237,032 Operating expenses...................... 145,743 Depreciation and amortization and other noncash expenses...................... 46,569 -------- Operating Income........................ $ 44,720 ========
- --------------- * Eller Media was formed on August 17, 1995, through the combination of Patrick Media Group, Inc. and Eller Investment Company. 20 22 RADIO BROADCASTING The following table sets forth selected information with regard to each of the Company's 38 AM and 74 FM radio stations and five radio networks which it owned or programmed as of May 8, 1997, and those stations for which an acquisition is pending.
TARGET DATE OF MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY ----------------------- ----------- -------------- ----------- --------- HOUSTON, TX(9) KPRC-AM(3)(5)............................ Adults 25-54 News/Talk/Sports Jan. 1995 950 AM KSEV-AM(3)(5)............................ Adults 25-54 News/Talk/Sports Jan. 1995 700 AM KMJQ-FM(5)............................... Adults 24-54 Adult Urban Contemporary Jan. 1995 102.1 FM KBXX-FM(5)............................... Adults 18-49 Urban Contemporary Aug. 1994 97.9 FM KHYS-FM(4)(5)............................ Adults 25-54 Rhythmic CHR LMA 98.5 FM KJOJ-AM(5)............................... Adults 25-54 Christian Jan. 1997 880 AM KJOJ-FM(5)............................... Adults 25-54 Rhythmic CHR May 1996 103.3 FM MIAMI/FT. LAUDERDALE, FL(11) WHYI-FM.................................. Adults 18-49 Contemporary Hits Oct. 1994 100.7 FM WBGG-FM.................................. Adults 18-49 Classic Rock Mar. 1994 105.9 FM TAMPA/ST. PETERSBURG, FL(21) WMTX-AM.................................. Adults 25-54 Sports/Talk Oct. 1994 1040 AM WMTX-FM.................................. Adults 25-54 Hot Adult Contemporary Oct. 1994 95.7 FM WRBQ-AM.................................. Adults 18-49 Adult Urban Contemporary July 1992 1380 AM WRBQ-FM.................................. Adults 25-54 Country July 1992 104.7 FM CLEVELAND, OH(22) WNCX-FM.................................. Adults 25-54 Classic Rock Oct. 1994 98.5 FM WERE-AM.................................. Adults 25-54 News/Talk Oct. 1994 1300 AM WENZ-FM.................................. Adults 18-49 Alternative Rock May 1996 107.9 FM MILWAUKEE, WI(29) WKKV-FM.................................. Adults 18-49 Urban Contemporary May 1996 100.7 FM WMIL-FM.................................. Adults 25-54 Country Apr. 1997 106.1 FM WOKY-AM.................................. Adults 35-64 Adult Standards Apr. 1997 920 AM PROVIDENCE, RI(31) WWBB-FM.................................. Adults 25-54 Oldies Dec. 1996 101.5 FM WWRX-FM.................................. Adults 25-54 Classic Rock Dec. 1996 103.7 FM NORFOLK, VA(33) WOWI-FM.................................. Adults 18-49 Urban Contemporary May 1996 102.9 FM WJCD-FM.................................. Adults 25-54 Smooth Jazz May 1996 105.3 FM WMYK-FM.................................. Adults 25-54 Rhythmic CHR Nov. 1996 92.1 FM WSVY-FM.................................. Adults 25-54 Adult Urban Contemporary Oct. 1996 107.7 FM SAN ANTONIO, TX(34) WOAI-AM(5)............................... Adults 25-54 News/Talk/Sports June 1975 1200 AM KQXT-FM(5)............................... Adults 25-54 Adult Contemporary Feb. 1993 101.9 FM KTKR-AM(5)............................... Adults 25-54 News/Talk/Sports July 1993 760 AM KAJA-FM(5)............................... Adults 25-54 Country Mar. 1972 97.3 FM KSJL-FM(5)(6)............................ Adults 25-54 Urban Adult Contemporary JSA 96.1 FM NEW ORLEANS, LA(39) WODT-AM.................................. Adults 25-54 Blues Oct. 1984 1280 AM WQUE-FM(7)............................... Adults 18-49 Urban Contemporary Oct. 1984 93.3 FM WYLD-AM.................................. Adults 25-54 Gospel Aug. 1995 940 AM WYLD-FM.................................. Adults 25-54 Urban Adult Contemporary Jan. 1995 98.5 FM WNOE-FM.................................. Adults 25-54 Country Aug. 1996 101.1 FM KKND-FM.................................. Adults 25-54 Alternative Rock Aug. 1996 106.7 FM KHOM-FM.................................. Adults 18-34 Contemporary Hits Feb. 1997 104.1 FM GREENSBORO, NC(41) WXRA-FM.................................. Adults 18-49 Alternative Rock Aug. 1996 94.5 FM WTQR-FM.................................. Adults 25-54 Country Aug. 1996 104.1 FM WSJS-AM.................................. Adults 25-54 News/Talk Aug. 1996 600 AM
21 23
TARGET DATE OF MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY ----------------------- ----------- -------------- ----------- --------- MEMPHIS, TN(43) WHRK-FM.................................. Adults 18-49 Urban Contemporary May 1996 97.1 FM WDIA-AM.................................. Adults 25-54 Adult Urban May 1996 1070 AM WEGR-FM.................................. Adults 25-54 Classic Rock Dec. 1996 102.7 FM WREC-AM.................................. Adults 35-64 News/Talk Dec. 1996 600 AM WRXQ-FM.................................. Adults 18-49 Alternative Rock Dec. 1996 95.7 FM KJMS-FM.................................. Adults 18-49 Urban Adult Contemporary Dec. 1996 101.1 FM KWAM-AM.................................. Adults 25-54 Religious Dec. 1996 990 AM RALEIGH, NC(48) WQOK-FM.................................. Adults 18-49 Urban Contemporary May 1996 97.5 FM WZZU-FM.................................. Adults 25-54 Classic Hits Jan. 1997 105.3 FM WDUR-AM(4)............................... Adults 25-54 Urban Oldies LMA/Pending 1490 AM WXFC-FM(4)............................... Adults 25-54 Urban Adult LMA/Pending 107.1 FM WXFK-FM(4)............................... Adults 18-49 Urban Adult LMA/Pending 104.3 FM LOUISVILLE, KY(50) WHAS-AM.................................. Adults 25-54 News/Talk/Sports Sept. 1986 840 AM WAMZ-FM.................................. Adults 25-54 Country Sept. 1986 97.5 FM WHKW-FM.................................. Adults 25-54 Country Jan. 1997 98.9 FM WTFX-FM.................................. Adults 25-54 Modern Rock Oct. 1996 100.5 FM WWKY-AM.................................. Adults 25-54 News/Talk/Sports Oct. 1996 790 AM WKJK-AM.................................. Adults 35-54 Country Oct. 1996 1080 AM WQMF-FM.................................. Adults 25-54 Classic Rock Jan. 1997 95.7 FM AUSTIN, TX(51) KPEZ-FM(5)............................... Adults 25-54 Classic Rock July 1982 102.3 FM KHFI-FM(5)............................... Adults 18-49 Contemporary Hits Mar. 1993 96.7 FM KEYI-FM(5)............................... Adults 25-54 Oldies Aug. 1996 103.5 FM KFON-AM(5)............................... Adults 25-54 Sports Aug. 1996 1490 AM OKLAHOMA CITY, OK(52) KTOK-AM(7)............................... Adults 25-54 News/Talk/Sports Oct. 1984 1000 AM KEBC-AM(7)............................... Adults 18-49 News/Talk/Spanish Jan. 1994 1340 AM KJYO-FM(7)............................... Adults 18-34 Contemporary Hits Oct. 1984 102.7 FM WKY-AM(4)(7)............................. Adults 25-54 News/Talk LMA 930 AM KTST-FM(7)............................... Adults 18-34 Country Aug. 1996 101.9 FM KXXY-FM(7)............................... Adults 25-54 Country Aug. 1996 96.1 FM KNRX-FM(7)............................... Adults 18-49 New Alternative Rock Jan. 1994 94.7 FM RICHMOND, VA(56) WRVA-AM.................................. Adults 25-54 News/Talk/Sports July 1992 1140 AM WRNL-AM.................................. Adults 25-54 Sports Sept. 1993 910 AM WRVQ-FM.................................. Adults 18-49 Contemporary Hits July 1992 94.5 FM WRXL-FM.................................. Adults 18-49 Album Oriented Rock Sept. 1993 102.1 FM WTVR-FM.................................. Adults 25-54 Soft AC May 1996 98.1 FM WTVR-AM.................................. Adults 35-64 Nostalgia May 1996 1380 AM ALBANY, NY(57) WQBK-FM(3)............................... Adults 18-49 Alternative Rock Mar. 1997 103.9 FM WQBJ-FM(3)............................... Adults 18-49 Alternative Rock Mar. 1997 103.5 FM WQBK-AM(3)............................... Adults 35-64 News/Talk Mar. 1997 1300 AM WXCR-FM(3)............................... Adults 25-54 Classic Rock Mar. 1997 102.3 FM TULSA, OK(61) KAKC-AM(7)............................... Adults 25-54 News/Sports/Oldies Oct. 1973 1300 AM KMOD-FM(7)............................... Adults 25-54 Album Oriented Rock Oct. 1973 97.5 FM KQLL-AM(4)(7)............................ Adults 25-54 Sports/Talk LMA/Pending 1430 AM KQLL-FM(4)(7)............................ Adults 25-54 Oldies LMA/Pending 106.1 FM KOAS-FM(6)(7)............................ Adults 25-54 Smooth Jazz JSA/Pending 92.1 FM
22 24
TARGET DATE OF MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY ----------------------- ----------- -------------- ----------- --------- GRAND RAPIDS, MI(66) WOOD-AM.................................. Adults 25-54 Talk May 1996 1300 AM WOOD-FM.................................. Adults 25-54 Adult Contemporary May 1996 105.7 FM WBCT-FM.................................. Adults 18-49 Country May 1996 93.7 FM WTKG-AM.................................. Adults 25-54 News/Talk/Sports Oct. 1996 1230 AM WCUZ-FM.................................. Adults 25-54 Country Oct. 1996 101.3 FM WVTI-FM.................................. Adults 25-54 Hot Adult Contemporary Feb. 1997 96.1 FM EL PASO, TX(69) KPRR-FM(5)............................... Adults 18-49 Contemporary Hits May 1996 102.1 FM KHEY-FM(5)............................... Adults 25-54 Country May 1996 96.3 FM KHEY-AM(5)............................... Adults 25-54 Oldies May 1996 690 AM FT. MYERS/NAPLES, FL(76) WCKT-FM.................................. Adults 25-54 Country Aug. 1996 107.1 FM WXRM-FM.................................. Adults 25-54 Soft Adult Contemporary Aug. 1996 105.5 FM WKII-AM.................................. Adults 35-64 Nostalgia March 1997 1090 AM WFSN-FM.................................. Adults 25-64 Country March 1997 100.1 FM WOLZ-FM.................................. Adults 25-64 Oldies March 1997 95.3 FM SPRINGFIELD, MA(77) WHYN-AM.................................. Adults 25-54 News/Talk/Sports Aug. 1996 560 AM WHYN-FM.................................. Adults 25-54 Adult Contemporary Aug. 1996 93.1 FM LITTLE ROCK, AR(82) KDDK-FM.................................. Adults 25-54 Country May 1996 100.3 FM KMJX-FM.................................. Adults 25-54 Classic Rock May 1996 105.1 FM KMVK-FM.................................. Adults 25-54 Country Pending 106.7 FM KSSN-FM.................................. Adults 25-54 Country Pending 95.7 FM KOLL-FM.................................. Adults 25-54 Oldies Pending 94.9 FM MOBILE, AL(84) WKSJ-FM.................................. Adults 35-64 Country Pending 94.9FM WKSJ-AM.................................. Adults 35-64 Country Pending 1270 AM WMXC-FM.................................. Adults 25-54 Adult Contemporary Pending 99.9FM WRKH-FM.................................. Adults 25-54 Classic Rock Pending 96.1FM WDWG-FM.................................. Adults 25-54 Country Pending 104.1FM WNTM-AM.................................. Adults 18-49 News/Talk Pending 710AM COLUMBIA, SC(88) WWDM-FM.................................. Adults 25-54 Urban Contemporary Aug. 1996 101.3 FM WARQ-FM.................................. Adults 18-49 Alternative Rock Aug. 1996 93.5 FM WMFX-FM.................................. Adults 25-54 Classic Rock Pending 102.3 FM WOIC-AM.................................. Adults 35-64 Urban Gold Pending 1230 AM NEW HAVEN, CT(97) WKCI-FM.................................. Adults 18-49 Contemporary Hits May 1992 101.3 FM WAVZ-AM.................................. Adults 25-54 Nostalgia May 1992 1300 AM WELI-AM.................................. Adults 25-54 News/Talk Oct. 1984 960 AM LANCASTER, PA(107) WLAN-FM(4)............................... Adults 18-49 Hot Adult Contemporary LMA/Pending 96.9 FM WLAN-AM(4)............................... Adults 25-54 Big Band LMA/Pending 1390 AM READING, PA(130) WRAW-AM.................................. Adults 35-64 Middle of the Road May 1996 1340 AM WRFY-FM.................................. Adults 18-49 Contemporary Hits May 1996 102.5 FM
23 25 RADIO NETWORKS
TARGET DATE OF MARKET/NETWORK AUDIENCE NETWORK FORMAT ACQUISITION -------------- ------------ -------------- ----------- LOUISVILLE, KY Kentucky News Network................. Adults 25-54 News/Agriculture Jan. 1992 RICHMOND, VA Virginia News Networks................ Adults 25-54 News/Agriculture Sept. 1993 OKLAHOMA CITY, OK Oklahoma News Network................. Adults 25-54 News/Agriculture Oct. 1984 SAN ANGELO, TX Voice of Southwest Agriculture........ Adults 25-54 News/Agriculture Oct. 1995 COLLEGE STATION, TX/DES MOINES, IA Clear Channel Sports.................. Adults 18-49 College Sports Networks Various
- --------------- (1) Number in parenthesis next to each market indicates that market's national rank according to BIA Publications, Inc.'s "Investing in Radio 1997 Market Report, 1st Edition." (2) Due to variations that may exist within the same station programming format(such as variations in the tempo of the music or the age of the songs broadcast), the primary demographic may be different even though the station programming format is the same. (3) 80% owned by the Company. (4) LMA(FCC license not owned by the Company). (5) Application for renewal of license filed with the FCC on April 11, 1997. (6) JSA(FCC license not owned and station not programmed by the Company). (7) Application for renewal of license pending with the FCC. In addition, the Company owns a 50% equity interest in the Australian Radio Network Pty, Ltd., which operates ten radio stations in Australia, a one-third equity interest in the New Zealand Radio Network, which operates 52 radio stations throughout New Zealand, a 50% equity interest in Radio Bonton, a.s., which operates a radio station in the Czech Republic, and a 32.3% equity interest in Heftel Broadcasting Corporation, a leading domestic Spanish-language broadcaster which operates 38 radio stations in the 11 domestic markets. The Company's radio stations employ various formats for their programming. A station's format is important in determining the size and characteristics of its listening audience. Advertising rates charged by a radio station are based primarily on the station's ability to attract audiences having certain demographic characteristics in the market area which advertisers want to reach, as well as the number of stations competing in the market. Advertisers often tailor their advertisements to appeal to selected population or demographic segments. The Company pays the cost of producing the programming for each station. Generally, the Company designs formats for its own stations, but has also used outside consultants and program syndicators for program material. Most of the Company's radio revenue is generated from the sale of local advertising. Additional revenue is generated from the sale of national advertising, network compensation payments and barter and other miscellaneous transactions. The Company has focused its sales effort on selling directly to local advertisers, while seeking to minimize sales through outside representatives, including advertising agencies. Direct contact with its customers has aided the Company's sales personnel in developing long-standing customer relationships, which the Company believes are a competitive advantage. The Company's sales personnel are paid on a commission basis, which emphasizes this direct local focus. The Company believes that this focus has enabled some of its stations to achieve market revenue shares exceeding their audience shares in a given year. Each of the Company's radio stations also engages indepen- 24 26 dent sales representatives to assist it in obtaining national advertising. The representatives obtain advertising through national advertising agencies and receive a commission from the Company based on the Company's net revenue from the advertising obtained. In February 1996, the Company formed an alliance with one of the nation's largest national advertising representation firms, whereby the firm will dedicate certain personnel to work exclusively for the Company's radio stations. The Company believes this arrangement will help its stations to achieve higher shares of national advertising revenue. TELEVISION BROADCASTING The following table sets forth selected information with regard to each of the 18 television stations which the Company owned or programmed as of May 8, 1997.
NETWORK DATE OF MARKET (RANK)/STATION(1) AFFILIATION CHANNEL ACQUISITION ------------------------ ----------- ------- ----------- MINNEAPOLIS, MN(14) WFTC-TV FOX TV-29 Oct. 1993 MEMPHIS, TN(42) WPTY-TV(2) ABC TV-24 Apr. 1992 WLMT-TV(3) UPN TV-30 LMA HARRISBURG/LEBANON/LANCASTER, PA(45) WHP-TV CBS TV-21 Oct. 1995 WLYH-TV(3) UPN TV-15 LMA PROVIDENCE/NEW BEDFORD, RI(47) WPRI-TV CBS TV-12 Jul 1996 WNAC-TV(3) FOX TV-64 LMA ALBANY/SCHENECTADY/TROY, NY(52) WXXA-TV FOX TV-23 Dec. 1994 JACKSONVILLE, FL(54) WAWS-TV FOX TV-30 Sept. 1989 WTEV-TV(3) UPN TV-47 LMA LITTLE ROCK, AR(58) KLRT-TV(4) FOX TV-16 Feb. 1994 KASN-TV(3) UPN TV-38 LMA TULSA, OK(58) KOKI-TV FOX TV-23 Dec. 1989 KTFO-TV(3) UPN TV-41 LMA MOBILE, AL/PENSACOLA, FL(61) WPMI-TV(4) NBC TV-15 Dec. 1988 WJTC-TV(3) UPN TV-44 LMA WICHITA, KS(65) KSAS-TV FOX TV-24 Aug. 1990 TUCSON, AZ(78) KTTU-TV(4) UPN TV-18 Feb. 1989
- --------------- (1) Number in parentheses next to each market indicates that market's national rank according to BIA Publications, Inc.'s "Investing in Television 1997 Market Report, 1st Edition." (2) Application for renewal of license filed with the FCC on April 1, 1997. (3) LMA (FCC license not owned by the Company). (4) Application for renewal of license pending with the FCC. The Company purchases the broadcast rights for the majority of its television programming for its Fox and UPN affiliates from various syndicators. The Company competes with other television 25 27 stations within each market for these broadcast rights. These programming costs have declined in the past five years and are expected to continue to decline in the foreseeable future due to the decrease in the number of stations in the Company's markets competing for the same programming. Moreover, the affiliation changes to NBC in Mobile, Alabama and to ABC in Memphis, Tennessee have reduced the Company's need to obtain outside programming. The primary sources of programming for the Company's affiliated television stations are their respective networks, which produce and distribute programming in exchange for each station's commitment to air the programming at specified times and for commercial announcement time during the programming. For 1996, the Fox, NBC and ABC networks' primary programming was intended to appeal primarily to a target audience of 18-49 year old adults, while the CBS network's primary programming was intended to appeal primarily to a target audience of 25-54 year old adults. The second source of programming is the production of local news programming on the Fox, CBS, ABC and NBC affiliate stations in Jacksonville, Florida; Harrisburg, Pennsylvania; Memphis, Tennessee; Mobile, Alabama; Providence, Rhode Island; and Albany, New York, respectively. Local news programming traditionally has appealed to a target audience of adults 25 to 54 years of age. Because these viewers generally have increased buying power relative to viewers in other demographic groups, they are one of the most sought-after target audiences for advertisers. With such programming, these stations are able to attract advertisers to which they otherwise would not have access. Each Fox contract currently runs for a five year term expiring in 1998, except for the Fox contract for WXXA-TV Albany, New York, which expires in 1999, and may be renewed by Fox or the Company. Based on the performance of its Fox-affiliated stations to date, the Company expects it will continue to be able to renew its Fox contracts, although no assurances in this regard can be given. The network affiliation agreements with ABC (for WPTY-TV in Memphis, Tennessee, effective December 1, 1995), CBS (for WHP-TV in Harrisburg, Pennsylvania, renewed and effective December 18, 1995), NBC (for WPMI-TV in Mobile, Alabama, effective January 1, 1996) and UPN (for KTTU-TV in Tucson, Arizona, entered into in 1995) run for ten-year terms. Revenue is generated primarily from the sale of local and national advertising, as well as from fees received from the affiliate television networks. Advertising rates depend primarily on the quantitative and qualitative characteristics of the audience the Company can deliver to the advertiser. Local advertising is sold by the Company's sales personnel, while national advertising is sold by independent national sales representatives. The Company's broadcasting revenue is seasonal, with the fourth quarter typically generating the highest level of revenue and the first quarter typically generating the lowest. The fourth quarter generally reflects higher advertising in preparation for the holiday season and the effect of political advertising in election years. The Company's broadcasting results are dependent on a number of factors, including the general strength of the economy, population growth, ability to provide popular programming, relative efficiency of radio and television broadcasting compared to other advertising media, signal strength, technological capabilities and developments and governmental regulations and policies. OUTDOOR ADVERTISING Following the consummation of the Eller Media Acquisition, the Company, through its wholly owned subsidiary, Eller Media, became one of the largest domestic outdoor advertising companies based on its total advertising display inventory of approximately 50,000 display faces. The Company now provides outdoor advertising services in 15 major metropolitan markets located in five operating regions: California, Texas, the Midwest, the Southeast and the Southwest. The Company currently has both outdoor advertising and broadcasting assets in seven domestic markets, as well as in five additional domestic markets currently served by Heftel. The markets in which the Company now provides outdoor advertising services represent approximately 22% of the total U.S. population and approximately 50% of the rapidly growing U.S. Hispanic population. The Company has a 26 28 significant outdoor advertising presence in eight of the ten largest U.S. Hispanic markets, including Los Angeles, Miami, Chicago and San Antonio. The outdoor advertising industry has experienced increased advertiser interest and revenue growth in recent years. Outdoor advertising generated total revenues of approximately $1.8 billion in 1995, or approximately 1.1% of the total advertising expenditures in the United States, and the out-of-home advertising industry generated revenues in excess of $3.0 billion in 1995, according to estimates by the Outdoor Advertising Association of America (the "OAAA"). Outdoor advertising's 1995 revenues represent growth of approximately 8.2% over estimated total 1994 revenues, which compares favorably to the growth of total U.S. advertising expenditures of approximately 7.7% during the same period. Outdoor advertising offers repetitive impact and lower cost-per-thousand impressions, a commonly used media measurement, as compared to competitive media, including television, radio, newspapers, magazines and direct mail marketing. The outdoor advertising industry has benefited from the growth in automobile travel time for business and leisure due to increased highway congestion and continued demographic shifts of residences and businesses from the cities to outlying suburbs. In all cases, outdoor advertising can be combined with other media such as radio and television to reinforce messages being provided to consumers. The outdoor advertising industry is comprised of several large outdoor advertising and media companies with operations in multiple markets, as well as many smaller and local companies operating a limited number of structures in a single or few local markets. While the industry has experienced some consolidation within the past few years, the OAAA estimates that there are still approximately 1,000 companies in the outdoor advertising industry operating approximately 396,000 billboard displays. The Company expects the trend of consolidation in the outdoor advertising industry to continue. The Company's outdoor advertising strategy is to expand its market presence and improve its operating results by (i) managing the advertising rates and occupancy levels of its displays to maximize market revenues; (ii) attracting new categories of advertisers to the outdoor medium through significant investments in sales and marketing resources; (iii) increasing focus on local advertising sales; (iv) constructing new displays and upgrading its existing displays; (v) taking advantage of technological advances which increase both sales force productivity and production department efficiency; and (vi) acquiring additional displays in its existing markets and expanding into additional markets where the Company already has a broadcasting presence as well as into the country's largest media markets and their surrounding regional areas. The Company believes this operating strategy enhances its ability to effectively respond to advertisers' needs. To support this operating strategy, the Company has decentralized its operating structure in order to place authority, autonomy and accountability for its outdoor advertising segment at the market level and provide local management with the tools necessary to oversee sales, display development, administration and production and to identify suitable acquisition candidates. The Company also maintains a fully-staffed sales and marketing office in New York which services national outdoor advertising accounts and supports the Company's local sales force in each market. The Company believes that one of its strongest competitive advantages is its unique blend of highly experienced corporate and local market management. The Company focuses its efforts on local sales. Local advertisers tend to have smaller advertising budgets and require greater assistance from the Company's production and creative personnel to design and produce advertising copy. In local sales, the Company often expends more sales efforts on educating customers regarding the benefits of outdoor media and helping potential customers develop an advertising strategy using outdoor advertising. While price and availability are important competitive factors, service and customer relationships are also critical components of local sales. 27 29 The Company operates the following types of outdoor advertising billboards and displays: - Bulletins generally are 14 feet high by 48 feet wide (672 square feet wide) or 20 feet high by 60 feet wide (1,200 square feet) and consist of panels on which advertising copy is displayed. Bulletin advertising copy is either printed with computer-generated graphics on a single sheet of vinyl that is "wrapped" around the structure, or is hand painted and attached to the outdoor advertising structure. Bulletins also include "wallscapes" that are painted on vinyl surfaces or directly on the sides of buildings, typically four stories or less. Because of their greater impact and higher cost, bulletins are usually located on major highways and freeways. In addition, wallscapes are located on major freeways, commuter and tourist routes and in downtown business districts. - Premier Panels(TM) generally are 12 feet high by 25 feet wide (300 square feet) and have vinyl wrapped around the display face. Premier Panels(TM) are built on superior 30-sheet poster locations that deliver a "bulletin-like" display. The Company also offers unique Premier Plus(TM)panels, 25 feet high by 25 feet wide (625 square feet), that consist of two stacked 30-sheet posters which are converted into one larger individual display face. - 30-sheet posters generally are 12 feet high by 25 feet wide (300 square feet) and are the most common type of billboard. Advertising copy for 30-sheet posters consists of lithographed or silk-screened paper sheets supplied by the advertiser that are pasted and applied like wallpaper to the face of the display. Thirty-sheet posters are typically concentrated on major surface arteries. - 8-sheet posters usually are 6 feet high by 12 feet wide (72 square feet). Displays are prepared and mounted in the same manner as 30-sheet posters. Most 8-sheet posters, because of their smaller size, are concentrated on city streets targeting pedestrian traffic. - Transit displays are lithographed or silk-screened paper sheets located on bus and commuter train exteriors, commuter rail terminals, interior train cars, bus shelters and subway platforms. The Company's transit customers include the San Francisco Bay Area Rapid Transit (BART) and the Metropolitan Rail (METRA) in Chicago. Billboards generally are mounted on structures owned by the outdoor advertising company and located on sites that are either owned or leased by it or on which it has acquired a permanent easement. Bus shelters are usually constructed, owned and maintained by the outdoor service provider under revenue-sharing arrangements with a municipality or transit authority. During 1996, the Company invested approximately $14.2 million for new display construction and for ongoing enhancement of its existing display inventory. Over 90% of the Company's bulletin inventory has been retrofitted for vinyl. The following table sets forth certain information with respect to the Company's outdoor advertising display faces as of May 8, 1997:
PREMIER PANEL(TM) AND PREMIER TOTAL MARKET PLUS(TM) 30-SHEET 8-SHEET TRANSIT DISPLAY MARKET RANK(1) BULLETINS PANELS POSTERS POSTERS DISPLAYS FACES ------ ------- --------- --------- -------- ------- -------- ------- CALIFORNIA: Los Angeles(2)............... 2 734 116 4,925 -- 1,318 7,093 San Diego.................... 15 112 125 575 -- -- 812 San Francisco/Oakland(3)..... 4 386 320 1,554 432 6,812 9,504 Sacramento................... 29 91 44 426 -- 142 703
28 30
PREMIER PANEL(TM) AND PREMIER TOTAL MARKET PLUS(TM) 30-SHEET 8-SHEET TRANSIT DISPLAY MARKET RANK(1) BULLETINS PANELS POSTERS POSTERS DISPLAYS FACES ------ ------- --------- --------- -------- ------- -------- ------- TEXAS: Dallas/Fort Worth............ 7 683 84 2,075 135 -- 2,977 El Paso...................... 70 284 11 545 544 -- 1,384 Houston...................... 9 559 647 2,215 1,860 -- 5,281 San Antonio.................. 34 754 -- 1,374 1,332 -- 3,460 MIDWEST: Chicago...................... 3 451 17 2,858 -- 3,078 6,404 Cleveland(4)................. 22 261 6 2,007 -- -- 2,274 Milwaukee.................... 28 137 30 821 -- -- 988 SOUTHEAST: Atlanta...................... 12 365 26 1,132 -- -- 1,523 Miami........................ 11 -- -- -- -- 2,088 2,088 Tampa(5)..................... 21 522 45 1,471 -- -- 2,038 SOUTHWEST: Phoenix...................... 20 365 -- -- -- -- 365 ===== ===== ====== ===== ====== ====== TOTAL........................ 5,704(6) 1,471 21,978 4,303 13,438 46,894(7) ===== ===== ====== ===== ====== ======
- --------------- (1) Market rank of the largest city in each market. (2) Includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. (3) Includes San Francisco, Oakland, San Jose, Santa Cruz and Solano counties. (4) Includes Akron and Canton. (5) Includes Sarasota and Bradenton. (6) Includes 21 wallscapes. (7) Excludes 4,086 convenience store displays. Advertising rates are based on a particular display's exposure (or number of "impressions" delivered) in relation to the demographics of the particular market and its location within that market. The number of "impressions" delivered by a display is measured by the number of vehicles passing the site during a defined period and is weighted to give effect to such factors as its proximity to other displays, the speed and viewing angle of approaching traffic, the national average of adults riding in vehicles and whether the display is illuminated. The number of impressions delivered by a display is verified by independent auditing companies. The Company has a diversified customer base in its outdoor advertising segment of over 3,000 advertisers and advertising agency clients. The size and geographic diversity of the Company's markets allow it to attract national advertisers, often by packaging displays in several of its markets in a single contract to allow a national advertiser to simplify its purchasing process and present its message in several markets. National advertisers generally seek wide exposure in major markets and therefore tend to make larger purchases. The Company competes for national advertisers primarily on the basis of price, location of displays, availability and service. In addition, the Company believes that its outdoor advertising inventory reaches approximately 50% of the rapidly growing U.S. Hispanic population. The Company has a significant presence in eight of the ten largest U.S. Hispanic markets, including Los Angeles, Miami, Chicago and San Antonio. Tobacco revenues have historically accounted for a significant portion of outdoor advertising revenues. In 1991 and 1992, the leading tobacco companies substantially reduced their expendi- 29 31 tures for outdoor advertising due to a declining population of smokers, societal pressures, consolidation in the tobacco industry and price competition from generic brands. Since tobacco advertisers often utilized some of the industry's prime inventory, the decline in tobacco-related advertising expenditures has made space available for other advertisers, including those that had not traditionally utilized outdoor advertising. As a result of this decline in tobacco-related advertising revenues and the increased use of outdoor advertising by other advertisers, such as entertainment companies, retailers, financial institutions and other businesses, the range of the Company's advertisers has become quite diverse. For other developments related to the regulation of outdoor advertising, including tobacco products, see "Risk Factors -- Government Regulation." The Company owns or has permanent easements on relatively few parcels of real property that serve as the sites for its outdoor displays. The Company's remaining approximately 18,343 billboard sites are leased. The Company's leases are for varying terms ranging from month-to-month or year-to-year to terms of ten years or longer, and many provide for renewal options. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. The Company believes that an important part of its management activity is to negotiate suitable lease renewals and extensions. As of December 31, 1996, Eller Media employed approximately 973 people in its outdoor advertising segment, of whom, approximately 192 were primarily engaged in sales and marketing, 588 were engaged in painting, bill posting and construction and maintenance of displays and the balance were employed in financial, public affairs, real estate, administrative and other capacities. MANAGEMENT The Company believes that one of its most important assets is its experienced management team. With respect to its broadcasting operations, general managers are responsible for the day-to-day operation of their respective stations. The Company believes that the autonomy of its general managers enables it to attract top quality managers capable of implementing the Company's aggressive marketing strategy and reacting to competition in the local markets. Most general managers have stock options in the Company. As an additional incentive, a portion of each manager's compensation is related to the performance of the profit centers for which he or she is responsible. In an effort to monitor expenses, corporate management routinely reviews staffing levels and operating costs. Combined with the centralized accounting functions, this monitoring enables the Company to control expenses effectively. Corporate management also advises local general managers on broad policy matters and is responsible for long-range planning, allocating resources, and financial reporting and controls. With respect to the Company's outdoor advertising operations, Karl Eller will remain with the Company to run Eller Media as a wholly-owned subsidiary. Mr. Eller's existing employment contract, which has approximately two and one-half years until expiration, will remain in place. On April 29, 1997, Karl Eller was appointed to the Board of Directors of the Company. In addition, Mr. Eller and other members of the Eller Media management team have stock options in the Company. Members of the Eller Media management team led by Karl Eller have proven themselves to be leaders in the outdoor advertising industry, and their experience will be an important asset to the Company. 30 32 SELLING SHAREHOLDERS The table below sets forth the beneficial ownership of the Company's Common Stock by the Selling Shareholders as of May 8, 1997, and after giving effect to the sale of shares offered by the Company and the Selling Shareholders hereby.
SHARES SHARES BENEFICIALLY OWNED BENEFICIALLY AFTER THE OFFERING (1) OWNED SHARES -------------------------- PRIOR TO BEING PERCENT OF SELLING SHAREHOLDER OFFERING(1) OFFERED NUMBER(1) OUTSTANDING ------------------- ------------ --------- ---------- ------------ Hellman & Friedman Capital Partners III, L.P.(2)................................ 5,566,114 4,951,884 614,230 * H&F Orchard Partners III, L.P.(2)........ 409,708 364,495 45,213 * H&F International Partners III, L.P.(2)................................ 123,458 109,834 13,624 * H. Irving Grousbeck(3)................... 197,495 175,701 21,794 * American Media Management, Inc.(4)....... 41,713 37,110 4,603 * Richard Reiss, Jr.(3).................... 101,920 92,440 9,480 * K. Tucker Anderson....................... 5,842 5,197 645 * Glen Krevlin, as Trustee f/b/o Nina Krevlin, Glenn Krevlin, Michael Krevlin and Jill Krevlin....................... 1,947 1,732 215 * Patricia Salas Pineda(3)................. 820 730 90 * Steven G. Mihaylo........................ 84,138 74,712 9,426 * El Dorado Investment Company............. 99,925 92,375 7,550 * --------- --------- ------- Total.......................... 6,633,080 5,906,210 726,870 ========= ========= =======
- --------------- * Less than 1%. (1) Reflects an aggregate of 726,870 shares of Common Stock held in escrow pursuant to the Escrow Agreement by and among the Company, Paul Meyer ("Stockholder Representative"), EM Holdings LLC, and Chase Trust Company of California, dated April 10, 1997 entered into in connection with the Eller Acquisition. (2) Hellman & Friedman Capital Partners III, L.P., H&F Orchard Partners III, L.P. and H&F International Partners III, L.P. (the "Partnerships") are each investment partnerships that collectively held the controlling interest in Eller Media prior to the Eller Media Acquisition. Certain affiliates of the general partner of the Partnerships served as directors and officers of Eller Media prior to the Eller Media Acquisition; all such affiliates ceased to hold such positions effective as of the consummation of the Eller Media Acquisition. (3) Prior to the Eller Media Acquisition, individual served as a director of Eller Media. (4) Prior to the Eller Media Acquisition, Mr. Arthur Kern, a director of American Media Management, Inc., served as a director of Eller Media. 31 33 SHARES ELIGIBLE FOR FUTURE SALE GENERAL Upon completion of the Offering, the Company will have 88,016,587 shares of Common Stock outstanding (assuming no exercise of the Underwriter's overallotment option). All of the 10,000,000 shares offered hereby (plus up to 1,000,000 additional shares in the event the Underwriters exercise their overallotment option) will be freely transferable without restriction or further registration under the Securities Act, unless purchased by an "affiliate" of the Company (as that term is defined under the Securities Act). Substantially all of the 14,539,919 shares owned by L. Lowry Mays and the 11,262,936 shares owned by B.J. McCombs are subject to certain of the resale limitations of Rule 144 because Messrs. Mays and McCombs are affiliates of the Company. In general, under Rule 144 as currently in effect, any person (or persons whose shares are aggregated) who has beneficially owned restricted shares of Common Stock for at least one year is entitled to sell, within any three-month period, a number of such shares which does not exceed the greater of 1% of the then outstanding shares of Common Stock (88,017,920 shares immediately after the Offering) or the average weekly public trading volume of the Common Stock during the four calendar weeks preceding the date on which notice of the sale is filed with the Securities and Exchange Commission. Sales under Rule 144 are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about the Company. Any person (or persons whose shares are aggregated) who has not been an affiliate of the Company at any time during the past three months preceding a sale and who has owned shares of Common Stock for at least two years is entitled to sell such shares under Rule 144(k) without regard to the volume limitations, manner of sale provisions, public information or notice requirements of Rule 144. The Company cannot make any predictions as to the effect, if any, sales of shares of Common Stock, or the availability of shares for future sale, will have on the market price of the Common Stock prevailing from time to time. REGISTRATION RIGHTS; STOCKHOLDERS AGREEMENT In connection with the consummation of the Eller Media Acquisition, the Company granted certain former stockholders of Eller Media (the "Eller Media Stockholders") certain demand and piggyback registration rights pursuant to a Registration Rights Agreement. The Eller Media Stockholders were granted three demand registrations (including the demand registration right used in conjunction with this Offering) which shall expire on the later of April 10, 1999, or the date when certain of the Eller Media Stockholders own less than 2,285,000 shares of the Company's Common Stock. After the successful completion of this Offering, the Eller Media Stockholders will own 734,427 shares of Common Stock, excluding options. The piggyback registration rights expire on the later of the date when the shares of the Company's Common Stock held by the Eller Media Stockholders have a value of less than $20 million or April 10, 2002. In addition, the Eller Media Stockholders agreed to certain "holdback" restrictions in the event of a public offering by the Company. The Company is also obligated to file a registration statement on Form S-8 registering the 1,468,182 shares of the Company's Common Stock issuable upon the exercise of stock options issued by the Company to former option holders of Eller Media. In connection with the consummation of the Eller Media Acquisition, the Company and Eller Media also entered into a Stockholders Agreement with the holders of approximately 7% of Eller Media's outstanding common stock (the "Minority Stockholders"). Pursuant to the Stockholders Agreement, until April 10, 2002, the Minority Stockholders shall have the right to require the Company to purchase their outstanding shares of Eller Media common stock for an aggregate of 1,081,469 shares of the Company's Common Stock. Such right may be exercised in whole or in part on no more than three occasions. From and after April 10, 2004, and prior to such date upon the occurrence of certain events, until April 10, 2007, the Company shall have the right to purchase all 32 34 of Minority Stockholders' shares of Eller Media common stock for an aggregate of 1,081,469 shares of the Company's Common Stock. Such shares, unless issued pursuant to an effective registration statement, shall be considered "restricted" securities and will be subject to certain transfer restriction. See "-- General." DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 2,000,000 shares of preferred stock, $1.00 par value per share ("Preferred Stock"), and 150,000,000 shares of Common Stock, $.10 par value per share, of which no shares of Preferred Stock and 83,924,130 shares of Common Stock were issued and outstanding at May 8, 1997, excluding 36,940 held in treasury. PREFERRED STOCK The Board of Directors has the authority to issue up to 2,000,000 shares of Preferred Stock, in one or more series, and to fix the rights, preferences, privileges and qualifications thereof without any further vote or action by the shareholders. The issuance of Preferred Stock could decrease the amount of earnings and assets available for distribution to holders of Common Stock, and adversely affect the rights and powers, including voting rights, of such holders and may have the effect of delaying, deferring or preventing a change in control of the Company. No shares of Preferred Stock have ever been issued, and the Company does not presently contemplate the issuance of Preferred Stock. COMMON STOCK Holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of shareholders of the Company and to ratably receive dividends, if any, as may be declared from time to time by the Board of Directors from funds legally available therefor, subject to the payment of any preferential dividends declared with respect to any Preferred Stock that from time to time may be outstanding. Upon liquidation, dissolution or winding up of the Company, holders of Common Stock are entitled to share ratably in any assets available for distribution to shareholders after payment of all obligations of the Company, subject to the rights to receive preferential distributions of the holders of any Preferred Stock then outstanding. Shareholders do not have cumulative voting rights or preemptive or other rights to acquire or subscribe to additional, unissued or treasury shares. The shares of Common Stock currently outstanding are, and the shares of Common Stock offered hereby will be, upon issuance thereof, validly issued, fully paid and nonassessable. REPURCHASE AGREEMENT In May 1977, the Company and its then shareholders, including L. Lowry Mays and B.J. McCombs, entered into a Buy-Sell Agreement (the "Repurchase Agreement") restricting the disposition of the outstanding shares of Common Stock owned by L. Lowry Mays and B.J. McCombs and their heirs, legal representatives, successors and assigns (collectively, the "Restricted Parties"). The Repurchase Agreement provides that in the event that a Restricted Party desires to dispose of his shares, other than by disposition by will or intestacy or through gifts to such Restricted Party's spouse or children, such shares must be offered for a period of 30 days to the Company. Any shares not purchased by the Company must then be offered for a period of 30 days to the other Restricted Parties. If all of the offered shares are not purchased by the Company or the other Restricted Parties, the Restricted Party offering his shares may sell them to a third party during a period of 90 days thereafter at a price and on terms not more favorable than those offered to the Company and the other Restricted Parties. In addition, a Restricted Party may not individually or in concert with others sell any shares so as to deliver voting control to a third party without providing in any such sale that all Restricted Parties will be offered the same price and terms for their shares. The Repurchase 33 35 Agreement will continue in effect following the Offering and may preserve the control of the present principal shareholders. FOREIGN OWNERSHIP As a consequence of the restrictions imposed by the Communications Act on ownership of Common Stock by aliens, the Company's bylaws were amended effective December 31, 1983 to provide that (i) not more than one-fifth of the shares outstanding shall at any time be owned of record, or voted, by or for the account of aliens, their representatives, a foreign government or a corporation organized under the laws of a foreign country, (ii) the Company shall not be owned or controlled directly or indirectly by any other corporation of which any officer or more than one-fourth of the directors are aliens or of which more than one-fourth of the shares are owned of record or voted by aliens, (iii) no person who is an alien may be elected or serve as an officer or director of the Company, and (iv) if the stock records of the Company shall at any time reflect one-fifth ownership, no transfers of additional shares to aliens shall be made and, if it shall thereafter be found that any such additional shares are in fact held by or for the account of an alien, such shares shall not be entitled to vote, to receive dividends or to have any other rights. The holder of such shares will be required to transfer them to a United States citizen or to the Company. This restriction will be applicable to the shares of Common Stock offered hereby and to the issuance or transfer of such shares after the date of this Prospectus. The Company's stock certificates will bear a legend setting forth this restriction. Since the bylaws were amended, the Communications Act has been revised to remove the limitations on alien officers and directors. 34 36 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the Underwriters named below (the "Underwriters") have severally agreed to purchase from the Company and the Selling Shareholders the following respective number of shares of Common Stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus:
NUMBER OF UNDERWRITER SHARES ----------- ---------- Alex. Brown & Sons Incorporated............................. Credit Suisse First Boston Corporation...................... Furman Selz LLC............................................. Goldman, Sachs & Co. ....................................... Lehman Brothers Inc. ....................................... Montgomery Securities....................................... Salomon Brothers Inc........................................ ---------- Total............................................. 10,000,000 ==========
The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all shares of Common Stock offered hereby if any of such shares are purchased. The Company and the Selling Shareholders have been advised by the Underwriters that the Underwriters propose to offer the shares of Common Stock to the public at the public offering price set forth on the cover page of this Prospectus, and to certain dealers at such price less a concession not in excess of $ per share. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per share to certain other dealers. After the Offering, the offering price and other selling terms may be changed by the Underwriters. The Company has granted to the Underwriters an option, exercisable not later than 30 days after the date of this Prospectus, to purchase up to 1,000,000 additional shares of Common Stock at the public offering price less the underwriting discounts and commission set forth on the cover page of this Prospectus. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof that the number of shares of Common Stock to be purchased by it shown in the above table bears to 10,000,000, and the Company will be obligated, pursuant to the option, to sell such shares to the Underwriters. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of Common Stock offered hereby. If purchased, the Underwriters will offer such additional shares on the same terms as those in which the 10,000,000 shares are being offered. The Underwriting Agreement contains covenants of indemnity and contribution among the Company, the Selling Shareholders and the Underwriters with respect to certain liabilities, including liabilities under the Securities Act of 1933, as amended. To facilitate the offering of the Common Stock, the Underwriters may engage in transactions that stabilize, maintain or otherwise affect the market price of the Common Stock. Specifically, the Underwriters may over-allot shares of the Common Stock in connection with the offering, thereby creating a short position in the Underwriters' account. Additionally, to cover such over-allotments or to stabilize the market price of the Common Stock, the Underwriters may bid for, and purchase, shares of the Common Stock at a level above that which might otherwise prevail in the open market. The Underwriters are not required to engage in these activities, and, if commenced, any such activities may be discontinued at any time. The Underwriters also may reclaim selling concessions allowed to an Underwriter or dealer, if the Underwriters repurchase shares distributed by that Underwriter or dealer. 35 37 The Company, Messrs. L. Lowry Mays and B.J. McCombs and the Selling Shareholders have agreed that they will not, directly or indirectly, offer, sell or otherwise dispose of any equity securities of the Company or any securities convertible into, or exchangeable for, or any rights to purchase or acquire, equity securities of the Company (other than employee stock options granted by the Company in the ordinary course of business) for a period of 90 days after the date of this Prospectus, without the prior written consent of Alex. Brown & Sons Incorporated. LEGAL OPINIONS Certain legal matters in connection with the shares of Common Stock offered hereby will be passed upon for the Company by its special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. (a partnership including professional corporations), San Antonio, Texas, and for the Underwriters by their special counsel, Piper & Marbury L.L.P., Baltimore, Maryland. Alan D. Feld, the sole shareholder of a professional corporation which is a partner of Akin, Gump, Strauss, Hauer & Feld, L.L.P., is a director of the Company and owns 48,000 shares of Common Stock (including presently exercisable nonqualified options to acquire 40,000 shares). EXPERTS The consolidated financial statements (and schedules) of the Company included or incorporated by reference in the Company's Annual Report (Form 10-K) for the year ended December 31, 1996, have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon included or incorporated by reference therein and incorporated herein by reference which, as to the years 1995 and 1996, are based in part on the report of KPMG, independent auditors. The financial statements and schedules referred to above are incorporated herein by reference in reliance upon such reports given upon the authority of such firms as experts in accounting and auditing. The consolidated financial statements of Australian Radio Network Pty Ltd not separately presented in the Company's Annual Report (Form 10-K) for the year ended December 31, 1996, have been audited by KPMG, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such report referred to above is incorporated herein by reference in reliance upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Eller Media Corporation as of December 31, 1996 and 1995 and for the year ended December 31, 1996 and for the period from August 18, 1995 through December 31, 1995, together with the consolidated financial statements of PMG Holdings, Inc. and subsidiaries and the combined financial statements of Eller Investment Company, Inc. for the period from January 1, 1995 to August 17, 1995, incorporated by reference in this prospectus and elsewhere in the registration statement are included in the Company's current report on Form 8-K, filed on April 17, 1997, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. The combined financial statements of Eller Investment Company, Inc. as of and for the period ended December 31, 1994, incorporated by reference in this prospectus and elsewhere in the registration statement are included in the Company's current report on form 8-K, filed April 17, 1997, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. The consolidated financial statements of PMG Holdings, Inc. and Subsidiaries as of December 31, 1994 and for the year then ended included in the Company's Current Report (Form 8-K) dated April 17, 1997, incorporated by reference herein have been so included in reliance on the 36 38 report of KPMG Peat Marwick LLP, independent accountants, and upon the authority of said firm as experts in auditing and accounting. The consolidated financial statements of US Radio, Inc. for the years ended December 31, 1995 and 1994, included in the Company's Current Report (Form 8-K) dated May 24, 1996, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The combined financial statements of Ragan Henry Communications Group, L.P., US Radio, L.P. and US Radio Stations, L.P. for the year ended December 31, 1994, included in the Company's Current Report (Form 8-K) dated May 24, 1996 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated herein by reference. Such combined financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Radio Equity Partners, L.P. and its subsidiary as of December 31, 1995 and 1994, and for the years then ended have been incorporated herein by reference in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing in the Form 8-K of Clear Channel Communications, Inc. dated June 5, 1996, and upon the authority of said firm as experts in accounting and auditing. AVAILABLE INFORMATION The Company is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements filed by the Company with the Commission pursuant to the information requirements of the Exchange Act may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the following Regional Offices of the Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New York, New York 10048; Los Angeles Regional Office, Suite 1100, 5670 Wilshire Boulevard, Los Angeles, California 90036; and Chicago Regional Office, 500 W. Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains a site on the World Wide Web at http://www.sec.gov that contains reports, proxies and information statements and other information regarding registrants (including the Company) that file electronically. In addition, reports, proxy statements and other information concerning the Company can be inspected and copied at the offices of the New York Stock Exchange ("NYSE"), 20 Broad Street, New York, New York 10005, on which the Common Stock of the Company (symbol: "CCU") is listed. This Prospectus, which constitutes a part of a Registration Statement filed by the Company with the Commission under the Securities Act, omits certain information contained in the Registration Statement, and reference is hereby made to the Registration Statement and to the exhibits thereto for further information with respect to the Company and the Common Stock offered hereby. Statements contained herein concerning provisions of any document are not necessarily complete, and each statement is qualified in its entirety by reference to the copy of such document filed with the Commission. 37 39 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, heretofore filed by the Company with the Commission pursuant to the Exchange Act, are hereby incorporated by reference into this Prospectus and made a part hereof: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, dated March 31, 1997. 2. The Company's Current Report on Form 8-K dated April 17, 1997. 3. The Company's Current Report on Form 8-K dated May 24, 1996. 4. The Company's Current Report on Form 8-K dated June 5, 1996. Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Offering of the Common Stock offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. To the extent that any proxy statement is incorporated by reference herein, such incorporation shall not include any information contained in such proxy statement which is not, pursuant to the Commission's rules, deemed to be "filed" with the Commission or subject to the liabilities of Section 18 of the Exchange Act. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon the written or oral request of any such person, a copy of any document described above (other than exhibits, unless such exhibits are specifically incorporated by reference). Requests for such copies should be directed to Houston Lane, Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600, San Antonio, Texas 78216 (telephone: (210) 822-2828). 38 40 ============================================================ NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. --------------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary.......................... 3 Risk Factors................................ 10 Capitalization.............................. 16 Dividend Policy............................. 16 Use of Proceeds............................. 17 Price Range of Common Stock................. 17 Selected Financial Information.............. 18 Business.................................... 20 Selling Shareholders........................ 31 Shares Eligible for Future Sale............. 32 Description of Capital Stock................ 33 Underwriting................................ 35 Legal Opinions.............................. 36 Experts..................................... 36 Available Information....................... 37 Incorporation of Certain Documents by Reference................................. 38
============================================================ ============================================================ 10,000,000 SHARES [CLEAR CHANNEL LOGO] [CLEAR CHANNEL COMMUNICATIONS, INC.] COMMON STOCK ----------------------- PROSPECTUS ----------------------- ALEX. BROWN & SONS INCORPORATED CREDIT SUISSE FIRST BOSTON FURMAN SELZ GOLDMAN, SACHS & CO. LEHMAN BROTHERS MONTGOMERY SECURITIES SALOMON BROTHERS INC , 1997 ============================================================ 41 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses (other than underwriting discounts and commissions) in connection with the issuance and distribution of the Common Stock registered hereby are as follows: SEC registration fee.................... $160,530 NASD filing fee......................... 30,500 Legal fees and expenses................. 50,000* Accounting fees and expenses............ 100,000* Printing and engraving expenses......... 85,000* Miscellaneous........................... 73,970* -------- Total......................... $500,000*
- --------------- * Estimated. The foregoing expenses will be paid by the registrant. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article 2.02-1 of the Texas Business Corporation Act provides for indemnification of directors and officers in certain circumstances. In addition, the Texas Miscellaneous Corporation Law provides that a corporation may amend its Articles of Incorporation to provide that no director shall be liable to the registrant or its shareholders for monetary damages for an act or omission in the director's capacity as a director, provided that the liability of a director is not eliminated or limited (i) for any breach of the director's duty of loyalty to the registrant or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) any transaction from which such director derived an improper personal benefit, or (iv) an act or omission for which the liability of a director is expressly provided by an applicable statute. The registrant has amended its Articles of Incorporation and added Article Eleven adopting such limitations on a director's liability. The registrant's Articles of Incorporation also provide in Article Nine, for indemnification of directors or officers in connection with the defense or settlement of suits brought against them in their capacities as directors or officers of the Company, except in respect of liabilities arising from gross negligence or willful misconduct in the performance of their duties. Article IX(8) of the registrant's bylaws provides for indemnification of any person made a party to a proceeding by reason of such person's status as a director, officer, employee, partner or trustee of the Company, except in respect of liabilities arising from negligence or misconduct in the performance of their duties. The Underwriting Agreement provides for indemnification by the Underwriters of the registrant, its directors and officers, and by the registrant of the Underwriters, for certain liabilities, including liabilities arising under the Securities Act. An insurance policy obtained by the registrant provides for indemnification of officers and directors of the registrant and certain other persons against liabilities and expenses incurred by any of them in certain stated proceedings and under certain stated conditions. II-1 42 ITEM 16. EXHIBITS EXHIBITS. 1 -- Form of Underwriting Agreement. 2.1 -- Stock Purchase Agreement By and Among Clear Channel Communications, Inc., Eller Media Corporation and the Stockholders of Eller Media Corporation, dated February 25, 1997. (Incorporated by reference to the exhibits of the Company's Form 10-K dated March 31, 1997). 2.2 -- Amendment to Stock Purchase Agreement by and among Clear Channel Communications, Inc., Eller Media Corporation and the Stockholders of Eller Media Corporation, dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 2.3 -- Registration Rights Agreement by and between Clear Channel Communications, Inc., and the Stockholders of Eller Media Corporation, dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 2.4 -- Stockholders Agreement by and between Clear Channel Communications, Inc., and EM Holdings LLC, dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 2.5 -- Escrow Agreement By and Among Eller Media Corporation, Clear Channel Communications, Inc., and EM Holdings LLC, and Chase Trust Company of California, Dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 4.1 -- Buy-Sell Agreement by and between Clear Channel Communications, Inc., L. Lowry Mays, B. J. McCombs, John M. Schaefer and John W. Barger, dated May 31, 1977. (Incorporated by reference to the exhibits of the Company's Registration Statement on Form S-1 (Reg. No. 289161) dated April 19, 1984.) 4.2 -- Third Amended and Restated Credit Agreement by and among Clear Channel Communications, Inc., NationsBank of Texas, N.A., as administrative lender, the First National Bank of Boston, as documentation agent, the Bank of Montreal and Toronto Dominion (Texas), Inc., as co-syndication agents, and certain other lenders dated April 10, 1997. 5 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. 23.1 -- Consent of Ernst & Young LLP. 23.2 -- Consent of Ernst & Young LLP. 23.3 -- Consent of Ernst & Young LLP. 23.4 -- Consent of KPMG. 23.5 -- Consent of KPMG Peat Marwick LLP. 23.6 -- Consent of Arthur Andersen LLP. 23.7 -- Consent of KPMG Peat Marwick LLP. 23.8 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in opinion filed as Exhibit 5).
ITEM 17. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, II-2 43 where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The undersigned Registrant hereby undertakes that: (1) For the purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such new securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 44 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Antonio, State of Texas, on May 9, 1997. CLEAR CHANNEL COMMUNICATIONS, INC. By: /s/ L. LOWRY MAYS ---------------------------------- L. Lowry Mays Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
NAME TITLE DATE ---- ----- ---- /s/ L. LOWRY MAYS Chief Executive Officer and May 9, 1997 - ----------------------------------------------------- Director L. Lowry Mays /s/ RANDALL T. MAYS Senior Vice President/Chief May 9, 1997 - ----------------------------------------------------- Financial Officer (Principal Randall T. Mays Financial Officer) /s/ HERBERT W. HILL, JR. Senior Vice President/Chief May 9, 1997 - ----------------------------------------------------- Accounting Officer (Principal Herbert W. Hill, Jr. Accounting Officer) /s/ ALAN D. FELD* Director May 9, 1997 - ----------------------------------------------------- Alan D. Feld /s/ B.J. MCCOMBS* Director May 9, 1997 - ----------------------------------------------------- B.J. McCombs /s/ THEODORE H. STRAUSS* Director May 9, 1997 - ----------------------------------------------------- Theodore H. Strauss /s/ JOHN H. WILLIAMS* Director May 9, 1997 - ----------------------------------------------------- John H. Williams Director - ----------------------------------------------------- Karl Eller * By L. Lowry Mays, attorney-in-fact pursuant to a Power of Attorney previously filed.
45 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ------- ----------- 1 -- Form of Underwriting Agreement. 2.1 -- Stock Purchase Agreement By and Among Clear Channel Communications, Inc., Eller Media Corporation and the Stockholders of Eller Media Corporation, dated February 25, 1997. (Incorporated by reference to the exhibits of the Company's Form 10-K dated March 31, 1997). 2.2 -- Amendment to Stock Purchase Agreement by and among Clear Channel Communications, Inc., Eller Media Corporation and the Stockholders of Eller Media Corporation, dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 2.3 -- Registration Rights Agreement by and between Clear Channel Communications, Inc., and the Stockholders of Eller Media Corporation, dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 2.4 -- Stockholders Agreement by and between Clear Channel Communications, Inc., and EM Holdings LLC, dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 2.5 -- Escrow Agreement By and Among Eller Media Corporation, Clear Channel Communications, Inc., and EM Holdings LLC, and Chase Trust Company of California, Dated April 10, 1997. (Incorporated by reference to the exhibits of the Company's Current Report on Form 8-K dated April 17, 1997.) 4.1 -- Buy-Sell Agreement by and between Clear Channel Communications, Inc., L. Lowry Mays, B. J. McCombs, John M. Schaefer and John W. Barger, dated May 31, 1977. (Incorporated by reference to the exhibits of the Company's Registration Statement on Form S-1 (Reg. No. 289161) dated April 19, 1984.) 4.2 -- Third Amended and Restated Credit Agreement by and among Clear Channel Communications, Inc., NationsBank of Texas, N.A., as administrative lender, the First National Bank of Boston, as documentation agent, the Bank of Montreal and Toronto Dominion (Texas), Inc., as co-syndication agents, and certain other lenders dated April 10, 1997. 5 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. 23.1 -- Consent of Ernst & Young LLP. 23.2 -- Consent of Ernst & Young LLP. 23.3 -- Consent of Ernst & Young LLP. 23.4 -- Consent of KPMG. 23.5 -- Consent of KPMG Peat Marwick LLP. 23.6 -- Consent of Arthur Andersen LLP. 23.7 -- Consent of KPMG Peat Marwick LLP. 23.8 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in opinion filed as Exhibit 5).
EX-1 2 FORM OF UNDERWRITING AGREEMENT 1 ================================================================================ 10,000,000 SHARES CLEAR CHANNEL COMMUNICATIONS, INC. COMMON STOCK _______________ UNDERWRITING AGREEMENT _______________ ___________ _____, 1997 ================================================================================ - 1 - 2 10,000,000 SHARES CLEAR CHANNEL COMMUNICATIONS, INC. COMMON STOCK UNDERWRITING AGREEMENT ________ _, 1997 ALEX. BROWN & SONS INCORPORATED CREDIT SUISSE FIRST BOSTON CORPORATION FURMAN SELZ LLC GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. MONTGOMERY SECURITIES SALOMON BROTHERS INC c/o Alex. Brown & Sons Incorporated One South Street Baltimore, Maryland 21202 Ladies and Gentlemen: Clear Channel Communications, Inc., a Texas corporation (the "Company"), and the selling shareholders listed on Schedule I hereto (the "Selling Shareholders"), propose to sell to the several underwriters (the "Underwriters") named in Schedule II hereto 10,000,000 shares of the Company's Common Stock, $.10 par value (the "Firm Shares"), of which 4,093,790 shares are to be sold by the Company (the "Company Shares") and 5,906,210 of which are to be sold by the Selling Shareholders (the "Selling Shareholder Shares"). The respective amounts of the Firm Shares to be so purchased by the several Underwriters are set forth opposite their names in Schedule II hereto. The Company also proposes to sell at the Underwriters' option an aggregate of up to [1,000,000] additional shares of the Company's Common Stock (the "Option Shares") as set forth below. The Selling Shareholders have executed Custody Agreements (the "Custody Agreement") and certain of them have executed Powers of Attorney, the forms of which have been previously delivered to you, pursuant to which the Selling Shareholders have placed their respective Selling Shareholder Shares in custody with the Company and agreed to take certain other actions with respect thereto and hereto. As the Underwriters, you have advised the Company and the Selling Shareholders (a) that you are authorized to enter into this Agreement, and (b) that the Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Shares set forth opposite their respective names in Schedule II, plus their pro rata portion of the Option Shares if you elect to exercise the over-allotment option in whole or in part. The Firm Shares and the Option Shares (to the extent the aforementioned option is exercised) are herein collectively called the "Shares." - 2 - 3 In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows: 1. Representations and Warranties of the Company. The Company represents and warrants as follows: (a) A registration statement on Form S-3 (File No. 333-25457) with respect to the Shares has been carefully prepared by the Company in conformity in all material respects with the requirements of the Securities Act of 1933, as amended, (the "Act") and the Rules and Regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder and has been filed with the Commission under the Act. The Company has complied with the conditions for the use of Form S-3. Copies of such registration statement, including any amendments thereto, the preliminary prospectuses (meeting the requirements of Rule 430A of the Rules and Regulations) contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to you. Such registration statement, together with any registration statement filed by the Company pursuant to Rule 462(b) of the Act, herein referred to as the "Registration Statement," which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and contained in the Prospectus referred to below, has been declared effective by the Commission under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement. "Prospectus" means (i) the form of prospectus first filed by the Company with the Commission pursuant to its Rule 424(b) or (ii) the last preliminary prospectus included in the Registration Statement filed prior to the time it becomes effective or filed pursuant to Rule 424(a) under the Act that is delivered by the Company to the Underwriters for delivery to purchasers of the Shares, together with any term sheet or abbreviated term sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus included in the Registration Statement prior to the time it becomes effective is herein referred to as a "Preliminary Prospectus." Except as specifically set forth herein, (i) any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein, as of the date of such Preliminary Prospectus or Prospectus, as the case may be, and (ii) in the case of any reference herein to any Prospectus, also shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rules 424(b) and 430A, and prior to the termination of the offering of the Shares by the Underwriters. (b) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Texas, with corporate power and authority to own its properties and conduct its business as described in the Registration Statement; each of the subsidiaries of the Company as listed on Schedule III hereto (collectively, the "Subsidiaries") has been duly organized and, is validly existing as a corporation in good standing under the - 3 - 4 laws of the jurisdiction of its incorporation, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement; the Company and each of the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification and a failure to qualify would have a materially adverse effect upon the business or financial condition of the Company and the Subsidiaries taken as a whole; except as set forth on Schedule III hereto, the outstanding shares of capital stock of each of the Subsidiaries owned by the Company or a Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the Company or another subsidiary free and clear of all liens, encumbrances and security interests and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests in the Subsidiaries are outstanding. (c) The authorized shares of Common Stock of the Company have been duly authorized. The outstanding shares of Common Stock of the Company have been duly authorized and are validly issued, fully-paid and non-assessable; the Shares to be issued and sold by the Company have been duly authorized and when issued and paid for as contemplated herein will be validly issued, fully-paid and non-assessable; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement nor the offering or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock. (d) This Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. (e) The information set forth under the caption "Capitalization" in the Prospectus is true and correct. The Shares conform in all material respects with the statements concerning them in the Registration Statement. (f) The Commission has not issued an order preventing or suspending the use of any Prospectus relating to the proposed offering of the Shares nor instituted proceedings for that purpose. The Registration Statement contains and the Prospectus and any amendments or supplements thereto will contain all statements which are required to be stated therein by, and in all material respects conform or will conform, as the case may be, to the requirements of, the Act and the Rules and Regulations. The documents incorporated by reference in the Prospectus, at the time they were filed with the Commission conformed in all material respects to the requirements of the Securities Exchange Act of 1934 or the Act, as applicable, and the Rules and Regulations of the Commission thereunder. Neither the Registration Statement nor any amendment thereto, and neither the Prospectus nor any supplement thereto, including any documents incorporated by reference therein, contains or will contain, as the case may be, any untrue statement of a material fact or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of - 4 - 5 the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, or any documents incorporated by reference therein, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter, specifically for use in the preparation thereof. (g) The consolidated financial statements of the Company and the Subsidiaries, together with related notes and schedules incorporated by reference in the Registration Statement, present fairly the financial position and the results of operations of the Company and its subsidiaries consolidated, at the indicated dates and for the indicated periods. Such financial statements have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The selected and summary financial and statistical data included in the Registration Statement present fairly the information shown therein and have been compiled on a basis consistent with the financial statements incorporated by reference therein and the books and records of the Company. The pro forma financial information included in the Registration Statement and the Prospectus present fairly the information shown therein, have been properly compiled on the pro forma bases described therein, and, in the opinion of the Company, the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein. (h) Except for those license renewal applications of the Company or its Subsidiaries currently pending before the Federal Communications Commission (the "FCC"), a description of which is set forth on Schedule III hereto or as set forth in the Registration Statement, there is no action or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of the Subsidiaries before any court or administrative agency which could reasonably be likely to result in any material adverse change in the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) of the Company and of the Subsidiaries (taken as a whole). (i) The Company and the Subsidiaries have good and marketable title to all of the properties and assets reflected in the financial statements hereinabove described (or as described in the Registration Statement) subject to no material lien, mortgage, pledge, charge or encumbrance of any kind, except those reflected in such financial statements or as described in the Registration Statement or set forth on Schedule III. The Company and the Subsidiaries occupy their leased properties under valid leases with such exceptions as are not material to the Company and the Subsidiaries taken as a whole and do not materially interfere with the use made and proposed to be made of such properties by the Company and the Subsidiaries. (j) The Company and the Subsidiaries have filed all Federal, State and foreign income tax returns which have been required to be filed and have paid all taxes indicated by said returns - 5 - 6 and all assessments received by them or any of them to the extent that such taxes have become due and are not being contested in good faith. The Company has no knowledge of any tax deficiency that has been or might be asserted against the Company. (k) Since the respective dates as of which information is given in the Registration Statement, as it may be amended or supplemented, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or business prospects of the Company and its Subsidiaries (taken as a whole), whether or not occurring in the ordinary course of business, other than general economic and industry conditions changes in the ordinary course of business and changes or transactions described or contemplated in the Registration Statement and there has not been any material transaction entered into by the Company or the Subsidiaries, other than transactions in the ordinary course of business and changes and transactions contemplated by the Registration Statement, as it may be amended or supplemented. None of the Company or the Subsidiaries have any material contingent obligations which are not disclosed in the Registration Statement, as it may be amended or supplemented. (l) Neither the Company nor any of the Subsidiaries is or with the giving of notice or lapse of time or both, will be in default under its Articles of Incorporation or By-Laws or any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound and which default is of material significance in respect of the business or financial condition of the Company and its Subsidiaries (taken as a whole). The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company or any Subsidiary is a party, or of the Articles of Incorporation or by-laws of the Company or any order, rule or regulation applicable to the Company or any Subsidiary, or of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction, except in all cases a conflict, breach or default which would not have a materially adverse effect on the business or financial condition of the Company and the Subsidiaries (taken as a whole). (m) Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated (except such additional steps as may be required by the National Association of Securities Dealers, Inc. (the "NASD") or the New York Stock Exchange ("NYSE") or may be necessary to qualify the Shares for public offering by the Underwriters under State securities or Blue Sky laws) has been obtained or made and is in full force and effect. - 6 - 7 (n) The Company and each of the Subsidiaries hold all material licenses, certificates and permits from governmental authorities, including without limitation, the FCC, which are necessary to the conduct of their businesses; and neither the Company nor any of the Subsidiaries has received notice of any infringement of any material patents, patent rights, trade names, trademarks or copyrights, which infringement is material to the business of the Company and the Subsidiaries (taken as a whole). (o) Ernst & Young LLP, KPMG and KPMG Peat Marwick LLP, each of whom have certified certain of the financial statements incorporated by reference in the Registration Statement and Prospectus, are to the knowledge of the Company independent public accountants as required by the Act and the Rules and Regulations. (p) To the Company's knowledge, there are no affiliations or associations between any member of the NASD and any of the Company's officers, directors or 5% or greater security holders except as otherwise disclosed in writing to Alex. Brown :& Sons Incorporated. (q) Neither the Company, nor to the Company's knowledge, any of the Subsidiaries, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares. The Company acknowledges that the Underwriters may engage in passive market making transactions in the Shares on The NYSE in accordance (and in compliance) with Regulation M under the Exchange Act. (r) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. (s) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (t) The Company and each of its Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar industries. (u) The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including - 7 - 8 the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) for which the Company would have any liability has occurred and is continuing; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. (v) The Company confirms as of the date hereof that it is in compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of doing Business with Cuba, and the Company further agrees that if it commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba after the date the Registration Statement becomes or has become effective with the Commission or with the Florida Department of Banking and Finance (the "Department"), whichever date is later, or if the information reported or incorporated by reference in the Prospectus, if any, concerning the Company's business with Cuba or with any person or affiliate located in Cuba changes in any material way, the Company will provide the Department notice of such business or change, as appropriate, in a form acceptable to the Department. (w) The information set forth in the Prospectus under the caption "Prospectus Summary-Recent Developments" is true and correct in all material respects. 2. Representations and Warranties of the Selling Shareholders. Each Selling Shareholder represents and warrants to the Underwriters that: (a) Such Selling Shareholder has and at the Closing Date will have good and marketable title to the Selling Shareholder Shares being sold by such Selling Shareholder hereunder, free and clear of any outstanding liens, encumbrances, security interests, rights, subscriptions, warrants, calls, preemptive rights, options or other agreements of any kind, and full right, power and authority to effect the sale and delivery of such Shares; and upon the delivery of and payment for the Selling Shareholder Shares pursuant to this Agreement, good and marketable title thereto, free and clear of any liens, encumbrances, security interests, rights, subscriptions, warrants, calls, preemptive rights, options or other agreements of any kind, will be transferred to the several Underwriters. (b) Such Selling Shareholder has full right, power and authority to execute and deliver this Agreement and the Custody Agreement referred to below and to perform its obligations under such Agreements. The execution and delivery of this Agreement and the consummation by such Selling Shareholder of the transactions herein contemplated and the fulfillment by such Selling Shareholder of the terms hereof will not require any consent, approval, authorization, or other order of any court, regulatory body, administrative agency or other governmental - 8 - 9 body (except as may be required under the Act, state securities laws or Blue Sky Laws). The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other material agreement or instrument to which such Selling Shareholder is a party, or any order, rule or regulation applicable to such Selling Shareholder of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction. (c) Such Selling Shareholder has not taken and will not take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result, under the Exchange Act, or otherwise, in stabilization or manipulation of the price of the Company's Common Stock to facilitate the sale or resale of the Shares. (d) Such Selling Shareholder has executed and delivered this Agreement and the Custody Agreement, and in connection herewith, such Selling Shareholder further represents, warrants and agrees that such Selling Shareholder has deposited with The Bank of New York, pursuant to the Custody Agreement, the certificates in negotiable form representing such Selling Shareholder Shares for the purpose of further delivery pursuant to this Agreement; and the form of the Custody Agreement has been previously delivered to you. (e) Without having undertaken to determine independently the accuracy or completeness of either the representations and warranties of the Company contained herein or the information contained in the Registration Statement and documents incorporated therein by reference, such Selling Shareholder is familiar with the Registration Statement and has no knowledge of any material fact, condition or information not disclosed in the Registration Statement or the documents incorporated therein by reference which has adversely affected or may adversely affect the business of the Company which was previously operated by Eller Media Company; and the sale of such Selling Shareholder's Shares by the Selling Shareholder pursuant hereto is not prompted by any information concerning the Company or any of the Subsidiaries which is not set forth in the Registration Statement or the documents incorporated therein by reference. (f) On the Closing Date, all transfer and other taxes (other than income taxes) that are required to be paid in connection with the sale and transfer of the Selling Shareholder Shares to the Underwriters will have been paid by the Selling Shareholder. 3. Purchase, Sale and Delivery of the Shares. (a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, (i) the Company agrees to sell to the Underwriters the Company Shares, and each Underwriter agrees, severally and not jointly, to purchase at a price of $______ per share, the number of Firm Shares set forth opposite the name of each Underwriter in Schedule II hereof, subject to adjustments in accordance with Section 10 hereof and (ii) each Selling Shareholder agrees to sell to the Underwriters the number of shares set forth opposite the name of such Selling Shareholder in Schedule I hereof, subject to - 9 - 10 adjustments in accordance with Section 10 hereof. The number of Firm Shares to be purchased by each Underwriter from the Company and each Selling Shareholder shall be as nearly as practical in the same proportion to the total number of Firm Shares being sold by the Company and the Selling Shareholders as the number of Firm Shares being purchased by each Underwriter bears to the total number of Firm Shares to be sold hereunder. The obligations of the Company and the Selling Shareholders shall be several and not joint. (b) Certificates in negotiable form for the total number of Shares to be sold hereunder by the Selling Shareholders have been placed in custody with The Bank of New York as custodian (the "Custodian") pursuant to the Custody Agreements executed by the Selling Shareholders for delivery of all Selling Shareholder Shares. Each Selling Shareholder specifically agrees that the Firm Shares represented by the certificates held in custody for such Selling Shareholder under the Custody Agreement are subject to the interest of the Underwriters hereunder, and that the arrangements made by such Selling Shareholder for such custody are to that extent irrevocable, and that the obligations of such Selling Shareholder hereunder shall not be terminable by any act or deed of the Selling Shareholder (or by any other person, firm or corporation, including the Company, the Custodian or the Underwriters) or by operation of law or by the occurrence of any other event or events, except as set forth in the Custody Agreement. If any such event should occur prior to the delivery to the Underwriters of the Firm Shares hereunder, certificates for the Firm Shares shall be delivered by the Custodian in accordance with the terms and conditions of this Agreement as if such event had not occurred. The Custodian is authorized to receive and acknowledge receipt of the proceeds of the sale of the Selling Shareholder Shares held by it against the delivery of such Shares. (c) Payment for the Firm Shares to be sold hereunder by the Company and the Selling Shareholders is to be made via wire transfer of immediately available funds or such other payment procedures agreed to by the parties. Such payment and delivery are to be made at the offices of Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland, at 10:00 a.m., Baltimore time, on the third business day after the date of this Agreement or at such other time and date not later than five business days thereafter as you and the Company shall agree upon, such time and date being herein referred to as the "Closing Date." (As used herein, "business day" means a day on which the New York Stock Exchange is open for trading and on which banks in New York are open for business and not permitted by law or executive order to be closed.) The certificates for the Firm Shares will be delivered in such denominations and in such registrations as the Underwriters request in writing not later than the second full business day prior to the Closing Date, and will be made available for inspection by the Underwriters at least one business day prior to the Closing Date. (d) In addition, on the basis of representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase the Option Shares at the price per share as set forth in the first paragraph of this Section 3. The option granted hereby may be exercised in whole or in part by giving written notice only once within 30 days after the date of this Agreement, by - 10 - 11 you, the Underwriters, to the Company, setting forth the number of Option Shares as to which the several Underwriters are exercising the option, the names and denominations in which the Option Shares are to be registered and the time and date at which such certificates are to be delivered. The time and date at which certificates for Option Shares are to be delivered shall be determined by the Underwriters but shall not be earlier than three nor later than ten full business days after the exercise of such option, nor in any event prior to the Closing Date (such time and date being herein referred to as the "Option Closing Date"). If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date. The number of Option Shares to be purchased by each Underwriter shall be in the same proportion to the total number of Option Shares being purchased as the number of Firm Shares being purchased by such Underwriter bears to the total number of Firm Shares, adjusted by you in such manner as to avoid fractional shares. The option with respect to the Option Shares granted hereunder may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters. You, the Underwriters, may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company. To the extent, if any, that the option is exercised, payment for the Option Shares shall be made on the Option Closing Date via wire transfer of immediately available funds or other payment procedures agreed to by the parties against delivery of certificates therefor at the offices of Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland. 4. Offering by the Underwriters. It is understood that the Underwriters are to make a public offering of the Firm Shares as soon as the Underwriters deem it advisable to do so. The Firm Shares are to be initially offered to the public at the public offering price set forth in the Prospectus. The Underwriters may from time to time thereafter change the public offering price and other selling terms. To the extent, if at all, that any Option Shares are purchased pursuant to Section 3 hereof, the Underwriters will offer them to the public on the foregoing terms. It is further understood that you will act as the Underwriters in the offering and sale of the Shares will take place in accordance with a Master Agreement Among Underwriters entered into by you and the several other Underwriters. 5. Covenants of the Company and the Selling Shareholders. The Company (and each Selling Shareholder with respect to Paragraph (j) of this Section 5 only) covenants and agrees with the several Underwriters that: (a) The Company will (i) prepare and timely file with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430A of the Rules and Regulations, (ii) not file any amendment to the Registration Statement or supplement to the Prospectus or documents incorporated by reference therein of which the Underwriters shall not previously have been advised and furnished with a copy or to which the Underwriters shall have reasonably objected in writing or which is not in compliance with the Rules and - 11 - 12 Regulations and (iii) file on a timely basis all reports and any definitive proxy or information statements required to be filed by the Company with the Commission subsequent to the date of the Prospectus and prior to the termination of the offering of the Shares by the Underwriters. (b) The Company will advise the Underwriters promptly of any request of the Commission for amendment of the Registration Statement or for supplement to the Prospectus or for any additional information, or of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the institution of any proceedings for that purpose, and the Company will use reasonable efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if issued. (c) The Company will deliver to, or upon the order of, the Underwriters, from time to time, as many copies of any Preliminary Prospectus as the Underwriters may reasonably request. The Company will deliver to, or upon the order of, the Underwriters during the period when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Underwriters may reasonably request. The Company will deliver to the Underwriters at or before the Closing Date, four signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Underwriters such number of copies of the Registration Statement, but without exhibits, and of all amendments thereto, as the Underwriters may reasonably request, including documents incorporated by reference therein. (d) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earnings statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earnings statement shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will advise you in writing when such statement has been so made available. (e) The Company will, for a period of five years from the Closing Date, deliver to the Underwriters copies of annual reports and copies of all other documents, reports and information furnished by the Company to its stockholders or filed with any securities exchange pursuant to the requirements of such exchange or with the Commission pursuant to the Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (f) No offering, sale, short sale or other disposition of any Common Stock or other securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company will be made by the Company for a period of 90 days after the date of this Agreement, directly or indirectly, by the Company otherwise than hereunder, or with the prior written consent of Alex. Brown & Sons Incorporated, except that the Company may, without such consent, grant options or issue shares of Common Stock pursuant to the exercise of - 12 - 13 options granted under the Company's current stock option plans and may offer or issue shares of Common Stock in connection with the acquisition of stock or assets of another person. (g) The Company will comply with the Act and the Rules and Regulations, and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If during the period in which a prospectus is required by law to be delivered by an Underwriter or dealer, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company promptly will either (i) prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus or (ii) prepare and file with the Commission an appropriate filing under the Exchange Act which shall be incorporated by reference in the Prospectus so that the Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with the law. (h) The Company will use its best efforts to list, subject to notice of issuance, the Shares on the NYSE. (i) The Company has caused each of L. Lowry Mays and B. J. McCombs to furnish to you, or or prior to the date of this agreement, a letter or letters, in form and substance satisfactory to the Underwriters, pursuant to which each such person has agreed not to offer, sell, sell short or otherwise dispose of any shares of Common Stock of the Company or other capital stock of the Company, or any other securities convertible, exchangeable or exercisable for common stock or derivative of common stock owned by such person or request the registration for the offer or sale of any of the foregoing (or as to which such person has the right to direct the disposition of) for a period of 90 days after the date of this Agreement, directly or indirectly, except with the prior written consent of Alex. Brown & Sons Incorporated ("Lockup Agreements"). (j) Each of the Selling Shareholders agrees not to offer, sell, sell short or otherwise dispose of any shares of Common Stock of the Company or other securities convertible, exchangeable or exercisable for common stock or derivative of common stock owned by such Selling Shareholder or request the registration for the offer or sale of any of the foregoing (or as to which such person has the right to direct the disposition of) for a period of 90 days after the date of this Agreement, directly or indirectly, except with the prior written consent of Alex. Brown & Sons Incorporated. (k) The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Shares in such a manner as would require the Company or any of the - 13 - 14 Subsidiaries to register as an investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). (l) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the Common Stock. (m) The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company. 6. Costs and Expenses. The Company and the Selling Shareholders will pay all costs, expenses and fees incident to the performance of the obligations of the Company and the Selling Shareholders under this Agreement, including, without limiting the generality of the foregoing, the following: accounting fees of the Company; the fees and disbursements of counsel for the Company and the Selling Shareholders; the cost of printing and delivering to, or as requested by, the Underwriters copies of the Registration Statement, Preliminary Prospectuses, the Prospectus, this Agreement; fees and expenses related to Blue Sky matters; the filing fees of the Commission; and the filing fees of the NASD. The Company and the Selling Shareholders shall not, however, be required to pay for any of the Underwriters' expenses except that, if this Agreement shall not be consummated because the conditions in Section 8 hereof are not satisfied, or because this Agreement is terminated by the Underwriters pursuant to Section 7 hereof, or by reason of any failure, refusal or inability on the part of the Company to perform any undertaking or satisfy any condition of this Agreement or to comply with any of the terms hereof on its part to be performed, unless such failure to satisfy said condition or to comply with said terms is due to the default or omission of any Underwriter, then the Company and the Selling Shareholders shall reimburse the several Underwriters for reasonable out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing their obligations hereunder; but the Company and the Selling Shareholders shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits from the sale by them of the Shares. 7. Conditions of Obligations of the Underwriters. The several obligations of the Underwriters to purchase the Firm Shares on the Closing Date and the Option Shares, if any, on the Option Closing Date are subject to the accuracy, as of the Closing Date or the Option Closing Date, as the case may be, of the representations and warranties of the Company contained herein, and to the performance by the Company of its covenants and obligations hereunder and to the following additional conditions: (a) The Registration Statement and all post-effective amendments thereto shall have become effective and any and all filings required by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and any request of the commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Underwriters and complied with to their reasonable satisfaction. No stop - 14 - 15 order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been taken or, to the knowledge of the Company, shall be contemplated by the Commission and no injunction, restraining order, or order of any nature by a Federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance of the Shares. (b) The Underwriters shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters to the effect that: (i) The Company is validly existing as a corporation in good standing under the laws of the State of Texas, with corporate power and authority to own or lease its properties and conduct its business as described in the Prospectus; each of the Subsidiaries is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; and the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and, to the best of such counsel's knowledge, except (A) as reflected in the Company's financial statements, (B) as described in the Registration Statement, are owned by the Company or a Subsidiary or (C) as set forth on Schedule III hereto; and, to such counsel's knowledge, the outstanding shares of capital stock of each of the Subsidiaries are owned free and clear of all liens, encumbrances and security interests and no options, warrants or other rights to purchase, agreements or other obligations to issue, or other rights to convert any obligations into any shares of capital stock or of ownership interests in the Subsidiaries are outstanding. (ii) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus; the authorized shares of its Common Stock have been duly authorized; the outstanding shares of its Common Stock have been duly authorized and validly issued and are fully-paid and non-assessable; all of the Shares conform to the description thereof contained in the Prospectus; the Shares, including the Option Shares, if any, to be sold by the Company pursuant to this Agreement have been duly authorized and will be validly issued, fully paid and non-assessable when issued and paid for as contemplated by this Agreement; and, to the knowledge of such counsel, no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. (iii) Except as described in or contemplated by the Prospectus, to the knowledge of such counsel, there are no outstanding securities of the Company convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company and there are no outstanding or authorized options, warrants, or rights of any character obligating the Company to issue any shares of its - 15 - 16 capital stock or any securities convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of such stock; and except as described in the Prospectus, to the knowledge of such counsel, no holder of any securities of the Company or any other person has the right, contractual or otherwise, which has not been satisfied or effectively waived, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Shares or the right to have any Common Stock or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Act of any shares of Common Stock or other securities of the Company. (iv) The Registration Statement has become effective under the Act and, to the best of the knowledge of such counsel, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Act. (v) The Registration Statement, all Preliminary Prospectuses, the Prospectus and each amendment or supplement thereto and documents incorporated by reference therein (each as amended to date) comply as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable and the applicable rules and regulations thereunder (except that such counsel need express no opinion as to, the statistical information contained in the Prospectus or financial statements, schedules and other financial information incorporated by reference therein). (vi) The statements under the captions "Prospectus Summary -- Recent Developments," "Shares Eligible for Future Sale -- Registration Rights" and "Description of Capital Stock" in the Prospectus, insofar as such statements constitute a summary of documents referred to therein or matters of law, are accurate summaries and fairly and correctly present the information called for with respect to such documents and matters. (vii) To such counsel's knowledge, there are no contracts or documents required to be filed as exhibits to the Registration Statement or described in the Registration Statement or the Prospectus (excluding any document incorporated therein by reference) which are not so filed or described as required, and such contracts and documents as are summarized in the Registration Statement or the Prospectus (excluding any document incorporated therein by reference) are fairly summarized in all material respects. (viii) To such counsel's knowledge, there are no material legal proceedings pending or threatened against the Company or any of the Subsidiaries which is of a character required to be disclosed in the Prospectus and which has not been properly disclosed therein. (ix) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated do not and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, the Articles of - 16 - 17 Incorporation or By-laws of the Company, or to such counsel's knowledge, any agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries may be bound (other than licenses or permits granted by the FCC, on which such counsel need not express any opinion), except a conflict, breach or default which would not have a materially adverse effect on the business or financial condition of the Company and its subsidiaries taken as a whole. (x) This Agreement has been duly authorized, executed and delivered by the Company. (xi) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body having jurisdiction over the Company is necessary in connection with the execution and delivery of this Agreement and the consummation of the transactions herein contemplated (other than as may be required by the NASD or NYSE or as required by State securities and Blue Sky laws as to which such counsel need express no opinion) except such as have been obtained or made, specifying the same. (xii) The Company is not, and will not become, as a result of the consummation of the transactions contemplated by this Agreement, and application of the net proceeds therefor as described in the Prospectus, required to register as an investment company under the 1940 Act. In rendering such opinion, such counsel may rely (A) as to matters governed by the laws of states other than Texas or Federal laws on local counsel in such jurisdictions, provided that in each case such counsel shall state that they believe that they and the Underwriters are justified in relying on such other counsel and (B) as to matters of fact, on certificates of responsible officers of the Company and certificates or other written statements of officers or departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company and any Subsidiary. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, as of the time it became effective under the Act, the Prospectus or any amendment or supplement thereto, on the date it was filed pursuant to Rule 424(b) and the Registration Statement and the Prospectus, or any amendment or supplement thereto, as of the Closing Date or the Option Closing Date, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no view as to matters pertaining to statistical information contained in the Prospectus or financial statements, schedules and other financial information contained or incorporated by reference in the Prospectus). With respect to such statement, such counsel may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. - 17 - 18 (c) The Underwriters shall have received on the Closing Date the opinion of special counsel or special counsels for the Selling Shareholders, dated the Closing Date, addressed to the Underwriters, to the effect that: (i) This Agreement, the Powers of Attorney and the Custody Agreements have been duly authorized, executed and delivered by each Selling Shareholder. (ii) Each Selling Shareholder has full legal right, power and authority, and any approval required by law (other than as required by the NASD and the NYSE or state securities and Blue Sky laws as to which such counsel need express no opinion), to sell, assign, transfer and deliver the Selling Shareholder Shares by such Selling Shareholder. (iii) The Underwriters (assuming they are bona fide purchasers within the meaning of the Uniform Commercial Code) have acquired good and marketable title to the Selling Shareholder Shares, free and clear of all claims, liens, encumbrances and security interests whatsoever. (d) The Underwriters shall also have received on the Closing Date the opinion of local counsel for the Company experienced in such matters, in each of the major jurisdictions in which the Company conducts business (Atlanta, Georgia; Dallas, San Antonio and Houston, Texas; Los Angeles and San Francisco/Oakland, California; Cleveland, Ohio; Chicago, Illinois; and Tampa, Florida), dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters substantially to the effect that the statements under the caption "Risk Factors-Government Regulation" insofar as such statements constitute a summary of regulatory matters in the applicable jurisdiction relating to the outdoor advertising industry, fairly describes the regulatory matters relating to the Company's business as that business is conducted in the applicable metropolitan area. (e) The Underwriters shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Wiley, Rein and Fielding, special FCC counsel to the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters to the effect that: (i) No consent, approval, authorization or order of, or filing or declaration with, the FCC is required for or in connection with the authorization, issuance, transfer, sale or delivery of the Shares by the Company as described in the Prospectus assuming that (i) no individual or entity will acquire an attributable ownership interest in the Company as that term is defined by the FCC; and (ii) less than 25% of the capital stock of the Company will be owned by alien individuals or entities; provided, however, certain of the transaction documents may be subject to a requirement that they be filed with the FCC pursuant to Section 73.3613 of its rules. (ii) The authorization, issuance, transfer, sale and delivery of the Shares by the company as described in the Prospectus will not result in a breach or violation of any - 18 - 19 term or provision of the Communications Act or the Telecommunications Act of 1996, or any orders, rules or regulations of the FCC thereunder, assuming that (i) no individual or entity will acquire an attributable ownership interest in the Company as that term is defined by the FCC and (ii) less than 25% of the capital stock of the Company will be owned by alien individuals or entities. (iii) Subsidiaries of the Company hold valid authorizations from the FCC ("Licenses") for the U.S. radio and television stations (the "Stations") identified in the Prospectus under "Business -- Radio Broadcasting " and "Business -- Television Broadcasting" in those instances where a date is entered in the column "Date of Acquisition." All of the Licenses are in full force and effect. (iv) To counsel's knowledge, the Licenses are the only FCC main station licenses necessary to operate the Stations on the frequencies and in the markets listed in the Prospectus under "Business -- Radio Broadcasting" and "Business -- Television Broadcasting" in the columns "Frequency" and "Market (Rank)/Station" or "Market/Network" respectively. (v) Those portions of the Prospectus under the caption "Risk Factors -- Government Regulation-Broadcasting" and "Risk Factors-- New Technologies" in the Company's Annual Report on Form 10-K, as amended to date, incorporated therein by reference, under the caption "Item 1. Business - Regulation of the Company's Business" (excluding those paragraphs headed "Antitrust Matters" and "Environmental Matters") are accurate and fairly present the information set forth therein in all material respects as of the date of the Prospectus. (vi) Subsidiaries of the Company have pending before the FCC or the FCC has granted the license assignment or transfer of control applications for the U.S. radio and television stations listed in the Prospectus Summary under the caption "Recent Developments-Pending Acquisitions." (f) The Underwriters shall have received from Piper & Marbury L.L.P., counsel for the Underwriters, an opinion dated the Closing Date or the Option Closing Date, as the case may be, substantially to the effect specified in subparagraphs (ii), (iv), (v) and (x) of Paragraph (b) of this Section 7, and that the Company is a validly organized and existing corporation under the laws of the State of Texas. In rendering such opinion Piper & Marbury L.L.P. may rely as to all matters governed other than by the laws of the State of Maryland or Federal laws on the opinion of counsel referred to in paragraph (b) of this Section 7. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, as of the time it became effective under the Act, and the Prospectus or any amendment or supplement thereto, on the date it was filed pursuant to Rule 424(b) and the Registration Statement and the Prospectus, or any amendment or supplement thereto, as of the Closing Date or the Option Closing Date, as the case may be, contain an untrue statement of a material - 19 - 20 fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no view as to financial statements, schedules and other financial information included therein). With respect to such statement, Piper & Marbury L.L.P. may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (g) The Underwriters shall have received on each of the date hereof, the Closing Date or the Option Closing Date, as the case may be, signed letters from Ernst & Young LLP, KPMG Peat Marwick LLP and KPMG, dated the Closing Date or the Option Closing Date, as the case may be, which shall confirm, on the basis of a review in accordance with the procedures set forth in the letters signed by such firms and dated and delivered to the Underwriters on the date hereof that nothing has come to their attention during the period from the date five days prior to the date hereof, to a date not more than five days prior to the Closing Date or the Option Closing Date, as the case may be, which would require any change in their letter dated the date hereof if it were required to be dated and delivered on the Closing Date or the Option Closing Date, as the case may be. All such letters shall be in form and substance satisfactory to the Underwriters. (h) The Underwriters shall have received on the Closing Date or the Option Closing Date, as the case may be, a certificate or certificates of the President or Chief Executive Officer and the Senior Vice President and Chief Accounting Officer of the Company to the effect that, as of the Closing Date or the Option Closing Date, as the case may be, each of them severally represents as follows: (i) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for such purpose have been taken or are, to his knowledge, contemplated by the Commission. (ii) He does not know of any litigation instituted or threatened against the Company of a character required to be disclosed in the Registration Statement which is not so disclosed. (iii) He has carefully examined the Registration Statement and the Prospectus and, in his opinion to his knowledge, as of the effective date of the Registration Statement, the statements contained in the Registration Statement were true and correct in all material respects, and such Registration Statement and Prospectus did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and, in his opinion, since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement to or an amendment of the Prospectus which has not been so set forth in such supplement or amendment. - 20 - 21 (i) The Company and the Selling Shareholders shall have furnished to the Underwriters such further certificates and documents confirming the representations and warranties contained herein and related matters as the Underwriters may reasonably have requested. (j) The Company Shares and Option Shares, if any, have been approved for listing upon official notice of issuance on the NYSE. The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects reasonably satisfactory to the Underwriters and to Piper & Marbury L.L.P., counsel for the Underwriters. If any of the conditions hereinabove provided for in this Section 7 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriters hereunder may be terminated by the Underwriters by notifying the Company of such termination in writing or by telegram at or prior to the Closing Date or the Option Closing Date, as the case may be. In such event, the Company and the Selling Shareholders and the Underwriters shall not be under any obligation to each other (except to the extent provided in Sections 6 and 9 hereof). 8. Conditions of the Obligations of the Company and the Selling Shareholders. The obligations of the Company and the Selling Shareholders to sell and deliver the Shares required to be delivered as and when specified in this Agreement are subject to the conditions that at the Closing Date or the Option Closing Date, as the case may be, no stop order suspending the effectiveness of the Registration Statement shall have been issued and in effect or proceedings therefor initiated or threatened. 9. Indemnification (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act against any losses, claims, damages or liabilities to which such Underwriter or such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or through the Underwriters specifically for use in the preparation - 21 - 22 thereof, and provided further that the Company shall not be liable with respect to any untrue statement contained in or any omission from a Preliminary Prospectus if the untrue statement contained in or such omission from such Preliminary Prospectus was corrected in the applicable Prospectus and the person asserting any such loss, liability, claim or damage was not given or sent a copy of the applicable Prospectus (excluding the documents incorporated by reference therein) in the manner and at such time as required by the Act, provided the Company has furnished you copies of such applicable Prospectus. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Selling Shareholder, severally and not jointly, agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act against any losses, claims, damages or liabilities to which such Underwriter or such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but in any such case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or such Underwriter directly or through such Selling Shareholder's representatives specifically for inclusion therein, and such Selling Shareholder, severally and jointly, will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, a Selling Shareholder will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company or the Selling Shareholder by or through the Underwriters specifically for use in the preparation thereof, and provided further that the Selling Shareholder shall not be liable with respect to any untrue statement contained in or any omission from a Preliminary Prospectus if the untrue statement contained in or such omission from such Preliminary Prospectus was corrected in the applicable Prospectus and the person asserting any such loss, liability, claim or damage was not given or sent a copy of the applicable Prospectus (excluding the documents incorporated by reference therein) in the manner and at such time as required by the Act, provided the Company has furnished you copies of such applicable Prospectus. In no event, however, shall the liability of a Selling Shareholder for indemnification under this Section 9(b) exceed the lesser of (i) that proportion of the total losses, claims, damages or liabilities indemnified against equal to the proportion of total Shares sold hereunder which is sold by such Selling Shareholder and (ii) the proceeds received by such Selling Shareholder from the Underwriters in the Offering. This indemnity agreement will be in addition to any liability which such Selling Shareholder may otherwise have. - 22 - 23 (c) Each Underwriter will indemnify and hold harmless the Company, each of its directors or nominees for director, each of its officers who have signed the Registration Statement, the Selling Shareholders and each person, if any, who controls the Company or any Selling Shareholder within the meaning of the Act, against any losses, claims, damages or liabilities to which the Company, the Selling Shareholders or any such director, nominee for director, officer, or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; and will reimburse any legal or other expenses reasonably incurred by the Company, the Selling Shareholders or any such director, nominee for director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that each Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by such Underwriter or through the Underwriters on behalf of such Underwriter specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have. (d) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 9, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing. No indemnification provided for in Section 9(a), (b) or (c) shall be available to any party who shall fail to give notice as provided in this Section 9(d) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 9(a), (b) or (c). In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any - 23 - 24 impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties. Such firm shall be selected by you in the case of parties indemnified pursuant to Section 9(a) or Section 9(b) and by the Company in the event of parties indemnified pursuant to Section 9(c). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. (e) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under Section 9(a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Shareholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Shareholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Shareholders on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No party shall be held liable for contribution with respect to any claim or action settled without its consent which shall not be unreasonably withheld. Such consent shall be given within three business days from the date on which the party requesting consent provides a written request to the other party. Notwithstanding any other provision of this Agreement to the contrary, (i) no Selling Shareholder shall be held liable for contribution with respect to any claim or action for which such Selling Shareholder would have no liability under Section 9(b), and (ii) no Selling Shareholder shall be held liable for contribution in excess of the amount for which such Selling Shareholder could have been held liable under Section 9(b). - 24 - 25 The Company, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 9(e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 9(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 9(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this Section 9(e) to contribute are several in proportion to their respective underwriting obligations and not joint. (f) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 9 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon him or it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join him or it as an additional defendant in any such proceeding in which such other contributing party is a party. (g) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 9 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred. The indemnity and contribution agreements contained in this Section 9 and the representations and warranties of the Company and the Selling Shareholders set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter, the Selling Shareholders, the Company, or its directors, nominees for director or officers or any persons controlling the Company or any Selling Shareholder, (ii) acceptance of any Shares and payment therefor hereunder, and (iii) any termination of this Agreement. A successor to any Underwriter, or to the Company, the Selling Shareholder or their respective directors or officers, or any person controlling the Company or any Selling Shareholder, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 9. 10. Default by Underwriters. If on the Closing Date or the Option Closing Date, as the case may be, any Underwriter shall fail to purchase and pay for the portion of the Shares which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company or the Selling Shareholders), the non-defaulting Underwriters shall use their best efforts to procure within 24 hours thereafter one or more of the other - 25 - 26 Underwriters, or any others, to purchase from the Company and the Selling Shareholders such amounts as may be agreed upon and upon the terms set forth herein, the Firm Shares or Option Shares, as the case may be, which the defaulting Underwriter or Underwriters failed to purchase. If during such 24 hours you, the non-defaulting Underwriters, shall not have procured such other Underwriters, or any others, to purchase the Firm Shares or Option Shares, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of shares with respect to which such default shall occur does not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Firm Shares or Option Shares, as the case may be, which they are obligated to purchase hereunder, to purchase the Firm Shares or Option Shares, as the case may be, which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of shares of Firm Shares or Option Shares, as the case may be, with respect to which such default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the Company or you as the Underwriters will have the right, by written notice given within the next 24-hour period to the parties to this Agreement, to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company except to the extent provided in Section 9 hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Section 10, the Closing Date or Option Closing Date, as the case may be, may be postponed for such period, not exceeding seven days, as you, the non-defaulting Underwriters, may determine in order that the required changes in the Registration Statement or in the Prospectus or in any other documents or arrangements may be effected. The term "Underwriter" includes any person substituted for a defaulting Underwriter. Any action taken under this Section 10 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 11. Notices. All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered or telegraphed and confirmed as follows: if to the Underwriters, to Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland 21202, Attention: Jeffrey S. Amling, Managing Director; if to the Company, to Clear Channel Communications, Inc., 20 Concord Plaza, Suite 600, San Antonio, Texas 78216, attention: Randall Mays, Vice President; if to the Selling Shareholders, to ___________, __________ attention: ____________; and if to Hellman & Frieman, to ________, ___________ attention:____________. 12. Termination. This Agreement may be terminated by you by notice to the Company and the Custodian and Paul J. Meyer, on behalf of the Selling Shareholders, as follows: (a) at any time prior to the earlier of (i) the time the Shares are released by you for sale by notice to the Underwriters, or (ii) 11:30 A.M. on the date of this Agreement; (b) at any time prior to the Closing Date if any of the following has occurred: (i) since the effective date of the Registration Statement, any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company and its Subsidiaries taken as a whole or the earnings, business - 26 - 27 affairs, management or business prospects of the Company and its Subsidiaries taken as a whole, whether or not arising in the ordinary course of business, (ii) any outbreak of hostilities or other national or international calamity or crisis or change in economic or political conditions if the effect of such outbreak, calamity, crisis or change on the financial markets of the United States would, in your reasonable judgment, make the offering or delivery of the Shares impracticable, (iii) suspension of trading in securities on the NYSE or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on the NYSE, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in your reasonable opinion materially and adversely affects or will materially or adversely affect the business or operations of the Company and the Subsidiaries taken as a whole, (v) declaration of a banking moratorium by either federal or New York State authorities or (vi) the taking of any action by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in your reasonable opinion has a material adverse effect on the securities markets in the United States; or (c) as provided in Sections 7 and 10 of this Agreement. This Agreement also may be terminated by you, by notice to the Company, as to any obligation of the Underwriters to purchase the Option Shares, upon the occurrence at any time prior to the Option Closing Date of any of the events described in subparagraph (b) above or as provided in Sections 7 and 10 of this Agreement. 13. Successors. This Agreement has been and is made solely for the benefit of the Underwriters, the Company, the Selling Shareholders and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. The term "successors" shall not include any purchaser of the Shares merely because of such purchase. 14. Information Provided by Underwriters. The Company, the Selling Shareholders and the Underwriters acknowledge and agree that the only information furnished or to be furnished by any Underwriter to the Company or the Selling Shareholders for inclusion in any Prospectus or the Registration Statement consists of the information set forth in the last paragraph on the front cover page (insofar as such information relates to the Underwriters), legends required by Item 502(d) of Regulation S-K and Regulation M under the Act and the information under the caption "Underwriting" in the Prospectus. 15. Miscellaneous. The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of any Underwriter or controlling person thereof, or by or on behalf of the Company or its directors or officers and (c) delivery of and payment for the Shares under this Agreement. - 27 - 28 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Maryland. If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Company, the Selling Shareholders and the several Underwriters in accordance with its terms. Very truly yours, CLEAR CHANNEL COMMUNICATIONS, INC. By ------------------------------------ L. Lowry Mays Chairman of the Board and Chief Executive Officer - 28 - 29 SELLING SHAREHOLDERS: HELLMAN & FRIEDMAN CAPITAL PARTNERS III, L.P By: Its General Partner, H&F Investors III By: Its Managing General Partner, Hellman & Friedman Associates III, L.P. By: Its Managing General Partner, H&F Investors III, Inc. By: --------------------------- Its: Address: One Maritime Plaza 12th Floor San Francisco, CA 94111 H&F ORCHARD PARTNERS III, L.P. By: Its General Partner, H&F Investors III By: Its Managing General Partner, Hellman & Friedman Associates III, L.P. By: Its Managing General Partner, H&F Investors III, Inc. By: --------------------------- Its: Address: One Maritime Plaza 12th Floor San Francisco, CA 94111 - 29 - 30 H&F INTERNATIONAL PARTNERS III, L.P. By: Its General Partner, H&F Investors III By: Its Managing General Partner, Hellman & Friedman Associates III, L.P. By: Its Managing General Partner, H&F Investors III, Inc. By: --------------------------- Its: Address: One Maritime Plaza 12th Floor San Francisco, CA 94111 H. Irving Grousebeck * American Media Management, Inc. * Richard Reiss, Jr. * K. Tucker Anderson * Glenn Krevlin, as Trustee * Patricia Sales Pineda * Steven G. Mihaylo * El Dorado Investment Company * By ---------------------------------------- Paul J. Meyer, As Attorney-in-Fact - 30 - 31 The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. ALEX. BROWN & SONS INCORPORATED CREDIT SUISSE FIRST BOSTON CORPORATION FURMAN SELZ LLC GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. MONTGOMERY SECURITIES SALOMON BROTHERS INC By ALEX. BROWN & SONS INCORPORATED By ------------------------------------ Authorized Officer - 31 - 32 SCHEDULE I SCHEDULE OF SELLING SHAREHOLDERS Hellman & Friedman Capital Partners III, L.P ....................... 4,951,884 H&F Orchard Partners III, L.P. ..................................... 364,495 H&F International Partners III, L.P. ............................... 109,834 H. Irving Grousebeck ............................................... 175,701 American Media Management, Inc. .................................... 37,110 Richard Reiss, Jr .................................................. 92,440 K. Tucker Anderson ................................................. 5,197 Glenn Krevlin, as Trustee .......................................... 1,732 Patricia Sales Pineda .............................................. 730 Steven G. Mihaylo .................................................. 74,712 El Dorado Investment Company ....................................... 92,375 --------- Total ......................................................... 5,906,210 =========
- 32 - 33 SCHEDULE II SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM SHARES UNDERWRITER TO BE PURCHASED - ----------- --------------------- Alex. Brown & Sons Incorporated ............................ Credit Suisse First Boston Corporation ..................... Furman Selz LLC ............................................ Goldman, Sachs & Co. ....................................... Lehman Brothers Inc. ....................................... Montgomery Securities Smith Barney Inc. .......................................... Total ................................................. 10,000,000 ==========
- 33 - 34 SCHEDULE III DISCLOSURE ITEMS 1. Material Subsidiaries 2. Liens, capitalization except for Subsidiary Stock 3. Pending Renewal applications 4. Clear Channel Common Stock exceptions 5. [other] - 34 - EX-4.2 3 3RD AMENDED & RESTATED CREDIT AGREEMENT 1 EXHIBIT 4.2 ================================================================================ THIRD AMENDED AND RESTATED CREDIT AGREEMENT AMONG CLEAR CHANNEL COMMUNICATIONS, INC. CERTAIN LENDERS NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER, THE FIRST NATIONAL BANK OF BOSTON, AS DOCUMENTATION AGENT, BANK OF MONTREAL, AS CO-SYNDICATION AGENT, AND TORONTO DOMINION (TEXAS), INC., AS CO-SYNDICATION AGENT ---------------------------------------- NATIONSBANC CAPITAL MARKETS, INC., AS ARRANGER APRIL 10, 1997 ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE 1 Definitions ----------- Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.2 Amendments and Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 1.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE 2 Advances -------- Section 2.1 The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 2.2 Manner of Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Section 2.5 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 2.6 Reduction and Change of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 2.7 Non-Receipt of Funds by the Administrative Lender . . . . . . . . . . . . . . . . . . . . . 27 Section 2.8 Payment of Principal of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.9 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 2.10 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 2.11 LIBOR Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.13 Calculation of LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 2.14 Booking Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 2.16 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE 3 Conditions Precedent -------------------- Section 3.1 Conditions Precedent to Closing and the Initial Advance and the Letters of Credit . . . . . 39 Section 3.2 Conditions Precedent to All Advances and Letters of Credit . . . . . . . . . . . . . . . . 42
i 3 ARTICLE 4 Representations and Warranties ------------------------------ Section 4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 4.2 Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . . . . . . 49 ARTICLE 5 General Covenants ----------------- Section 5.1 Preservation of Existence and Similar Matters . . . . . . . . . . . . . . . . . . . . . . . 50 Section 5.2 Business; Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 5.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 5.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 5.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.7 Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.8 Payment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.11 Environmental Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 5.12 Conversion of Eller to Unrestricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . 54 Section 5.13 Syndication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 5.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 ARTICLE 6 Information Covenants --------------------- Section 6.1 Quarterly Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.2 Annual Financial Statements and Information; Certificate of No Default . . . . . . . . . . 55 Section 6.3 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.4 Copies of Other Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.5 Notice of Litigation, Default and Other Matters . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.6 ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 ARTICLE 7 Negative Covenants ------------------ Section 7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Section 7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ii 4 Section 7.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Section 7.4 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 7.5 Liquidation, Disposition or Acquisition of Assets, Merger, New Subsidiaries . . . . . . . . 61 Section 7.6 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 7.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 7.8 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 7.9 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 7.10 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 7.11 Fixed Charges Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.12 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.13 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.14 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.15 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.16 Business of Clear Channel Television Licenses, Inc. and Clear Channel Radio Licenses, Inc. and Clear Channel Metroplex Licenses, Inc. . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.18 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 ARTICLE 8 Default ------- Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 ARTICLE 9 Changes in Circumstances ------------------------ Section 9.1 LIBOR Basis Determination Inadequate . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 9.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 9.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 9.4 Effect On Base Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 9.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 ARTICLE 10 Agreement Among Lenders ----------------------- Section 10.1 Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 10.2 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 10.3 Benefits of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
iii 5 ARTICLE 11 Miscellaneous ------------- Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 11.4 Determination by the Lenders Conclusive and Binding . . . . . . . . . . . . . . . . . . . . 77 Section 11.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 11.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.9 Interest and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.11 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.12 Exception to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Section 11.13 No Liability of Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Section 11.14 Credit Agreement Governs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 SECTION 11.15 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 SECTION 11.16 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 SECTION 11.17 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
iv 6 Schedules and Exhibits Schedule 1: LIBOR Lending Offices Schedule 2: Existing Liens Schedule 3: Existing Litigation Schedule 4: Licenses, Permits and Other Authorizations Schedule 5: Intentionally Deleted Schedule 6: Existing Guaranties Schedule 7: Subsidiaries Schedule 8: Existing Investments Schedule 9: Existing Indebtedness Schedule 10: Intentionally Deleted Schedule 11: Material Adverse Changes Schedule 12: Specified Percentages Schedule 13: Subsidiary Guarantors Schedule 14: Existing Letters of Credit Exhibit A: Revolving Credit Note Exhibit B: Bid Rate Note Exhibit C: Subsidiary Guaranty Exhibit D: Compliance Certificate Exhibit E: Assignment and Acceptance v 7 THIRD AMENDED AND RESTATED CREDIT AGREEMENT THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 10, 1997, among CLEAR CHANNEL COMMUNICATIONS, INC., a Texas corporation ("Borrower"), the Lenders from time to time party hereto, NATIONSBANK OF TEXAS, N.A., a national banking association, as administrative agent for the Lenders, THE FIRST NATIONAL BANK OF BOSTON, as Documentation Agent, BANK OF MONTREAL, as Co-Syndication Agent and TORONTO DOMINION (TEXAS), INC., as Co-Syndication Agent. BACKGROUND The Borrower and lenders entered into that certain Credit Agreement dated as of September 30, 1994 in the maximum principal amount of $350,000,000 (said Credit Agreement, as amended, the "Original Credit Agreement"). The Borrower and certain of the Lenders entered into the certain Amended and Restated Credit Agreement dated as of October 19, 1995 in the maximum principal amount of $600,000,000 (said Amended and Restated Credit Agreement, as amended, the "October 1995 Credit Agreement"). The Borrower and certain of the Lenders entered into the certain Second Amended and Restated Credit Agreement dated as of August 1, 1996 in the maximum principal amount of $1,040,000,000 (said Second Amended and Restated Credit Agreement, as amended, the "Existing Credit Agreement"). The Borrower has requested that the Lenders amend and restate the Existing Credit Agreement by making a credit facility available to the Borrower in the maximum principal amount of $1,750,000,000, subject to a possible increase up to $2,000,000,000 as provided in Section 5.13 hereof. In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration hereby acknowledged, the parties hereto agree that the Existing Credit Agreement is being amended and restated as follows: 1 8 ARTICLE 1 Definitions Section 1.1 Defined Terms. For purposes of this Agreement: "ARN" means the Australian Radio Network Limited, PTY, an Australian propriety company, 50% of whose Capital Stock is owned by the Borrower. "Additional Costs" has the meaning set forth in Section 9.5 hereof. "Administrative Lender" means NationsBank of Texas, N.A., a national banking association, as administrative agent for Lenders, or such successor administrative agent appointed pursuant to Section 10.1(b) hereof. "Advance" means a Revolving Credit Advance or a Bid Rate Advance and "Advances" means Revolving Credit Advances and Bid Rate Advances. "Affiliate" means any Person that directly or indirectly through one or more Subsidiaries Controls, or is Controlled By or Under Common Control with, the Borrower. "Affiliation Agreements" means all affiliation agreements of the Borrower and each Subsidiary with Fox Broadcasting. "Agreement" means this Third Amended and Restated Credit Agreement, as amended or renewed from time to time. "Agreement Date" means the date of this Agreement. "Amortization Date" means September 30, 2000. "Applicable Environmental Laws" means applicable federal, state or local laws, rules and regulations pertaining to health or the environment, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (as amended from time to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as amended from time to time, "RCRA"), the Texas Water Code, and the Texas Solid Waste Disposal Act. "Applicable Law" means (a) in respect of any Person, all provisions of constitutions, statutes, rules, regulations, courts and orders of governmental bodies or regulatory agencies applicable to such Person and its properties, including, without limiting the foregoing, all orders and decrees of all courts and arbitrators in proceedings or actions to which the Person in 2 9 question is a party, and (b) in respect of contracts relating to interest or finance charges that are made or performed in the State of Texas, "Applicable Law" shall mean the laws of the United States of America, including without limitation 12 USC Sections 85 and 86, as amended from time to time, and any other statute of the United States of America now or at any time hereafter prescribing the maximum rates of interest on loans and extensions of credit, and the laws of the State of Texas, including, without limitation, Article 5069-1.04, Title 79, Revised Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other statute of the State of Texas now or at any time hereafter prescribing maximum rates of interest on loans and extensions of credit; provided that the parties hereto agree that the provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as amended, shall not apply to Advances, this Agreement, the notes or any other Loan Documents. "Applicable Margin" means the following per annum percentages, applicable in the following situations:
LIBOR Applicability Percentage ------------- ---------- (i) If the Leverage Ratio is not less than 6.0 to 1 1.0000 (ii) If the Leverage Ratio is less than 6.0 to 1 but is not less than 0.8750 5.75 to 1 (iii) If the Leverage Ratio is less than 5.75 to 1 but is not less than 0.7500 5.50 to 1 (iv) If the Leverage Ratio is less than 5.50 to 1 but is not less than 0.6250 5.00 to 1 (v) If the Leverage Ratio is less than 5.00 to 1 but is not less than 0.5000 4.50 to 1 (vi) If the Leverage Ratio is less than 4.50 to 1 but is not less than 0.4000 4.00 to 1 (vii) If the Leverage Ratio is less than 4.00 to 1 but is not less than 0.3250 3.50 to 1 (viii) If the Leverage Ratio is less than 3.50 to 1 but is not less than 0.2500 3.00 to 1 (ix) If the Leverage Ratio is less than 3.00 to 1 0.2250
The Applicable Margin payable by the Borrower on the Revolving Credit Advances outstanding hereunder shall be subject to reduction or increase, as applicable and as set forth in the table above, on a quarterly basis according to the performance of the Borrower as tested by the Leverage Ratio. Except as set forth in the last sentence hereof, any such increase or reduction in the Applicable Margin provided for herein shall be effective three Business Days after receipt by Administrative Lender of the applicable financial statements. If financial statements of the 3 10 Borrower setting forth the Leverage Ratio are not received by the Administrative Lender by the date required pursuant to Section 6.1 hereof, the Applicable Margin shall be determined as if the Leverage Ratio is not less than 6.00 to 1 until such time as such financial statements are received. For the final quarter of any fiscal year of the Borrower, the Borrower may provide its unaudited financial statements, subject only to year-end adjustments, for the purpose of adjusting the Applicable Margin. Notwithstanding anything above to the contrary, if the compliance certificate required to be delivered pursuant to Section 7.5(b) hereof prior to any proposed acquisition indicates that the Leverage Ratio after giving effect to the proposed acquisition would result in an adjustment of the Applicable Margin, the Applicable Margin shall be increased or decreased, as the case may be, as of the date of such acquisition. "Art. 1.04" has the meaning ascribed thereto in the definition of "Applicable Law." "Assignees" means any assignee of a Lender pursuant to an Assignment Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof. "Assignment Agreement" has the meaning ascribed thereto in Section 11.6 hereof. "Authorized Signatory" means such senior personnel of the Borrower as may be duly authorized and designated in writing by the Borrower to execute documents, agreements and instruments on behalf of the Borrower, and to request Advances and Letters of Credit hereunder. "Base Rate Advance" means any Revolving Credit Advance bearing interest at the Base Rate Basis. "Base Rate Basis" means, for any day, a per annum interest rate equal to the lesser of (a) the Highest Lawful Rate on such day, or (b) the higher of (i) the sum of (A) 0.50% plus (B) the Federal Funds Rate on such day or (ii) the Prime Rate on such day. The Base Rate Basis shall be adjusted automatically as of the opening of business on the effective date of each change in the Prime Rate or Federal Funds Rate, as the case may be, to account for such change. "Bid Rate Advance" means an Advance the interest rate on which is determined by agreement between the Borrower and the Lender making such Advance pursuant to Section 2.1(b) hereof. "Bid Rate Note" means each promissory note of the Borrower evidencing Bid Rate Advances, substantially in the form of Exhibit B hereto, together with any extension, renewal or amendment thereof or substitution therefor. "Borrower" means Clear Channel Communications, Inc., a Texas corporation. "Business Day" shall mean a day on which banks are open for the transaction of business as required by this Agreement in Dallas, Texas and New York, New York and, with respect to 4 11 any LIBOR Advance, a domestic business day in London, England and a day on which commercial banks are open for international business in London, England (including dealings in United States dollar deposits), and as otherwise relevant to the determination to be made or the action to be taken. "Capital Expenditures" means expenditures for the purchase of tangible assets of long-term use which are capitalized in accordance with GAAP; provided, however, Capital Expenditures shall not include assets acquired through trade without any expenditure of cash, such trade capital expenditures not to exceed $10,000,000 in aggregate value per year, such valuation to be determined using the lesser of the fair market value of assets received or the value of air-time run in exchange for the assets received. "Capital Stock" means, as to any Person, the equity interests in such Person, including, without limitation, the shares of each class of capital stock of any Person that is a corporation and each class of partnership interests (including, without limitation, general, limited and preference units) in any Person that is a partnership. "Capitalized Lease Obligations" means that portion of any obligation of the Borrower or any Restricted Subsidiary as lessee under a lease which at the time would be required to be capitalized on a balance sheet prepared in accordance with GAAP. "CCC-Houston" means CCC-Houston AM, Ltd., a Texas limited partnership and a Subsidiary of the Borrower. "Code" means the Internal Revenue Code of 1986, as amended. "Commitment" means (a) prior to the Syndication Date, $1,750,000,000, as reduced from time to time pursuant to Section 2.6 hereof and (b) on and after the Syndication Date, an amount not to exceed $2,000,000,000, as reduced from time to time pursuant to Section 2.6 hereof. "Communications Act" means, collectively, the Communications Act of 1934, as amended and the rules and regulations promulgated thereunder, as from time to time in effect. "Control" or "Controlled By" or "Under Common Control" means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise); provided, however, that (a) in the event that no one Person owns more than 50% of the outstanding Capital Stock of a corporation or entity, any Person which beneficially owns, directly or, by contract or law, indirectly, 10% or more (in number of votes) of the securities having ordinary voting power for the election of directors (or other managing authority) of such corporation or entity shall be conclusively presumed to control such corporation or entity or (b) in the event that one Person owns greater than 50% of the outstanding Capital Stock of a corporation or entity, any Person which beneficially owns, directly or, by contract or law, indirectly, greater than 20% or more (in number of votes) of the securities having ordinary voting power for the election of directors 5 12 (or other managing authority) of such corporation or entity shall be conclusively presumed to control such corporation. "Controlled Group" means, as to any Person, all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) which are under common control with such Person and which, together with such Person, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code; provided, however, that the Subsidiaries of the Borrower shall be deemed to be members of the Borrower's Controlled Group, and the Borrower and any other entities (whether incorporated or not incorporated) which are under common Control with the Borrower and which, together with the Borrower, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code, shall be deemed to be members of the Borrower's Controlled Group on and after the Agreement Date. "Default" means an Event of Default and/or any of the events specified in Section 8.1, regardless of whether there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event an Event of Default. "Default Rate" means a simple per annum interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b) the sum of the Base Rate Basis plus two percent. "Determining Lenders" means, on any date of determination, any combination of the Lenders having at least 51% of the aggregate amount of the Revolving Credit Advances then outstanding; provided, however, that if there are no Revolving Credit Advances outstanding hereunder, "Determining Lenders" shall mean any combination of Lenders whose Specified Percentages aggregate at least 51%. "Dividend" means, as to any Person, (a) any declaration or payment of any dividend (other than a dividend paid solely in shares of the common stock of such Person) on, or the making of any distribution, loan, advance or investment to or in any holder of, any shares of Capital Stock of such Person (other than salaries and bonuses paid in the ordinary course of business), or (b) any purchase, redemption, or other acquisition or retirement for value of any shares of Capital Stock of such Person; provided, however, that the acquisition of shares of Capital Stock of such Person for the purpose of acquiring a Subsidiary (whether by merger, consolidation, asset acquisition, stock acquisition, or otherwise) shall not be deemed a Dividend if (a) such shares are used as a portion or all of the purchase price for the acquisition of a Subsidiary within a period of ninety days from the date the initial shares of such Capital Stock were acquired and (b) such Person shall have given the Administrative Lender prior written notice of its intention to acquire such Capital Stock for the purpose of acquiring a Subsidiary. "Eller" means Eller Media Corporation, a Delaware corporation, formerly known as EMC Group, Inc., formerly Eller Media Company. "Eller Acquisition Documents" means in form and substance acceptable to Administrative Lender, all those documents relating to the acquisition by the Borrower of no less than 88% of 6 13 the Capital Stock of Eller pursuant to that stock purchase agreement by and between the Borrower, Eller and the stockholders of Eller dated as of February 25, 1997. "Equity" means shares of Capital Stock, or options, warrants or any other right to subscribe for or otherwise acquire Capital Stock, of the Borrower or any Subsidiary. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulation promulgated thereunder. "ERISA Event" means, with respect to the Borrower and its Subsidiaries, (a) a Reportable Event (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under regulations issued under Section 4043 of ERISA), (b) the withdrawal of any such Person or any member of its Controlled Group from a Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) the failure to make required contributions which could result in the imposition of a lien under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or the imposition of any liability under Title IV of ERISA other than PBGC premiums due but not delinquent under Section 4007 of ERISA. "Event of Default" means any of the events specified in Section 8.1, provided that any requirement for notice or lapse of time has been satisfied. "Existing Credit Agreement" means that certain Second Amended and Restated Credit Agreement dated as of August 1, 1996, by and among the Borrower, NationsBank of Texas, N.A., as Administrative Lender, and the lenders party thereto, as the same may have been amended, modified, renewed or extended from time to time. "Existing Eller Credit Agreement" means that amended and restated credit agreement in an amount not to exceed $550,000,000 among Eller Media Company, Eller, the Subsidiary Guarantors (as defined therein) and The Chase Manhattan Bank, as administrative agent dated as of November 19, 1996. "Existing Letters of Credit" means those certain Letters of Credit more specifically described on Schedule 14 hereto. "FCC" means the Federal Communications Commission, or any governmental agency succeeding to the functions thereof. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal 7 14 funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Administrative Lender on such day on such transactions as determined by Administrative Lender. "Fixed Charges" means, for the Borrower and its Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, for the four most recently ended fiscal quarters preceding any date of determination, an amount equal to the sum of (a) all payments of principal, interest, fees and other amounts paid on all Indebtedness, plus (b) all payments under Capitalized Lease Obligations, plus (c) all Capital Expenditures, plus (d) cash expenditures for the payment of taxes, plus (e) all Dividends paid. "GAAP" means generally accepted accounting principles applied on a consistent basis, set forth in the Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, or their successors which are applicable in the circumstances as of the date in question. The requisite that such principles be applied on a consistent basis shall mean that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period. "Guaranty" or "Guaranteed", as applied to an obligation, means and includes (a) a guaranty, direct or indirect, in any manner, of any part or all of such obligation, and (b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation, including, without limiting the foregoing, any reimbursement obligations with respect to amounts which may be drawn by beneficiaries of outstanding letters of credit. "Heftel" means Heftel Broadcasting Corporation, a Delaware corporation. "Highest Lawful Rate" means at the particular time in question the maximum rate of interest which, under Applicable Law, the Lenders are then permitted to charge on the Obligations. If the maximum rate of interest which, under Applicable Law, the Lenders are permitted to charge on the Obligations shall change after the date hereof, the Highest Lawful Rate shall be automatically increased or decreased, as the case may be, from time to time as of the effective time of each change in the Highest Lawful Rate without notice to the Borrower. For purposes of determining the Highest Lawful Rate under the Applicable Law of the State of Texas (including any amendment to such Applicable Law), the applicable rate ceiling shall be (a) the indicated rate ceiling described in and computed in accordance with the provisions of Section (a)(1) of Art. 1.04, or (b) if the parties subsequently contract as allowed by Applicable Law, the quarterly ceiling or the annualized ceiling computed pursuant to Section (d) of Art. 1.04; provided, however, that at any time the indicated rate ceiling, the quarterly ceiling or the 8 15 annualized ceiling shall be less than 18% per annum or more than 24% per annum, the provisions of Sections (b)(1) and (2) of said Art. 1.04 shall control for purposes of such determination, as applicable. "Increased Letter of Credit Costs" has the meaning set forth in Section 2.16(d) hereof. "Increased Letter of Credit Costs Retroactive Effective Date" has the meaning set forth in Section 2.16(d) hereof. "Increased Letter of Credit Costs Set Date" has the meaning set forth in Section 2.16(d) hereof. "Indebtedness" means, with respect to any Person, (a) all items, except items of partners' equity or of Capital Stock or of surplus or of general contingency or deferred tax reserves, which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person, (b) all obligations secured by any Lien on any property or asset owned by such Person, whether or not the obligation secured thereby shall have been assumed, (c) to the extent not otherwise included, all Capitalized Lease Obligations of such Person, all obligations of such Person with respect to leases constituting part of a sale and leaseback arrangement, all Guaranties, all obligations under interest rate swap agreements or similar hedge agreements, all indebtedness for borrowed money (excluding, for purposes of calculation of financial covenants only, indebtedness evidenced by Intercompany Notes), and all reimbursement obligations with respect to outstanding letters of credit, and (d) any "withdrawal liability" of the Borrower or any Subsidiary, as such term is defined under Part I of Subtitle E of Title IV of ERISA. "Indemnified Matters" has the meaning ascribed to it in Section 5.10(a) hereof. "Indemnitees" has the meaning ascribed to it in Section 5.10(a) hereof. "Index Debt Rating" means the rating available to the Borrower's senior, unsecured, non-credit-enhanced long term indebtedness for borrowed money ("Index Debt") or the implied rating established by Moody's or S&P as if the Borrower had outstanding Index Debt. "Institutional Debt" means Indebtedness for borrowed money which may be raised by the Borrower in the private placement or public debt markets. "Intercompany Notes" means those notes payable to the Borrower or any Subsidiary from any Subsidiary evidencing loans or advances made by the Borrower or any Subsidiary to such Subsidiary. "Interest Period" means for (a) any LIBOR Advance, the period beginning on the day the Advance is made and ending one, two, three, six or, subject to each Lender's good faith determination of availability, twelve months thereafter (as the Borrower shall select), and (b) any 9 16 Bid Rate Advance, the period beginning on the day the Advance was made and ending the date the Borrower and the Lender making the Bid Rate Advance agree pursuant to Section 2.1(b). "Investment" means any acquisition of all or substantially all assets of any Person, or any direct or indirect purchase or other acquisition of, or beneficial interest in, Capital Stock or other securities of any other Person, or any direct or indirect loan, advance (other than advances to employees for moving and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution to, or investment in any other Person, including without limitation the incurrence or sufferance of Indebtedness or accounts receivable of any other Person that are not current assets or do not arise in the ordinary course of business. "Issuing Bank" means NationsBank of Texas, N.A., in its capacity as issuer of the Letters of Credit. "L/C Cash Collateral Account" has the meaning specified in Section 2.16(g) hereof. "L/C Related Documents" has the meaning specified in Section 2.16(e) hereof. "Lender" means each financial institution or fund shown on the signature pages hereof so long as such financial institution or fund maintains a Commitment or is owed any part of the Obligations (including the Administrative Lender in its individual capacity), and each Assignee that hereafter becomes party hereto pursuant to Section 11.6 hereof. "Letter of Credit" has the meaning specified in Section 2.16(a) hereof. "Letter of Credit Agreement" has the meaning specified in Section 2.16(b) hereof. "Letter of Credit Facility" means the amount of the Letters of Credit the Issuing Bank may issue pursuant to Section 2.16(a) hereof. "Leverage Ratio" means, for any date of determination, the ratio of Total Debt as of the date of determination to Operating Cash Flow for the four most recently ended fiscal quarters preceding such date of determination. "LIBOR Advance" means a Revolving Credit Advance which the Borrower requests to be made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with the provisions of Section 2.2 hereof. "LIBOR Basis" means a simple per annum interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the Applicable Margin. The LIBOR Basis shall, with respect to LIBOR Advances with Interest Periods in excess of six months, be subject to premiums assessed by each Lender, which are payable directly to each Lender. Once determined, the LIBOR Basis shall remain unchanged during the applicable Interest Period. 10 17 "LIBOR Lending Office" means, with respect to a Lender, the office designated as its LIBOR Lending Office on Schedule 1 attached hereto, and such other office of the Lender or any of its affiliates hereafter designated by notice to the Borrower and the Administrative Lender. "LIBOR Rate" shall mean, for any LIBOR Advance for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest one-one hundredth (1/100th) of one percent (1%)) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in United States dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period. If for any reason such rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest one-one hundredth (1/100th) of one percent (1%)) appearing on Reuters Screen LIBO page as the London interbank offered rate for deposits in United States dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. "Lien" means, with respect to any property, any mortgage, lien, pledge, collateral assignment, hypothecation, charge, security interest, title retention agreement, levy, execution, seizure, attachment, garnishment or other encumbrance of any kind in respect of such property, whether or not choate, vested or perfected. "Loan Documents" means this Agreement, the Revolving Credit Notes, the Bid Rate Notes, the Subsidiary Guaranty, fee letters, and any other document or agreement executed or delivered from time to time by the Borrower, any Subsidiary or any other Person in connection herewith or as security for the Obligations. "Local Marketing Agreement" means any time brokerage agreements, local market affiliation agreements or related or similar agreements entered into between the Borrower or any Subsidiary and any other Person, as any of the above may be amended, substituted, replaced or modified. "Material Adverse Effect" means any act or circumstance or event that (a) causes a Default, or (b) otherwise could reasonably be expected to be material and adverse to the business, consolidated assets, liabilities, financial condition, results of operations or prospects of the Borrower and its Restricted Subsidiaries, together taken as a whole. "Maturity Date" means June 30, 2005. "Maximum Amount" means the maximum amount of interest which, under Applicable Law, the Lenders are permitted to charge on the Obligations. "Moody's" means Moody's Investors Services, Inc. 11 18 "Multiemployer Plan" means, as to any Person, at any time, a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person or any member of its Controlled Group is making, or is obligated to make contributions or has made, or been obligated to make, contributions. "NationsBank Guaranty" means the Guaranty in favor of NationsBank of Texas, N.A. on behalf of RDS Broadcasting, Inc. in the amount of $9,575,000. "Necessary Authorization" means any license, permit, consent, approval or authorization from, or any filing or registration with, any governmental or other regulatory authority (including without limitation the FCC) necessary or appropriate to enable the Borrower or any Subsidiary to maintain and operate its business and properties. "Net Cash Proceeds" means, with respect to any sale, lease, transfer or disposition of any asset by any Person or the issuance of Institutional Debt or Equity by any Person (other than the net cash proceeds from the consolidation of any Restricted Subsidiary with another Restricted Subsidiary), the aggregate amount of cash received by such Person in connection with such transaction minus reasonable fees, costs and expenses and related taxes. "Notice of Issuance" has the meaning ascribed to it in Section 2.16(b) hereof. "NRNZ" means NRNZ Holdings, Limited, a New Zealand corporation of which 33 1/3% of the outstanding Capital Stock is owned by the Borrower. "Obligations" means (a) all obligations of any nature (whether matured or unmatured, fixed or contingent, including the Reimbursement Obligations) of the Borrower or any Subsidiary to the Lenders under the Loan Documents, as they may be amended from time to time, and (b) all obligations of the Borrower or any Subsidiary for losses, damages, expenses or any other liabilities of any kind that any Lender may suffer by reason of a breach by the Borrower or any Subsidiary of any obligation, covenant or undertaking with respect to any Loan Document. "Operating Cash Flow" means, for any period, determined in accordance with GAAP on a consolidated basis for the Borrower and its Restricted Subsidiaries, the sum of (a) pre-tax net income (excluding therefrom (i) any items of extraordinary gain, including net gains on the sale of assets other than asset sales in the ordinary course of business, and (ii) any items of extraordinary loss, including net losses on the sale of assets other than asset sales in the ordinary course of business), plus (b) interest expense, depreciation and amortization (including amortization of film contracts), deferred and other non-cash expenses, and minus (c) cash payments made or scheduled to be made with respect to film contracts. Operating Cash Flow shall be adjusted to exclude (i) any extraordinary non-cash items deducted from or included in the calculation of pre-tax net income and (ii) without duplication, any accrued but not paid income or loss from Investments. For purpose of calculation of Operating Cash Flow with respect to assets not owned at all times during the four fiscal quarters preceding the date of 12 19 determination of Operating Cash Flow there shall be (i) included in Operating Cash Flow the Operating Cash Flow of any assets acquired during any of such four fiscal quarters for the twelve month period preceding the date of determination, and (ii) excluded from Operating Cash Flow the Operating Cash Flow of any assets disposed of during any of such four fiscal quarters for the twelve month period preceding the date of determination; provided, however, that if any Subsidiary becomes a Restricted Subsidiary after the Agreement Date and the Borrower shall directly or indirectly own less than 90% of such Subsidiary's Capital Stock, or with respect to Eller and its subsidiaries, Borrower shall directly or indirectly own less than 88% of such Capital Stock, then for purposes of the calculation of Operating Cash Flow, the Borrower shall only include a percentage of such Subsidiary's operating cash flow equal to the Borrower's percentage ownership of the Capital Stock of such Subsidiary. "Operating Lease" means any operating lease, as defined in the Financial Accounting Standard Board Statement of Financial Accounting Standards No. 13, dated November, 1976 or otherwise in accordance with GAAP, with an initial or remaining noncancellable lease term in excess of one year. "Participant" has the meaning ascribed to it in Section 11.6(c) hereof. "Participation" has the meaning ascribed to it in Section 11.6(c) hereof. "Payment Date" means the last day of the Interest Period for any LIBOR Advance or Bid Rate Advance. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Liens" means, as applied to any Person: (a) any Lien in favor of the Lenders to secure the Obligations hereunder; (b) (i) Liens on real estate for real estate taxes not yet delinquent, (ii) Liens created by lease agreements to secure the payments of rental amounts and other sums not yet due thereunder, (iii) Liens on leasehold interests created by the lessor in favor of any mortgagee of the leased premises, and (iv) Liens for taxes, assessments, governmental charges, levies or claims that are being diligently contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on such Person's books, but only so long as no foreclosure, restraint, sale or similar proceedings have been commenced with respect thereto; (c) Liens of carriers, warehousemen, mechanics, laborers and materialmen and other similar Liens incurred in the ordinary course of business for sums not yet due or being contested in good faith, if such reserve or appropriate provision, if any, as shall be required by GAAP shall have been made therefor; 13 20 (d) Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or similar legislation; (e) Easements, right-of-way, restrictions and other similar encumbrances on the use of real property which do not interfere with the ordinary conduct of the business of such Person; (f) Liens created to secure the purchase price of tangible personal property acquired by such Person or created to secure Indebtedness permitted by Section 7.1(d) hereof in an amount not to exceed $25,000,000 in the aggregate, which is incurred solely for the purpose of financing the acquisition of such assets and incurred at the time of acquisition, so long as each such Lien shall at all times be confined solely to the asset or assets so acquired (and proceeds thereof), and refinancings thereof so long as any such Lien remains solely on the asset or assets acquired and the amount of Indebtedness related thereto is not increased; (g) Liens in respect of judgments or awards for which appeals or proceedings for review are being prosecuted and in respect of which a stay of execution upon any such appeal or proceeding for review shall have been secured, provided that (i) such Person shall have established adequate reserves for such judgments or awards, (ii) such judgments or awards shall be fully insured and the insurer shall not have denied coverage, or (iii) such judgments or awards shall have been bonded to the satisfaction of the Determining Lenders; and (h) Any Liens existing on the Agreement Date which are described on Schedule 2 hereto, and Liens resulting from the refinancing of the related Indebtedness, provided that the Indebtedness secured thereby shall not be increased and the Liens shall not cover additional assets of the Borrower. "Person" means an individual, corporation, partnership, trust or unincorporated organization, limited liability company, or a government or any agency or political subdivision thereof. "Plan" means an employee pension benefit plan as defined in Section 3(2) of ERISA (including a Multiemployer Plan) that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is maintained for the employees of the Borrower, its Subsidiaries or any member of their Controlled Group. "Prime Rate" means, at any time, the prime interest rate announced or published by the Administrative Lender from time to time as its reference rate for the determination of interest rates for loans of varying maturities in United States dollars to United States residents of varying degrees of creditworthiness and being quoted at such time by the Administrative Lender as its "prime rate;" it being understood that such rate may not be the lowest rate of interest charged by the Administrative Lender. "Pro-Forma Debt Service" means, as of any date of determination, determined in accordance with GAAP for the Borrower and its Restricted Subsidiaries on a consolidated basis, 14 21 the sum (without duplication) of (a) all payments of principal, interest, fees and other amounts scheduled to be paid on all Indebtedness during the succeeding four fiscal quarters (assuming for any Indebtedness subject to a floating interest rate, an interest rate equal to the applicable rate in effect on the date of determination), plus (b) without duplication, all rentals and other amounts (excluding insurance premiums and property taxes) scheduled to be paid under all Capitalized Lease Obligations during the succeeding four fiscal quarters, plus (c) all debt discount and expense scheduled to be amortized during the succeeding four fiscal quarters. "Quarterly Date" means March 31, June 30, September 30 and December 31, beginning March 31, 1997. "Refinancing Advance" means any LIBOR Advance or Bid Rate Advance which is used to pay the principal amount (or any portion thereof) of a LIBOR Advance or Bid Rate Advance at the end of its Interest Period and which, after giving effect to such application, does not result in an increase in the aggregate amount of outstanding LIBOR Advances or Bid Rate Advances at the time of the Refinancing Advance. "Regulatory Modification" has the meaning set forth in Section 9.5 hereof. "Regulatory Modification Retroactive Effective Date" has the meaning set forth in Section 9.5 hereof. "Regulatory Modification Set Date" has the meaning set forth in Section 9.5 hereof. "Reimbursement Obligations" means, in respect of any Letters of Credit as at any date of determination, the maximum aggregate amount which is then available to be drawn under such Letter of Credit (whether the conditions to drawing thereunder have been met) plus any unreimbursed amounts under Letters of Credit. "Release Date" means the date on which the notes have been paid, all other Obligations due and owing have been paid and performed in full, and the Commitment has been terminated. "Reportable Event" has the meaning set forth in Title IV of ERISA. "Restricted Subsidiary" means (i) any Subsidiary which is not an Unrestricted Subsidiary, (ii) ARN, (iii) NRNZ, (iv) CCC-Houston and (v) Eller Target Media Group, L.P.; provided, however that each of the Subsidiaries set forth in clauses (ii) through (v) herein shall not have executed any Subsidiary Guaranties. "Revolving Credit Advance" means an Advance made pursuant to Section 2.1(a) hereof. "Revolving Credit Note" means any promissory note of the Borrower evidencing Revolving Credit Advances hereunder, substantially in the form of Exhibit A hereto, together with any extension, renewal or amendment thereof or substitution therefor. 15 22 "S&P" means Standard & Poor's Ratings Services, a Division of The McGraw-Hill, Inc., a New York corporation. "Special Counsel" means the law firm of Donohoe, Jameson & Carroll, P.C., or such other legal counsel as the Administrative Lender may select. "Specified Percentage" means, as to any Lender, the percentage indicated beside its name on Schedule 12 (which percentages may be amended on or before the Syndication Date to reflect an increase in the Commitment as a result of the syndication referred to in Section 5.13 hereof), or if applicable, specified in its most recent Assignment Agreement. "Subordinated Debt" means any Institutional Debt of the Borrower or any of its Subsidiaries which shall have been and continues to be validly and effectively subordinated to the prior payment in full of the Obligations on terms and documentation approved in writing by the Determining Lenders. "Subsidiary" means (a) any corporation of which 50% or more of the outstanding stock (other than directors' qualifying shares) having ordinary voting power to elect a majority of its board of directors, regardless of the existence at the time of a right of the holders of any class of securities of such corporation to exercise such voting power by reason of the happening of any contingency, is at the time owned by the Borrower, directly or through one or more intermediaries, and (b) any other entity which is Controlled or then capable of being Controlled by the Borrower, directly or through one or more intermediaries, whether a Restricted Subsidiary or Unrestricted Subsidiary. "Subsidiary Guaranty" means any Guaranty executed by one or more Restricted Subsidiaries guarantying payment and performance of the Obligations, substantially in the form of Exhibit C hereto, as such agreement may be amended, modified, renewed or extended from time to time. "Syndication Date" means the earlier of (a) the date notice is delivered to Borrower informing Borrower that the Commitment has increased to an amount not to exceed $2,000,000,000 and is available to be drawn as designated by Borrower or (b) December 31, 1997; provided, however, that no more than one such syndication shall occur during such period. "Termination Event" means, with respect to the Borrower, any of its Subsidiaries or any Plan, (a) a Reportable Event, (b) the withdrawal from a Plan during a Plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan or appoint a trustee to administer a Plan, (e) the failure to comply with the minimum funding requirements of ERISA with respect to any Plan, or (f) any 16 23 other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. "Total Debt" means, as of any date of determination, determined for the Borrower and its Restricted Subsidiaries on a consolidated basis, the sum (without duplication) of (a) all principal and interest owing under the Loan Documents, (b) all Indebtedness evidenced by a promissory note or otherwise representing borrowed money, (c) all Capitalized Lease Obligations and (d) all Guaranties. "Unrestricted Subsidiary" means those Subsidiaries designated as Unrestricted Subsidiaries on Schedule 7, any entity acquired by an Investment after the Agreement Date to the extent permitted pursuant to Section 7.3(h) hereof and if it complies with Section 5.12 hereof, Eller and each direct or indirect subsidiary of Eller. An Unrestricted Subsidiary may become a Restricted Subsidiary and subject to the provisions hereof by becoming a party to the Subsidiary Guaranty. "Weighted Average Life to Maturity" means, as of the date of determination, with respect to any debt instrument, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal payment of such debt instrument by the amount of such principal payment by (ii) the sum of all such principal payments. Section 1.2 Amendments and Renewals. Each definition of an agreement in this Article 1 shall include such agreement as amended to date, and as amended or renewed from time to time in accordance with its terms, but only with the prior written consent of the Determining Lenders. Section 1.3 Construction. The terms defined in this Article 1 (except as otherwise expressly provided in this Agreement) for all purposes shall have the meanings set forth in Section 1.1 hereof, and the singular shall include the plural, and vice versa, unless otherwise specifically required by the context. All accounting terms used in this Agreement which are not otherwise defined herein shall be construed in accordance with GAAP on a consolidated basis for the Borrower and its Subsidiaries, unless otherwise expressly stated herein. To the extent that a material change in GAAP occurs after the Agreement Date, the Borrower and Lenders agree to negotiate in good faith to effect conforming changes to the financial covenants set forth in Article 7 hereof. 17 24 ARTICLE 2 Advances Section 2.1 The Advances. (a) Revolving Credit Advances. Each Lender severally agrees, upon the terms and subject to the conditions of this Agreement, to make Revolving Credit Advances to the Borrower from time to time up to and including the Maturity Date in an aggregate amount not to exceed its Specified Percentage of the Commitment less its Specified Percentage of the Reimbursement Obligations then outstanding (assuming compliance with all conditions to drawing) for the purposes set forth in Section 5.9 hereof. Subject to Section 2.8 hereof, Advances may be repaid and then reborrowed. Any Revolving Credit Advance shall, at the option of the Borrower as provided in Section 2.2 hereof (and, in the case of LIBOR Advances, subject to availability and to the provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR Advance; provided that there shall not be outstanding to any Lender, at any one time, more than ten LIBOR Advances. Notwithstanding any provision in any Loan Document to the contrary, in no event shall the principal amount of all outstanding Revolving Credit Advances, Bid Rate Advances and Reimbursement Obligations plus the principal amount of Indebtedness guaranteed by the Borrower pursuant to the NationsBank Guaranty exceed the Commitment. On the Maturity Date unless sooner paid as provided herein, the outstanding Revolving Credit Advances shall be repaid in full. (b) Bid Rate Advances. Each Lender may, in its sole discretion and on the terms and conditions set forth in this Agreement, make Bid Rate Advances to the Borrower from time to time in an aggregate amount not in excess of the difference between (i) the Commitment minus (ii) the sum of (A) the aggregate outstanding principal amount for all Revolving Credit Advances, plus (B) the aggregate outstanding principal amount of all Bid Rate Advances, plus (C) the amount of all Reimbursement Obligations, plus (D) the principal amount of Indebtedness guaranteed by the Borrower pursuant to the NationsBank Guaranty. Notwithstanding anything in the preceding sentence to the contrary, Bid Rate Advances may not exceed $750,000,000 in the aggregate at any time. Each Bid Rate Advance shall be for a period for not less than 7 days and not more than 90 days. The Borrower may not request any Bid Rate Advances unless the Index Debt Rating is the following or better: BBB- from S&P or Baa3 from Moody's. Bid Rate Advances may not be prepaid without the prior written consent of the Lender making such Bid Rate Advances. Section 2.2 Manner of Borrowing and Disbursement. (a) In the case of Base Rate Advances, the Borrower, through an Authorized Signatory, shall give the Administrative Lender at least one Business Days' irrevocable written notice, or irrevocable telephonic notice followed immediately by written notice (provided, however, that the Borrower's failure to confirm any telephonic notice in writing shall not invalidate any notice so given), of its intention to borrow or reborrow a Base Rate Advance 18 25 hereunder. Notice shall be given to the Administrative Lender prior to 11:00 a.m., Dallas, Texas time, in order for such Business Day to count toward the minimum number of Business Days required. Such notice of borrowing shall specify the requested funding date, which shall be a Business Day, and the amount of the proposed aggregate Base Rate Advances to be made by Lenders. (b) In the case of LIBOR Advances, the Borrower, through an Authorized Signatory, shall give the Administrative Lender at least three Business Days' irrevocable written notice, or irrevocable telephonic notice followed immediately by written notice (provided, however, that the Borrower's failure to confirm any telephonic notice in writing shall not invalidate any notice so given), of its intention to borrow or reborrow a LIBOR Advance hereunder. Notice shall be given to the Administrative Lender prior to 11:00 a.m., Dallas, Texas time, in order for such Business Day to count toward the minimum number of Business Days required. LIBOR Advances shall in all cases be subject to availability and to Article 9 hereof. For LIBOR Advances, the notice of borrowing shall specify the requested funding date, which shall be a Business Day, the amount of the proposed aggregate LIBOR Advances to be made by Lenders and the Interest Period selected by the Borrower, provided that no such Interest Period shall extend past the Maturity Date or prohibit or impair the Borrower's ability to comply with Section 2.8 hereof. (c) Subject to Sections 2.1 and 2.9 hereof, at least three Business Days prior to each Payment Date for a LIBOR Advance, the Borrower, through an Authorized Signatory, shall give the Administrative Lender irrevocable written notice, or irrevocable telephonic notice followed immediately by written notice (provided, however, that the Borrower's failure to confirm any telephonic notice in writing shall not invalidate any notice so given), specifying whether all or a portion of such LIBOR Advance outstanding on the Payment Date (i) is to be repaid and then reborrowed in whole or in part as a LIBOR Advance, (ii) is to be repaid and then reborrowed in whole or in part as a Base Rate Advance, or (iii) is to be repaid and not reborrowed; provided, however, notwithstanding anything in this Agreement to the contrary, if on any Payment Date a Default shall exist, such LIBOR Advance may only be reborrowed as a Base Rate Advance. Upon such Payment Date, such LIBOR Advance shall, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. (d) Subject to Sections 2.1 and 2.9 hereof, upon at least one Business Day irrevocable prior written notice (or three Business Days if the Borrower wishes to reborrow a LIBOR Advance), through an Authorized Signatory, or irrevocable telephonic notice followed immediately by written notice (provided, however, that the Borrower's failure to confirm any telephonic notice in writing shall not invalidate any notice so given), the Borrower may repay a Base Rate Advance, and (i) reborrow all or a portion of the principal amount thereof as a Base Rate Advance, (ii) reborrow all or a portion of the principal amount thereof as one or more LIBOR Advances, or (iii) not reborrow all or any portion of such Base Rate Advance. Upon such Payment Date or date of repayment, such Base Rate Advance shall, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. 19 26 (e) The aggregate amount of Base Rate Advances to be made by the Lenders on any day shall be in a principal amount which is at least $1,000,000 and which is an integral multiple of $100,000; provided, however, that such amount may equal the unused amount of the Commitment. The aggregate amount of LIBOR Advances having the same Interest Period and to be made by the Lenders on any day shall be in a principal amount which is at least $5,000,000 and which is an integral multiple of $100,000. (f) The Administrative Lender shall promptly notify the Lenders of each notice (other than with respect to a Bid Rate Advance) received from the Borrower pursuant to this Section. Failure of the Borrower to give any notice in accordance with Section 2.2(c) hereof shall result in a repayment of any such existing LIBOR Advance on the applicable Payment Date by a Refinancing Advance which is a Base Rate Advance. Each Lender shall, not later than noon, Dallas, Texas time, on the date of any Revolving Credit Advance that is not a Refinancing Advance, deliver to the Administrative Lender, at its address set forth herein, such Lender's Specified Percentage of such Revolving Credit Advance in immediately available funds in accordance with the Administrative Lender's instructions. Prior to 2:00 p.m., Dallas, Texas time, on the date of any Revolving Credit Advance hereunder, the Administrative Lender shall, subject to satisfaction of the conditions set forth in Article 3, disburse the amounts made available to the Administrative Lender by the Lenders by (i) transferring such amounts by wire transfer pursuant to the Borrower's instructions, or (ii) in the absence of such instructions, crediting such amounts to the account of the Borrower maintained with the Administrative Lender. All Revolving Credit Advances shall be made by each Lender according to its Specified Percentage. No Lender shall be relieved of its obligation to fund its Specified Percentage of any Revolving Credit Advance notwithstanding the fact that at any time the aggregate outstanding principal amount of all Bid Rate Advances made by such Lender exceed its Specified Percentage of the Commitment. (g) Bid Rate Advances (i) In the case of Bid Rate Advances, the Borrower, through an Authorized Signatory, shall give the Administrative Lender (which shall promptly notify the Lenders) prior to 12:00 noon, Dallas, Texas time, at least one Business Day prior to the proposed borrowing, irrevocable written notice of its intention to borrow a Bid Rate Advance. Each Bid Rate Advance request shall be subject to a non- refundable $500.00 processing fee payable to the Administrative Lender by the Borrower regardless of whether such Bid Rate Advance is funded. Such notice of borrowing shall specify (i) the requested funding date, which shall be a Business Day, (ii) the aggregate amount of the proposed Bid Rate Advances, (iii) the Interest Period selected by the Borrower, provided that no Interest Period shall extend past the Maturity Date and (iv) any other terms applicable thereto. (ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Bid Rate Advances to the Borrower as part of such proposed borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by making a written quote to the Administrative Lender (which shall give prompt notice 20 27 thereof to the Borrower) before 9:30 a.m., Dallas, Texas time, on the date of such proposed borrowing, setting forth the minimum amount and maximum amount of each Bid Rate Advance which such Lender would be willing to make as part of the proposed borrowing (which amounts may exceed such Lender's Specified Percentage of the Commitment) and the rate or rates of interest therefor and the Interest Period therefor. If NationsBank of Texas, N.A. elects to offer to make one or more Bid Rate Advances, it shall deliver its written quote with respect to the proposed borrowing to the Borrower prior to the Administrative Lender's receipt of any other Lender's written quote for such proposed borrowing. The Administrative Lender shall notify the Borrower of each written quote provided by each Lender with respect to the proposed borrowing before 10:00 a.m., Dallas, Texas, on the date of such proposed borrowing. If any Lender shall elect not to make such an offer, such Lender shall so notify the Administrative Lender before 9:30 a.m., Dallas, Texas time, on the date of such proposed borrowing, and such Lender shall not make any Bid Rate Advance as part of such borrowing. If any Lender shall fail to respond to the Administrative Lender by such time, such Lender shall be deemed to have elected not to make an offer. (iii) The Borrower shall, in turn, before 10:30 a.m., Dallas, Texas time, on the date of such proposed borrowing either (A) cancel such proposed borrowing by giving the Administrative Lender notice to that effect, or (B) accept one or more of the offers made by any Lender or Lenders pursuant to clause (ii) above, in its sole discretion, by giving notice to the Administrative Lender of the amount of each Bid Rate Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, for which notification was given to the Borrower by the Administrative Lender on behalf of such Lender for such Bid Rate Advance pursuant to clause (ii) above) to be made by each Lender as part of such borrowing, and reject any remaining offers made by the Lenders pursuant to clause (ii) above by giving the Administrative Lender notice to that effect. (iv) If the Borrower notifies the Administrative Lender that such proposed borrowing is cancelled pursuant to clause (iii)(A) above, the Administrative Lender shall give prompt notice thereof to the Lenders and such borrowing shall not be made. (v) If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to clause (iii)(B) above, the Administrative Lender shall in turn promptly notify each Lender of the date, rate of interest, and amount of each Bid Rate Advance and the Lender making such Advance. 21 28 Section 2.3 Interest. (a) On Base Rate Advances. (i) The Borrower shall pay interest on the outstanding unpaid principal amount of each Base Rate Advance, from the date such Advance is made until it is due (whether at maturity, by reason of acceleration, by scheduled reduction, or otherwise) or repaid, at a simple interest rate per annum equal to the Base Rate Basis as in effect from time to time, provided that interest on Base Rate Advances shall not exceed the Maximum Amount. If at any time the Base Rate Basis would exceed the Highest Lawful Rate, interest payable on Base Rate Advances shall be limited to the Highest Lawful Rate, but the Base Rate Basis shall not thereafter be reduced below the Highest Lawful Rate until the total amount of interest accrued on such Advances equals the amount of interest that would have accrued if the Base Rate Basis had been in effect at all times. (ii) Interest on each Base Rate Advance shall be computed on the basis of a year of 365 or 366 days, as applicable, for the number of days actually elapsed, and shall be payable in arrears on each Quarterly Date and on the Maturity Date. (b) On LIBOR Advances. (i) The Borrower shall pay interest on the unpaid principal amount of each LIBOR Advance, from the date such Advance is made until it is due (whether at maturity, by reason of acceleration, by scheduled reduction, or otherwise) or repaid, at a rate per annum equal to the LIBOR Basis for such Advance. The Administrative Lender, whose determination shall be conclusive, shall determine the LIBOR Basis on the second Business Day prior to the applicable funding date and shall notify the Borrower and the Lenders of such LIBOR Basis. (ii) Subject to Section 11.9 hereof, interest on each LIBOR Advance shall be computed on the basis of a 360-day year for the actual number of days elapsed, and shall be payable in arrears on the applicable Payment Date and on the Maturity Date; provided, however, that if the Interest Period for such Advance exceeds three months, interest shall also be due and payable in arrears on each Quarterly Date during such Interest Period. (c) On Bid Rate Advances. The Borrower shall pay interest on the outstanding unpaid principal amount of each Bid Rate Advance at a per annum rate equal to the interest rate agreed to by the Borrower and the Lender making such Bid Rate Advance pursuant to Section 2.2(g) hereof. Interest on each Bid Rate Advance shall be computed and shall be payable at such times as agreed upon between the Borrower and the Lender making such Advance pursuant to Section 2.2(g) hereof. 22 29 (d) Interest if No Notice of Selection of LIBOR Basis or Interest Period. If the Borrower fails to give the Administrative Lender timely notice of its selection of a LIBOR Basis for a LIBOR Advance, or if for any reason a determination of a LIBOR Basis for any Advance is not timely concluded due to the fault of the Borrower, the Base Rate Basis shall apply to the applicable Advance. If the Borrower fails to give the Administrative Lender timely notice of its selection of an Interest Period for a LIBOR Advance, a one-month Interest Period shall apply to the applicable Advance. (e) Interest After an Event of Default. (i) After an Event of Default (other than an Event of Default specified in Section 8.1(f) or (g) hereof) and during any continuance thereof, at the option of Determining Lenders, and (ii) after an Event of Default specified in Section 8.1(f) or (g) hereof and during any continuance thereof, automatically and without any action by the Administrative Lender or any Lender, the Obligations shall bear interest at a rate per annum equal to the Default Rate. Such interest shall be payable on the earlier of demand, the Maturity Date or upon the occurrence of an Event of Default specified in Section 8.1(f) or 8.1(g) hereof, immediately, and shall accrue until the earlier of (i) waiver or cure (to the satisfaction of the Determining Lenders) of the applicable Event of Default, (ii) agreement by the Lenders to rescind the charging of interest at the Default Rate, or (iii) payment in full of the Obligations. The Lenders shall not be required to accelerate the maturity of the Advances, to exercise any other rights or remedies under the Loan Documents, or to give notice to the Borrower of the decision to charge interest at the Default Rate. The Lenders will undertake to notify the Borrower, after the effective date, of the decision to charge interest at the Default Rate, but any failure to do so will not affect the application of such rate. Section 2.4 Fees. (a) Commitment Fee. Subject to Section 11.9 hereof, the Borrower agrees to pay to the Administrative Lender, for the ratable account of the Lenders, a commitment fee on the daily average unborrowed balance of the Commitment based on the following schedule:
Per Annum Applicability Percentage ------------- ---------- (i) If the Leverage Ratio is not less than 4.5 to 1 0.2500 (ii) If the Leverage Ratio is less than 4.5 to 1 but is not 0.1875 less than 3.5 to 1 (iii) If the Leverage Ratio is less than 3.5 to 1 0.1250
The commitment fee shall be subject to reduction or increase, as applicable and as set forth in the table above, on a quarterly basis according to the performance of the Borrower as tested by the Leverage Ratio. Except as set forth in the last sentence hereof, any such increase or reduction in such fee shall be effective on the third Business Day following the date of receipt of the applicable financial statements. If financial statements of the Borrower setting forth the Leverage Ratio are not received by the Administrative Lender by the date required pursuant to 23 30 Section 6.1 hereof, the commitment fee shall be determined as if the Leverage Ratio is not less than 4.5 to 1 until such time as such financial statements are received. For the last fiscal quarter of any fiscal year of the Borrower, the Borrower may provide its unaudited financial statements, subject only to year-end adjustments, for the purpose of adjusting the commitment fee. Notwithstanding anything above to the contrary, if the compliance certificate required to be delivered pursuant to Section 7.5(b) hereof, prior to any proposed acquisition, indicates that the Leverage Ratio after giving effect to the proposed acquisition would result in an adjustment of the commitment fee, such fee shall be increased or decreased, as the case may be, as of the date of such acquisition. The commitment fee shall be (i) payable in arrears on each Quarterly Date and the Maturity Date, fully earned when due and, subject to Section 11.9 hereof, nonrefundable when paid and (ii) subject to Section 11.9 hereof, computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed. For purposes of calculating the commitment fee only, (i) undrawn portions of Letters of Credit outstanding from time to time will reduce the unused portion of the Commitment and (ii) outstanding Bid Rate Advances shall not reduce the unused portion of the Commitment. (b) Facility Fee. Subject to Section 11.9 hereof, the Borrower agrees to pay directly to each Lender a facility fee in the amount provided for in a facility fee letter between the Borrower and each Lender. Such fee shall be payable on the Agreement Date, fully earned when due and, subject to Section 11.9 hereof, nonrefundable when paid. (c) Administrative Fee. Subject to Section 11.9 hereof, the Borrower agrees to pay to the Administrative Lender, for its account and not the account of the Lenders, a quarterly administrative fee as provided in a fee letter between the Borrower and the Administrative Lender. Section 2.5 Prepayment. (a) Voluntary Prepayments. The principal amount of any Base Rate Advance may be prepaid in full or in part at any time, without penalty and, upon two Business Days' prior telephonic notice (to be promptly followed by written notice), and any LIBOR Advance may be prepaid, subject to the penultimate sentence of this Section upon three Business Days' prior telephonic notice (to be promptly followed by written notice) by an Authorized Signatory to the Administrative Lender. LIBOR Advances may be voluntarily prepaid only so long as the Borrower concurrently reimburses the Lenders in accordance with Section 2.9 hereof. Any notice of prepayment shall be irrevocable. (b) Mandatory Prepayment. On or before the date of any reduction of the Commitment, the Borrower shall prepay applicable outstanding Advances in an amount necessary to reduce the sum of outstanding Advances and Reimbursement Obligations to an amount less than or equal to the Commitment as so reduced. The Borrower shall first prepay all Base Rate Advances, shall thereafter prepay LIBOR Advances, and finally prepay Bid Rate Advances. To 24 31 the extent that any prepayment requires that a LIBOR Advance be repaid on a date other than the last day of its Interest Period, the Borrower shall reimburse each Lender in accordance with Section 2.9 hereof. (c) Prepayments from Sales of Assets and Equity. Concurrently with the receipt of Net Cash Proceeds from the sale or disposition by the Borrower, any Restricted Subsidiary, or if Eller becomes an Unrestricted Subsidiary, Eller, of (i) any (A) asset in which the Net Cash Proceeds from the sale or disposition thereof exceeds $100,000 and (B) assets sold or disposed of during any fiscal year in which the aggregate Net Cash Proceeds previously received during such fiscal year from sales or dispositions of all assets exceeds $1,000,000, the Borrower shall first prepay all Base Rate Advances, shall thereafter prepay LIBOR Advances, and finally prepay Bid Rate Advances in a principal amount equal to (y) in the case of clause (A) above, all Net Cash Proceeds from such sale or disposition and (z) in the case of clause (B) above, the amount that the aggregate Net Cash Proceeds received during any such fiscal year exceeds $1,000,000, or (ii) any Equity, the Borrower shall prepay Advances in the same order as provided in clause (i) above, in a principal amount by which 50% of the aggregate Net Cash Proceeds in excess of $200,000,000 are received by the Borrower and its Restricted Subsidiaries after the Agreement Date from the sale or disposition of Equity. (d) Prepayments from Issuance of Institutional Debt. Concurrently with the receipt of Net Cash Proceeds from the issuance of Institutional Debt by the Borrower, the Borrower shall prepay first all Base Rate Advances, shall thereafter prepay LIBOR Advances, and finally prepay Bid Rate Advances in a principal amount equal to such Net Cash Proceeds. (e) Prepayments, Generally. Any prepayment of an Advance shall be accompanied by interest accrued on the principal amount being prepaid. Any voluntary partial prepayment of a Base Rate Advance shall be in a principal amount which is at least $1,000,000 and which is an integral multiple of $100,000. Any voluntary partial prepayment of a LIBOR Advance shall be in a principal amount which is at least $1,000,000 and which is an integral multiple of $100,000, and to the extent that any prepayment of a LIBOR Advance is made on a date other than the last day of its Interest Period, the Borrower shall reimburse each Lender in accordance with Section 2.9 hereof. Following the Amortization Date, prepayments shall be applied to the mandatory reductions of the Commitment pursuant to Section 2.6(b) hereof in inverse order. Section 2.6 Reduction and Change of Commitment. (a) Voluntary Reduction. The Borrower shall have the right, upon not less than 3 Business Days' notice (provided no notice shall be required for a termination in whole of the Commitment) by an Authorized Signatory to the Administrative Lender (if telephonic, to be confirmed by telex or in writing on or before the date of reduction or termination), which shall promptly notify the Lenders, to terminate or reduce the Commitment, in whole or in part. Each partial termination shall be in an aggregate amount which is at least $5,000,000 and which is an integral multiple of $100,000, and no voluntary reduction in the Commitment shall cause any LIBOR Advance to be repaid prior to the last day of its Interest Period. Notwithstanding 25 32 anything herein to the contrary, in no event shall the Borrower have the right to reduce the Commitment to an amount less than the aggregate outstanding Reimbursement Obligations. (b) Mandatory Reduction. The Commitment shall be automatically reduced (i) by the amount of any amount prepaid or required to be prepaid pursuant to Section 2.5(b) hereof, (ii) if a Default or Event of Default exists or would exist as a result of the sale or disposition of assets, by the amount of aggregate Net Cash Proceeds received by the Borrower and its Subsidiaries after the Agreement Date from the sale and disposition of assets referred to in Section 2.5(c) hereof and which are required to be used to prepay Advances as provided therein, (iii) if a Default or Event of Default exists, by the amount of aggregate Net Cash Proceeds received by the Borrower and its Subsidiaries after the Agreement Date from the sale or disposition of Equity referred to in Section 2.5(c) hereof, and (iv) if a Default or Event or Default exists or would exist as a result of the issuance of Institutional Debt, by the amount of any amount prepaid or required to be prepaid pursuant to Section 2.5(d) hereof. Notwithstanding anything herein to the contrary, in no event shall the Borrower reduce the Commitment to an amount less than the aggregate outstanding Reimbursement Obligations. (c) Amortization. The Commitment shall be automatically and permanently reduced on each date set forth below until the Commitment has been reduced to zero:
Period Reduction Amount - ------ ---------------- September 30, 2000 $ 43,750,000 December 31, 2000 $ 43,750,000 March 31, 2001 $ 54,687,500 June 30, 2001 $ 54,687,500 September 30, 2001 $ 54,687,500 December 31, 2001 $ 54,687,500 March 31, 2002 $ 76,562,500 June 30, 2002 $ 76,562,500 September 30, 2002 $ 76,562,500 December 31, 2002 $ 76,562,500 March 31, 2003 $109,375,000 June 30, 2003 $109,375,000 September 30, 2003 $109,375,000 December 31, 2003 $109,375,000 March 31, 2004 $109,375,000
26 33 June 30, 2004 $109,375,000 September 30, 2004 $109,375,000 December 31, 2004 $109,375,000 March 31, 2005 $131,250,000 June 30, 2005 $131,250,000
(d) General Requirements. Upon any reduction of the Commitment pursuant to Section 2.6(b), the Borrower shall immediately make a repayment of applicable Advances in accordance with Section 2.5(b) hereof. The Borrower shall reimburse each Lender for any loss or out-of-pocket expense incurred by each Lender in connection with any such payment, as set forth in Section 2.9 hereof. The Borrower shall not have any right to rescind any termination or reduction. Once reduced, the Commitment may not be increased or reinstated. Section 2.7 Non-Receipt of Funds by the Administrative Lender. Unless the Administrative Lender shall have been notified by a Lender prior to the date of any proposed Revolving Credit Advance (which notice shall be effective upon receipt) that such Lender does not intend to make the proceeds of such Revolving Credit Advance available to the Administrative Lender, the Administrative Lender may assume that such Lender has made such proceeds available to the Administrative Lender on such date, and the Administrative Lender may in reliance upon such assumption (but shall not be required to) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Lender by such Lender, the Administrative Lender shall be entitled to recover such amount on demand from such Lender (or, if such Lender fails to pay such amount forthwith upon such demand, from the Borrower) together with interest thereon in respect of each day during the period commencing on the date such amount was available to the Borrower and ending on (but excluding) the date the Administrative Lender receives such amount from the Lender, with interest thereon if paid by such Lender,at a per annum rate equal to the Federal Funds Rate, and if paid by the Borrower, at the applicable Base Rate Basis. No Lender shall be liable for any other Lender's failure to fund a Revolving Credit Advance hereunder. Section 2.8 Payment of Principal of Advances. The Borrower agrees to pay the principal amount of the Advances to the Administrative Lender for the account of the Lenders as follows: (a) End of Interest Period. The principal amount of each LIBOR Advance and Bid Rate Advance hereunder shall be due and payable on its Payment Date, which principal payment may be made by means of a Refinancing Advance. (b) Commitment Reduction. On the date of reduction of the Commitment pursuant to Section 2.6 hereof, including the Maturity Date, the aggregate amount of the Advances outstanding on such date of reduction in excess of the Commitment as reduced minus all 27 34 outstanding Reimbursement Obligations shall be due and payable, which principal payment may not be made by means of Refinancing Advances. (c) Maturity Date. The principal amount of the Advances, all accrued interest and fees thereon, and all other Obligations, shall be due and payable in full on the Maturity Date. Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur any losses or reasonable out-of-pocket expenses in connection with (a) failure by the Borrower to borrow any LIBOR Advance or Bid Rate Advance which is at a fixed rate after having given notice of its intention to borrow in accordance with Section 2.2 hereof (whether by reason of the Borrower's election not to proceed or the non-fulfillment of any of the conditions set forth in Article 3 hereof), or (b) any prepayment for any reason of any LIBOR Advance in whole or in part (including a prepayment pursuant to Sections 2.5(c), 2.5(d) and 9.3(b) hereof), the Borrower agrees to pay to any such Lender, upon its demand, an amount sufficient to compensate such Lender for all such losses and out-of-pocket expenses. Such Lender's good faith determination of the amount of such losses or out-of-pocket expenses, calculated in its usual fashion, absent manifest error, shall be binding and conclusive. Such losses shall include, without limiting the generality of the foregoing, lost profits and reasonable expenses incurred by such Lender in connection with the re-employment of funds prepaid, repaid, converted or not borrowed, converted or paid, as the case may be. Upon request of the Borrower, such Lender shall provide a certificate setting forth the amount to be paid to it by the Borrower hereunder and calculations therefor. Section 2.10 Manner of Payment. (a) Each payment (including prepayments) by the Borrower of the principal of or interest on the Advances, fees, and any other amount owed under this Agreement or any other Loan Document shall be made not later than 1:00 p.m. (Dallas, Texas time) on the date specified for payment under this Agreement to the Administrative Lender at the Administrative Lender's office, in lawful money of the United States of America constituting immediately available funds. (b) If any payment under this Agreement or any other Loan Document shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day, unless such Business Day falls in another calendar month, in which case payment shall be made on the preceding Business Day. Any extension of time shall in such case be included in computing interest and fees, if any, in connection with such payment. (c) The Borrower agrees to pay principal, interest, fees and all other amounts due under the Loan Documents without deduction for set-off or counterclaim or any deduction whatsoever. 28 35 (d) Each payment by the Borrower in respect of obligations relating to the Revolving Credit Advance and the Letters of Credit (whether for principal, interest, fees or otherwise) shall be made to the Administrative Lender for the account of the Lenders pro rata in accordance with their respective Specified Percentages. Each payment by the Borrower in respect of obligations related to Bid Rate Advances (whether for principal, interest, fees or otherwise) shall be made to the Administrative Lender for the account of each Lender holding such Bid Rate Advance. Notwithstanding anything in this Section 2.10(d) or any other provision of this Agreement or any other Loan Document to the contrary, any payment by the Borrower in respect of any Advances after acceleration of the Advances pursuant to Section 8.2 or any monies received by the Administrative Lender as a result of the exercise of remedies under any Loan Documents after acceleration of the Advances pursuant to Section 8.2 shall be distributed pro rata to each Lender based on the percentage that the outstanding Advances and Reimbursement Obligations owed to such Lender bears to the aggregate Advances and Reimbursement Obligations owed to all Lenders after the payment of the Administrative Lender's expenses incurred on behalf of the Lenders then due and payable. Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending Office is set forth opposite its name in Schedule 1 attached hereto. Each Lender shall have the right at any time and from time to time to designate a different office of itself or of any Affiliate as such Lender's LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending Office. No such designation or transfer shall result in any liability on the part of the Borrower for increased costs or expenses resulting solely from such designation or transfer (except any such transfer which is made by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying with Applicable Law). Increased costs for expenses resulting from a change in law occurring subsequent to any such designation or transfer shall be deemed not to result solely from such designation or transfer. Section 2.12 Sharing of Payments. Any Lender obtaining a payment (whether voluntary or involuntary, due to the exercise of any right of set-off, or otherwise) on account of its Revolving Credit Advances or Reimbursement Obligations in excess of its Specified Percentage of all payments made by the Borrower with respect to Revolving Credit Advances or Reimbursement Obligations shall purchase from each other Lender such participation in the Revolving Credit Advances or Reimbursement Obligations made by such other Lender as shall be necessary to cause such purchasing Lender to share the excess payment pro rata according to Specified Percentages with each other Lender which is not in default of its obligations hereunder with respect to such Revolving Credit Advance or Reimbursement Obligations; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest, provided, further that after an Event of Default, such payments will be shared pro rata among all Lenders based on the total amount of all Advances or Reimbursement Obligations outstanding. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section, to the fullest extent permitted by law, may exercise all its rights of payment (including the right of set-off) with 29 36 respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement relating to calculation of the LIBOR Rate are included only for the purpose of determining the rate of interest or other amounts to be paid hereunder that are based upon such rate, it being understood that each Lender shall be entitled to fund and maintain its funding of all or any part of a LIBOR Advance as it sees fit. Section 2.14 Booking Loans. Any Lender may make, carry or transfer Advances at, to or for the account of any of its branch offices or the office of any Affiliate. Section 2.15 Taxes. (a) Any and all payments by the Borrower hereunder shall be made, in accordance with Section 2.10, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges and withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Lender, taxes imposed on its overall net income, and franchise taxes imposed on it (including interest and penalties imposed thereon), by the jurisdiction under the laws of which such Lender or the Administrative Lender (as the case may be) is organized or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Lender, (x) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.15) such Lender or the Administrative Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (y) the Borrower shall make such deductions and (z) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with Applicable Law. (b) In addition, the Borrower agrees to pay any and all stamp and documentary taxes and any and all other excise and property taxes, charges and similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) The Borrower will indemnify each Lender and the Administrative Lender for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.15) paid by such Lender or the Administrative Lender (as the case may be) and all liabilities (including penalties, additions to tax, interest and reasonable expenses) arising therefrom or with respect thereto whether or not such Taxes or Other Taxes were correctly or legally asserted, other than penalties, additions to tax, interest and expenses arising as a result of gross negligence on the 30 37 part of such Lender or the Administrative Lender, provided, however, that the Borrower shall have no obligation to indemnify such Lender or the Administrative Lender (i) unless notice has been given by such Lender or the Administrative Lender, as applicable, in a time sufficient to afford the Borrower, in good faith, a reasonable opportunity to contest such payment by such Lender or the Administrative Lender, provided such opportunity to contest exists under Applicable Law, and (ii) until such Lender or the Administrative Lender shall have delivered to the Borrower a certificate setting forth in reasonable detail the basis of the Borrower's obligation to indemnify such Lender or the Administrative Lender pursuant to this Section 2.15. This indemnification shall be made within 30 days from the date such Lender or the Administrative Lender (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrower will furnish to the Administrative Lender the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are payable in respect of any payment hereunder, the Borrower will furnish to the Administrative Lender a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the Administrative Lender, in either case stating that such payment is exempt from or not subject to Taxes, provided, however, that such certificate or opinion need only be given if: (i) the Borrower makes any payment from any account located outside the United States, or (ii) the payment is made by a payor that is not a United States Person. For purposes of this Section 2.15 the terms "United States" and "United States Person" shall have the meanings set forth in Section 7701 of the Code. (e) Each Lender which is not a United States Person hereby agrees that: (i) it shall, no later than the Agreement Date (or, in the case of a Lender which becomes a party hereto pursuant to Section 11.06 after the Agreement Date, the date upon which such Lender becomes a party hereto) deliver to the Borrower through the Administrative Lender, with a copy to the Administrative Lender: (A) if any lending office is located in the United States of America, two (2) accurate and complete signed originals of Internal Revenue Service Form 4224 or any successor thereto ("Form 4224"), (B) if any lending office is located outside the United States of America, two (2) accurate and complete signed originals of Internal Revenue Service Form 1001 or any successor thereto ("Form 1001"). in each case indicating that such Lender is on the date of delivery thereof entitled to receive payments of principal, interest and fees for the account of such lending office or lending offices under this Agreement free from withholding of United States Federal income tax; (ii) if at any time such Lender changes its lending office or lending offices or selects an additional lending office it shall, at the same time or reasonably promptly 31 38 thereafter but only to the extent the forms previously delivered by it hereunder are no longer effective, deliver to the Borrower through the Administrative Lender, with a copy to the Administrative Lender, in replacement for the forms previously delivered by it hereunder: (A) if such changed or additional lending office is located in the United States of America, two (2) accurate and complete signed originals of Form 4224; or (B) otherwise, two (2) accurate and complete signed originals of Form 1001, in each case indicating that such Lender is on the date of delivery thereof entitled to receive payments of principal, interest and fees for the account of such changed or additional lending office under this Agreement free from withholding of United States Federal income tax; (iii) it shall, before or promptly after the occurrence of any event (including the passing of time but excluding any event mentioned in clause (ii) above) requiring a change in the most recent Form 4224 or Form 1001 previously delivered by such Lender and if the delivery of the same be lawful, deliver to the Borrower through the Administrative Lender with a copy to the Administrative Lender, two (2) accurate and complete original signed copies of Form 4224 or Form 1001 in replacement for the forms previously delivered by such Lender; and (iv) it shall, promptly upon the request of the Borrower to that effect, deliver to the Borrower such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Lender's tax status for withholding purposes. (f) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.15 shall survive the payment in full of principal and interest hereunder. (g) Any Lender claiming any additional amounts payable pursuant to this Section 2.15 shall use its reasonable best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its lending office, if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the sole judgment of such Lender, be otherwise disadvantageous to such Lender. (h) Each Lender (and the Administrative Lender with respect to payments to the Administrative Lender for its own account) agrees that (i) it will take all reasonable actions by all usual means to maintain all exemptions, if any, available to it from United States withholding taxes (whether available by treaty, existing administrative waiver, by virtue of the location of 32 39 any Lender's lending office) and (ii) otherwise cooperate with the Borrower to minimize amounts payable by the Borrower under this Section 2.15; provided, however, the Lenders and the Administrative Lender shall not be obligated by reason of this Section 2.15(h) to contest the payment of any Taxes or Other Taxes or to disclose any information regarding its tax affairs or tax computations or reorder its tax or other affairs or tax or other planning. Section 2.16 Letters of Credit. (a) The Letter of Credit Facility. The Borrower may request the Issuing Bank, on the terms and conditions hereinafter set forth, to issue, and the Issuing Bank shall, if so requested, issue, letters of credit, including the Existing Letters of Credit (the "Letters of Credit") for the account of the Borrower from time to time on any Business Day from the date of the initial Advance until the Maturity Date in an aggregate maximum amount (assuming compliance with all conditions to drawing) not to exceed at any time outstanding the lesser of (i) $200,000,000 (the "Letter of Credit Facility"), and (ii) the difference of (A) the Commitment minus (B) the aggregate principal amount of Advances then outstanding. No Letter of Credit shall have an expiration date (including all rights of renewal) later than the earlier of (i) the Maturity Date or (ii) one year after the date of issuance thereof. Immediately upon the issuance of each Letter of Credit (or, with respect to the Existing Letters of Credit, upon satisfaction of the conditions set forth in Sections 3.1 and 3.2 of this Agreement), the Issuing Bank shall be deemed to have sold and transferred to each Lender, and each Lender shall be deemed to have purchased and received from the Issuing Bank, in each case irrevocably and without any further action by any party, an undivided interest and participation in such Letter of Credit, each drawing thereunder and the obligations of the Borrower under this Agreement in respect thereof in an amount equal to the product of (i) such Lender's Specified Percentage of the Commitment times (ii) the maximum amount available to be drawn under such Letter of Credit (assuming compliance with all conditions to drawing). Within the limits of the Letter of Credit Facility, and subject to the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.16(a), repay any Advances resulting from drawings thereunder pursuant to Section 2.16(c) and request the issuance of additional Letters of Credit under this Section 2.16(a). During the term of this Agreement, provided that no Default or Event of Default then exists and subject to the same conditions for the issuance of a Letter of Credit set forth in Section 3.2 hereof, the Issuing Bank may at the Borrower's option, automatically renew any expiring Letters of Credit for a period of time not to exceed the earlier of (x) five (5) days prior to the Maturity Date or (y) one year after the date of issuance thereof. (b) Request for Issuance. Each Letter of Credit shall be issued upon notice, given not later than 11:00 a.m. (Dallas time) on the third Business Day prior to the date of the proposed issuance of such Letter of Credit, by the Borrower to the Issuing Bank, which shall give to the Administrative Lender and each Lender prompt notice thereof by telex, telecopier or cable. Each Letter of Credit shall be issued upon notice given in accordance with the terms of any separate agreement between the Borrower and the Issuing Bank in form and substance reasonably satisfactory to the Borrower and the Issuing Bank providing for the issuance of Letters of Credit pursuant to this Agreement and containing terms and conditions not inconsistent 33 40 with this Agreement (a "Letter of Credit Agreement"), provided that if any such terms and conditions are inconsistent with this Agreement, this Agreement shall control. Each such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be by telex, telecopier or cable, specifying therein, the requested (A) date of such issuance (which shall be a Business Day), (B) maximum amount of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name and address of the beneficiary of such Letter of Credit, (E) form of such Letter of Credit and (F) such other information as shall be required pursuant to the relevant Letter of Credit Agreement. If the requested terms of such Letter of Credit are acceptable to the Issuing Bank in its reasonable discretion, the Issuing Bank shall, subject to this Section 2.16(b), upon fulfillment of the applicable conditions set forth in Article 3 hereof, make such Letter of Credit available to the Borrower at its office referred to in Section 11.1 or as otherwise agreed with the Borrower in connection with such issuance. (c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Bank of a Revolving Credit Advance, which shall bear interest at the applicable Base Rate Basis, in the amount of such draft (but without any requirement for compliance with the conditions set forth in Article 3 hereof). In the event that a drawing under any Letter of Credit is not reimbursed by the Borrower by 11:00 a.m. (Dallas time) on the first Business Day after such drawing, the Issuing Bank shall promptly notify Administrative Lender and each other Lender. Each such Lender shall, on the first Business Day following such notification, make an Revolving Credit Advance, which shall bear interest at the applicable Base Rate Basis, and shall be used to repay the applicable portion of the Issuing Bank's Revolving Credit Advance with respect to such Letter of Credit, in an amount equal to the amount of its participation in such drawing for application to reimburse the Issuing Bank (but without any requirement for compliance with the applicable conditions set forth in Article 3 hereof) and shall make available to the Administrative Lender for the account of the Issuing Bank, by deposit at the Administrative Lender's office, in same day funds, the amount of such Revolving Credit Advance. In the event that any Lender fails to make available to the Administrative Lender for the account of the Issuing Bank the amount of such Revolving Credit Advance, the Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest thereon at a rate per annum equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate. (d) Increased Costs. If any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against letters of credit or guarantees issued by, or assets held by, or deposits in or for the account of, the Issuing Bank or any Lender or (ii) impose on the Issuing Bank or any Lender any other condition regarding this Agreement or such Lender or any Letter of Credit, and the result of any event referred to in the preceding clause (i) or (ii) shall be, in the reasonable opinion of the Issuing Bank or any Lender, to increase the cost to the Issuing Bank of issuing or maintaining any Letter of Credit or to any Lender of purchasing any participation therein or making any Advance pursuant to Section 2.16(c) ("Increased Letter of Credit Costs"), 34 41 then, upon demand by the Issuing Bank or such Lender, the Borrower shall, subject to Section 11.9 hereof, pay to the Issuing Bank or such Lender, from time to time as specified by the Issuing Bank or such Lender, additional amounts that shall be sufficient to compensate the Issuing Bank or such Lender for such Increased Letter of Credit Costs. Notwithstanding the foregoing, any demand for Increased Letter of Credit Costs shall not include any Letter of Credit costs with respect to any period more than 180 days prior to the date that the Issuing Bank or any Lender gives notice to the Borrower of such Increased Letter of Credit Costs unless the effective date of the condition which results in the right to received Increased Letter of Credit Costs is retroactive (the "Increased Letter of Credit Costs Retroactive Effective Date"). If any Increased Letter of Credit Costs has an Increased Costs Letter of Credit Retroactive Effective Date and the Issuing Bank or any Lender demands compensation within 180 days after the date setting the Increased Letter of Credit Costs Effective Date (the "Increased Letter of Credit Costs Set Date"), the Issuing Bank or such Lender, as appropriate, shall have the right to receive such Increased Letter of Credit Costs from the Increased Letter of Credit Retroactive Effective Date. If the Issuing Bank or a Lender does not demand such Increased Letter of Credit Costs within 180 days after the Increased Letter of Credit Costs Set Date, the Issuing Bank or such Lender, as appropriate, may not receive payment of Increased Letter of Credit Costs with respect to any period more than 180 days prior to such demand. A certificate as to the amount of such increased cost, submitted to the Borrower by the Issuing Bank or such Lender, shall include in reasonable detail the basis for the demand for additional compensation and shall be conclusive and binding for all purposes, absent demonstrable error. The obligations of the Borrower under this Section 2.16(d) shall survive termination of this Agreement. The Issuing Bank or any Lender claiming any additional compensation under this Section 2.16(d) shall use reasonable efforts (consistent with legal and regulatory restrictions) to reduce or eliminate any such additional compensation which may thereafter accrue and which efforts would not, in the sole discretion of the Issuing Bank or such Lender, be otherwise disadvantageous. (e) Obligations Absolute. The obligations of the Borrower under this Agreement with respect to any Letter of Credit, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit or any Advance pursuant to Section 2.16(c) shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of this Agreement, any other Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (collectively, the "L/C Related Documents"); (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower in respect of the Letters of Credit or any Revolving Credit Advance pursuant to Section 2.16(c) or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; 35 42 (iii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Bank, any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C Related Documents or any unrelated transaction; (iv) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, except to the extent that any payment by the Issuing Bank against any such statement or other document shall be as a result of the Issuing Bank's gross negligence or willful misconduct; (v) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not comply with the terms of the Letter of Credit, except for any payment made upon the Issuing Bank's gross negligence or willful misconduct; (vi) any exchange, release or non-perfection of any Collateral, or any release or amendment or waiver of or consent to departure from any Subsidiary Guaranty or any other guarantee, for all or any of the Obligations of the Borrower in respect of the Letters of Credit or any Revolving Credit Advance pursuant to Section 2.16(c); or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor, other than the Issuing's Bank gross negligence or wilful misconduct. (f) Compensation for Letters of Credit. (i) Credit Fees. Subject to Section 11.9 hereof, the Borrower shall pay to the Administrative Lender for the account of each Lender a credit fee (which shall be payable quarterly in arrears on each Quarterly Date and on the Maturity Date) on the average daily amount available for drawing under all outstanding Letters of Credit (computed, subject to Section 11.9 hereof, on the basis of a 365-day year for the actual number of days elapsed) at the following per annum percentages, applicable in the following situations: 36 43
Percentage ---------- Applicability ------------- (i) If the Leverage Ratio is not less than 6.00 to 1 1.0000 (ii) If the Leverage Ratio is less than 6.00 to 1 but is not less than 0.8750 5.75 to 1 (iii) If the Leverage Ratio is less than 5.75 to 1 but is not less than 0.7500 5.50 to 1 (iv) If the Leverage Ratio is less than 5.50 to 1 but is not less than 0.6250 5.00 to 1 (v) If the Leverage Ratio is less than 5.00 to 1 but is not less than 0.5000 4.50 to 1 (vi) If the Leverage Ratio is less than 4.50 to 1 but is not less than 0.4000 4.00 to 1 (vii) If the Leverage Ratio is less than 4.00 to 1 but is not less than 0.3250 3.50 to 1 (xiii) If the Leverage Ratio is less than 3.50 to 1 but is not less than 0.2500 3.00 to 1 (ix) If the Leverage Ratio is less than 3.00 to 1 0.2250
(ii) Adjustment of Credit Fee. The credit fee payable in respect of the Letters of Credit shall be subject to reduction or increase, as applicable and as set forth in the table in (i) above, on a quarterly basis according to the performance of the Borrower as tested by the Leverage Ratio. Except as set forth in the last sentence hereof, any such increase or reduction in such fee shall be effective on the third Business Day following the date of receipt of the applicable financial statements. If financial statements of the Borrower setting forth the Leverage Ratio are not received by the Administrative Lender by the date required pursuant to Section 6.1 hereof, the fee payable in respect of the Letters of Credit shall be determined as if the Leverage Ratio is not less than 6.0 to 1 until such time as such financial statements are received. For the last fiscal quarter of any fiscal year of the Borrower, the Borrower may provide its unaudited financial statements, subject only to year-end adjustments, for the purpose of adjusting the Letter of Credit fee. Notwithstanding anything above to the contrary, if the compliance certificate required to be delivered pursuant to Section 7.5(b) hereof, prior to any proposed acquisition, indicates that the Leverage Ratio after giving effect to the proposed acquisition would result in an adjustment of the Letter of Credit fee, such fee shall be increased or decreased, as the case may be, as of the date of such acquisition. (iii) Issuance Fee. Subject to Section 11.9 hereof, the Borrower shall pay to the Administrative Lender, for the sole account of the Issuing Bank, an issuance fee of $500 on the date of issuance of each Letter of Credit. 37 44 (g) L/C Cash Collateral Account. (i) Upon the occurrence of an Event of Default and demand by the Administrative Lender pursuant to Section 8.2(c), other than an Event of Default pursuant to Section 8.1(f) or 8.1(g) hereof upon such event the referenced sums will become immediately due and payable without further action by the Administrative Lender, the Borrower will promptly pay to the Administrative Lender in immediately available funds an amount equal to 100% of the maximum amount then available to be drawn under the Letters of Credit then outstanding. Any amounts so received by the Administrative Lender shall be deposited by the Administrative Lender in a deposit account maintained by the Issuing Bank (the "L/C Cash Collateral Account"). (ii) As security for the payment of all Reimbursement Obligations and for any other Obligations, the Borrower hereby grants, conveys, assigns, pledges, sets over and transfers to the Administrative Lender (for the benefit of the Issuing Bank and Lenders), and creates in the Administrative Lender's favor (for the benefit of the Issuing Bank and Lenders) a Lien in, all money, instruments and securities at any time held in or acquired in connection with the L/C Cash Collateral Account, together with all proceeds thereof. The L/C Cash Collateral Account shall be under the sole dominion and control of the Administrative Lender and the Borrower shall have no right to withdraw or to cause the Administrative Lender to withdraw any funds deposited in the L/C Cash Collateral Account except as otherwise provided in Section 2.16(g)(iii). At any time and from time to time, upon the Administrative Lender's request, the Borrower promptly shall execute and deliver any and all such further instruments and documents, including UCC financing statements, as may be necessary, appropriate or desirable in the Administrative Lender's judgment to obtain the full benefits (including perfection and priority) of the security interest created or intended to be created by this paragraph (ii) and of the rights and powers herein granted. The Borrower shall not create or suffer to exist any Lien on any amounts or investments held in the L/C Cash Collateral Account other than the Lien granted under this paragraph (ii) and Liens arising by operation of Law and not by contract which secure amounts not yet due and payable. (iii) The Administrative Lender shall (A) apply any funds in the L/C Cash Collateral Account on account of Reimbursement Obligations when the same become due and payable if and to the extent that the Borrower shall fail directly to pay such Reimbursement Obligations, (B) after the Maturity Date, apply any proceeds remaining in the L/C Cash Collateral Account first to pay any unpaid Obligations then outstanding hereunder and then to refund any remaining amount to the Borrower, and (C) provided no Default or Event of Default shall be in existence, return any funds in the L/C Cash Collateral Account to the Borrower. (iv) The Borrower, no more than once in any calendar month, may direct the Administrative Lender to invest the funds held in the L/C Cash Collateral Account (so long as the aggregate amount of such funds exceeds any relevant minimum investment 38 45 requirement) in (A) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof and (B) one or more other types of investments permitted by the Determining Lenders, in each case with such maturities as the Borrower, with the consent of the Determining Lenders, may specify, pending application of such funds on account of Reimbursement Obligations or on account of other Obligations, as the case may be. In the absence of any such direction from the Borrower, the Administrative Lender shall invest the funds held in the L/C Cash Collateral Account (so long as the aggregate amount of such funds exceeds any relevant minimum investment requirement) in one or more types of investments with the consent of the Determining Lenders with such maturities as the Borrower, with the consent of the Determining Lenders, may specify, pending application of such funds on account of Reimbursement Obligations or on account of other Obligations, as the case may be. All such investments shall be made in the Administrative Lender's name for the account of the Lenders. The Borrower recognizes that any losses or taxes with respect to such investments shall be borne solely by the Borrower, and the Borrower agrees to hold the Administrative Lender and the Lenders harmless from any and all such losses and taxes. Administrative Lender may liquidate any investment held in the L/C Cash Collateral Account in order to apply the proceeds of such investment on account of the Reimbursement Obligations (or on account of any other Obligation then due and payable, as the case may be) without regard to whether such investment has matured and without liability for any penalty or other fee incurred (with respect to which the Borrower hereby agrees to reimburse the Administrative Lender) as a result of such application. (v) The Borrower shall pay to the Administrative Lender the fees customarily charged by the Issuing Bank with respect to the maintenance of accounts similar to the L/C Cash Collateral Account in an amount not to exceed $1,000 in aggregate per calendar year. ARTICLE 3 Conditions Precedent Section 3.1 Conditions Precedent to Closing and the Initial Advance and the Letters of Credit. The obligation of each Lender to sign this Agreement and to make the initial Advance and the obligation of the Issuing Bank to issue the initial Letter of Credit is subject to receipt by the Administrative Lender of each of the following, in form and substance satisfactory to the Administrative Lender, with a copy (except for the notes) for each Lender: (a) a loan certificate of the Borrower certifying as to the accuracy of its representations and warranties in the Loan Documents, certifying that no Default or Material Adverse Effect, except as listed in Schedule 11 hereto, has occurred since the last financial statements delivered to the Lenders prior to the Agreement Date with respect to the Borrower and its Subsidiaries on a consolidated basis, certifying the Borrower is in compliance with all 39 46 covenants in the Agreement, and including a certificate of incumbency with respect to each Authorized Signatory, and including (i) a copy of the Articles of Incorporation of the Borrower, certified to be true, complete and correct by the secretary of state of its state of incorporation, (ii) a copy of the By- Laws of the Borrower, as in effect on the Agreement Date (or a certification that there has been no change thereto from such form provided in connection with the Existing Credit Agreement), (iii) a copy of the resolutions of the Borrower authorizing it to execute, deliver and perform this Agreement, the Revolving Credit Notes, the Bid Rate Notes, and the other Loan Documents to which it is a party, and (iv) a copy of a certificate of good standing and a certificate of existence for its state of incorporation and each state in which it is or should be qualified to do business; (b) a certificate of an officer or general partner acceptable to the Lenders of each Restricted Subsidiary, certifying as to the incumbency of the officers or partners signing the Loan Documents to which it is a party, and including (i) a copy of its Articles of Incorporation, certified as true, complete and correct by the secretary of state of its state of incorporation or a copy of the partnership agreement, as the case may be, (ii) with respect to any Restricted Subsidiary that is a corporation, a copy of its By-Laws, as in effect on the Agreement Date (or a certification that there has been no change thereto from such form provided in connection with the Existing Credit Agreement), (iii) with respect to any Restricted Subsidiary that is a corporation, a copy of the resolutions authorizing it to execute, deliver and perform the Loan Documents to which it is a party, and (iv) a copy of a certificate of good standing and a certificate of existence for its state of incorporation or organization and each state in which it is or should be qualified to do business; (c) duly executed Revolving Credit Notes, payable to the order of each Lender and in an amount for each Lender equal to its Specified Percentage of the Commitment; (d) duly executed Bid Rate Notes, payable to the order of each Lender in the principal amount of $750,000,000; (e) a duly executed and completed Subsidiary Guaranty, dated as of the Agreement Date executed by each Restricted Subsidiary listed on Schedule 13 hereto; (f) an opinion of counsel and of FCC counsel to the Borrower and its Restricted Subsidiaries addressed to the Lenders and in form and substance satisfactory to the Lenders, dated the Agreement Date; (g) copies of insurance binders or certificates covering the assets of the Borrower and its Subsidiaries, and meeting the requirements of Section 5.5 hereof; (h) reimbursement for Administrative Lender for Special Counsel's reasonable fees and expenses rendered through the date hereof; 40 47 (i) evidence that all corporate or organizational proceedings of the Borrower and its Restricted Subsidiaries taken in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be reasonably satisfactory in form and substance to the Lenders and Special Counsel; and the Lenders shall have received copies of all documents or other evidence which the Administrative Lender, Special Counsel or any Lender may reasonably request in connection with such transactions; (j) copies of the following consolidated and consolidating financial statements for the Borrower and its Subsidiaries, as of and for the period ended December 31, 1996: (i) consolidated and consolidating balance sheets as of the end of such period, and (ii) consolidated and consolidating statements of income and changes in cash for such period; which financial statements shall set forth in comparative form figures for the corresponding periods in the previous fiscal year, all in reasonable detail and certified by an Authorized Signatory to the best of his knowledge to be complete and correct and prepared in accordance with GAAP (other than footnotes thereto), subject to year-end adjustment; (k) the facility fee for the account of each Lender as required pursuant to Section 2.4(b) hereof; (l) all Indebtedness owing by the Borrower under the Existing Credit Agreement shall have been refinanced in full; (m) evidence that the Eller acquisition, pursuant to the Eller Acquisition Documents, shall have been completed simultaneously with this Agreement and that Eller and each of Eller's subsidiaries are Restricted Subsidiaries of the Borrower; (n) delivery by the Borrower of fully executed copies of each of the Eller Acquisition Documents; (o) delivery of evidence that the Existing Eller Credit Agreement will have been paid-in-full and that such agreement has been terminated; (p) delivery of all collateral pledged under the Existing Eller Credit Agreement to Administrative Lender, executed UCC termination statements for each UCC filing under such agreement and a general release of all liens under such agreement; (q) in form and substance satisfactory to the Lenders and Special Counsel, such other documents, instruments and certificates as the Administrative Lender or any Lender may reasonably require in connection with the transactions contemplated hereby, including without limitation the status, organization or authority of the Borrower or any Restricted Subsidiary, and the enforceability of and security for the Obligation; and (r) there shall be no Default or Event of Default under any of the Loan Documents both before and after giving effect to the initial Advance. 41 48 Section 3.2 Conditions Precedent to All Advances and Letters of Credit. The obligation of each Lender to make each Advance (including the initial Advance) and the obligation of the Issuing Bank to issue each Letter of Credit (including the initial Letter of Credit) hereunder is subject to fulfillment of the following conditions immediately prior to or contemporaneously with each such Advance or issuance: (a) With respect to Advances (other than Refinancing Advances that are Refinancing Advances of Revolving Credit Advances) and each issuance of a Letter of Credit, all of the representations and warranties of the Borrower under this Agreement, which, pursuant to Section 4.2 hereof, are made at and as of the time of such Advance or issuance, shall be true and correct at such time in all material respects, both before and after giving effect to the application of the proceeds of the Advance or issuance; (b) The incumbency of the Authorized Signatories shall be as stated in the certificate of incumbency delivered in the Borrower's loan certificate pursuant to Section 3.1(a) or as subsequently modified and reflected in a certificate of incumbency delivered to the Administrative Lender. The Lenders may, without waiving this condition, consider it fulfilled and a representation by the Borrower made to such effect if no written notice to the contrary, dated on or before the date of such Advance or issuance, is received by the Administrative Lender from the Borrower prior to the making of such Advance or issuance; (c) There shall not exist a Default hereunder, with respect to Advances (other than Refinancing Advances that are Refinancing Advances of Revolving Credit Advances) and with respect to issuance of each Letter of Credit, or an Event of Default, with respect to any Refinancing Advance, and, with respect to each Advance (other than a Refinancing Advance that is a Refinancing Advances of a Revolving Credit Advance) and with respect to issuance of each Letter of Credit, the Administrative Lender shall have received written or telephonic certification thereof by an Authorized Signatory (which certification, if telephonic, shall be followed promptly by written certification); (d) The aggregate Advances and amount available for draws under Letters of Credit, after giving effect to such proposed Advance or Letter of Credit, shall not exceed the maximum principal amount then permitted to be outstanding hereunder; (e) The Administrative Lender shall have received all such other certificates, reports, statements or other documents as the Administrative Lender or any Lender may reasonably request; and (f) there shall be no Default or Event of Default under any of the Loan Documents both before and after giving effect to any Advance. Each request by the Borrower to the Administrative Lender or the Issuing Bank, as appropriate, for an Advance or the issuance of a Letter of Credit shall constitute a representation 42 49 and warranty by the Borrower as of the date of the making of such Advance or the issuance of such Letter of Credit that all the conditions contained in this Section 3.2 have been satisfied. ARTICLE 4 Representations and Warranties Section 4.1 Representations and Warranties. The Borrower hereby represents and warrants to each Lender as follows: (a) Organization; Power; Qualification. As of the Agreement Date, (i) the respective jurisdictions of incorporation and percentage ownership by the Borrower or another Subsidiary of the Subsidiaries listed on Schedule 7 are true and correct and (ii) all Subsidiaries other than Heftel and Radio Data Group, Inc. are Restricted Subsidiaries except as otherwise allowed pursuant to Section 5.12 hereof. Each of the Borrower and its Restricted Subsidiaries is a corporation or partnership duly organized, validly existing and in good standing under the laws of its state of organization. Each of the Borrower and its Restricted Subsidiaries has the corporate or organizational power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted. Each of the Borrower and its Restricted Subsidiaries is duly qualified, in good standing and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization. (b) Authorization. The Borrower has corporate power and has taken all necessary corporate action to authorize it to borrow hereunder. Each of the Borrower and its Restricted Subsidiaries has corporate or organizational power and authority and has taken all necessary corporate or organizational action, as the case may be, to execute, deliver and perform the Loan Documents to which it is party in accordance with the terms thereof, and to consummate the transactions contemplated thereby. Each Loan Document has been duly executed and delivered by the Borrower or the Restricted Subsidiary executing it. Each of the Loan Documents to which the Borrower and its Restricted Subsidiaries are party is a legal, valid and binding respective obligation of the Borrower or the Restricted Subsidiary, as applicable, enforceable in accordance with its terms, subject, to enforcement of remedies, to the following qualifications: (i) equitable principles generally, and (ii) bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower or any Restricted Subsidiary). (c) Compliance with Other Loan Documents and Contemplated Transactions. The execution, delivery and performance by the Borrower and its Restricted Subsidiaries of the other Loan Documents to which they are respectively a party, and the consummation of the transactions contemplated thereby, do not and will not (i) require any consent or approval not already obtained, (ii) violate any Applicable Law, (iii) conflict with, result in a breach of, or constitute a default under the articles of incorporation or by- laws of the Borrower or any 43 50 Restricted Subsidiary, or under any Necessary Authorization, indenture, agreement or other instrument, to which the Borrower or any Restricted Subsidiary is a party or by which they or their respective properties may be bound, or (iv) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower or any Restricted Subsidiary, except Permitted Liens. (d) Business. The Borrower and its Restricted Subsidiaries are engaged solely in the communications and media broadcasting business and activities related thereto (including, without limitation, radio and television broadcasting, print, productions, billboards, power transmission rentals and sales and real property rentals and sales, but only to the extent that such real property rentals and sales arise from the lease or sale of properties previously used by the Borrower or its Restricted Subsidiaries in the communications and media broadcasting business). (e) Licenses, etc. All Necessary Authorizations have been duly authorized and obtained, and are in full force and effect. The Borrower and its Restricted Subsidiaries are and will continue to be in compliance in all material respects with all provisions thereof. No Necessary Authorization is the subject of any pending or, to the best of the Borrower's knowledge, threatened challenge or revocation. (f) Compliance with Law. The Borrower and its Restricted Subsidiaries are in compliance with all Applicable Laws, the violation of which could reasonably be expected to have a Material Adverse Effect. The Borrower and its Restricted Subsidiaries have duly and timely filed all reports, statements and filings that are required to be filed by any of them under the Communications Act, and are in all material respects in compliance therewith, including without limitation the rules and regulations of the FCC relating to the operation of television and radio stations. The Borrower and its Restricted Subsidiaries have obtained all appropriate approvals and consents of, and have made all filings with, the FCC in connection with the acquisition and ownership of each of their television and radio stations. No Person has filed or submitted any document or instrument to the FCC challenging or contesting the FCC order approving any assignment of a FCC license to the Borrower or any of its Restricted Subsidiaries. (g) Title to Properties. The Borrower and its Restricted Subsidiaries have good and indefeasible title to, or a valid leasehold interest in, all of their material assets. None of their assets are subject to any Liens, except Permitted Liens. No financing statement or other Lien filing (except relating to Permitted Liens) is on file in any state or jurisdiction that names the Borrower or any of its Restricted Subsidiaries as debtor or covers (or purports to cover) any assets of the Borrower or any of its Restricted Subsidiaries. The Borrower and its Restricted Subsidiaries have not signed any such financing statement or filing, nor any security agreement authorizing any Person to file any such financing statement or filing. (h) Litigation. Except as reflected on Schedule 3 hereto, there is no action, suit, investigation or proceeding pending against, or, to the best of the Borrower's knowledge, threatened against the Borrower or any of its Restricted Subsidiaries, or in any other manner relating directly and materially adversely to the Borrower, any of its Restricted Subsidiaries, or 44 51 any of their material properties, including, but not limited to any litigation with respect to these Loan Documents, in any court or before any arbitrator of any kind or before or by any governmental body the result of which could reasonably be expected to require the payment of money by the Borrower or any Restricted Subsidiary in an amount of $500,000 or more in any one such action, suit or proceeding or $2,500,000 or more in the aggregate for all such actions, suits or proceedings. (i) Taxes. All federal, state and other tax returns of the Borrower and its Restricted Subsidiaries required by law to be filed have been duly filed and all federal, state and other taxes, assessments and other governmental charges or levies upon the Borrower, its Restricted Subsidiaries or any of their properties, income, profits and assets, which are due and payable, have been paid, unless the same are being diligently contested in good faith by appropriate proceedings, with adequate reserves established therefor, and no Lien (other than a Permitted Lien) has attached and no foreclosure, distraint, sale or similar proceedings have been commenced. The charges, accruals and reserves on the books of the Borrower and its Restricted Subsidiaries in respect of their taxes are, in the judgment of the Borrower, adequate. (j) Financial Statements; Material Liabilities. The Borrower has furnished or caused to be furnished to the Lenders copies of its December 31, 1996, financial statements, which are prepared in good faith and complete in all material respects and present fairly in accordance with GAAP the financial position of the Borrower and its Restricted Subsidiaries as at such dates and the results of operations for the periods then ended, subject to normal year- end adjustments. The Borrower and its Restricted Subsidiaries have no material liabilities, contingent or otherwise, nor material losses, except as disclosed in writing to the Lenders prior to the Agreement Date. (k) No Adverse Change. Since December 31, 1996, no event or circumstances has occurred or arisen that could reasonably be expected to have a Material Adverse Effect except as listed on Schedule 11 hereto. (l) ERISA. None of the Borrower or its Controlled Group maintains or contributes to any Plan other than those disclosed to the Administrative Lender in writing. Each such Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and any other applicable Federal or state law, rule or regulation. With respect to each Plan of the Borrower and each member of its Controlled Group (other than a Multiemployer Plan), all reports required under ERISA or any other Applicable Law to be filed with any governmental authority, the failure of which to file could reasonably result in liability of the Borrower or any member of its Controlled Group in excess of $100,000, have been duly filed. All such reports are true and correct in all material respects as of the date given. No such Plan of the Borrower or any member of its Controlled Group has been terminated nor has any accumulated funding deficiency (as defined in Section 412(a) of the Code) been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. None of the Borrower or any member of its Controlled Group has failed to make any contribution or pay any amount due or owing as 45 52 required by Section 412 of the Code or Section 302 of ERISA or the terms of any such Plan prior to the due date under Section 412 of the Code and Section 302 of ERISA. There has been no ERISA Event or any event requiring disclosure under Section 4041(c)(3)(C), 4068(f), 4063(a) or 4043(b) of ERISA with respect to any Plan or trust of the Borrower or any member of its Controlled Group since the effective date of ERISA. The value of the assets of each Plan (other than a Multiemployer Plan) of the Borrower and each member of its Controlled Group equaled or exceeded the present value of the benefit liabilities, as defined in Title IV of ERISA, of each such Plan as of the most recent valuation date using Plan actuarial assumptions at such date. There are no pending or, to the best of the Borrower's knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and neither the Borrower nor any member of its Controlled Group has knowledge of any threatened litigation or claims against, (i) the assets of any Plan or trust or against any fiduciary of a Plan with respect to the operation of such Plan, or (ii) the assets of any employee welfare benefit plan within the meaning of Section 3(1) or ERISA, or against any fiduciary thereof with respect to the operation of any such plan. None of the Borrower or any member of its Controlled Group has engaged in any prohibited transactions, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan. None of the Borrower or any member of its Controlled Group has withdrawn from any Multiemployer Plan, nor has incurred or reasonably expects to incur (A) any liability under Title IV of ERISA (other than premiums due under Section 4007 of ERISA to the PBGC), (B) any withdrawal liability (and no event has occurred which with the giving of notice under Section 4219 of ERISA would result in such liability) under Section 4201 of ERISA as a result of a complete or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section 4042 of ERISA. None of the Borrower, any member of its Controlled Group, or any organization to which the Borrower or any member of its Controlled Group is a successor or parent corporation within the meaning of ERISA Section 4069(b), has engaged in a transaction within the meaning of ERISA Section 4069. None of the Borrower or any member of its Controlled Group maintains or has established any welfare benefit plan within the meaning of Section 3(1) of ERISA which provides for continuing benefits or coverage for any participant or any beneficiary of any participant after such participant's termination of employment except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and the regulations thereunder, and at the expense of the participant or the beneficiary of the participant, or retiree medical liabilities. Each of the Borrower and its Controlled Group which maintains a welfare benefit plan within the meaning of Section 3(1) of ERISA has complied in all material respects with any applicable notice and continuation requirements of COBRA and the regulations thereunder. (m) Compliance with Regulations G, T, U and X. The Borrower is not engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying any margin stock within the meaning of Regulations G, T, U and X of the Board of Governors of the Federal Reserve System, and no part of the proceeds of the Advances or the Letters of Credit will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. No assets 46 53 of the Borrower and its Restricted Subsidiaries are margin stock, and none of the Pledged Stock is margin stock. None of the Borrower and its Restricted Subsidiaries, nor any agent acting on their behalf, have taken or will knowingly take any action which might cause this Agreement or any Loan Documents to violate any regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect. (n) Governmental Regulation. The Borrower and its Restricted Subsidiaries are not required to obtain any Necessary Authorization that has not already been obtained from, or effect any material filing or registration that has not already been effected with, the FCC or any other federal, state or local regulatory authority in connection with the execution and delivery of this Agreement or any other Loan Document, or the performance thereof (other than any enforcement of remedies by the Administrative Lender on behalf of the Lenders), in accordance with their respective terms, including any borrowings hereunder. (o) Absence of Default. The Borrower and its Restricted Subsidiaries are in compliance in all material respects with all of the provisions of their articles of incorporation and by-laws, and no event has occurred or failed to occur, which has not been remedied or waived, the occurrence or non-occurrence of which constitutes, or which with the passage of time or giving of notice or both would constitute, (i) an Event of Default or (ii) a default by the Borrower or any of its Restricted Subsidiaries under any material indenture, agreement or other instrument, or any judgment, decree or order to which the Borrower or any of its Restricted Subsidiaries is a party or by which they or any of their material properties is bound. (p) Investment Company Act. The Borrower is not required to register under the provisions of the Investment Company Act of 1940, as amended. Neither the entering into or performance by the Borrower of this Agreement nor the issuance of the notes violates any provision of such act or requires any consent, approval, or authorization of, or registration with, the Securities and Exchange Commission or any other governmental or public body or authority pursuant to any provisions of such act. (q) Environmental Matters. Neither the Borrower nor any Subsidiary has any actual knowledge or reason to believe that any substance deemed hazardous by any Applicable Environmental Law, has been installed on any real property now owned by the Borrower or any of its Subsidiaries. The Borrower and its Subsidiaries are not in violation of or subject to any existing, pending or, to the best of the Borrower's knowledge, threatened investigation or inquiry by any governmental authority or to any material remedial obligations under any Applicable Environmental Laws, and this representation and warranty would continue to be true and correct following disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to any real property of the Borrower and its Subsidiaries. The Borrower and its Subsidiaries have not obtained and are not required to obtain any permits, licenses or similar authorizations to construct, occupy, operate or use any buildings, improvements, fixtures, and equipment forming a part of any real property of the Borrower or any Subsidiary by reason of any Applicable Environmental Laws. The Borrower and its 47 54 Subsidiaries undertook, at the time of acquisition of any real property, reasonable inquiry into the previous ownership and uses of such real property consistent with good commercial or customary practice. The Borrower and its Subsidiaries have taken all reasonable steps to determine, and the Borrower and its Subsidiaries have no actual knowledge or reason to believe, after reasonable investigation, that any hazardous substances or solid wastes have been disposed of or otherwise released on or to the real property of the Borrower or any of its Subsidiaries in any manner or quantities which would be deemed a violation of the Applicable Environmental Laws. (r) Certain Agreements. The Capitalized Lease Obligations and the Affiliation Agreements have been duly authorized, executed and delivered by the Borrower or its Restricted Subsidiaries, as applicable, and (to the best of the Borrower's knowledge) the other parties thereto. Except as disclosed to each Lender, there is no litigation, or, to the best of the Borrower's knowledge, claim of breach or default, pending or threatened with respect to any Capitalized Lease Obligations or Affiliation Agreement that could reasonably be expected to adversely effect any such lease or contract. The Borrower has no knowledge of any default by any seller of any of the Borrower's or its Restricted Subsidiaries' television or radio stations under any obligations of such seller to the Borrower or any Restricted Subsidiary. The Borrower has no notice of or belief that any party to any Capitalized Lease Obligation or Affiliation Agreement is contemplating a breach, default or termination for any reason of such contract or lease, other than as disclosed in writing and reasonably acceptable to the Lenders. The Borrower has provided, or caused to be provided, to the Administrative Lender complete and correct copies of or access to the Capitalized Lease Obligations and Affiliation Agreements, all as amended, together with all exhibits and schedules thereto. (s) Valid Issuance of Securities. All Capital Stock of the Borrower and its Subsidiaries has been duly authorized and validly issued, and is fully paid and nonassessable. The Capital Stock of the Borrower and its Subsidiaries, when issued or sold, was either (i) registered or qualified under applicable federal or state securities laws, or (ii) exempt therefrom. (t) Certain Fees. No broker's, finder's or other fee or commission will be payable by the Borrower (other than to the Lenders hereunder) with respect to the making of the Commitment or the Advances hereunder or the issuance of any Letters of Credit. The Borrower agrees to indemnify and hold harmless the Administrative Lender and each Lender from and against any claims, demand, liability, proceedings, costs or expenses asserted with respect to or arising in connection with any such fees or commissions. (u) Compliance. Attached as Schedule 4 hereto is a complete list of all material licenses, consents, authorizations, permits and Necessary Authorizations as of the Agreement Date. Such licenses, consents, permits and authorizations constitute all that are necessary, appropriate or advisable for each of the Borrower and its Restricted Subsidiaries to operate its business and own its properties, and are in full force and effect. No event has occurred which permits (or with the passage of time would permit) the revocation or termination of any such 48 55 license, consents, permits and authorizations, or which could result in the imposition of any restriction thereon of such a nature that could reasonably be expected to have a Material Adverse Effect. (v) Patents, Etc. The Borrower and its Restricted Subsidiaries have obtained all patents, trademarks, service-marks, trade names, copyrights, licenses and other rights, free from burdensome restrictions, that are necessary for the operation of their business as presently conducted and as proposed to be conducted, the loss of which could reasonably be expected to have a Material Adverse Effect. Nothing has come to the attention of the Borrower or any of its Restricted Subsidiaries to the effect that (i) any process, method, part or other material presently contemplated to be employed by the Borrower or any Restricted Subsidiary may infringe any patent, trademark, service-mark, trade name, copyright, license or other right owned by any other Person, or (ii) there is pending or overtly threatened any claim or litigation against or affecting the Borrower or any Restricted Subsidiary contesting its right to sell or use any such process, method, part or other material. (w) Disclosure. Neither this Agreement nor any other document, certificate or statement which has been furnished to any Lender by or on behalf of the Borrower or any Restricted Subsidiary in connection herewith contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statement contained herein and therein not misleading at the time it was furnished. There is no fact known to the Borrower and not known to the public generally that could reasonably be expected to materially adversely affect the assets or business of the Borrower and its Restricted Subsidiaries, or in the future could reasonably be expected (so far as the Borrower can now foresee) to have a Material Adverse Effect, which has not been set forth in this Agreement or in the documents, certificates and statements furnished to the Lenders by or on behalf of the Borrower prior to the date hereof in connection with the transaction contemplated hereby. Section 4.2 Survival of Representations and Warranties, etc. All representations and warranties made under this Agreement and the other Loan Documents shall be deemed to be made at and as of the Agreement Date and at and as of the date of each Advance and each Letter of Credit, and each shall be true and correct when made, except to the extent (a) previously fulfilled in accordance with the terms hereof, (b) applicable to a specific date or otherwise subsequently inapplicable, or (c) previously waived in writing by the Determining Lenders with respect to any particular factual circumstance. All such representations and warranties shall survive, and not be waived by, the execution hereof by any Lender, any investigation or inquiry by any Lender, or by the making of any Advance under this Agreement. 49 56 ARTICLE 5 General Covenants So long as any of the Obligations are outstanding and unpaid or any Commitment is outstanding (whether or not the conditions to borrowing have been or can be fulfilled): Section 5.1 Preservation of Existence and Similar Matters. Except as provided in Section 7.5, the Borrower shall, and shall cause each Restricted Subsidiary to: (a) preserve and maintain, or timely obtain and thereafter preserve and maintain, its existence, rights, franchises, licenses, authorizations, consents, privileges and all other Necessary Authorizations from federal, state and local governmental bodies and any tribunal (regulatory or otherwise), the loss of which could have a Material Adverse Effect; and (b) qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization, unless the failure to do so could not have a Material Adverse Effect. Section 5.2 Business; Compliance with Applicable Law. The Borrower and its Restricted Subsidiaries shall (a) engage substantially in the media or communication related business and activities related thereto, and (b) comply in all material respects with the requirements of all Applicable Law, the failure of which could reasonably be expected to have a Material Adverse Effect. Section 5.3 Maintenance of Properties. The Borrower shall, and shall cause each Restricted Subsidiary to, maintain or cause to be maintained all its properties (whether owned or held under lease) in reasonably good repair, working order and condition, taken as a whole, and from time to time make or cause to be made all appropriate repairs, renewals, replacements, additions, betterments and improvements thereto. Section 5.4 Accounting Methods and Financial Records. The Borrower shall, and shall cause each Restricted Subsidiary to, maintain a system of accounting established and administered in accordance with GAAP, keep adequate records and books of account in which complete entries will be made and all transactions reflected in accordance with GAAP, and keep accurate and complete records of its respective assets. The Borrower and each of its Restricted Subsidiaries shall maintain a fiscal year ending on December 31. Section 5.5 Insurance. The Borrower shall, and shall cause each Restricted Subsidiary or its direct parent to, maintain insurance from responsible companies in such amounts and against such risks as shall be customary and usual in the industry for companies of similar size and capability, but in no event less than the amount and types insured as of the Agreement Date. Each insurance policy shall provide for at least 30 days' prior notice to the Administrative Lender of any proposed termination or cancellation of such policy, whether on account of default 50 57 or otherwise, the loss of which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall cause each Restricted Subsidiary to, pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or its income or properties prior to the date on which penalties attach thereto, and all lawful material claims for labor, materials and supplies which, if unpaid, might become a Lien upon any of its properties; except that no such tax, assessment, charge, levy or claim need be paid which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on the appropriate books, but only so long as no Lien (other than a Permitted Lien) shall attach with respect thereto and no foreclosure, distraint, sale or similar proceedings shall have been commenced. The Borrower shall, and shall cause each Restricted Subsidiary to, timely file all information returns required by federal, state or local tax authorities. Section 5.7 Visits and Inspections. The Borrower shall, and shall cause each Restricted Subsidiary to, promptly permit representatives of the Administrative Lender or any Lender from time to time to (a) visit and inspect the properties of the Borrower and Restricted Subsidiary as often as the Administrative Lender or any Lender shall deem advisable, (b) inspect and make extracts from and copies of the Borrower's and each Restricted Subsidiary's books and records, and (c) discuss with the Borrower's and each Restricted Subsidiary's directors, officers, employees and auditors its business, assets, liabilities, financial positions, results of operations and business prospects. Section 5.8 Payment of Indebtedness. Subject to Section 5.6 hereof, the Borrower shall, and shall cause each Restricted Subsidiary to, pay its Indebtedness when and as the same becomes due, other than amounts (other than the Obligations) duly and diligently disputed in good faith. Section 5.9 Use of Proceeds. The Borrower shall use the proceeds of Advances and Letters of Credit to make acquisitions permitted under Section 7.5 hereof, to make Capital Expenditures, to make Investments (including advances to Subsidiaries) permitted pursuant to Section 7.3 hereof, to refinance all outstanding Indebtedness under the Existing Credit Agreement, to repay and terminate the Existing Eller Credit Agreement, for working capital and for other general corporate purposes. SECTION 5.10 INDEMNITY. (a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE LENDER, THE ISSUING BANK, EACH LENDER, EACH OF THEIR RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND 51 58 AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR ANY OF ITS SUBSIDIARIES), IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT THERETO, THE MAKING OF OR ANY PARTICIPATIONS IN THE ADVANCES OR THE LETTERS OF CREDIT AND THE MANAGEMENT OF THE ADVANCES AND THE LETTERS OF CREDIT, INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF ADMINISTRATIVE LENDER, THE ISSUING BANK OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE ADMINISTRATIVE LENDER, THE ISSUING BANK OR ANY LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE ADVANCES AND THE LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, BUT EXCLUDING MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT (COLLECTIVELY, "INDEMNIFIED MATTERS"); PROVIDED HOWEVER, THAT SO LONG AS NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, THERE SHALL BE NO SETTLEMENT BY THE INDEMNITEES OR ANY OF THEM WITH RESPECT TO ANY INDEMNIFIED MATTER WITHOUT PRIOR CONSULTATION WITH THE BORROWER. (b) IN ADDITION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER; PROVIDED, HOWEVER, THAT THE INDEMNITEES AGREE THAT THEY SHALL ENDEAVOR TO USE LEGAL COUNSEL COMMON TO ALL INDEMNITEES IN CONNECTION WITH ANY INDEMNIFIED MATTER UNLESS ANY SUCH INDEMNITEE SHALL REASONABLY DETERMINE, IN ITS SOLE DISCRETION, THAT THE USE OF SUCH COMMON LEGAL COUNSEL WOULD CONFLICT WITH ITS INTERESTS IN SUCH INDEMNIFIED MATTER. IF FOR ANY REASON THE FOREGOING INDEMNIFICATION IS UNAVAILABLE TO ANY INDEMNITEE OR INSUFFICIENT TO HOLD ANY INDEMNITEE HARMLESS WITH RESPECT TO INDEMNIFIED MATTERS, THEN THE BORROWER SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNITEE AS A RESULT OF SUCH LOSS, CLAIM, DAMAGE OR LIABILITY IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT NOT ONLY THE RELATIVE BENEFITS RECEIVED BY THE BORROWER AND THE BORROWER'S STOCKHOLDERS ON THE ONE HAND AND SUCH INDEMNITEE ON THE OTHER HAND BUT ALSO THE RELATIVE FAULT OF THE BORROWER AND SUCH INDEMNITEE, AS WELL AS ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND 52 59 CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE LENDER, THE ISSUING BANK, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS. Section 5.11 Environmental Law Compliance. The use which the Borrower or any Subsidiary intends to make of any real property owned by it will not result in the disposal or other release of any hazardous substance or solid waste on or to such real property in any manner or quantities which would be deemed a violation of the Applicable Environmental Laws. The Borrower further agrees to exercise reasonable due diligence in the acquisition of real property in connection with compliance with Applicable Environmental Laws. As used herein, the terms "hazardous substance" and "release" as used in this Section shall have the meanings specified in CERCLA (as defined in the definition of Applicable Environmental Laws), and the terms "solid waste" and "disposal" shall have the meanings specified in RCRA (as defined in the definition of Applicable Environmental Laws); provided, however, that if CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment; and provided further, to the extent that any other law applicable to the Borrower, any Subsidiary or any of their properties establishes a meaning for "hazardous substance," "release," "solid waste," or "disposal" which is broader than that specified in either CERCLA or RCRA, such broader meaning shall apply. THE BORROWER AGREES TO INDEMNIFY AND HOLD THE ADMINISTRATIVE LENDER, THE ISSUING BANK AND EACH LENDER HARMLESS FROM AND AGAINST, AND TO REIMBURSE THEM WITH RESPECT TO, ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION, LOSS, DAMAGE, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURTS COSTS) OF ANY KIND OR CHARACTER, KNOWN OR UNKNOWN, FIXED OR CONTINGENT, ASSERTED AGAINST OR INCURRED BY ANY OF THEM AT ANY TIME AND FROM TIME TO TIME BY REASON OF OR ARISING OUT OF (A) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO PERFORM ANY OBLIGATION HEREUNDER REGARDING ASBESTOS OR APPLICABLE ENVIRONMENTAL LAWS, (B) ANY VIOLATION ON OR BEFORE THE RELEASE DATE OF ANY APPLICABLE ENVIRONMENTAL LAW IN EFFECT ON OR BEFORE THE RELEASE DATE, AND (C) ANY ACT, OMISSION, EVENT OR CIRCUMSTANCE EXISTING OR OCCURRING ON OR PRIOR TO THE RELEASE DATE (INCLUDING WITHOUT LIMITATION THE PRESENCE ON SUCH REAL PROPERTY OR RELEASE FROM SUCH REAL PROPERTY OF HAZARDOUS SUBSTANCES OR SOLID WASTES DISPOSED OF OR OTHERWISE RELEASED ON OR PRIOR TO THE RELEASE DATE), RESULTING FROM OR IN CONNECTION WITH THE OWNERSHIP OF THE REAL PROPERTY, REGARDLESS OF WHETHER THE ACT, OMISSION, EVENT OR CIRCUMSTANCE CONSTITUTED A VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAW AT THE TIME OF ITS EXISTENCE OR OCCURRENCE, OR WHETHER THE ACT, OMISSION, EVENT OR CIRCUMSTANCE IS CAUSED BY OR RELATES TO THE NEGLIGENCE OF ANY INDEMNIFIED PERSON; PROVIDED THAT, THE BORROWER SHALL NOT BE UNDER ANY OBLIGATION TO INDEMNIFY THE ADMINISTRATIVE LENDER, THE ISSUING BANK OR ANY LENDER TO THE EXTENT THAT ANY SUCH LIABILITY ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSON, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE RELEASE DATE AND SHALL CONTINUE THEREAFTER IN FULL FORCE AND EFFECT. 53 60 Section 5.12 Conversion of Eller to Unrestricted Subsidiary. Provided there shall exist no Default or Event or Default both prior to and after giving effect to the conversion of Eller and each of Eller's subsidiaries to Unrestricted Subsidiaries, Eller and each of Eller's subsidiaries may, in Eller's sole discretion and upon 30 days' written notice to the Lenders, become Unrestricted Subsidiaries. Section 5.13 Syndication. The Borrower shall assist the Administrative Lender and the Lenders in attempting to syndicate up to an additional $250,000,000 in excess of $1,750,000,000; it being understood that neither the Administrative Lender nor any Lender is obligated to syndicate such additional $250,000,000 or participate or obtain other lenders to participate in such syndication. The Borrower's assistance shall include, without limitation, (a) providing all information reasonably deemed necessary by the Administrative Lender and its Affiliates to assist in such syndication, (b) making available appropriate officers and representatives of the Borrower and its Subsidiaries to participate in information meetings for potential syndicate members and participants as the Administrative Lender and its Affiliates may reasonably request, and (c) in assembling and updating from time to time an information package for delivery to potential syndicate members and participants (the "Syndication Book"). The Borrower agrees it will be responsible for the contents of the Syndication Book (insofar as information furnished by it is concerned) and prior to dissemination by the Administrative Lender and its Affiliates of the Syndication Book. The Borrower will notify Administrative Lender and Lenders on or before December 31, 1997 of any increase in the Commitment above $1,750,000,000 as a result of any syndication. Section 5.14 Ownership of Subsidiaries. Except as provided in this Section 5.14 or Section 7.5 hereof, the Borrower shall continue to own directly or indirectly no less than 90% of the Capital Stock of each of its Restricted Subsidiaries; provided, however, that (i) if Heftel becomes a Restricted Subsidiary, the Borrower shall own directly or indirectly no less than 51% of the Capital Stock of Heftel, (ii) the Borrower shall continue to own directly or indirectly no less than 79% of the Capital Stock of CCC-Houston, (iii) the Borrower shall continue to own directly or indirectly no less than 50% of the Capital Stock of ARN; (iv) the Borrower shall continue to own directly or indirectly no less than 30% of the Capital Stock of NRNZ; (v) Borrower shall continue to own directly or indirectly no less than 88% of the Capital Stock of Eller; and (vi) Borrower shall continue to own directly or indirectly no less than 76% of the Capital Stock of Eller Target Media Group, L.P. ARTICLE 6 Information Covenants So long as any of the Obligations are outstanding and unpaid or any Commitment is outstanding (whether or not the conditions to borrowing have been or can be fulfilled), the Borrower shall furnish or cause to be furnished to the Administrative Lender: 54 61 Section 6.1 Quarterly Financial Statements and Information. Within 45 days after the end of each fiscal quarter, consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as at the end of such quarter and the related consolidated and consolidating statements of income and consolidated statements of changes in cash flow for such quarter and for the elapsed portion of the year ended with the last day of such quarter, all of which shall be certified by the president or chief financial officer of the Borrower, to be, in his or her opinion, complete and correct in all material respects and to present fairly, in accordance with GAAP, the financial position and results of operations of the Borrower and its Subsidiaries as at the end of and for such period, and for the elapsed portion of the year ended with the last day of such period, subject only to normal year-end adjustments. In addition, the Borrower shall furnish within such time period a reconciliation of such financial statements setting forth the difference in financial position and results of operations between its Subsidiaries and its Restricted Subsidiaries for such period and for the elapsed portion of the year ended with the last day on such period, subject to sound year-end adjustments. Section 6.2 Annual Financial Statements and Information; Certificate of No Default. (a) Within 90 days after the end of each fiscal year, a copy of (i) the consolidated balance sheet of the Borrower and its Subsidiaries, as of the end of the current and prior fiscal years and (ii) consolidated statements of earnings, statements of changes in shareholders' equity, and statements of changes in cash flow as of and through the end of such fiscal year, all of which are prepared in accordance with GAAP, and certified by independent certified public accountants acceptable to the Lenders, whose opinion shall be in scope and substance in accordance with generally accepted auditing standards and shall be unqualified. In addition, the Borrower shall furnish within such time period an unaudited reconciliation of such financial statements setting forth the difference in financial position and results of operations between its Subsidiaries and its Restricted Subsidiaries as of and through the end of such fiscal year. (b) Simultaneously with the delivery of the statements required by this Section 6.2, a letter from the Borrower's public accountants certifying that no Default was detected during the examination of the Borrower and its Restricted Subsidiaries, and authorizing the Borrower to deliver such financial statements and opinion thereon to the Administrative Lender and Lenders pursuant to this Agreement. (c) As soon as available, but in any event within 60 days following the end of each fiscal year, a copy of the annual consolidated operating budget of the Borrower and its Subsidiaries for the succeeding fiscal year. Section 6.3 Compliance Certificates. At the time financial statements are furnished pursuant to Sections 6.1 and 6.2 hereof, a certificate of an Authorized Signatory: (a) setting forth at the end of such period, a calculation of the Leverage Ratio, as well as certifications and arithmetical calculations required to establish whether the Borrower and its Restricted Subsidiaries were in compliance with the requirements of Sections 7.1(d), (f), (h) and 55 62 (i), 7.3(h), 7.6, 7.7, 7.10, 7.11, 7.12, and 7.13 hereof, which shall be substantially in the form of Exhibit D hereto; (b) setting forth the aggregate amount of outstanding Advances and Reimbursement Obligations and certifying as to compliance herewith; and (c) stating that, to the best of his or her knowledge after due inquiry, no Default has occurred as at the end of such period, or if a Default has occurred, disclosing each such Default and its nature, when it occurred, whether it is continuing and the steps being taken with respect to such Default. Section 6.4 Copies of Other Reports and Notices. (a) Promptly upon their becoming available, a copy of (i) all material reports or letters submitted to the Borrower or any Restricted Subsidiary by accountants in connection with any annual, interim or special audit, including without limitation any report prepared in connection with the annual audit referred to in Section 6.2 hereof, and any other comment letter submitted to management in connection with any such audit, (ii) each financial statement, report, notice or proxy statement sent by the Borrower or any Restricted Subsidiary to stockholders generally, (iii) each regular or periodic report and any registration statement (other than statements on Form S-8) or prospectus (or material written communication in respect of any thereof) filed by the Borrower or any subsidiary with any securities exchange, with the Securities and Exchange Commission or any successor agency, and (iv) all press releases concerning material financial aspects of the Borrower or any Restricted Subsidiary; (b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or other evidence of indebtedness or other security of the Borrower or any Restricted Subsidiary in excess of $750,000 in the aggregate has given notice or taken any action with respect to a breach, failure to perform, claimed default or event of default thereunder, (ii) any party to any Capitalized Lease Obligations or any Local Marketing Agreement has given notice or taken any action with respect to a breach, failure to perform, claimed default or event of default thereunder, (iii) any occurrence or non-occurrence of any event which constitutes or which with the passage of time or giving of notice or both could constitute a material breach by the Borrower or any Restricted Subsidiary under any material agreement or instrument which could reasonably be expected to result in a liability in excess of $750,000, other than this Agreement to which the Borrower or any Restricted Subsidiary is a party or by which any of their properties may be bound, or (iv) any event, circumstance or condition which could reasonably be expected to have a Material Adverse Effect, a written notice specifying the details thereof (or the nature of any claimed default or event of default) and what action is being taken or is proposed to be taken with respect thereto; provided, however, no notice shall be required to be delivered hereunder with respect to any event, circumstance or condition set forth in clause (i), (ii) or (iii) immediately preceding if, in the opinion of counsel to the Borrower or such Restricted Subsidiary, there is no reasonable possibility of an adverse determination with respect to such event, circumstance or condition; 56 63 (c) Promptly upon receipt thereof, information with respect to and copies of any notices received from the FCC or any other federal, state or local regulatory agencies or any tribunal relating to any order, ruling, law, information or policy that relates to a breach of or noncompliance with the Communications Act, or could reasonably be expected to result in the payment of money by the Borrower or any Restricted Subsidiary in an amount of $750,000 or more in the aggregate, or otherwise have a Material Adverse Effect, or result in the loss or suspension of any Necessary Authorization; provided, however, no information shall be required to be delivered hereunder if, in the opinion of counsel to the Borrower or such Restricted Subsidiary, there is no reasonable possibility of an adverse determination with respect to such notice; (d) Promptly upon receipt from any governmental agency, or any government, political subdivision or other entity, any material notice, correspondence, hearing, proceeding or order regarding or affecting the Borrower, any Subsidiary, or any of their properties or businesses; and (e) From time to time and promptly upon each request, such data, certificates, reports, statements, opinions of counsel, documents or further information regarding the assets, business, liabilities, financial position, projections, results of operations or business prospects of the Borrower and its Subsidiaries, as the Administrative Lender or any Lender may reasonably request. Section 6.5 Notice of Litigation, Default and Other Matters. Prompt notice of the following events after the Borrower has knowledge or notice thereof: (a) The commencement of all proceedings and investigations by or before the FCC or any other governmental body, and all actions and proceedings in any court or before any arbitrator involving claims for damages, fines or penalties (including punitive damages) in excess of $2,000,000 per claim and $5,000,000 in the aggregate (after deducting the amount with respect to the Borrower or any Restricted Subsidiary such Person is insured, provided such claim has not been denied), against or in any other way relating directly to the Borrower, any Restricted Subsidiary, or any of their properties or businesses; provided, however, no notice shall be required to be delivered hereunder if, in the opinion of counsel to the Borrower or such Restricted Subsidiary, there is no reasonable possibility of an adverse determination in such action or proceeding; (b) Promptly upon the happening of any condition or event which constitutes a Default, a written notice specifying the nature and period of existence thereof and what action is being taken or is proposed to be taken with respect thereto; and (c) Any material adverse change with respect to the business, assets, liabilities, financial position, results of operations or prospective business of the Borrower or any Subsidiary, other than changes in the ordinary course of business which have not had and are not likely to have a Material Adverse Effect. 57 64 Section 6.6 ERISA Reporting Requirements. (a) Promptly and in any event (i) within 30 days after the Borrower or any member of its Controlled Group knows or has reason to know that any ERISA Event described in clause (a) of the definition of ERISA Event or any event described in Section 4063(a) of ERISA with respect to any Plan of the Borrower or any member of its Controlled Group has occurred, and (ii) within 10 days after the Borrower or any member of its Controlled Group knows or has reason to know that any other ERISA Event with respect to any Plan of the Borrower or any member of its Controlled Group has occurred or a request for a minimum funding waiver under Section 412 of the Code with respect to any Plan of the Borrower or any member of its Controlled Group, a written notice describing such event and describing what action is being taken or is proposed to be taken with respect thereto, together with a copy of any notice of event that is given to the PBGC; (b) Promptly and in any event within two Business Days after receipt thereof by the Borrower or any member of its Controlled Group from the PBGC, copies of each notice received by the Borrower or any member of its Controlled Group of the PBGC's intention to terminate any Plan or to have a trustee appointed to administer any Plan; (c) Promptly and in any event within 30 days after the filing thereof by the Borrower or any member of its Controlled Group with the United States Department of Labor, the Internal Revenue Service or the PBGC, copies of each annual and other report (including Schedule B thereto) with respect to each Plan; (d) Promptly and in any event within 30 days after receipt thereof, a copy of any notice, determination letter, ruling or opinion the Borrower or any member of its Controlled Group receives from the PBGC, the United States Department of Labor or the Internal Revenue Service with respect to any Plan; (e) Promptly, and in any event within 10 Business Days after receipt thereof, a copy of any correspondence the Borrower or any member of its Controlled Group receives from the Plan Sponsor (as defined by Section 4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief financial officer of the Borrower or such member of its Controlled Group setting forth details as to the events giving rise to such potential withdrawal liability and the action which the Borrower or such member of its Controlled Group is taking or proposes to take with respect thereto; (f) Notification within 30 days of any material increases in the benefits of any existing Plan which is not a Multiemployer Plan, or the establishment of any new Plans, or the commencement of contributions to any Plan to which the Borrower or any member of its Controlled Group was not previously contributing; 58 65 (g) Notification within three Business Days after the Borrower or any member of its Controlled Group knows or has reason to know that the Borrower or any such member of its Controlled Group has or intends to file a notice of intent to terminate any Plan under a distress termination within the meaning of Section 4041(c) of ERISA and a copy of such notice; and (h) Promptly after receipt of written notice of commencement thereof, notice of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Borrower or any member of its Controlled Group with respect to any Plan, except those which, in the aggregate, if adversely determined could not have a Material Adverse Effect. ARTICLE 7 Negative Covenants So long as any of the Obligations are outstanding and unpaid or any Commitment is outstanding (whether or not the conditions to borrowing have been or can be fulfilled): Section 7.1 Indebtedness. The Borrower shall not, and shall not permit any Restricted Subsidiary to, create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, or suffer to exist any Indebtedness, except: (a) Indebtedness under the Loan Documents; (b) Accounts payable (including film right payables), accrued expenses, deferred revenue items, pension liabilities and customer advance payments incurred in the ordinary course of business; (c) Guaranties to the extent permitted under Section 7.6 hereof; (d) Capitalized Lease Obligations and Indebtedness incurred to purchase tangible personal property, in an aggregate amount not to exceed $25,000,000 at any time; (e) Indebtedness evidenced by the Intercompany Notes; and (f) Institutional Debt in an aggregate amount not to exceed $750,000,000 at any time outstanding; provided, that, (i) such debt is unsecured, (ii) such debt is at all times on terms and conditions to the reasonable satisfaction of the Determining Lenders, including but not limited to the absence of financial covenants and restrictions and events of default that are more restrictive than those under this Agreement, (iii) such debt has a final maturity and Weighted Average Life to Maturity (computed from the date of incurrence of such debt) at least one day longer than the Maturity Date and the Weighted Average Life to Maturity of the Obligations, and (iv) the Net Cash Proceeds of such issuance are applied in accordance with Section 2.5(d) 59 66 hereof; provided, however, notwithstanding anything contained in this Section 7.1(f), $250,000,000 of the Institutional Debt authorized by this Section 7.1(f) may have a final maturity of any date no less than five years after the Agreement Date. (g) Indebtedness set forth on Schedule 9 hereto, and all renewals and extensions (but not increases) thereof; (h) Indebtedness (in addition to the Indebtedness otherwise permitted pursuant to this Section 7.1) of its Restricted Subsidiaries not to exceed $20,000,000 in aggregate principal amount outstanding at any time; and (i) Indebtedness (in addition to the Indebtedness otherwise permitted pursuant to this Section 7.1) of the Borrower not to exceed in aggregate principal amount outstanding at any time the greater of (i) $250,000,000 or (ii) 100% of Operating Cash Flow for the immediately preceding four fiscal quarters. provided, however, the incurrence of Indebtedness otherwise permitted pursuant to clauses (c), (d), (e), (f), (h), and (i) immediately preceding shall be permitted only if there shall exist no Default prior to or after giving effect to any such proposed Indebtedness. Section 7.2 Liens. The Borrower shall not, and shall not permit any Restricted Subsidiary to, create, assume, incur, permit or suffer to exist, directly or indirectly, any Lien on any of its assets, whether now owned or hereafter acquired, except Permitted Liens. The Borrower shall not, and shall not permit any Restricted Subsidiary to, agree with any other Person that it shall not create, assume, incur, permit or suffer to exist or to be created, assumed, incurred or permitted to exist, directly or indirectly, any Lien on any of its assets. Section 7.3 Investments. The Borrower shall not, and shall not permit any Subsidiary to, make, own or maintain any Investment, except that the Borrower or such Subsidiary may purchase or otherwise acquire and own and maintain: (a) Marketable, direct obligations of, or guaranteed by, the United States of America and maturing within 365 days of the date of purchase; (b) Commercial paper issued by U.S. corporations that have a rating of A-1/P-1 or better by Moody's or S&P; (c) Certificates of deposit of domestic banks maturing within 365 days of the date of purchase, which banks' debt obligations have one of the two highest ratings obtainable from Moody's or S&P; (d) Securities issued by U.S. corporations that have one of the two highest ratings obtainable from Moody's or S&P; 60 67 (e) Investments in newly-formed or existing Restricted Subsidiaries (i) that are subject to the provisions hereof, (ii) that are or immediately become party to the Subsidiary Guaranty and (iii) that executed an Intercompany Note; (f) Accounts receivable that arise in the ordinary course of business and are payable on standard terms; (g) Investments which are described on Schedule 8 hereto; and (h) Provided there shall exist no Default prior to or after giving effect to any such proposed Investments (which shall include, without limitation, Investments in Unrestricted Subsidiaries and Restricted Subsidiaries that have not executed a Subsidiary Guaranty), other Investments in communication or media related businesses not to exceed, at any time outstanding, an aggregate amount (determined using the purchase price or cost of such Investments without any adjustment for depreciation or amortization) equal to the sum of (i) $200,000,000, plus (ii) 150% of Operating Cash Flow for the immediately preceding four fiscal quarters, plus (iii) 50% of Net Cash Proceeds in excess of $200,000,000 received by the Borrower and its Subsidiaries from the issuance of Equity (including any conversion of subordinated convertible debentures, which constitutes Subordinated Debt, into Equity) after the Agreement Date. Section 7.4 Amendment and Waiver. Other than as provided in Section 7.5 herein, the Borrower shall not, and shall not permit any Restricted Subsidiary to, enter into any amendment of any material term or provision of its articles of incorporation or by-laws. In addition, the Borrower shall not, and shall not permit any Restricted Subsidiary to, enter into any amendment of, or agree to or accept any waiver of any of the provisions of, any Necessary Authorization, unless (a) the Determining Lenders consent to such amendment and (b) the Lenders are provided with 10 days' written notice prior to the execution or effectiveness of the proposed amendment or waiver. Section 7.5 Liquidation, Disposition or Acquisition of Assets, Merger, New Subsidiaries. The Borrower shall not, and shall not permit any Restricted Subsidiary to, at any time: (a) liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up; or sell, lease, abandon, transfer or otherwise dispose of all or any part of its assets, properties or business, other than immaterial assets sold in the ordinary course of business, or dispositions whose proceeds are applied in accordance with Section 2.5(c) hereof; (b) acquire (i) all or any substantial part of the assets, property or business of any other Person, or (ii) any assets that constitute a division or operating unit of the business of any other Person; provided, however, that, so long as there shall exist no Default prior to or after giving effect to a proposed transaction, the Borrower or any Restricted Subsidiary may, subject to the limitations set forth in Section 7.3(h) hereof and in this Section 7.5(b), purchase assets, 61 68 property or business of another Person, so long as (i) the Lenders shall have received prior written notice at least 20 Business Days prior to the date of such purchase, (ii) the Administrative Lender shall have received at least 10 Business Days prior to the date of such purchase a compliance certificate in the form required by Section 6.3 hereof, but setting forth the covenant calculations described in Section 6.3(a) hereof both prior to and after giving effect to the proposed purchase, (iii) such acquisition shall be pursuant to documentation acceptable to the Administrative Lender, (iv) such assets, property or business shall be in or relate to the communications or media related business, and (v) the Administrative Lender shall have received copies of all documents, instruments, opinions and other information relating to the seller and assets to be acquired as it may reasonably request; (c) enter into any merger or consolidation; provided, however, that, so long as there shall exist no Default prior to or after giving effect to a proposed transaction, (i)(A) a Restricted Subsidiary may merge or consolidate with another Restricted Subsidiary; (B) an Unrestricted Subsidiary may merge or consolidate with another Unrestricted Subsidiary or a Restricted Subsidiary; and (C) an Unrestricted Subsidiary or a Restricted Subsidiary may merge or consolidate with the Borrower provided, that the Borrower or such Restricted Subsidiary shall be the surviving entity of any transaction governed by this Section 7.5(c)(i); (ii) the Borrower or any Restricted Subsidiary may, subject to the limitations set forth in Section 7.3(h) hereof and in this Section 7.5(c), merge or consolidate with another Person, so long as (A) the Lenders shall have received prior written notice at least 20 Business Days prior to the date of such transaction, (B) the Administrative Lender shall have received at least 10 Business Days prior to the date of such transaction a compliance certificate in the form required by Section 6.3 hereof, but setting forth the covenant calculations described in Section 6.3(a) hereof both prior to and after giving effect to the proposed merger or consolidation, (C) such merger or consolidation shall be pursuant to documentation acceptable to the Administrative Lender, (D) the Person with whom such merger or consolidation is being consummated with shall be engaged in a communication or media related business, (E) the Borrower or such Restricted Subsidiary shall be the surviving entity, and (F) the Administrative Lender shall have received copies of all documents, instruments, opinions and other information relating to the seller and assets to be acquired as it may reasonably request; or (d) create or acquire any Subsidiary, except as permitted by Sections 7.3(e) and (h) hereof. Section 7.6 Guaranties. Other than those guaranties referenced on Schedule 6 hereto, the Borrower shall not, and shall not permit any Restricted Subsidiary to, at any time make or issue any Guaranty, or assume, be obligated with respect to, or permit to be outstanding any Guaranty, of any obligation of any other Person except Guaranties in an aggregate amount not to exceed $10,000,000 at any time; provided, however, such Guaranties shall be permitted only if prior to such proposed Guaranty or after giving effect thereto there shall exist no Default. Section 7.7 Dividends. The Borrower shall not, and shall not permit any Subsidiary to, directly or indirectly declare or pay any Dividend; provided, however, (a) any Subsidiary 62 69 may declare and pay Dividends to the Borrower or any Restricted Subsidiary and (b) the Borrower may declare and pay Dividends (including amounts which become Dividends as a result of the proviso in the definition of Dividends) on any date in an amount such that the aggregate amount of Dividends paid and declared during the term of this Agreement shall not exceed $750,000,000; provided, however, notwithstanding clause (b) immediately preceding to the contrary, the Borrower shall pay no such Dividends unless there shall exist no Default prior to or after giving effect to any such proposed Dividend. Section 7.8 Affiliate Transactions. The Borrower shall not, and shall not permit any Subsidiary to, at any time engage in any transaction with an Affiliate, nor make an assignment or other transfer of any of its assets or properties to any Affiliate, on terms materially less advantageous to the Borrower or Subsidiary than would be the case if such transaction had been effected with a non-Affiliate (other than advances to employees in the ordinary course of business). The Borrower shall not, and shall not permit any Subsidiary to, in any event incur or suffer to exist any Indebtedness or Guaranty in favor of any Affiliate, unless such Affiliate shall subordinate the payment and performance thereof on terms satisfactory to the Lenders in their sole discretion, and otherwise upon terms, conditions and documentation, and in a manner satisfactory to Determining Lenders. Notwithstanding the foregoing, the Borrower may loan the proceeds of Advances to Subsidiaries that are Restricted Subsidiaries, so long as (a) there shall exist no Default prior to or after giving effect to such proposed loan and (b) such advances are evidenced by Intercompany Notes and for which entries in the financial records of the Borrower and its Restricted Subsidiaries are made evidencing such loans and repayments thereof. Section 7.9 Compliance with ERISA. The Borrower shall not, and shall not permit any Subsidiary to, directly or indirectly, or permit any member of its Controlled Group to directly or indirectly, (a) terminate any Plan so as to result in any material (in the opinion of the Determining Lenders) liability to the Borrower or any member of its Controlled Group, (b) permit to exist any ERISA Event, or any other event or condition which presents the risk of a material (in the opinion of the Determining Lenders) liability of the Borrower or any member of its Controlled Group, (c) make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any material (in the opinion of the Determining Lenders) liability to the Borrower or any member of its Controlled Group, (d) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder except in the ordinary course of business consistent with past practice which could result in any material (in the opinion of the Determining Lenders) liability to the Borrower or any member of its Controlled Group, or (e) permit the present value of all benefit liabilities, as defined in Title IV of ERISA, under each Plan of the Borrower or any member of its Controlled Group (using the actuarial assumptions utilized by the PBGC upon termination of a plan) to materially (in the opinion of the Determining Lenders) exceed the fair market value of Plan assets allocable to such benefits all determined as of the most recent valuation date for each such Plan. Section 7.10 Leverage Ratio. At the end of each fiscal quarter occurring during the periods indicated below, the Borrower shall not permit the Leverage Ratio to be greater than: 63 70
Period Ratio ------ ----- From date hereof through March 31, 1998 6.25 to 1 Thereafter through March 31, 1999 5.75 to 1 Thereafter through December 31, 2000 5.25 to 1 Thereafter 4.50 to 1
Section 7.11 Fixed Charges Coverage Ratio. The Borrower shall not permit the ratio of (a) Operating Cash Flow for the four consecutive fiscal quarters then ending to (b) Fixed Charges for such fiscal quarters as of the last day of any fiscal quarter during the term of this Agreement, to be less than 1.05 to 1. Section 7.12 Interest Coverage Ratio. At the end of each fiscal quarter, the Borrower shall not permit the ratio of (a) Operating Cash Flow for the four consecutive fiscal quarters then ending, to (b) interest expense of the Borrower and its Subsidiaries for such quarters, to be less than 2.0 to 1. Section 7.13 Debt Service Coverage Ratio. The Borrower shall not permit the ratio of (a) Operating Cash Flow for the four consecutive fiscal quarters then ending, to (b) Pro-Forma Debt Service for the four succeeding fiscal quarters, to be less than 1.25 to 1 at the end of each fiscal quarter during the term of this Agreement. Section 7.14 Sale and Leaseback. The Borrower shall not, and shall not permit any Restricted Subsidiary to, enter into any arrangement whereby it sells or transfers any of its assets, and thereafter rents or leases such assets. Section 7.15 Sale or Discount of Receivables. The Borrower shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly sell, with or without recourse, for discount or otherwise, any notes or accounts receivable. Section 7.16 Business of Clear Channel Television Licenses, Inc. and Clear Channel Radio Licenses, Inc. and Clear Channel Metroplex Licenses, Inc. Notwithstanding anything in this Agreement to the contrary, the Borrower shall not permit Clear Channel Television Licenses, Inc., Clear Channel Radio Licenses, Inc. or Clear Channel Metroplex Licenses, Inc. to engage in any business other than the ownership of (i) FCC licenses and Necessary Authorizations for the operation of Clear Channel Television, Inc., Clear Channel Radio, Inc. and Clear Channel Metroplex, Inc., respectively, and (ii) at least 95% of the Capital Stock of Clear Channel Television, Inc. and 100% of the Capital Stock of Clear Channel Radio, Inc. and Clear Channel Metroplex, Inc. respectively. 64 71 Section 7.18 Subordinated Debt. The Borrower shall not, and shall not permit any Subsidiary to, (a) make any payment of principal, interest, premium, fee or otherwise with respect to Subordinated Debt except in strict accordance with the terms of the Subordinated Debt documentation, (b) prepay, redeem, repurchase or defease, or set aside funds for the prepayment, redemption, repurchase or defeasance of all or any portion of the Subordinated Debt or (c) amend or change (or take any action or fail to take any action the result of which is an effective amendment or change) or accept any waiver or consent with respect to, any document or instrument in connection with any Subordinated Debt that would result in (i) an increase in the outstanding principal amount of the Subordinated Debt, (ii) a change in any principal, interest, fees, or other amounts payable under the Subordinated Debt (including without limitation a waiver or action that results in the waiver of any payment default under the Subordinated Debt), (iii) a change in any date fixed for any payment of principal, interest, fees, or other amounts payable under the Subordinated Debt (including, without limitation, as a result of any redemption, defeasance or otherwise), (iv) a change in any percentage of holders of the Subordinated Debt required to take (or refrain from taking) any action, (v) a change in any financial covenant, (vi) a change in any remedy or right of the holders of the Subordinated Debt, (vii) a change in any covenant, term or provision which would result in such term or provision being more restrictive than the terms of this Agreement and the other Loan Documents, (viii) a change that grants or permits the granting of any security interest or Lien on any asset or property of the Borrower or any Subsidiary to secure any Subordinated Debt, or (ix) a change in any term or provision of any document or instrument in connection with any Subordinated Debt that could have, in any material respect, an adverse effect on the interests of Lenders. Section 7.19 Other Agreements. Except as otherwise provided in this Agreement, neither the Borrower nor any Restricted Subsidiary shall enter into any agreement pursuant to which the ability of the Borrower or a Restricted Subsidiary to pay any money, dividend or other type of advance to, or otherwise make any other Investment in, the Borrower or any Restricted Subsidiary shall be limited or in which such payment would be a default or event of default. ARTICLE 8 Default Section 8.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such event, and whether voluntary, involuntary, or effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any governmental or non-governmental body: (a) Any representation or warranty made under any Loan Document shall prove to have been incorrect or misleading in any material respect when made; (b) The Borrower shall default in the payment of (i) any interest or any fees payable hereunder or any other costs, fees, expenses or other amounts payable hereunder or under the 65 72 Loan Documents, when due, which Default is not cured within three days from the date such payment became due by payment of such late amount, or (ii) any principal when due; (c) The Borrower or any Restricted Subsidiary shall default in the performance or observance of any agreement or covenant contained in Section 5.1, Section 5.14 or Article 7 hereof; (d) The Borrower or any Restricted Subsidiary shall default in the performance or observance of any other agreement or covenant contained in this Agreement not specifically referred to elsewhere in this Section 8.1, and such default shall not be cured within a period of 30 days after the earlier of written notice from the Administrative Lender thereof or actual notice thereof; (e) There shall occur any default or breach in the performance or observance of any agreement or covenant (after the expiration of any applicable grace period) or breach of any representation or warranty contained in any of the Loan Documents (other than this Agreement); (f) There shall be entered a decree or order by a court having jurisdiction in the premises constituting an order for relief in respect of the Borrower or any Subsidiary under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable Federal or state bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official of the Borrower or any Subsidiary, or of any substantial part of their respective properties, or ordering the winding-up or liquidation of the affairs of the Borrower or any Subsidiary, and any such decree or order shall continue unstayed and in effect for a period of 60 consecutive days; provided, that the affected assets alone or in the aggregate total in excess of $5,000,000; (g) The Borrower or any Subsidiary shall file a petition, answer or consent seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable Federal or state bankruptcy law or other similar law, or the Borrower or any Subsidiary shall consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment or taking of possession of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Borrower or any Subsidiary or of any substantial part of their respective properties, or the Borrower or any Subsidiary shall fail generally to pay its debts as they become due, or the Borrower or any Subsidiary shall take any action in furtherance of any such action; provided, that the affected assets alone or in the aggregate total in excess of $5,000,000; (h) A final judgment or judgments shall be entered by any court against the Borrower or any Subsidiary for the payment of money which exceeds $5,000,000 in the aggregate, or a warrant of attachment or execution or similar process shall be issued or levied against property of the Borrower or any Subsidiary which, together with all other such property of the Borrower and its Subsidiaries subject to other such process, exceeds in value $5,000,000 in the aggregate, and if such judgment or award is not insured or, within 30 days after the entry, issue or levy 66 73 thereof, such judgment, warrant or process shall not have been paid or discharged or stayed pending appeal, or if, after the expiration of any such stay, such judgment, warrant or process shall not have been paid or discharged; (i) With respect to any Plan of the Borrower or any member of its Controlled Group: (i) the Borrower, any such member, or any other party-in- interest or disqualified person shall engage in transactions which in the aggregate would reasonably result in a direct or indirect liability to the Borrower or any member of its Controlled Group in excess of $5,000,000 under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the Borrower or any member of its Controlled Group shall incur any accumulated funding deficiency, as defined in Section 412 of the Code, in the aggregate in excess of $5,000,000, or request a funding waiver from the Internal Revenue Service for contributions in the aggregate in excess of $5,000,000; (iii) the Borrower or any member of its Controlled Group shall incur any withdrawal liability in the aggregate in excess of $5,000,000 as a result of a complete or partial withdrawal within the meaning of Section 4203 or 4205 of ERISA; (iv) the Borrower or any member of its Controlled Group shall fail to make a required contribution by the due date under Section 412 of the Code or Section 302 of ERISA which would result in the imposition of a lien under Section 412 of the Code or Section 302 of ERISA; (v) the Borrower, any member of its Controlled Group or any Plan sponsor shall notify the PBGC of an intent to terminate, or the PBGC shall institute proceedings to terminate, or the PBGC shall institute proceedings to terminate, any Plan; (vi) a Reportable Event shall occur with respect to a Plan, and within 15 days after the reporting of such Reportable Event to the Administrative Lender, the Administrative Lender shall have notified the Borrower in writing that the Determining Lenders have made a determination that, on the basis of such Reportable Event, there are reasonable grounds for the termination of such Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan and as a result thereof an Event of Default shall have occurred hereunder; (vii) a trustee shall be appointed by a court of competent jurisdiction to administer any Plan or the assets thereof; (viii) the benefits of any Plan shall be increased, or the Borrower or any member of its Controlled Group shall begin to maintain, or begin to contribute to, any Plan, without the prior written consent of the Determining Lenders; or (ix) any ERISA Event with respect to a Plan shall have occurred, and 30 days thereafter (A) such ERISA Event, other than such event described in clause (vi) of the definition of ERISA Event herein, (if correctable) shall not have been corrected and (B) the then present value of such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed the then current value of assets accumulated in such Plan; provided, however, that the events listed in subsections (v) through (ix) shall constitute Events of Default only if, as of the date thereof or any subsequent date, the maximum amount of liability that the Borrower or any member of its Controlled Group could incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4023 of ERISA or any other provision of law with respect to all such Plans, computed by the actuary of the Plan taking into account any applicable rules and regulations of the PBGC at such time, and based on the actuarial assumptions used by the Plan, resulting from or otherwise associated with such event exceeds $5,000,000; 67 74 (j) All or any material portion of the Loan Documents shall be the subject of any proceeding instituted by any Person other than a Lender (except in connection with any Lender's exercise of any remedies under the Loan Documents), or there shall exist any litigation or threatened litigation with respect to all or any material portion of the Collateral or the Loan Documents, or any Person shall challenge in any manner whatsoever the validity or enforceability of all or any portion of the Loan Documents; provided, however, that during any such time any such circumstance shall be bonded or stayed in accordance with Applicable Law and to the satisfaction of the Determining Lenders, such circumstance shall not be an Event of Default; (k) The Borrower or any Restricted Subsidiary shall default in the payment of any Indebtedness in an aggregate amount of $5,000,000 or more beyond any grace period provided with respect thereto, or shall default in the performance of any agreement or instrument under which such Indebtedness is created or evidenced beyond any applicable grace period or an event shall occur with respect to such Indebtedness, if the effect of such default or event is to permit or cause the holder of such Indebtedness (or a trustee on behalf of any such holder) to cause such Indebtedness to become due prior to its date of maturity; (l) The Borrower or any Subsidiary shall fail to comply in any material respect with the Communications Act, or any rule or regulation promulgated by the FCC; (m) Any material Necessary Authorization shall be revoked; or there shall occur a material default under any material Necessary Authorization by the Borrower or any Subsidiary beyond any applicable grace period; or any proceedings shall in any way be brought by any Person to challenge the validity or enforceability of any material Necessary Authorization and the FCC shall designate the Necessary Authorization for a revocation hearing; or proceedings for the renewal of any material Necessary Authorization shall not be commenced at least 90 days prior to the expiration thereof; or any material Necessary Authorization shall expire due to termination, nonrenewal or for any other reason, or shall be designated for a revocation hearing. (n) Any lease of the Borrower or any Restricted Subsidiary shall terminate or cease to be effective, and termination or cessation thereof could reasonably be expected to have a Material Adverse Effect; provided, however, that termination or cessation of a lease shall not constitute an Event of Default if another lease reasonably satisfactory to the Determining Lenders is contemporaneously substituted therefor; (o) Any material provision of any Loan Document shall for any reason cease to be valid and binding on or enforceable against any party to it (other than the Administrative Lender or any Lender) in all material respects, or any such party shall so state in writing; (p) There shall exist any breach or default of any management agreement or contract of the Borrower or any Restricted Subsidiary, or any such management agreement or contract shall terminate in accordance with its terms and shall not be renewed among the parties upon 68 75 substantially similar terms, and such breach, default or termination could reasonably be expected to have a Material Adverse Effect; or (q) Any civil action, suit or proceeding shall be commenced against the Borrower, or any Subsidiary of the Borrower under any federal or state racketeering statute (including, without limitation, the Racketeer Influenced and Corrupt Organization Act of 1970)("RICO") and such suit shall be adversely determined by a court of applicable jurisdiction, and which is either non-appealable or which the Borrower or such Subsidiary has elected not to appeal; or any criminal action or proceeding shall be commenced against the Borrower, any Subsidiary of the Borrower under any federal or state racketeering statute (including, without limitation, RICO). Section 8.2 Remedies. If an Event of Default shall have occurred and shall be continuing: (a) With the exception of an Event of Default specified in Section 8.1(f) or (g) hereof, the Administrative Lender shall, upon the direction of the Determining Lenders, terminate the Commitments and/or declare the principal of and interest on the Advances and all Obligations and other amounts owed under the Loan Documents to be forthwith due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything in the Loan Documents to the contrary notwithstanding. (b) Upon the occurrence of an Event of Default specified in Section 8.1(f) or (g) hereof, such principal, interest and other amounts shall thereupon and concurrently therewith become due and payable and the Commitments shall forthwith terminate, all without any action by the Administrative Lender, any Lender or any holders of the notes and without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in the Loan Documents to the contrary notwithstanding. (c) If any Letter of Credit shall be then outstanding, the Administrative Lender may (or, upon the direction of the Determining Lenders, shall) demand upon the Borrower to, and forthwith upon such demand, the Borrower shall, pay to the Administrative Lender in same day funds at the office of the Administrative Lender on such demand for deposit in the L/C Cash Collateral Account, an amount equal to the maximum amount available to be drawn under the Letters of Credit then outstanding; provided, however, that upon the occurrence of an Event of Default pursuant to Section 8.1(f) or 8.1(g) hereof, such amount shall become immediately due and payable without the requirement of any action on the part of Administrative Lender. (d) The Administrative Lender, and the Lenders may exercise all of the post-default rights granted to them under the Loan Documents or under Applicable Law. (e) The rights and remedies of the Administrative Lender and the Lenders hereunder shall be cumulative, and not exclusive. 69 76 ARTICLE 9 Changes in Circumstances Section 9.1 LIBOR Basis Determination Inadequate. If with respect to any proposed LIBOR Advance for any Interest Period, any Lender determines that (i) deposits in dollars (in the applicable amount) are not being offered to that Lender in the relevant market for such Interest Period or (ii) the LIBOR Basis for such proposed LIBOR Advance does not adequately cover the cost to such Lender of making and maintaining such proposed LIBOR Advance for such Interest Period, such Lender shall forthwith give notice thereof to the Borrower, whereupon until such Lender notifies the Borrower that the circumstances giving rise to such situation no longer exist, the obligation of such Lender to make LIBOR Advances shall be suspended. Section 9.2 Illegality. If any applicable law, rule or regulation, or any change therein or adoption thereof, or interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its LIBOR Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, shall make it unlawful or impossible for such Lender (or its LIBOR Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall so notify the Borrower and the Administrative Lender. Before giving any notice to the Borrower pursuant to this Section, the notifying Lender shall designate a different LIBOR Lending Office or other lending office if such designation will avoid the need for giving such notice and will not, in the sole judgment of the Lender, be materially disadvantageous to the Lender. Upon receipt of such notice, notwithstanding anything contained in Article 2 hereof, the Borrower shall repay in full the then outstanding principal amount of each LIBOR Advance owing to the notifying Lender, together with accrued interest thereon, on either (a) the last day of the Interest Period applicable to such Advance, if the Lender may lawfully continue to maintain and fund such Advance to such day, or (b) immediately, if the Lender may not lawfully continue to fund and maintain such Advance to such day. Concurrently with repaying each affected LIBOR Advance owing to such Lender, notwithstanding anything contained in Article 2 hereof, the Borrower shall borrow a Base Rate Advance from such Lender, and such Lender shall make such Base Rate Advance, in an amount such that the outstanding principal amount of the Advances owing to such Lender shall equal the outstanding principal amount of the Advances owing immediately prior to such repayment. Section 9.3 Increased Costs. (a) If any applicable law, rule or regulation, or any change in or adoption of any law, rule or regulation, or any interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by any Lender (or its LIBOR Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or compatible agency: 70 77 (i) shall subject a Lender (or its LIBOR Lending Office) to any tax, duty or other charge (net of any tax benefit engendered thereby) with respect to its LIBOR Advances or its obligation to make such Advances, or shall change the basis of taxation of payments to a Lender (or to its LIBOR Lending Office) of the principal of or interest on its LIBOR Advances or in respect of any other amounts due under this Agreement, as the case may be, or its obligation to make such Advances (except for changes in the rate of tax on the overall net income of the Lender or its LIBOR Lending Office and franchise taxes imposed upon such Lender); or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, a Lender's LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its LIBOR Advances or its obligation to make such Advances; and the result of any of the foregoing is to increase the cost to a Lender (or its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to reduce the amount of any sum received or receivable by a Lender (or its LIBOR Lending Office) with respect thereto, by an amount deemed by a Lender to be material, then, within 15 days after demand by a Lender, the Borrower agrees to pay to such Lender such additional amount as will compensate such Lender for such increased costs or reduced amounts. The affected Lender will as soon as practicable notify the Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section and will designate a different LIBOR Lending Office or other lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole judgment of the affected Lender made in good faith, be disadvantageous to such Lender. (b) A certificate of any Lender claiming compensation under this Section and setting forth the additional amounts to be paid to it hereunder and calculations therefor shall be conclusive in the absence of manifest error. In determining such amount, a Lender may use any reasonable averaging and attribution methods. If a Lender demands compensation under this Section, the Borrower may at any time, upon at least five Business Days' prior notice to the Lender, after reimbursement to the Lender by the Borrower in accordance with this Section of all costs incurred, prepay in full the then outstanding LIBOR Advances of the Lender, together with accrued interest thereon to the date of prepayment, along with any reimbursement required under Section 2.9 hereof. Concurrently with prepaying such LIBOR Advances, the Borrower shall borrow a Base Rate Advance from the Lender, and the Lender shall make such Base Rate Advance, in an amount such that the outstanding principal amount of the Advances owing to such Lender shall equal the outstanding principal amount of the Advances owing immediately prior to such prepayment. 71 78 Section 9.4 Effect On Base Rate Advances. If notice has been given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or prepaid, then, unless and until the Lender notifies the Borrower that the circumstances giving rise to such repayment no longer apply, all Advances which would otherwise be made by such Lender as LIBOR Advances shall be made instead as Base Rate Advances. Section 9.5 Capital Adequacy. If either (a) the introduction of or any change in or in the interpretation of any law, rule or regulation or (b) compliance by a Lender with any law, rule or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by a Lender or any corporation controlling such Lender (any event or occurrence in clauses (a) or (b) above being a "Regulatory Modification"), and such Lender reasonably determines that the amount of such capital is increased by or based upon the existence of such Lender's commitment or Advances hereunder and other commitments or advances of such Lender of this type, then, upon demand by such Lender, subject to Section 11.9, the Borrower shall immediately pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender with respect to such circumstances (collectively, "Additional Costs"), to the extent that such Lender reasonably determines in good faith such increase in capital to be allocable to the existence of such Lender's Commitment hereunder. Notwithstanding the foregoing, any Lender's demand for Additional Costs shall not include any Additional Costs with respect to any period more than 180 days prior to the date that such Lender gives notice to the Borrower of such Additional Costs unless the effective date of the Regulatory Modification which results in the right to receive Additional Costs is retroactive (the "Regulatory Modification Retroactive Effective Date"). If any Regulatory Modification has a Regulatory Modification Retroactive Effective Date and any Lender demands compensation within 180 days after the date setting the Regulatory Modification Retroactive Effective Date (the "Regulatory Modification Set Date"), such Lender shall have the right to receive such Additional Costs from the Regulatory Modification Retroactive Effective Date. If a Lender does not demand such Additional Costs within 180 days after the Regulatory Modification Set Date, such lender may not receive payment of Additional Costs with respect to any period more than 180 days prior to such demand. A certificate as to such amounts submitted to the Borrower by a Lender hereunder, shall, in the absence of demonstrable error, be conclusive and binding for all purposes. ARTICLE 10 Agreement Among Lenders Section 10.1 Agreement Among Lenders. The Lenders agree among themselves that: (a) Administrative Lender. Each Lender hereby appoints the Administrative Lender as its nominee in its name and on its behalf, to receive all documents and items to be furnished 72 79 hereunder; to act as nominee for and on behalf of all Lenders under the Loan Documents; to take such action as may be requested by Determining Lenders, provided that, unless and until the Administrative Lender shall have received such requests, the Administrative Lender may take such administrative action, or refrain from taking such administrative action, as it may deem advisable and in the best interests of the Lenders; to arrange the means whereby the proceeds of the Advances of the Lenders are to be made available to the Borrower; to distribute promptly to each Lender information, requests and documents received from the Borrower, and each payment (in like funds received) with respect to any of such Lender's Advances, fee or other amount; and to deliver to the Borrower requests, demands, approvals and consents received from the Lenders. Administrative Lender agrees to promptly distribute to each Lender, at such Lender's address set forth below information, requests, documents and payments received from the Borrower. (b) Replacement of Administrative Lender. Should the Administrative Lender or any successor Administrative Lender ever cease to be a Lender hereunder, or should the Administrative Lender or any successor Administrative Lender ever resign as Administrative Lender, or should the Administrative Lender or any successor Administrative Lender ever be removed with or without cause by the Determining Lenders, then the Lender appointed by the other Lenders shall forthwith become the Administrative Lender, and the Borrower and the Lenders shall execute such documents as any Lender may reasonably request to reflect such change. Any resignation or removal of the Administrative Lender or any successor Administrative Lender shall become effective upon the appointment by the Lenders of a successor Administrative Lender; provided, however, that if the Lenders fail for any reason to appoint a successor within 60 days after such removal or resignation, the Administrative Lender or any successor Administrative Lender (as the case may be) shall thereafter have no obligation to act as Administrative Lender hereunder. (c) Expenses. Each Lender shall pay its pro rata share, based on its Specified Percentage, of any reasonable expenses paid by the Administrative Lender directly and solely in connection with any of the Loan Documents if Administrative Lender does not receive reimbursement therefor from other sources within 60 days after the date incurred, unless payment of such fees is being diligently disputed by such Lender or the Borrower in good faith. Any amount so paid by the Lenders to the Administrative Lender shall be returned by the Administrative Lender pro rata to each paying Lender to the extent later paid by the Borrower or any other Person on the Borrower's behalf to the Administrative Lender. (d) Delegation of Duties. The Administrative Lender may execute any of its duties hereunder by or through officers, directors, employees, attorneys or agents, and shall be entitled to (and shall be protected in relying upon) advice of counsel concerning all matters pertaining to its duties hereunder. (e) Reliance by Administrative Lender. The Administrative Lender and its officers, directors, employees, attorneys and agents shall be entitled to rely and shall be fully protected in relying on any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, 73 80 telegram, telex or teletype message, statement, order, or other document or conversation reasonably believed by it or them in good faith to be genuine and correct and to have been signed or made by the proper Person and, with respect to legal matters, upon opinions of counsel selected by the Administrative Lender. The Administrative Lender may, in its reasonable judgment, deem and treat the payee of any note as the owner thereof for all purposes hereof. (f) Limitation of Administrative Lender's Liability. Neither the Administrative Lender nor any of its officers, directors, employees, attorneys or agents shall be liable for any action taken or omitted to be taken by it or them hereunder in good faith and believed by it or them to be within the discretion or power conferred to it or them by the Loan Documents or be responsible for the consequences of any error of judgment, except for its or their own gross negligence or wilful misconduct. Except as aforesaid, the Administrative Lender shall be under no duty to enforce any rights with respect to any of the Advances, or any security therefor. The Administrative Lender shall not be compelled to do any act hereunder or to take any action towards the execution or enforcement of the powers hereby created or to prosecute or defend any suit in respect hereof, unless indemnified to its satisfaction against loss, cost, liability and expense. The Administrative Lender shall not be responsible in any manner to any Lender for the effectiveness, enforceability, genuineness, validity or due execution of any of the Loan Documents, or for any representation, warranty, document, certificate, report or statement made herein or furnished in connection with any Loan Documents, or be under any obligation to any Lender to ascertain or to inquire as to the performance or observation of any of the terms, covenants or conditions of any Loan Documents on the part of the Borrower. To the extent not reimbursed by the Borrower, each Lender hereby severally, but not jointly, indemnifies and holds harmless the Administrative Lender, pro rata according to its Specified Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and/or disbursements of any kind or nature whatsoever which may be imposed on, asserted against, or incurred by the Administrative Lender in any way with respect to any Loan Documents or any action taken or omitted by the Administrative Lender under the Loan Documents (including any negligent action of the Administrative Lender), except to the extent the same result from gross negligence or wilful misconduct by the Administrative Lender. (g) Liability Among Lenders. No Lender shall incur any liability (other than the sharing of expenses and other matters specifically set forth herein and in the other Loan Documents) to any other Lender, except for acts or omissions in bad faith. (h) Rights as Lender. With respect to its commitment hereunder, the Advances made by it and note issued to it, the Administrative Lender shall have the same rights as a Lender and may exercise the same as though it were not the Administrative Lender, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Administrative Lender in its individual capacity. The Administrative Lender or any Lender may accept deposits from, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower and any of its Affiliates, and any Person who may do business with or own securities of the 74 81 Borrower or any of its Affiliates, all as if the Administrative Lender were not the Administrative Lender hereunder and without any duty to account therefor to the Lenders. Section 10.2 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Lender or any other Lender and based upon the financial statements referred to in Sections 4.1(j), 6.1 and 6.2 hereof, and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Lender or any other Lender and based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. Section 10.3 Benefits of Article. None of the provisions of this Article shall inure to the benefit of any Person other than Lenders or the Borrower, as applicable; consequently, no Person other than Lenders or the Borrower shall be entitled to rely upon, or to raise as a defense, in any manner whatsoever, the failure of the Administrative Lender or any Lender to comply with such provisions. ARTICLE 11 Miscellaneous Section 11.1 Notices. (a) All notices and other communications under this Agreement shall be in writing and shall be deemed to have been given on the date personally delivered or sent by telecopy (answerback received), or three days after deposit in the mail, designated as registered mail, return receipt requested, postage-prepaid, or one day after being entrusted to a reputable commercial overnight delivery service, or one day after being delivered to the telegraph office or sent out by telex addressed to the party to which such notice is directed at its address determined as provided in this Section. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses: (i) If to the Borrower, at: Clear Channel Communications, Inc. 7710 Jones-Maltsberger, Suite 600 San Antonio, Texas 78216 Attn: Randall T. Mays, Executive Vice President/CFO 75 82 (ii) If to the Administrative Lender, at: NationsBank of Texas, N.A. 901 Main Street, 64th Floor Dallas, Texas 75202 Attn: Thomas E. Carter, Senior Vice President (iii) If to a Lender, at its address shown below its name on the signature pages hereof, or if applicable, set forth in its Assignment Agreement. (b) Any party hereto may change the address to which notices shall be directed by giving 10 days' written notice of such change to the other parties. Section 11.2 Expenses. The Borrower shall promptly pay: (a) all reasonable out-of-pocket expenses of the Administrative Lender in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents, the transactions contemplated hereunder and thereunder, and the making of Advances and the issuance of Letters of Credit hereunder, including without limitation the reasonable fees and disbursements of Special Counsel; (b) all reasonable out-of-pocket expenses of the Administrative Lender in connection with the administration of the transactions contemplated in this Agreement and the other Loan Documents, the preparation, negotiation, execution and delivery of any waiver, amendment or consent by the Lenders relating to this Agreement or the other Loan Documents; and (c) all reasonable costs, out-of-pocket expenses and attorneys' fees of the Administrative Lender and each Lender incurred for enforcement, collection, restructuring, refinancing and "work-out", or otherwise incurred in obtaining performance under the Loan Documents, and all reasonable costs and out-of-pocket expenses of collection if default is made in the payment of the notes, which in each case shall include without limitation reasonable fees and expenses of consultants, counsel for the Administrative Lender and any Lender, and administrative fees for the Administrative Lender. Section 11.3 Waivers. The rights and remedies of the Lenders under this Agreement and the other Loan Documents shall be cumulative and not exclusive of any rights or remedies which they would otherwise have. No failure or delay by the Administrative Lender or any Lender in exercising any right shall operate as a waiver of such right. The Lenders expressly reserve the right to require strict compliance with the terms of this Agreement in connection with any funding of a request for an Advance and the Issuing Bank expressly reserves the right to require strict compliance with the terms of this Agreement in connection with any issuance of a Letter of Credit. In the event that any Lender decides to fund an Advance or the Issuing Bank decides to issue a Letter of Credit at a time when the Borrower is not in strict compliance with the terms of this Agreement, such decision by such Lender shall not be deemed to constitute an 76 83 undertaking by the Lender to fund any further requests for Advances or by the Issuing Bank to issue any additional Letter of Credit or preclude the Lenders from exercising any rights available under the Loan Documents or at law or equity. Any waiver or indulgence granted by the Lenders shall not constitute a modification of this Agreement, except to the extent expressly provided in such waiver or indulgence, or constitute a course of dealing by the Lenders at variance with the terms of the Agreement such as to require further notice by the Lenders of the Lenders' intent to require strict adherence to the terms of this Agreement in the future. Any such actions shall not in any way affect the ability of the Administrative Lender or the Lenders, in their discretion, to exercise any rights available to them under this Agreement or under any other agreement, whether or not the Administrative Lender or any of the Lenders are a party thereto, relating to the Borrower. Section 11.4 Determination by the Lenders Conclusive and Binding. Any material determination required or expressly permitted to be made by the Administrative Lender or any Lender under this Agreement shall be made in its reasonable judgment and in good faith, and shall when made, absent manifest error, be conclusive and binding on all parties. Section 11.5 Set-Off. In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each Lender and any subsequent holder of any note, and any assignee or participant in any note is hereby authorized by the Borrower at any time or from time to time, without notice to the Borrower or any other Person, any such notice being hereby expressly waived, to set-off, appropriate and apply any deposits (general or special (except trust and escrow accounts), time or demand, including without limitation Indebtedness evidenced by certificates of deposit, in each case whether matured or unmatured) and any other Indebtedness at any time held or owing by such Lender or holder to or for the credit or the account of the Borrower, against and on account of the Obligations and other liabilities of the Borrower to such Lender or holder, irrespective of whether or not (a) the Lender or holder shall have made any demand hereunder, or (b) the Lender or holder shall have declared the principal of and interest on the Advances and other amounts due hereunder to be due and payable as permitted by Section 8.2 and although such obligations and liabilities, or any of them, shall be contingent or unmatured. Any sums obtained by any Lender or by any assignee, participant or subsequent holder of any note shall be subject to pro rata treatment of all Obligations and other liabilities hereunder. Section 11.6 Assignment. (a) The Borrower may not assign or transfer any of its rights or obligations hereunder or under the other Loan Documents without the prior written consent of the Lenders. (b) No Lender shall be entitled to assign its interest in this Agreement, its notes or its Advances, except as hereinafter set forth. 77 84 (c) A Lender may at any time sell participations in all or any part of its Advances (collectively, "Participations") to any bank, other financial institution or fund ("Participants") provided that such Participation shall not confer on any Person (other than the parties hereto) any right to vote on, approve or sign amendments or waivers, or any other independent benefit or any legal or equitable right, remedy or other claim under this Agreement or any other Loan Documents, other than the right to vote on, approve, or sign amendments or waivers or consents with respect to items that would result in (i) any increase in the commitment of any Participant; or (ii)(A) the extension of the date of maturity of, or (B) the extension of the due date for any payment of principal, interest or fees respecting, or (C) the reduction of the amount of any installment of principal or interest on or the change or reduction of any mandatory reduction required hereunder, or (D) a reduction of the rate of interest on, the Advances, the Letters of Credit, or the Reimbursement Obligations, or change in Applicable Margin; or (iii) the release of security for the Obligations, including without limitation any guarantee or Pledged Stock; or (iv) the reduction of any fees payable hereunder. Notwithstanding the foregoing, the Borrower agrees that the Participants shall be entitled to the benefits of Article 9 and Section 11.5 hereof as though they were Lenders and the Lenders may provide copies of all financial information received from the Borrower to such Participants. To the fullest extent it may effectively do so under Applicable Law, the Borrower agrees that any Participant may exercise any and all rights of banker's lien, set-off and counterclaim with respect to this Participation as fully as if such Participant were the holder of the Advances in the amount of its Participation. (d) Each Lender may assign to one or more financial institutions or funds organized under the laws of the United States, or any state thereof, or under the laws of any other country that is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business (each, an "Assignee") its rights and obligations under this Agreement and the other Loan Documents up to a total of 49% of its Specified Percentage of the Commitment; provided, however, that (i) prior to each such assignment, the assigning Lender shall provide Administrative Lender and the Borrower with notice of such assignment, (ii) each such assignment shall be of a constant, and not a varying, percentage of the Lender's rights and obligations under this Agreement, (iii) the amount of the Commitment, Advances and Reimbursement Obligations being assigned pursuant to each such assignment (determined as of the date of the assignment with respect to such assignment) shall in no event be less than $5,000,000 and which is an integral multiple of $1,000,000, (iv) the applicable Lender, Administrative Lender and applicable Assignee shall execute and deliver to the Administrative Lender an Assignment and Acceptance Agreement (an "Assignment Agreement") in substantially the form of Exhibit E hereto, together with the notes subject to such assignment, (v) the Assignee or the Lender executing the Assignment as the case may be, shall deliver to the Administrative Lender a processing fee of $3,500 and (vi) notwithstanding anything herein to the contrary, any Lender may assign up to a total of 100% of its Specified Percentage of the Commitment with the prior written consent of the Borrower and the Administrative Lender, which consent shall not be unreasonably withheld or delayed (provided that without the consent of the Borrower or the Administrative Lender, any Lender may make assignments to its Affiliates or another Lender). Upon such execution, delivery and acceptance 78 85 from and after the effective date specified in each Assignment, which effective date shall be at least three Business Days after the execution thereof, (A) the Assignee thereunder shall be party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment, have the rights and obligations of a Lender hereunder and (B) the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment, relinquish such rights and be released from such obligations under this Agreement. The Borrower shall not be liable for any fees or expenses of the Administrative Lender, any Lender, or any Assignee, incurred in connection with such an Assignment. (e) Notwithstanding anything in clause (d) above to the contrary, any Lender may assign and pledge all or any portion of its Advances and note to any Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank; provided, however, that no such assignment under this clause (e) shall release the assignor Lender from its obligations hereunder. (f) Upon its receipt of an Assignment Agreement executed by a Lender and an Assignee, and any note or notes subject to such assignment, the Borrower shall, within three Business Days after its receipt of such Assignment Agreement, at its own expense, execute and deliver to the Administrative Lender in exchange for the surrendered notes new notes to the order of such Assignee in an amount equal to the portion of the Advances, Reimbursement Obligations and Commitment assigned to it pursuant to such Assignment Agreement and new notes to the order of the assigning Lender in an amount equal to the portion of the Advances and Commitment retained by it hereunder. Such new notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered notes, shall be dated the effective date of such Assignment Agreement and shall otherwise be in substantially the form of Exhibit A hereto. (g) No Lender may, without the prior consent of the Borrower, which shall not be unreasonably withheld or delayed, in connection with any assignment or Participation or proposed assignment or Participation pursuant to this Section 11.6, disclose to the Assignee or Participant or proposed Assignee or Participant, any information (which is not otherwise publicly available) relating to the Borrower furnished to such Lender by or on behalf of the Borrower, unless such proposed assignee or participant agrees to keep such information confidential and signs a confidentiality agreement in a form substantially similar to the confidentiality agreement signed by the Persons who were Lenders on the Agreement Date. The Borrower may not prohibit any Participation by withholding its consent pursuant to this Section 11.6(g). (h) Except as specifically set forth in this Section 11.6, nothing in this Agreement or any other Loan Documents, expressed or implied, is intended to or shall confer on any Person other than the respective parties hereto and thereto and their successors and assignees permitted hereunder and thereunder any benefit or any legal or equitable right, remedy or other claim under this Agreement or any other Loan Documents. 79 86 Section 11.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Section 11.8 Severability. Any provision of this Agreement which is for any reason prohibited or found or held invalid or unenforceable by any court or governmental agency shall be ineffective to the extent of such prohibition or invalidity or unenforceability without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction. Section 11.9 Interest and Charges. It is not the intention of any parties to this Agreement to make an agreement in violation of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in any Loan Documents, no Lender shall ever be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the Maximum Amount. If any Lender or participant ever receives, collects or applies, as interest, any such excess, such amount which would be excessive interest shall be deemed a partial repayment of principal and treated hereunder as such; and if principal is paid in full, any remaining excess shall be paid to the Borrower. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Maximum Amount, the Borrower and the Lenders shall, to the maximum extent permitted under Applicable Law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate, allocate and spread in equal parts, the total amount of interest throughout the entire contemplated term of the Obligations so that the interest rate is uniform throughout the entire term of the Obligations; provided, however, that if the Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Amount, the Lenders shall refund to the Borrower the amount of such excess or credit the amount of such excess against the total principal amount of the Obligations owing, and, in such event, the Lenders shall not be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Maximum Amount. This Section shall control every other provision of all agreements pertaining to the transactions contemplated by or contained in the Loan Documents. Section 11.10 Headings. Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof. Section 11.11 Amendment and Waiver. This Agreement may not be amended, modified or waived except by the written agreement of the Borrower and the Determining Lenders; provided, however, that no such amendment, modification or waiver shall be made (a) without the consent of all Lenders, if it would (i) increase the Specified Percentage or commitment of any Lender, or (ii) extend or postpone any Commitment Reduction, extend or postpone the date of payment or maturity of, extend the due date for any payment of principal or interest on, reduce the amount of any installment of principal or interest on, or reduce the rate of interest on, any Advance, the Reimbursement Obligations, fees or other amounts owing under any Loan 80 87 Documents, or (iii) release any security for or guaranty of the Obligations (except pursuant to this Agreement), or (iv) reduce the fees payable hereunder, or (v) revise this Section 11.11, or (v) waive the date for payment of any of the Obligations, or (vi) amend the definition of Determining Lenders, (vii) revise Sections 2.5(b), (c) or (d) hereof or (vii) revise Sections 2.6(b) or (c) hereof; or (b) without the consent of the Administrative Lender, if it would alter the rights, duties or obligations of the Administrative Lender. Neither this Agreement nor any term hereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by the Administrative Lender and, in the case of an amendment, by the Borrower. Section 11.12 Exception to Covenants. Neither the Borrower nor any Restricted Subsidiary shall be deemed to be permitted to take any action or fail to take any action which is permitted as an exception to any of the covenants contained herein or which is within the permissible limits of any of the covenants contained herein if such action or omission would result in the breach of any other covenant contained herein. Section 11.13 No Liability of Issuing Bank. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Bank nor any Lender nor any of their respective officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit, except for any payment made upon the Issuing Bank's gross negligence or willful misconduct; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit other than pursuant to the Uniform Commercial Code Section 5-114. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. Section 11.14 Credit Agreement Governs. In the event of any conflict between the terms of this Agreement and any terms of any other Loan Document, the terms of this Agreement shall control. 81 88 SECTION 11.15 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE FEDERAL LAWS OF THE UNITED STATES; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE ADMINISTRATIVE LENDER AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY ADVANCES HEREUNDER. SECTION 11.17 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. REMAINDER OF PAGE LEFT INTENTIONALLY BLANK 82 89 IN WITNESS WHEREOF, this Amended and Restated Credit Agreement is executed as of the date first set forth above. BORROWER: CLEAR CHANNEL COMMUNICATIONS, INC. By: ------------------------------------------------------------- Name: -------------------------------------------------------- Title: -------------------------------------------------------
83 90 NATIONSBANK OF TEXAS, N.A., as a Lender and as Administrative Lender By: ------------------------------------------------------------- Name: David G. James Title: Vice President 901 Main Street, 64th Floor Dallas, Texas 75202 Attn: David G. James Title: Vice President
84 91 THE FIRST NATIONAL BANK OF BOSTON, as a Lender and as Documentation Agent By: ------------------------------------------------------------- Name: Mark S. Denomme Title: Director 100 Federal Street Boston, Massachusetts 02110 Attn: Mark Denomme Title: Director
85 92 BANK OF MONTREAL, as a Lender and as Co-Syndication Agent By: ------------------------------------------------------------- Name: Rene Encarnacion Title: Director 430 Park Avenue New York, New York 10022 Attn: Ola Anderssen Title: Associate
86 93 TORONTO DOMINION (TEXAS), INC., as a Lender and as Co-Syndication Agent By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- Houston Agency 909 Fannin Street, 17th Floor Houston, Texas 77010 Attn: Lisa Allison Title:
87 94 ABN AMRO BANK N.V., HOUSTON AGENCY By: ------------------------------------------------------------- Name: Laurie C. Tuzo Title: Group Vice President By: ------------------------------------------------------------- Name: David P. Orr Title: Vice President Three Riverway, Suite 1700 Houston, Texas 77056 Attn: Ms. Laurie C. Tuzo Title: Group Vice President
88 95 BANK BRUSSELS LAMBERT, New York Branch By: ------------------------------------------------------------- Name: -------------------------------------------------------- Title: ----------------------------------------------------- By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 630 Fifth Avenue, 6th floor New York, New York 10111 Attn: Craig Hallsteen Title: Vice President
89 96 BANK OF HAWAII By: ------------------------------------------------------------- Name: -------------------------------------------------------- Title: ----------------------------------------------------- 1850 N. Central Avenue Suite 400 Phoenix, Arizona 85004 Attn: Elizabeth McLean Title:
90 97 BANK OF IRELAND - GRAND CAYMAN BRANCH By: ------------------------------------------------------------- Name: -------------------------------------------------------- Title: ----------------------------------------------------- 640 Fifth Avenue, 2nd Floor New York, New York 10019 Attn: Roger Burns Title:
91 98 THE BANK OF NEW YORK By: ------------------------------------------------------------- Name: -------------------------------------------------------- Title: ----------------------------------------------------- One Wall Street 16th Floor South New York, New York 10286 Attn: Ted Ryan Title:
92 99 THE BANK OF NOVA SCOTIA By: ------------------------------------------------------------- Name: Vince Fitzgerald Title: Authorized Signatory One Liberty Plaza 26th Floor New York, New York 10006 Attn: Townsend Devereux Title: Relationship Manager
93 100 BANQUE PARIBAS By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 2029 Century Park East Suite 3900 Los Angeles, California 90067 Attn: Bryan Petermann Title: Vice President
94 101 BARCLAYS BANK PLC By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- BZW Division 388 Market Street, Suite 1700 San Francisco, California 94111 Attn: Michael Bloom Title:
95 102 THE CHASE MANHATTAN BANK, N.A. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 270 Park Avenue 37th Floor New York, New York 10017 Attn: James Kuster Title: Managing Director
96 103 CIBC INC. By: ------------------------------------------------------------- Name: Susan Hanna Title: DIRECTOR, CIBC WOOD GUNDY SECURITY CORP., AS AGENT 425 Lexington Avenue New York, New York 10017 Attn: Susan Hanna Title: DIRECTOR, CIBC WOOD GUNDY SECURITY CORP., AS AGENT
97 104 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 520 Madison Avenue 37th Floor New York, New York 10022 Attn: Marcus Edward Title: Vice President
98 105 CAISSE NATIONALE DE CREDIT AGRICOLE By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 600 Travis, Suite 2340 Houston, Texas 77002 Attn: Ken Coulter Title: Vice President
99 106 CREDIT SUISSE FIRST BOSTON By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- Eleven Madison Avenue 19th Floor New York, New York 10010-3629 Attn: Joe Coneeny Title: Managing Director
100 107 CRESTAR BANK By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 919 E. Main Street 22th Floor Richmond, Virginia 23219 Attn: Eric Millham Title:
101 108 THE DAI-ICHI KANGYO BANK, LTD By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- One World Trade Center 48th Floor New York, New York 10048 Attn: Seiji Imai Title: Vice President
102 109 FIRST UNION NATIONAL BANK OF NORTH CAROLINA By: ------------------------------------------------------------- Name: Bruce Loftin Title: Senior Vice President Capital Markets Group - Communications One First Union Center 301 South College Street, 5th Floor Charlotte, North Carolina 28288-0735 Attn: Adrienne T. Musgnug Title: Vice President
103 110 FLEET BANK, N.A. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 175 State Street 28th Floor New York, New York 10038 Attn: Mike Cerrullo Title: Vice President
104 111 THE FUJI BANK, LIMITED By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- One Houston Center Suite 4100 1221 McKinney Street Houston, Texas 77010 Attn: Phillip C. Lauinger III Title: Vice President and Manager
105 112 HIBERNIA NATIONAL BANK By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 313 Carondelet Street New Orleans, Louisiana 70130 Attn: Troy Villafarra Title: Vice President
106 113 INDUSTRIAL BANK OF JAPAN By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 1251 Avenue of the Americas 32nd Floor New York, New York 10020-1104 Attn: Jeff Cole Title:
107 114 KEYBANK NATIONAL ASSOCIATION By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- Media & Telecommunications Finance Division 127 Public Square Cleveland, Ohio 44114-1306 Attn: Jason R. Weaver Title: Assistant Vice President
108 115 THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 165 Broadway New York, New York 10006 Attn: Maria Araujo Title:
109 116 MELLON BANK, N.A. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- One Mellon Bank Center, Room 4440 Pittsburgh, Pennsylvania 15258-0001 Attn: Lisa M. Pellow Title: Vice President
110 117 MICHIGAN NATIONAL BANK By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- Specialty Industries 10-36 27777 Inkster Road Farmington Hills, Michigan 48334-1036 Attn: Stephane Lubin Title: Vice President
111 118 THE MITSUBISHI TRUST AND BANKING CORPORATION By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 520 Madison Avenue, 26th Floor New York, New York 10022 Attn: Tony Rock Title:
112 119 PNC BANK, NATIONAL ASSOCIATION By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 1600 Market Street 21st Floor Philadelphia, Pennsylvania 19103 Attn: Jeff Hauser Title: Vice President
113 120 THE ROYAL BANK OF SCOTLAND, PLC By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 88 Pine Street 26th Floor New York, New York 10005 Attn: Karen Stefancic Title: Vice President
114 121 THE SANWA BANK, LIMITED, DALLAS AGENCY By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 4100 W. Texas Commerce Tower 2200 Ross Avenue Dallas, Texas 75201 Attn: Matthew Patrick Title: Vice President
115 122 SOCIETE GENERALE By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 1221 Avenue of the Americas New York, New York 10020 Attn: Mark Vigil Title:
116 123 THE SUMITOMO BANK, LIMITED By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 700 Louisiana Suite 1750 Houston, Texas 77002 Attn: Daniel Payer Title:
117 124 SUN TRUST BANK, CENTRAL FLORIDA, N.A. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 200 South Orange Avenue Orlando, Florida 32801 Attn: Chris Aguilar Title: First Vice President
118 125 THE TOYO TRUST & BANKING COMPANY, LTD., NEW YORK BRANCH By: ------------------------------------------------------------- Name: Howard Tulley Mott Title: Vice President By: ------------------------------------------------------------- Name: Takao Shida Title: Deputy General Manager 666 Fifth Avenue 23rd Floor Attn: Howard Tulley Mott Title: Vice President
119 126 UNION BANK OF CALIFORNIA, N.A. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: ----------------------------------------------------- 445 South Figueroa Street Los Angeles, California 90071 Attn: Christine Ball Title: Vice President
120 127 WACHOVIA BANK OF GEORGIA, N.A. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 191 Peachtree Street 28th Floor, Mail Code 370 Atlanta, Georgia 30303 Attn: Carl E. Peoples Title: Vice President
121 128 WELLS FARGO BANK (TEXAS), N.A., formerly known as FIRST INTERSTATE BANK OF TEXAS, N.A. By: --------------------------------------------------- Name: Susan Coulter Title: Vice President 100 Congress, Suite 150 Austin, Texas 78701 Attn: Susan Coulter Title: Vice President
122 129 WESTDEUTSCHE LANDESBANK, GIROZENTRALE By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 1211 Avenue of the Americas New York, New York 10036 Attn: Kheil McIntyre Title: Vice President
123 130 THE YASUDA TRUST AND BANKING CO., LTD. By: ------------------------------------------------------------- Name: ----------------------------------------------------- Title: -------------------------------------------- 666 Fifth Avenue 8th Floor New York, New York 10103 Attn: Eric Pelletier Title: Vice President
124 131 SCHEDULE 1 LIBOR Lending Offices NATIONSBANK OF TEXAS, N.A. 901 Main Street, 64th Floor Dallas, Texas 75202 THE FIRST NATIONAL BANK OF BOSTON 100 Federal Street Boston, Massachusetts 02110 BANK OF MONTREAL 430 Park Avenue New York, New York 10022 TORONTO DOMINION (TEXAS), INC. 909 Fannin Street, 17th Floor Houston, Texas 77010 ABN AMRO BANK N.V. Three Riverway, Suite 1700 Houston, Texas 77056 BANK BRUSSELS LAMBERT, NEW YORK BRANCH 630 Fifth Avenue 6th Floor New York, New York 10111 BANK OF HAWAII 1850 N. Central Avenue Suite 400 Phoenix, Arizona 85004 BANK OF IRELAND - GRAND CAYMAN BRANCH 640 Fifth Avenue, 2nd Floor New York, New York 10019 THE BANK OF NEW YORK One Wall Street, 16th Floor South New York, New York 10286 132 THE BANK OF NOVA SCOTIA One Liberty Plaza 26th Floor New York, New York 10006 BANQUE PARIBAS 2029 Century Park East, Suite 3900 Los Angeles, California 90067 BARCLAYS BANK PLC BZW Division 388 Market Street, Suite 1700 San Francisco, California 94111 CAISSE NATIONALE DE CREDIT AGRICOLE 600 Travis, Suite 2340 Houston, Texas 77002 THE CHASE MANHATTAN BANK, N.A. 270 Park Avenue 37th Floor New York, New York 10017 CIBC INC. 425 Lexington Avenue New York, New York 10017 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE 520 Madison Avenue 37th Floor New York, New York 10022 CREDIT SUISSE FIRST BOSTON Eleven Madison Avenue 19th Floor New York, New York 10010-3629 CRESTAR BANK 919 E. Main Street 22th Floor Richmond, Virginia 23219 -2- 133 THE DAI-ICHI KANGYO BANK, LTD. One World Trade Center 48th Floor New York, New York 10048 FIRST UNION NATIONAL BANK OF NORTH CAROLINA Capital Markets Group - Communications One First Union Center 301 South College Street, 5th Floor Charlotte, North Carolina 28288-0735 FLEET BANK, N.A. 175 Water Street 28th Floor New York, New York 10038 THE FUJI BANK, LIMITED One Houston Center Suite 4100 1221 McKinney Street Houston, Texas 77010 HIBERNIA NATIONAL BANK 313 Carondelet Street New Orleans, Louisiana 70130 INDUSTRIAL BANK OF JAPAN 1251 Avenue of the Americas 32nd Floor New York, New York 10020-1104 KEYBANK NATIONAL ASSOCIATION Media & Telecommunications Finance Division 127 Public Square Cleveland, Ohio 44114-1306 THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH 165 Broadway New York, New York 10006 MELLON BANK, N.A. One Mellon Bank Center, Room 4440 Pittsburgh, Pennsylvania 15258-0001 -3- 134 MICHIGAN NATIONAL BANK Specialty Industries 10-36 27777 Inkster Road Farmington Hills, Michigan 48334-1036 THE MITSUBISHI TRUST AND BANKING CORPORATION 520 Madison Avenue, 26th Floor New York, New York 10022 PNC BANK, NATIONAL ASSOCIATION 1600 Market Street, 21st Floor Philadelphia, Pennsylvania 19103 THE ROYAL BANK OF SCOTLAND, PLC 88 Pine Street 26th Floor New York, New York 10005 THE SANWA BANK, LIMITED, DALLAS AGENCY 4100 W. Texas Commerce Tower 2200 Ross Avenue Dallas, Texas 75201 SOCIETE GENERALE 1221 Avenue of the Americas New York, New York 10020 THE SUMITOMO BANK, LIMITED 700 Louisiana, Suite 1750 Houston, Texas 77002 SUN TRUST BANK, CENTRAL FLORIDA, N.A. 200 South Orange Avenue Orlando, Florida 32801 THE TOYO TRUST AND BANKING COMPANY, LTD., NEW YORK BRANCH 666 Fifth Avenue, 23rd Floor New York, New York 10103-3395 UNION BANK OF CALIFORNIA, N.A. 445 South Figueroa Street Los Angeles, California 90071 -4- 135 WACHOVIA BANK OF GEORGIA, N.A. 191 Peachtree Street 28th Floor, Mail Code 370 Atlanta, Georgia 30303 WELLS FARGO BANK (TEXAS), N.A. 100 Congress, Suite 150 Austin, Texas 78701 WESTDEUSTCHE LANDESBANK, GIROZENTRALE 1211 Avenue of the Americas New York, New York 10036 THE YASUDA TRUST AND BANKING CO., LTD. 666 Fifth Avenue 8th Floor New York, New York 10103 -5- 136 SCHEDULE 2 EXISTING LIENS As part of the purchase of the stock of US Radio by Memphis, the debt owed under that one certain Senior Secured Credit Agreement dated September 23, 1994, with Chemical Bank as agent (and amendments thereto), was paid and the necessary documents releasing the liens held pursuant to such Senior Secured Credit Agreement were delivered to Memphis at the closing. Such lien releases have been filed with the appropriate state and/or county authorities and confirmation of filing of such lien releases have been received on all lien releases except for a Satisfaction of Mortgage to be filed in Racine County, Wisconsin. 137 SCHEDULE 3 EXISTING LITIGATION 138 SCHEDULE 4 LICENSES, PERMITS AND OTHER AUTHORIZATIONS 139 SCHEDULE 6 EXISTING GUARANTEES 1. Borrower guaranty of RDS Broadcasting, Inc. in the original principal amount of $9,575,000. 2. Borrower guaranty of Metroplex Communications, Inc. in the form of a letter of credit for $7,000,000. 3. Borrower $1,150,000 guaranty via a letter of credit issued to Roddy Peeples for obligations owed to Roddy Peoples. 140 SCHEDULE 7 RESTRICTED SUBSIDIARIES FIRST TIER "ARN" means the Australian Radio Network Limited, PTY, an Australian propriety company, 50% of whose Capital Stock is owned by the Borrower. "CCC-Houston" means CCC-Houston AM, Ltd., a Texas limited partnership and a Subsidiary of Clear Channel Radio, Inc. and CCR Houston-Nevada, Inc. "CCRE" means Clear Channel Real Estate, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Holdings. "CCR Houston-Nevada" means CCR Houston-Nevada, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Radio. "Eller" means Eller Media Corporation, a Delaware corporation, formerly known as EMC Group, Inc., formerly Eller Media Company, and a Subsidiary of Clear Channel Holdings, Inc. "Holdings" means Clear Channel Holdings, Inc., a Nevada corporation, and a wholly-owned Subsidiary of the Borrower. "Management" means Clear Channel Management, Inc., a Delaware corporation, and a wholly-owned Subsidiary of Holdings. "Memphis" means Clear Channel Communications of Memphis, Inc., a Texas corporation, and a wholly-owned Subsidiary of Holdings. "Metroplex" means Clear Channel Metroplex, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Metroplex Licenses. "Metroplex Licenses" means Clear Channel Metroplex Licenses, Inc., a Nevada corporation, and a wholly-owned Subsidiary of the Borrower. "Productions" means Clear Channel Productions, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Holdings. "Radio" means Clear Channel Radio, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Radio Licenses. 141 "Radio Licenses" means Clear Channel Radio Licenses, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Holdings. "Television" means Clear Channel Television, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Television Licenses. "Television Licenses" means Clear Channel Television Licenses, Inc., a Nevada corporation, and a wholly-owned Subsidiary of Holdings. SECOND TIER "Eller Media Company" means Eller Media Company, a Delaware corporation, formerly known as EH&F, Inc., and a wholly-owned Subsidiary of Eller. THIRD TIER "Eller Investment" means Eller Investment Company, Inc., an Arizona corporation, and a wholly-owned Subsidiary of Eller Media Company. "PMG" means PMG Holdings, Inc., a Delaware corporation, and a wholly-owned Subsidiary of Eller Media Company. "Patrick Media" means Patrick Media Group, Inc., a Delaware corporation owned 99.1% by Eller Media Company and 0.9% by PMG. FOURTH TIER "Blue Wallscapes" means Blue Wallscapes, Inc., a California corporation, and a wholly-owned Subsidiary of Patrick Media. "Chicago Shelters" means Chicago Shelters Advertising, Inc., an Illinois corporation, and a wholly-owned Subsidiary of Patrick Media. "Eller Advertising" means Eller Outdoor Advertising Company, an Arizona corporation, and a wholly-owned Subsidiary of Eller Investment. "Eller Atlanta" means Eller Outdoor Advertising Co. of Atlanta, an Arizona corporation, and a wholly-owned Subsidiary of Eller Investment. "Eller El Paso" means Eller Outdoor of El Paso, Inc., a Texas corporation, and a wholly-owned Subsidiary of Eller Investment. "Eltex" means Eltex Investment Corp., a Delaware corporation, and a wholly-owned Subsidiary of Patrick Media. -2- 142 "PMG Target" means PMG Target Media Holdings, Inc., a Delaware corporation, and a wholly-owned Subsidiary of Patrick Media. "Shelter Advertising" means Shelter Advertising of America, Inc., a Delaware corporation, and a wholly-owned Subsidiary of Patrick Media. FIFTH TIER "Eller Target" means Eller Target Media Group, L.P., a California limited partnership, owned 83% by PMG Target as a general partner, and 17% by B. Seidel as a limited partner. "Shelter Advertising of Hialeah" means Shelter Advertising of Hialeah, Inc., a Florida corporation, and a wholly-owned Subsidiary of Shelter Advertising. "Trendel International" means Trendel International Development Corporation, a Florida corporation, and a wholly-owned Subsidiary of Shelter Advertising. SIXTH TIER "American Shelter" means American Shelter Company, Inc., an Illinois corporation, and a wholly-owned Subsidiary of Eller Target. "Trendel" means Trendel, Inc., a Florida corporation, and a wholly-owned Subsidiary of Trendel International. "Trendel Enterprises" means Trendel Enterprises International, Inc., a Florida corporation, and a wholly-owned Subsidiary of Trendel International. OTHER "NRNZ" means NRNZ Holdings, Limited, a New Zealand corporation of which 33 1/3% of the outstanding Capital Stock is owned by Borrower. -3- 143 UNRESTRICTED SUBSIDIARIES 1. "Heftel" means Heftel Broadcasting Corporation, a Delaware corporation. 2. Radio Data Group, Inc. -4- 144 SCHEDULE 8 EXISTING INVESTMENTS 1. Clear Channel Television, Inc. ("CCT") purchased $2,250,000 of equipment on May 27, 1992 from Mercury. Among the assets purchased was a tower located between Mobile, Alabama and Pensacola, Florida. A portion of the equipment is being leased back to Mercury. 2. Clear Channel Communications, Inc. ("CCC") invested $500,000 in Radio Data Group. 3. Clear Channel Communications, Inc. ("CCC") made a $500,000 investment in the San Antonio Spurs professional basketball team. 4. In May of 1995, Clear Channel Radio, Inc. made an investment, now worth $73,241,896, in the Australian Radio Network. 5. In May of 1995, Clear Channel Radio, Inc. made an investment, now worth $128,024,699, in Heftel Broadcasting Corporation. 6. In October of 1984, Clear Channel Communications, Inc. made an investment, now worth $83,733, in a joint venture with Swanco Broadcasting, Inc. to form the Oklahoma City Tower Company. 7. In 1973, Clear Channel Communications, Inc. made an investment, now worth $44,162, in the Osage Tower in Tulsa, Oklahoma. 8. In October of 1989, Clear Channel Communications, Inc. made an investment, now worth $289,657, in a joint venture with Encore Tower of Austin, Inc. to form the Austin Tower Company. 9. In March of 1994, Clear Channel Radio, Inc. made an investment, now worth $222,160, in the Senior Road Tower Group of Houston, Texas. 10. In 1992, Clear Channel Radio, Inc. made an investment, now worth $90,000, in a joint venture with Host Broadcasting to broadcast University of Kentucky sporting events. 11. In January of 1994, Clear Channel Radio, Inc. made an investment, now worth $96,233, in a joint venture with Host Communications, Inc. to broadcast University of Virginia sporting events. 13. In July 1996, Clear Channel Radio, Inc. made an investment now worth $29,393,139 in New Zealand Radio Network. 14. In February 1997, Clear Channel Communications, Inc. made an investment in a publically traded company at a cost of $14,080,186 with a fair market value of $23,256,000. 145 SCHEDULE 9 EXISTING INDEBTEDNESS NONE 146 SCHEDULE 11 Material Adverse Changes None. 147 SCHEDULE 12 Closing Specified Percentages NATIONSBANK OF TEXAS, N.A. Specified Percentage: 5.71428571542857% THE FIRST NATIONAL BANK OF BOSTON Specified Percentage: 4.71428571428571% BANK OF MONTREAL Specified Percentage: 4.71428571428571% TORONTO DOMINION (TEXAS), INC. Specified Percentage: 4.71428571428571% ABN AMRO BANK N.V. Specified Percentage: 2.85714285714286% BANK BRUSSELS LAMBERT, NEW YORK BRANCH Specified Percentage: 1.14285714285714% BANK OF HAWAII Specified Percentage: 0.85714285714286% BANK OF IRELAND - GRAND CAYMAN BRANCH Specified Percentage: 1.42857142857143% THE BANK OF NEW YORK Specified Percentage: 4.11904761885714% THE BANK OF NOVA SCOTIA Specified Percentage: 2.85714285714286%
148 BANQUE PARIBAS Specified Percentage: 1.14285714285714% BARCLAYS BANK PLC Specified Percentage: 2.85714285714286% CAISSE NATIONALE DE CREDIT AGRICOLE Specified Percentage: 0.85714285714286% THE CHASE MANHATTAN BANK, N.A. Specified Percentage: 4.11904761885714% CIBC INC. Specified Percentage: 4.11904761885714% COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE Specified Percentage: 2.00000000000000% CREDIT SUISSE FIRST BOSTON Specified Percentage: 2.85714285714286% CRESTAR BANK Specified Percentage: 1.42857142857143% THE DAI-ICHI KANGYO BANK, LTD. Specified Percentage: 2.85714285714286% FIRST UNION NATIONAL BANK OF NORTH CAROLINA Specified Percentage: 2.85714285714286% FLEET BANK, N.A. Specified Percentage:
-2- 149 4.11904761885714% THE FUJI BANK, LIMITED Specified Percentage: 2.00000000000000% HIBERNIA NATIONAL BANK Specified Percentage: 1.42857142857143% INDUSTRIAL BANK OF JAPAN Specified Percentage: 1.42857142857143% KEYBANK NATIONAL ASSOCIATION Specified Percentage: 2.00000000000000% THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH Specified Percentage: 2.85714285714286% MELLON BANK, N.A. Specified Percentage: 4.11904761885714% MICHIGAN NATIONAL BANK Specified Percentage: 1.14285714285714% THE MITSUBISHI TRUST AND BANKING CORPORATION Specified Percentage: 1.42857142857143% PNC BANK, NATIONAL ASSOCIATION Specified Percentage: 2.85714285714286% THE ROYAL BANK OF SCOTLAND, PLC Specified Percentage: 1.42857142857143% THE SANWA BANK, LIMITED, DALLAS AGENCY
-3- 150 Specified Percentage: 2.85714285714286% SOCIETE GENERALE Specified Percentage: 1.14285714285714% THE SUMITOMO BANK, LIMITED Specified Percentage: 1.42857142857143% SUN TRUST BANK, CENTRAL FLORIDA, N.A. Specified Percentage: 1.42857142857143% THE TOYO TRUST AND BANKING COMPANY, LTD., NEW YORK BRANCH Specified Percentage: 0.85714285714286% UNION BANK OF CALIFORNIA, N.A. Specified Percentage: 4.11904761885714% WACHOVIA BANK OF GEORGIA, N.A. Specified Percentage: 1.42857142857143% WELLS FARGO BANK (TEXAS), N.A. Specified Percentage: 1.42857142857143% WESTDEUTSCHE LANDESBANK, GIROZENTRALE Specified Percentage: 1.42857142857143% THE YASUDA TRUST AND BANKING CO., LTD. Specified Percentage: 0.85714285714286%
-4- 151 SCHEDULE 13 Subsidiary Guarantors Holdings Management Memphis Radio Licenses Television Licenses Metroplex Licenses Radio Television Metroplex CCRE CCR Houston-Nevada Eller Eller Media Company Eller Investment PMG Patrick Media Blue Wallscapes Chicago Shelters Eller Advertising Eller Atlanta 152 Eller El Paso Eltex PMG Target Shelter Advertising Shelter Advertising of Hialeah Trendel International American Shelter Trendel Trendel Enterprises -2- 153 SCHEDULE 14 Existing Letters of Credit EX-5 4 OPINION OF AKIN, GUMP, STRAUSS, HAUER & FELD LLP 1 EXHIBIT 5 [AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD] May 9, 1997 Clear Channel Communications, Inc. 200 Concord Plaza, Suite 600 San Antonio, Texas 78216 Gentlemen: We have acted as counsel to Clear Channel Communications, Inc., a Texas corporation (the "Company"), in connection with the proposed public offering of up to 11,000,000 shares of the Company's Common Stock, $.10 par value (the "Common Stock"), including the over-allotment option granted to the proposed underwriters, as described in the Registration Statement on Form S-3 (the "Registration Statement") filed with the Securities and Exchange Commission on April 18, 1997. We have, as counsel, examined such corporate records, certificates and other documents and reviewed such questions of law as we have deemed necessary, relevant or appropriate to enable us to render the opinions expressed below. In rendering such opinions, we have assumed the genuineness of all signatures and the authenticity of all documents examined by us. As to various questions of fact material to such opinions, we have relied upon representations of the Company. Based upon such examination and representations, we advise you that, in our opinion: A. The shares of Common Stock which are to be sold and delivered by the Company as contemplated by the Underwriting Agreement (the "Underwriting Agreement"), the form of which is filed as Exhibit 1 to the Registration Statement, have been duly and validly authorized by the Company and, when issued and delivered in accordance with the terms of the Underwriting Agreement, will be validly issued, fully paid, and non-assessable. B. The shares of Common Stock which are to be sold and delivered by the Selling Shareholders as contemplated by the Underwriting Agreement have been duly and validly authorized and issued by the Company and, when delivered in accordance with the terms of the Underwriting Agreement, will be fully paid, and non-assessable. We consent to the filing of this opinion as Exhibit 5 to the Registration Statement and to the reference of this firm under the caption "Legal Opinions" in the Prospectus contained therein. Very truly yours, /s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. EX-23.1 5 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP We consent to the references to our firm under the captions "Selected Financial Information" and "Experts" in the Registration Statement (Form S-3) and related Prospectus of Clear Channel Communications, Inc. for the registration of shares of its common stock and to the incorporation by reference therein of our reports dated February 17, 1997, (except for Note K, as to which the date is February 25, 1997), with respect to the consolidated financial statements of Clear Channel Communications, Inc. incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 1996 and the related financial statement schedules included therein, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP May 8, 1997 San Antonio, Texas EX-23.2 6 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 4, 1996, with respect to the consolidated financial statements of US Radio, Inc. incorporated by reference in the Registration Statement (Form S-3) and related Prospectus of Clear Channel Communications, Inc. for the registration of shares of its common Stock. /s/ ERNST & YOUNG LLP Philadelphia, Pennsylvania May 8, 1997 EX-23.3 7 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.3 CONSENT OF ERNST & YOUNG LLP We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 10, 1995, with respect to the combined financial statements of Ragan Henry Communications Group, L.P., US Radio, L.P. and US Radio Stations, L.P. incorporated by reference in the Registration Statement (Form S-3) and related Prospectus of Clear Channel Communications, Inc. for the registration of shares of its common stock. /s/ ERNST & YOUNG LLP Philadelphia, Pennsylvania May 8, 1997 EX-23.4 8 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.4 CONSENT OF KPMG Board of Directors Clear Channel Communications, Inc. We consent to the incorporation by reference in the registration statement on Form S-3 of Clear Channel Communications, Inc. of our report dated 4 March 1997, with respect to the consolidated balance sheets of Australian Radio Network Pty Limited and its controlled entities as at 31 December 1996 and 1995 and the related consolidated profit and loss accounts and statements of cash flows for the years then ended (not separately incorporated by reference in such registration statement), which report appears in the December 31, 1996 annual report on form 10-K of Clear Channel Communications, Inc. Additionally, we consent to the references to our firm under the heading "Experts" in the prospectus. /s/ KPMG Sydney, Australia May 8, 1997 EX-23.5 9 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.5 CONSENT OF KPMG PEAT MARWICK LLP The Board of Directors PMG Holdings, Inc. We consent to the incorporation by reference in Amendment No. 1 to the Registration Statement on Form S-3 of Clear Channel Communications, Inc. of our report dated April 27, 1995 with respect to the consolidated balance sheet of PMG Holdings, Inc. and subsidiaries as of December 31, 1994 and the related consolidated statements of operations, changes in stockholders' deficit and cash flows for the year then ended, which report appears in the Form 8-K of Clear Channel Communications, Inc. dated April 17, 1997. We also consent to the reference to our firm under the heading "Experts" in the Registration Statement. /s/ KPMG PEAT MARWICK LLP Stamford, Connecticut May 8, 1997 EX-23.6 10 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.6 CONSENT OF ARTHUR ANDERSEN LLP As independent public accountants, we hereby consent to the incorporation by reference in this registration statement on Form S-3 of our reports dated March 14, 1997 and March 9, 1995 included in Clear Channel Communications, Inc. Current Report on Form 8-K, filed April 17, 1997, and to all references to our Firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP Phoenix, Arizona, May 8, 1997 EX-23.7 11 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.7 CONSENT OF KPMG PEAT MARWICK LLP The Board of Directors Clear Channel Communications, Inc.: We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG PEAT MARWICK LLP New York, New York May 8, 1997 -----END PRIVACY-ENHANCED MESSAGE-----