-----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, JZiGRhm800SsMt0zZLZSjvNnFOUajO4NJSaZYdBq9nN2pwQThzlWFR2iyskmOaeR OL7+6oMJ7CrOTqcOf9SKIg== 0000950134-96-003078.txt : 19960624 0000950134-96-003078.hdr.sgml : 19960624 ACCESSION NUMBER: 0000950134-96-003078 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19960621 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HEFTEL BROADCASTING CORP CENTRAL INDEX KEY: 0000922503 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 990113417 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43975 FILM NUMBER: 96583902 BUSINESS ADDRESS: STREET 1: 6767 WEST TROPICANA AVE CITY: LAS VEGAS STATE: NV ZIP: 89603 BUSINESS PHONE: 7023673322 FILED BY: 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: SC 14D1/A 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 SC 14D1/A 1 AMENDMENT NO.1 TO SCHEDULE 14D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- SCHEDULE 14D-1/A Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 (Amendment No. 1) SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 2) HEFTEL BROADCASTING CORPORATION (Name of Subject Company) CLEAR CHANNEL RADIO, INC. CLEAR CHANNEL COMMUNICATIONS, INC. (Bidders) CLASS A COMMON STOCK, PAR VALUE $.001 PER SHARE (Title of Class of Securities) 422799106 (CUSIP Number of Class of Securities) ----------------- L. LOWRY MAYS CLEAR CHANNEL COMMUNICATIONS, INC. 200 CONCORD PLAZA, SUITE 600 SAN ANTONIO, TEXAS 78216 (210) 822-2828 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications on Behalf of Bidders) Copies to: STEPHEN C. MOUNT AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. 300 CONVENT STREET, SUITE 1500 SAN ANTONIO, TEXAS 78205 (210) 270-0800 CALCULATION OF FILING FEE =============================================================================== Transaction valuation* Amount of Filing Fee - ------------------------------------------------------------------------------- $109,747,950 $21,949.59 =============================================================================== *For purposes of calculating fee only. This amount assumes the purchase of 4,771,650 shares of Class A Common Stock of Heftel Broadcasting Corporation, at $23.00 in cash per share. The amount of the filing fee, calculated in accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50 of one percentum of the value of the shares to be purchased. /x/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $21,949.59 Form or Registration No.: Combined Schedule 14D-1 and Schedule 13D (Amendment No.1) Filing Party: Clear Channel Communications, Inc. Clear Channel Radio, Inc. Date Filed: June 7, 1996 2 Introduction This Amendment No. 1 amends and supplements the Tender Offer Statement on Schedule 14D-1 filed with the Securities and Exchange Commission (the "Commission") on June 7, 1996 (as may be amended from time to time, the "Schedule 14D-1") which relates to the offer by Clear Channel Radio, Inc., a Nevada corporation (the "Purchaser"), to purchase any and all outstanding shares of Class A Common Stock, par value $.001 per share (the "Shares"), of Heftel Broadcasting Corporation, a Delaware corporation, at a price of $23.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 7, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2), respectively, to the Schedule 14D-1 and which are incorporated herein by reference. Purchaser is a wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas corporation ("Parent"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them elsewhere in the Schedule 14D-1. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. Item 5(a)-(e) is hereby amended and supplemented by the addition of the following paragraphs thereto: "Tender Offer Agreement. On June 20, 1996, the parties to the Tender Offer Agreement entered into an amendment ("Amendment No. 2") to the Tender Offer Agreement which amends certain provisions therein as follows: (i) Amendment No. 2 amends the provision relating to the Company's filing with the Commission of a Solicitation/Recommendation Statement on Schedule 14D-9 (as may be amended from time to time, the "Schedule 14D-9") to require the Company to file on or before June 21, 1996 such Schedule 14D-9 which shall reflect either the recommendation of the Company's Board of Directors (the "Board") to accept the Offer or a statement by the Board that it is not expressing an opinion, and is remaining neutral, with respect to the Offer. The Company is required to mail copies of such Schedule 14D-9, excluding exhibits, to its stockholders on or before June 21, 1996. (ii) Amendment No. 2 adds a provision to the Tender Offer Agreement which states that the Company will, concurrently with the closing of the Offer, take all actions necessary to cause persons designated by the Purchaser to become directors of the Company so that such persons shall constitute at least a majority of the Board or if the Purchaser so requests, all of the directors of the Company. In furtherance thereof, the Company will increase the size of the Board, or use reasonable efforts to secure the resignation of directors, or both, as is necessary to permit the Purchaser's designees to be elected to the Board. At such time, the Company also will cause persons designated by the Purchaser to constitute at least a majority of each committee of the Board or if the Purchaser so requests, all of the directors on each committee of the Company's Board. The Company's obligations to appoint designees to the Board shall be subject to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated thereunder. Amendment No. 2 states that the Company is required to promptly take all actions required under such securities law and rule in order to fulfill the above obligations. The Purchaser is required to supply the Company with all information which the Company shall reasonably request with respect to nominees in connection with the filing required by Section 14(f) of the Exchange Act. As of the date hereof, the Purchaser has not yet determined the persons who shall be designees to the Board. (iii) Amendment No. 2 amends the condition in the Tender Offer Agreement that the Company's representations and warranties therein remain true and correct in all material respects to provide that the representation and warranty that the Board has resolved to recommend acceptance of the Offer need only be true as of June 1, 1996. 2 3 (iv) Amendment No. 2 amends the termination provision of the Tender Offer Agreement to provide that the Tender Offer Agreement and the Offer may be terminated by either the Company or the Purchaser at any time prior to the closing of the Offer, upon written notice, if, among other things, (a) the Company shall have determined pursuant to duly adopted resolutions of the Board, to recommend against acceptance of the Offer by reason of receipt of a Takeover Proposal (as such term is defined in the Tender Offer Agreement); (b) the Company after receipt of a Takeover Proposal shall not have, within five days after being so requested by the Purchaser, determined pursuant to duly adopted resolutions to recommend acceptance of the Offer, or after so recommending acceptance of the Offer shall have withdrawn or modified or resolved to modify or withdraw such recommendation; or (c) the Company recommends, pursuant to duly adopted resolutions, any Takeover Proposal from a person or entity other than the Purchaser or its affiliates; provided, however, that the Purchaser shall not terminate the Tender Offer Agreement pursuant to subsection (a) hereof if as a result of the Company's receipt of a Takeover Proposal from a third-party, the Company, as required by applicable law as advised by outside counsel, recommends against acceptance of the Offer, but within five business days thereafter the Company publicly withdraws its recommendation against acceptance of the Offer. The foregoing summary of the Tender Offer Agreement, as amended, does not purport to be complete and is qualified in its entirety by reference to the text of Amendment No. 2, which is herein incorporated by reference, a copy of which is attached hereto and filed as Exhibit 99(c)(13) to the Schedule 14D-1." "Consent of Stockholders. On June 20, 1996, the Selling Stockholders executed a consent whereby each Selling Stockholder consented to Amendment No. 2 to the Tender Offer Agreement and acknowledged and agreed that any references to the Tender Offer Agreement in the Stockholder Purchase Agreement shall mean the Tender Offer Agreement, as amended by Amendments No. 1 and 2 thereto and any subsequent amendments. The foregoing summary of the Consent of Stockholders does not purport to be complete and is qualified in its entirety by reference to the text of such Consent of Stockholders, which is herein incorporated by reference, a copy of which is attached hereto and filed as Exhibit 99(c)(14) to the Schedule 14D-1." Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities. Item 7 is hereby amended and supplemented as set forth in Item 5 above. Item 10. Additional Information. Item 10(a) is hereby amended and supplemented as set forth in Item 5 above. Item 10(e) is hereby amended and supplemented by the addition of the following paragraph thereto: "(e) On June 14, 1996, a purported stockholder class action suit was filed in the Court of Chancery in the State of Delaware (Levine v. Heftel, et al., C.A. No. 15066). The Levine action names as defendants the Company, Parent and certain individual directors and senior executive officers of the Company (collectively, the "Individual Defendants"). In general, the Levine action alleges that, among other things, the defendants breached their fiduciary duties, because the Offer is "grossly unfair" to the stockholders and is "substantially below true value and is a product of defendants' conflict of interest." The action also alleges that the Company and Parent failed to adequately reveal the consideration involved in the Settlement Agreements and Agreements Not to Compete entered into with Cecil Heftel and Carl Parmer, despite the fact that such information was disclosed in the Schedule 14D-1 and Offer to Purchase. Additionally, the action alleges that given the Individual Defendants' "domination and control" of the Board, they cannot be expected to act independently, and consequently, in order for such individuals not to breach their fiduciary duties, a 3 4 recommendation of the transaction from "a truly independent representative of the public stockholders" or obtaining the majority approval of the public unaffiliated stockholders of the Company is required. The plaintiff is seeking, among other things, certification as a class action, preliminary and permanent injunctive relief, rescissory damages in the event the Offer is consummated, compensatory damages, and costs, disbursements and legal fees relating to the action. Parent believes that the Levine action is meritless and intends to oppose it vigorously. The foregoing summary of the Levine action does not purport to be complete and is qualified in its entirety by reference to the text of such action which is herein incorporated by reference, a copy of which is attached hereto and filed as Exhibit 99(g) to the Schedule 14D-1." Item 11. Material to be Filed as Exhibits. Item 11 is amended to add the following: 99(c)(13) Amendment No. 2 to Tender Offer Agreement, dated June 20, 1996. 99(c)(14) Consent of Stockholders, dated June 20, 1996. 99(g) Class Action Complaint, Jeffrey Levine v. Cecil Heftel, H. Carl Parmer, Madison Graves, Richard Heftel, John Mason, Heftel Broadcasting Corporation and Clear Channel Communications, Inc. (C.A. No. 15066), filed June 14, 1996, in the Court of Chancery in the State of Delaware. 4 5 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. DATED: June 21, 1996 CLEAR CHANNEL COMMUNICATIONS, INC. By: /s/ Mark P. Mays -------------------------------- Mark P. Mays, Senior Vice President/Operations CLEAR CHANNEL RADIO, INC. By: /s/ Mark P. Mays -------------------------------- Mark P. Mays, Senior Vice President/Operations 5 6 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------- ----------- 99(c)(13) Amendment No. 2 to Tender Offer Agreement, dated June 20, 1996 . . . . . . . . . . . . . . . . . . . 99(c)(14) Consent of Stockholders, dated June 20, 1996 . . . . . . 99(g) Class Action Complaint, Jeffrey Levine v. Cecil Heftel, H. Carl Parmer, Madison Graves, Richard Heftel, John Mason, Heftel Broadcasting Corporation and Clear Channel Communications, Inc. (C.A. No. 15066), filed June 14, 1996, in the Court of Chancery in the State of Delaware. . 6 EX-99.(C)(13) 2 AMENDMENT NO.2 TO TENDER OFFER AGREEMENT 1 Exhibit (c)(13) AMENDMENT NO. 2 TO TENDER OFFER AGREEMENT THE TENDER OFFER AGREEMENT dated June 1, 1996 (the "Agreement"), by and between CLEAR CHANNEL RADIO, INC., a Nevada corporation, and HEFTEL BROADCASTING CORPORATION, a Delaware corporation as heretofore amended by that certain Amendment No. 1 to Tender Offer Agreement dated June 6, 1996 ("Amendment No. 1"), is hereby amended as follows: 1. The second and third sentences of Section 1.4 are deleted in their entirety and replaced by the following new sentences: "The Company shall, on or before June 21, 1996, file with the Commission a Solicitation/Recommendation Statement on Schedule 14D-9 (as amended from time to time, the "Schedule 14D-9") which shall reflect either the recommendation of the Company's Board of Directors to accept the Offer or a statement by the Company's Board of Directors that it is not expressing an opinion, and is remaining neutral, with respect to the Offer." The Company shall mail copies of such Schedule 14D-9 (excluding exhibits) to its stockholders on or before June 21, 1996. 2. Article 1 is amended by adding the following new Section 1.7: "1.7 Directors. The Company will, concurrently with the Closing, take all actions necessary to cause persons designated by Parent to become directors of the Company so that such persons shall constitute at least a majority of the Board of Directors of the Company or if Parent so requests, all of the directors of the Company. In furtherance thereof, the Company will increase the size of its Board of Directors, or use its reasonable efforts to secure the resignation of directors, or both, as necessary to permit Parent's designees to be elected to the Company's Board of Directors. The Company also will, concurrently with the Closing, cause persons designated by Parent to constitute at least a majority of each committee of the Company's Board of Directors or if Parent so requests, all of the directors on each committee of the Company's Board of Directors. The Company's obligations to appoint designees to its Board of Directors shall be subject to Section 2 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to such section and rule in order to fulfill its obligations under this Section 1.7. Parent will supply the Company with all information which the Company shall reasonably request with respect to nominees to the Company's Board of Directors in order for the Company to make the filing required by Section 14(f) of the Exchange Act. 3. Section 7.4 is amended by adding the following at the end of the first sentence thereof immediately after the word "date": "and except the representation and warranty contained in Section 3.5 need only be true as of June 1, 1996" 4. Section 8.1(d) is deleted in its entirety and replaced by the following new Section 8.1(d): "(d) By either the Company or Parent if (i) the Company shall have determined, pursuant to duly adopted resolutions of its Board of Directors, to recommend against acceptance of the Offer by reason of receipt of a Takeover Proposal, (ii) after receipt of a Takeover Proposal the Company shall not have, within five days after being so requested by Parent, determined pursuant to duly adopted resolutions to recommend acceptance of the Offer, or after so recommending acceptance of the Offer shall have withdrawn or modified or resolved to modify or withdraw such recommendation or (iii) the Company recommends, pursuant to duly adopted resolutions, any Takeover Proposal from a person or entity other than Parent or its affiliates; provided, however, that Parent shall not terminate this Agreement pursuant to clause (i) of this subsection if as a result of the Company's receipt of a Takeover Proposal from a third-party the Company, as required by applicable law as advised by outside counsel, recommends against acceptance of the Offer but within five business days thereafter the Company publicly withdraws its recommendation against acceptance of the Offer;" 5. Except as amended hereby or by Amendment No. 1, the Agreement is not changed and is in full force and effect. -2- 3 IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be executed on June 20, 1996 by its officer thereunto duly authorized. CLEAR CHANNEL RADIO, INC. By: /s/ Randall T. Mays --------------------------- Name: Randall T. Mays ------------------------- Title: Vice President ------------------------ HEFTEL BROADCASTING CORPORATION By: /s/ Carl Parmer --------------------------- Name: Carl Parmer ------------------------- Title: President and Co-Chief Executive Officer ------------------------ -3- EX-99.(C)(14) 3 CONSENT OF STOCKHOLDERS 1 Exhibit (c)(14) CONSENT OF STOCKHOLDERS ("CONSENT") Reference is hereby made to the Stockholder Purchase Agreement, dated June 1, 1996, among Clear Channel Radio, Inc. ("Clear Channel") and the undersigned (the "Agreement"). The undersigned hereby consent to Amendment No. 2 to the Tender Offer Agreement, dated June 1, 1996, between Clear Channel Radio, Inc. and Heftel Broadcasting Corporation, as amended (the "Offer Agreement") and hereby acknowledge the term "Tender Offer Agreement" as used in the Agreement shall mean the Offer Agreement as heretofore and hereafter amended. A copy of Amendment No. 2 is attached hereto. In WITNESS WHEREOF, the undersigned have executed this Consent as of June 20, 1996. /s/ Catharine Rolph - ----------------------------------- Catharine Rolph /s/ Margaret A.H. Wilson - ----------------------------------- Margaret A.H. Wilson, individually and as custodian for each of Nalani Wilson, Ryan Wilson and Deven Wilson, under the Hawaii Uniform Transfers to Minors Act /s/ Susan Heftel-Liquido - ----------------------------------- Susan Heftel-Liquido, as trustee of the Susan Heftel-Liquido Trust u/t/d 2/1/93 and as custodian for each of Francisco Liquido, Tiara Liquido, Carlo Liquido and Fernando Liquido under Hawaii Uniform Transfers to Minors Act /s/ Christopher Lee Heftel - ----------------------------------- Christopher Lee Heftel, individually and as custodian for each of Logan Heftel, Brannon Heftel and Hayden Heftel under the Tennessee Uniform Transfers to Minors Act /s/ Terry Heftel - ----------------------------------- Terry Heftel, individually and as custodian for each of Jonathan Heftel, Jeffrey Welch and Jeremy Heftel under the Utah Uniform Transfers to Minors Act 1 2 /s/ Richard Heftel - ----------------------------------- Richard Heftel, as trustee of the Richard Heftel Living Trust dated January 9, 1996, and as custodian for each of Kawika Heftel, Christian Heftel and Brittany Heftel, under the California Uniform Transfers to Minors Act /s/ Cecil Heftel - ----------------------------------- Cecil Heftel /s/ Michelle Lopez Hendrick - ----------------------------------- Michelle Lopez Hendrick /s/ Michael Donohoe - ----------------------------------- Michael Donohoe /s/ James Donohoe - ----------------------------------- James Donohoe /s/ Lani Donohoe - ----------------------------------- Lani Donohoe, as custodian for Josh Donohoe, under the California Uniform Transfers to Minors Act /s/ Carl Parmer - ----------------------------------- Carl Parmer 2 EX-99.(G) 4 CLASS ACTION COMPLAINT 1 EXHIBIT 99(g) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY JEFFREY LEVINE, | | Plaintiff, | | v. | | C.A. No. 15066 | CECIL HEFTEL, H. CARL PARMER, MADISON | GRAVES, RICHARD HEFTEL, JOHN MASON, | HEFTEL BROADCASTING CORPORATION and | CLEAR CHANNEL COMMUNICATIONS, INC. | | Defendants. | CLASS ACTION COMPLAINT Plaintiff, by his attorneys, for his Complaint alleges upon information and belief, except as to the allegations contained in paragraph 2, which plaintiff alleges upon knowledge, as follows: NATURE OF ACTION 1. Plaintiff brings this class action on behalf of himself and all other shareholders of defendant Heftel Broadcasting Corp. ("Heftel" or the "Company") similarly situated (the "Class") to enjoin defendants from effectuating a coercive $23.00 per share tender offer for their equity interests in the Company by Clear Channel Communications, Inc. ("Clear Channel"). Clear Channel already owns 21% of the Company's shares outstanding. The tender offer is manifestly unfair as it is substantially below the fair market value of Heftel in light of the Company's exceptional growth prospects, and is below current trading levels of the Company's common shares, which 2 was as high as $27.375 just two days after the announcement. Further, Heftel and Clear Channel failed to disclose, when jointly making the tender offer proposal, that defendants Cecil Heftel and H. Carl Parmer, who principally control a management group which controls approximately 40% of Heftel, in exchange for their agreement to tender their shares, are to receive from Clear Channel extremely lucrative additional consideration solely for themselves amounting to $25.7 million or more than 10% of the total cash consideration to be paid by Clear Channel to effectuate the tender offer. PARTIES 2. Plaintiff Jeffrey Levine, at all times relevant hereto, owned shares of Heftel common stock. 3. Defendant Heftel is a Delaware corporation with its principal executive offices located at 6767 West Tropicana Avenue, Las Vegas, Nevada 89103. Heftel is a Spanish language radio broadcasting company that owns radio stations in large metropolitan U.S. cities. As of February 1, 1996, the Company had 10.92 million shares of common stock outstanding. For the fiscal year ended September 30, 1995, the Company reported net income of $3.7 million, an increase of 740% over the prior fiscal year, on revenues of $88.2 million, an increase of 248% over the prior fiscal year. 4. Clear Channel is a Nevada corporation that owns, operates and manages approximately 35 radio stations and nine television stations. In fiscal 1995, the Company's net revenues were $283.4 million, and its net income was $22 million. -2- 3 5. At all relevant times herein, defendant Cecil Heftel ("Cecil Heftel") was Chairman of Heftel's Board of Directors ("Board"), Co-Chief Executive Officer and a Director of the Company. Defendant Cecil Heftel controls approximately 3.7 million shares of Heftel Class B common stock, which gives him 69% of all shareholder voting power in the Company. As discussed below, as part of Clear Channel's tender offer, Cecil Heftel will receive, in addition to $23 per share for his common stock, $14.3 million in additional cash consideration. 6. At all relevant times herein, defendant H. Carl Parmer ("Parmer") has been Co-Chief Executive Officer, President, Director of the Company, as well as member of the Board's Audit Committee. Parmer owns 413,026 shares of Heftel Class B common stock and 168,044 shares of Heftel Class A common stock, which gives him approximately 10% of the shareholder voting power in the Company. As part of Clear Channel's tender offer, Parmer will receive, in addition to $23 per share for his common stock, $11.4 million in additional cash consideration. 7. At all relevant times herein, Defendant Madison Graves ("Graves") has been a Director of the Company and a member of the Board's Audit and Compensation Committee. 8. At all relevant times herein, Defendant Richard Heftel ("Richard Heftel") has been a Director of the Company, and is the son of Cecil Heftel. Richard Heftel currently owns 559,118 shares of Heftel Class B common stock and has agreed to tender those shares to Clear Channel for $23 per share. -3- 4 9. At all relevant times herein, Defendant John Mason ("Mason") has been a Director of the Company and a member of the Company's Audit and Compensation Committee. 10. By virtue of their positions as directors and/or senior executive officers of Heftel and their exercise of control over its business and corporate affairs, defendants Cecil Heftel, Parmer, Graves, Richard Heftel and Mason (collectively the "Individual Defendants" or the "Management Group"), at all relevant times, had and have the power to control and influence, and did control and influence, and cause Heftel to agree to and to engage in the transaction complained of herein. Each Individual Defendant owes Heftel and its public stockholders fiduciary obligations and is required to: use his ability to control and manage Heftel in a fair, just and equitable manner; maximize shareholder value; act in furtherance of the best interests of Heftel and its public stockholders; govern Heftel in such a manner as to heed the expressed views of its public shareholders; refrain from abusing his positions of control; provide full disclosure to the public shareholders; and not favor his own or any other party's interests at the expense of Heftel and its public shareholders. -4- 5 CLASS ACTION ALLEGATIONS 11. Plaintiff brings this action pursuant to Rule 23 of the Rules of the Court of Chancery, for declaratory, injunctive and other relief on his own behalf and as a class action, on behalf of all public stockholders of Heftel (except defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants) and their successors in interest, who are being deprived of their equity interest in Heftel and the opportunity to maximize the value of the their Heftel shares by the wrongful acts of the defendants described herein. 12. This action is properly maintainable as a class action for the following reasons: (a) The class of stockholders for whose benefit this action is brought is so numerous that joinder of all class members is impracticable. As of February 1, 1996, Heftel has approximately 10.92 million shares of common stock duly issued and outstanding, which traded on the NASDAQ National Market, and were owned by thousands of shareholders. Members of the Class are scattered throughout the United States. (b) There are questions of law and fact that are common to the members of the Class including, inter alia, the following: (i) whether the defendants have engaged in conduct constituting unfair dealing to the detriment of the public stockholders of Heftel; -5- 6 (ii) whether the tender offer by Clear Channel is unfair to the public stockholders of Heftel because it does not constitute a fair price for the shares of the Company; and (iii) whether defendants Cecil Heftel and Parmer have breached their fiduciary and common law duties owed by them to plaintiff and the other members of the Class by tendering their shares to Clear Channel in exchange for exceptionally lucrative buy-out packages not available to other Heftel shareholders. (c) The claims of plaintiff are typical of the claims of the other members of the Class, and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. (d) Plaintiff is committed to the vigorous prosection of this action and has retained competent counsel experienced in litigation of this nature. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (e) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, and that would establish incompatible standards of conduct for the party opposing the Class. -6- 7 (f) Defendants have acted, and are about to act, on grounds generally applicable to the Class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the Class as a whole. CLAIM FOR RELIEF 13. Heftel is a company that has experienced substantial revenue and earnings growth during the past few years. Its revenues have grown from $19.7 million 1992 to $68.2 million in 1995. Its earnings have grown sevenfold from 1994 to 1995, growing from $0.5 million to $3.7 million. 14. Analysts and investors alike were excited about Heftel's future prospects because the Company was well- positioned to maximize upon two macro-trends in telecommunications: the sweeping telecommunications bill that Congress passed in February that removed ownership restrictions of radio stations, and the explosive growth of the Spanish- language radio market. Indeed, on June 3, 1996, analyst Rita Zanella from Gruntal & Co. touted Heftel's prospects and stated that "[t]here's tremendous growth in the Hispanic market." 15. Investor enthusiasm was also fueled in part by the optimistic statements being made by Heftel's management. For instance, on January 25, 1996, in announcing First Quarter 1996 fiscal results, defendant Parmer stated that "[t]he Company's outlook for the balance of the year is encouraging given KLVE's dominance of the entire Los Angeles market." -7- 8 16. Heftel shareholders were predictably outraged when, on June 3, 1996, Heftel and Clear Channel jointly announced that Clear Channel would commence a tender offer for all the shares of Heftel not beneficially owned by Clear Channel for $23 per share. Concurrently, the Management Group announced it agreed to sell its shares, which represents 40% of the shares outstanding, to Clear Channel at the tender price. The Management Group's agreement to tender their shares, their effective voting control of the Company, together with Clear Channel's already 21% interest in the Company-- which will rise to 61% with management's shares--renders this transaction a "fait accompli." The transaction is coercive to the minority shareholders in that persons failing to tender will be left with, at most, no effective vote and diminished liquidity. 17. Heftel and Clear Channel failed adequately to reveal publicly at the time the tender offer was announced that defendants Cecil Heftel and Parmer, who together controlled 79% of shareholder voting power, were to receive lucrative buy-out packages, in the form of purported "settlement agreements" and "covenants not to compete," that provided for cash payments of approximately $25.7 million. Such facts were only set forth in Clear Channel's Schedule 14D-1 filed in connection with the tender offer. 18. The Clear Channel tender offer is at an inadequate price for the Heftel minority shareholders and is proceeding only because defendants Cecil Heftel and Parmer have negotiated an exceptionally lucrative private deal to the exclusion and detriment of Heftel shareholders for an additional 11% cash payment above the total cash proceeds of the entire transaction. If that $25.7 million were part of the offer to all -8- 9 Heftel shareholders, it would equal an additional $2.35 per share in the tender offer price. 19. Given Cecil Heftel's and the Management Group's domination and control of Heftel, the Heftel Board cannot be expected to act independently and advocate and/or protect the best interests of Heftel's public shareholders. 20. In view of the Management Group's control of Heftel, it is unfair and in violation of defendants' fiduciary duties to consummate the transaction without first obtaining a recommendation by a truly independent representative of the public stockholders or obtaining the majority approval of the public unaffiliated stockholders of the Company. Indeed, the Five Member Board of Directors ("Five Member Board of Directors") is comprised of three members who are tendering their shares to Clear Channel and defendant Mason (a remaining director). who may not be independent because of existing conflicts due to his acting as counsel to the Company and certain of As Individual Defendants. Thus, the minority shareholder will not receive any effective representation at the Board level in connection with this transaction and especially in the formulation of a recommendation by the Board as to whether shareholders should tender their shares. 21. By virtue of the acts and conduct alleged herein, the defendants are carrying out a preconceived plan whereby Clear Channel will acquire the public shares of Heftel pursuant to a price that is grossly inadequate and intrinsically unfair to Heftel public shareholders, is substantially below true value and is a product of defendants' -9- 10 conflicts of interest. As a result, the public common stockholders of Heftel will be wrongfully deprived of their valuable investment in the Company and will receive, in return for their investment, a grossly inadequate consideration. 22. Defendants Cecil Heftel and Parmer are breaching their fiduciary duties to Heftel's stockholders by negotiating and obtaining special benefits in the transaction not available to other Heftel shareholders. 23. Unless enjoined by this Court, defendants will continue to breach fiduciary duties owed to plaintiff and the other members of the Class, and will succeed in consummating an unfair transaction by virtue of the unfair dealing complained of herein, all to the irreparable harm of the Class. 24. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment and relief in his favor and in favor of the Class and against defendants, as follows: A. Declaring that this action be certified as a proper class action and certifying plaintiff as a class representative; B. Declaring that the defendants and each of them have committed a gross abuse of trust and have breached their fiduciary duties to plaintiff and other members of the class; C. Preliminarily and permanently enjoining defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from -10- 11 proceeding with, consummating or closing the proposed transaction which will irreparably harm plaintiff and the Class; D. In the event the tender offer is consummated, rescinding it and setting it aside and/or granting rescissory damages; E. Awarding compensatory damages in an amount to be determined upon the proof submitted to the Court; F. Awarding the costs and disbursements of this action; G. Awarding plaintiff counsel fees; and H. Awarding such other and further relief which the Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Norman M. Monhait ----------------------------------------- Suite 1401, Mellon Bank Center P. O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP Vincent R. Cappucci, Esq. 1285 Avenue of the Americas New York, New York 10019 (212) 554-1400 -11- -----END PRIVACY-ENHANCED MESSAGE-----