-----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, RbQ49Qx0ka/bXjA9h/I0GGbh0s7rqZdebpM0ycWKiOeGym8j8NHAh/xdCH9MK9My y5NXv1UrfRE9VfEp3555QQ== 0000950148-96-001273.txt : 19960624 0000950148-96-001273.hdr.sgml : 19960624 ACCESSION NUMBER: 0000950148-96-001273 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960621 SROS: NASD 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 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-43975 FILM NUMBER: 96584111 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: 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 14D9 BUSINESS ADDRESS: STREET 1: 6767 WEST TROPICANA AVE CITY: LAS VEGAS STATE: NV ZIP: 89603 BUSINESS PHONE: 7023673322 SC 14D9 1 SOLICITATION/RECOMMENDATION STATEMENT 1 ================================================================= SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 ------------------------- HEFTEL BROADCASTING CORPORATION (Name of Subject Company) HEFTEL BROADCASTING CORPORATION (Name of Person(s) Filing Statement) ------------------------- Class A Common Stock, par value $.001 (Title of Class of Securities) ------------------------- 422799 10 6 (CUSIP Number of Class of Securities) ------------------------- Carl Parmer Co-Chief Executive Officer and President Heftel Broadcasting Corporation 6767 West Tropicana Avenue, Suite 102 Las Vegas, Nevada 89103 (702) 284-6484 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person Filing Statement) Copies to: Frederick W. Gartside, Esq. Jeffer, Mangels, Butler & Marmaro LLP 2121 Avenue of the Stars, 10th Floor Los Angeles, California 90067 ================================================================= 2 ITEM 1. SECURITY AND SUBJECT COMPANY. The name of the subject company is Heftel Broadcasting Corporation, a Delaware corporation (the "Company"). The address of the Company's principal executive offices is 6767 West Tropicana Avenue, Suite 102, Las Vegas, Nevada 89103. The title of the class of equity securities to which this statement relates is the Class A Common Stock, par value $.001 per share, of the Company ("Class A Common Stock"). ITEM 2. TENDER OFFER OF THE BIDDER. This statement relates to the offer by Clear Channel Radio, Inc., a Nevada corporation ("Clear Channel"), which is an indirect wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas corporation ("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1 filed on June 6, 1996 (the "Schedule 14D-1"), to acquire all of the outstanding shares of Class A Common Stock and Class B Common Stock, par value $.001, of the Company (the Class A Common Stock and the Class B Common Stock collectively are referred to herein as the "Company Common") for a price of $23 per share. The address of the principal executive offices of Clear Channel and Parent is 200 Concord Plaza, Suite 600, San Antonio, Texas 78216. ITEM 3. IDENTITY AND BACKGROUND. (a) The person filing this statement is the Company. Its business address is set forth under Item 1 above. (b)(1) Tender Offer Agreement. The following is a summary of the material terms of the Tender Offer Agreement, dated June 1, 1996, between the Company and Clear Channel, as amended (the "Offer Agreement"). This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof, which is incorporated herein by reference. A copy of the Tender Offer Agreement and Amendment No. 1 have been filed with the Commission as an Exhibit to Clear Channel's Schedule 14D-1 and a copy of Amendment No. 2 to the Tender Offer Agreement has been filed with the Commission as an Exhibit to this Schedule 14D-9. Offer. The Offer Agreement requires Clear Channel to make a tender offer (the "Offer") to purchase all of the outstanding shares of Company Common for a price of $23 per share (the "Offer Price"). Subject to satisfaction of Clear Channel's closing conditions, Clear Channel will be obligated to purchase any and all shares tendered in response to the Offer. Clear Channel's obligation to purchase tendered shares is not conditioned on a specified minimum number of shares being tendered. As discussed under Item 3(b)(2) below, concurrently with the execution of the Offer Agreement, Clear Channel also -2- 3 entered into a Stockholder Purchase Agreement dated June 1, 1996 (the "Stockholder Purchase Agreement") with certain stockholders of the Company (collectively, the "Selling Stockholders"), pursuant to which each of the Selling Stockholders agreed to sell, and Clear Channel agreed to purchase, all shares of Company Common owned by such Selling Stockholders at a price per share equal to the Offer Price. The Selling Stockholders collectively own 160,000 shares of Class A Common Stock and 3,356,529 shares of Class B Common Stock, or a total of 3,516,529 shares of Company Common, representing approximately 34.8% of the outstanding shares of Company Common. The Selling Stockholders also own options to acquire 349,339 shares of Class A Common Stock and warrants to acquire 806,678 shares of Class B Common Stock, and have agreed to tender the shares issuable upon exercise of such options and warrants pursuant to the Offer. If Clear Channel is deemed the beneficial owner of all shares subject to the Stockholder Purchase Agreement (including those issuable upon exercise of options and warrants), Clear Channel would beneficially own 6,829,345 shares or 59.1% of the outstanding shares of Company Common on a fully-diluted basis. The Offer Agreement provides the Offer must remain open for 40 days; provided, however, if at any time prior to the end of such 40-day period, shares of Company Common are tendered to Clear Channel which, when combined with the shares of Class A Common Stock owned by affiliates of Clear Channel, total 80% of the outstanding shares of Company Common, Clear Channel must publish notice of such fact and must extend the termination date for the Offer by ten days. Clear Channel may not do any of the following without the consent of the Company: (a) reduce the Offer Price, (b) amend or add to the conditions to the obligations of Clear Channel to complete the transactions contemplated by the Offer Agreement set forth in Article 7 of the Offer Agreement, (c) change the number of shares of Company Common subject to the Offer, (d) change the form of consideration payable in the Offer, (e) except as set forth in the Offer Agreement, extend the termination date for the Offer, or (e) terminate the Offer except in accordance with Section 8.1 of the Offer Agreement. The Company caused its transfer agent to furnish Clear Channel with mailing labels containing the names and addresses of the recordholders of Company Common and has agreed to furnish Clear Channel with such information and assistance as Clear Channel may reasonably request in communicating the Offer to the Company's stockholders. Conduct of The Company's Business Prior to the Closing. Under the Offer Agreement, except as otherwise expressly contemplated by the Offer Agreement, the Company covenants and agrees that prior to the date of the closing of the transactions contemplated by the Offer Agreement (the "Closing Date"), unless Clear Channel shall otherwise consent in writing: -3- 4 (i) The Company and the Company's subsidiaries (individually, a "Company Subsidiary") shall conduct their business and keep their books and accounts, records and files in the usual and ordinary manner in which such business has been conducted in the past; (ii) The Company shall not directly or indirectly do, or permit any Company Subsidiary to do, any of the following: a. issue, sell, pledge, dispose of or encumber any shares of, or any options, warrants or rights of any kind to acquire any shares of or any securities convertible into or exchangeable or exercisable for any shares of, capital stock of the Company or any Company Subsidiary, except for shares of Company Common issuable upon exercise of options and warrants outstanding on the date of the Offer Agreement set forth on a Schedule attached to the Offer Agreement (collectively "Convertible Securities"); b. except (A) in the ordinary course of business and consistent with prior practice, (B) for transactions with non-affiliates of the Company which involve payments up to $500,000 in the aggregate, and (C) for the sale of KLTY-TV, sell, pledge, dispose of or encumber any assets of the Company or any Company Subsidiary which are material to the Company or any Company Subsidiary; c. split, combine, subdivide or reclassify any shares of the Company's capital stock or declare, set aside or pay any dividend or distribution, payable in cash, stock, property or otherwise, with respect to any of the Company's capital stock, other than the payment in cash of any accrued dividends on the Series A Preferred Stock; d. redeem, purchase or otherwise acquire or offer to redeem, purchase or otherwise acquire any of the Company's capital stock; e. adopt a plan of complete or partial liquidation or resolutions providing for the complete or partial liquidation or dissolution of the Company or any Company Subsidiary, except for certain consolidations of subsidiaries of the Company set forth in a Schedule attached to the Offer Agreement (collectively, the "Subsidiary Reorganizations"); f. acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division or any material assets thereof or, other than cash management transactions in the ordinary course of business and consistent with prior practice, make any investment either by purchase of stock or securities, contributions to capital, property transfer or purchase of any property or assets of any other individual or entity; -4- 5 g. amend or modify the corporate charter, bylaws or other organizational documents of any Company Subsidiary, except in connection with the Subsidiary Reorganizations; h. enter into any agreement or transaction with any, or modify the terms of any existing agreement with any, affiliate; i. terminate or fail to renew any license for a radio station issued by the Federal Communications Commission (individually, a "Company FCC License"); j. fail to operate any radio station owned by the Company or a Company Subsidiary (individually, a "Station") in accordance with the Communications Act of 1934, the rules, regulations and policies of the Federal Communications Commission (the "FCC") and the terms of the Company FCC Licenses, other than failures which, individually or in the aggregate, are not reasonably anticipated to have a material adverse effect on the business, assets, results of operations, financial condition or prospects of the Company on a consolidated basis; k. cancel, discount or otherwise compromise any accounts receivable except in the ordinary course of business consistent with past practice; l. fail to file in a timely manner any applications to renew a Company FCC License; m. (other than agreements for the sale of air time) enter into any agreement which involves payments by the Company of $50,000 or more, unless such agreement provides for cancellation thereof by the Company on 60 or fewer days notice and the amount payable by the Company during the period from the date of delivery of notice of cancellation until the date of cancellation plus any penalty for early termination does not exceed $50,000; n. enter into any barter or trade agreement that is prepaid; o. apply to the FCC for any construction permit that would restrict the current operations of any Station or make any change in any Station's buildings, leasehold improvements or fixtures, except in the ordinary course of business or as necessary to comply with the Company's affirmative covenants regarding maintaining the Company's properties in good operating condition; or p. enter into any contract, agree- ment, commitment or arrangement to do any of the foregoing; -5- 6 (iii) Except (a) for salary increases or other employee benefit arrangements in the ordinary course of business and consistent with prior practice, (b) as may be required pursuant to any agreements in effect on the date of the Offer Agreement, (c) as may be required by law, neither the Company nor any Company Subsidiary shall (1) grant any severance or termination pay to, or enter into any new employment or severance agreement with, any officer or employee of the Company or any Company Subsidiary, (2) adopt or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, employee benefit plan, agreement, trust fund or other arrangement for the benefit or welfare of employees or former employees or (3) increase the compensation or fringe benefits of any employee or former employee or pay any benefit not required by any existing plan, arrangement or agreement; (iv) The Company shall not directly or indirectly do, or permit any Company Subsidiary to do, any of the following: make or revoke any material tax election, settle or compromise any material federal, state, local or foreign tax liability (or any other tax liability which may have a material effect on taxable years ending after the Closing Date) or change (or make a request to any taxing authority to change) any aspect of accounting for tax purposes in any material respect; (v) The Company shall deliver to Clear Channel copies of any report, statement or schedule filed with the Commission subsequent to the date of the Offer Agreement; (vi) The Company shall provide Clear Channel with copies of the regular monthly internal operating statements relating to the Company for the monthly accounting periods between the date of the Offer Agreement and the Closing Date by the 20th day of each calendar month for the preceding calendar month, which shall present fairly the financial position of the Company and the results of operations for the period indicated in accordance with generally accepted accounting principles consistently applied. Such monthly statements shall: (1) show the actual results and budget for such month by line item, and (2) account for items of non-recurring income and expense separately and (3) account for and separately state all intercompany allocations of expenses relating to the Company, all of which shall be presented fairly and in accordance with generally accepted accounting principles consistently applied; (vii) The Company shall make all commercially reasonable efforts to preserve the business organization of each Station intact, to retain substantially as at date of the Offer Agreement each Station's employees, consultants and agents, and to preserve the goodwill of each Station's suppliers, advertisers, customers and others having business relations with it; and -6- 7 (viii) The Company shall keep all tangible personal property and real property in good operating condition (ordinary wear and tear excepted) and repair and maintain adequate and usual supplies of inventory, office supplies, spare parts and other materials as have been customarily maintained in the past. The Company shall maintain in effect the casualty and liability insurance on its assets in force on the date of the Offer Agreement. No Solicitation of Competing Transactions. The Offer Agreement provides the Company shall not, directly or indirectly, solicit, initiate or encourage (including by way of furnishing information or assistance) any inquiry or the making of any proposal that constitutes, or may reasonably be expected to lead to, any inquiry or proposal that constitutes, or may reasonably be expected to lead to, any Competing Transaction (a "Takeover Proposal") or enter into any discussions, contracts or negotiations with respect to any Competing Transaction and the Company shall not authorize or knowingly permit any of its officers, directors, employees, investment bankers, attorneys, accountants or other advisors or representatives to take any such action and the Company will direct such parties not to take any such action. The Company promptly shall advise Clear Channel in writing of any Takeover Proposal and shall, in such notice, indicate the identity of the offeror and the material terms and conditions of any such Takeover Proposal, including, without limitation, price. Notwithstanding the foregoing, the Board of Directors of the Company or any committee thereof is not prevented from (a) (i) furnishing or causing to be furnished information concerning the Company and its businesses, properties or assets to a third party, (ii) engaging in negotiations with a third party, (iii) taking and disclosing to the Company's stockholders a position with respect to any Takeover Proposal (and, in connection therewith, withdrawing or modifying the approval or recommendation by the Board of Directors of the Offer) or (iv) entering into a Competing Transaction, but in each case referred to in the foregoing clauses (i) through (iv) only to the extent that prior to furnishing such information to, or entering into discussions or negotiations with, such person or entity (A) the Board of Directors of the Company shall conclude, after consultation with its outside legal counsel (which may be the Company's regularly engaged legal counsel), in good faith that such action is required under applicable law for the discharge of its fiduciary duties, and (B) the Company provides written notice to Clear Channel to the effect that it is furnishing information, or affording access to properties, books or records to, or entering into discussions or negotiations with, such person or entity or (b) complying with Rule 14e-2 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As used in the Offer Agreement, "Competing Transaction" means any merger, consolidation, reorganization, share exchange or other business combination involving the Company or any Company Subsidiary or any acquisition in any manner of beneficial ownership of 20% or more of the outstanding -7- 8 shares of any class of capital stock of the Company, or any class of the capital stock of any Company Subsidiary, or of all or a significant portion of the assets of the Company and the Company Subsidiaries, taken as a whole. Renewal Application. In the event at the closing of the transactions contemplated by the Offer Agreement (the "Closing") the application for renewal of the license for WAMR- FM, Miami, Florida (the "Renewal Application") remains pending or has not become a final order, the Offer Agreement provides the Closing shall occur and the Company and Clear Channel agree to abide by the procedures established in Stockholders of CBS, Inc., FCC 95-469 (rel. Nov. 22, 1995) Sections 34-35, for processing applications for transfer of control of a license during the pendency of an application for renewal of a station license. Without limiting the generality of the foregoing, the Company agreed to use commercially reasonable efforts to cooperate with Clear Channel with the prosecution of the Renewal Application, and Clear Channel agreed that any interest it may acquire in such license at the Closing will be subject to whatever action the FCC may ultimately take with respect to the Renewal Application. These agreements will survive the Closing until any order issued by the FCC with respect to the Renewal Application becomes a final order. Indemnification. Pursuant to the Offer Agreement Clear Channel agreed to indemnify, defend and hold harmless the Company, each stockholder who executed the Stockholder Purchase Agreement (as defined under Item 3(b)(2)) and each person who on the date of the Offer Agreement, or who becomes prior to the Closing Date, an officer or director of the Company or any Company Subsidiary against all losses, claims, damages, costs, expenses, liabilities or judgments, or amounts that are paid in settlement with the approval of Clear Channel (which approval shall not be unreasonably withheld), arising out of or related to any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the Offer Agreement or the transactions contemplated thereby; provided, however, no indemnity will be available to the extent a court of competent jurisdiction finally determines that the claim for indemnity is caused by the Company knowingly and intentionally misrepresenting that it may enter into the Offer Agreement. From and after the Closing, Clear Channel agreed to indemnify, defend and hold harmless each person who on the date of the Offer Agreement, or who becomes prior to the Closing Date, an officer or director of the Company or any Company Subsidiary (the "D&O Indemnified Parties") against all losses, claims, damages, costs, expenses, liabilities or judgments, or amounts that are paid in settlement with the approval of Clear Channel (which approval shall not be unreasonably withheld), arising out of or related to any claim, action, suit, proceeding or investigation based in whole or in -8- 9 part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company or any Company Subsidiary, whether pertaining to any matter existing or occurring at or prior to the Closing Date (including, without limitation, any matter relating to the transactions contemplated by the Offer Agreement) and whether asserted or claimed prior to, or at or after, the Closing Date, in each case to the full extent the Company or the applicable Company Subsidiary would have been permitted under the law of the state of its incorporation and its Certificate, or Articles, of Incorporation and Bylaws to indemnify such person (and Clear Channel agreed to pay expenses in advance of the final disposition of any such action or proceeding to each D&O Indemnified Party upon receipt of any undertaking by or on behalf of such D&O Indemnified Party to repay such amount if it shall ultimately be determined that he or she is not entitled to indemnification). All rights to indemnification existing in favor of D&O Indemnified Parties will continue in full force and effect after the Closing Date. Company Indebtedness. Concurrently with the Closing, the Offer Agreement requires Clear Channel to repay or cause to be repaid all outstanding indebtedness under the Credit Agreement, dated as of August 19, 1994, as amended and restated as of March 13, 1996, among the Company, its subsidiaries and the lenders signatory thereto (the "Credit Agreement") or, at Clear Channel's option, obtain the consent of the Company's lenders under the Credit Agreement to have such indebtedness remain outstanding. Covenant to Maintain Listing. Pursuant to the Offer Agreement, for a period of one year from and after the Closing, Clear Channel agreed to use its best efforts to cause the shares of Class A Common Stock to remain listed or quoted on a recognized national exchange or National Association of Securities Dealers, Inc. ("NASD") quotation system. Independent Directors. Pursuant to the Offer Agreement, from and after the Closing and until the later of one year from the Closing Date or the date on which the Company no longer is a reporting company under the Exchange Act, Clear Channel agreed to cause the Company to maintain two independent directors. Board of Directors. Pursuant to the Offer Agreement, the Company will, concurrently with the Closing, take all actions necessary to cause persons designated by Clear Channel 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 Clear Channel 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 Clear Channel's designees to be elected to the Company's Board of Directors. The Company also -9- 10 will, concurrently with the Closing, cause persons designated by Clear Channel to constitute at least a majority of each committee of the Company's Board of Directors or if Clear Channel 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 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Representations and Warranties. The Offer Agreement contains representations and warranties by the Company regarding the Company's organization, capital structure and power and authority to enter into the Offer Agreement, the Offer Agreement being a valid and binding obligation of the Company, no governmental consents being necessary for the Company to complete the transaction contemplated by the Offer Agreement other than the consents set forth in the Offer Agreement, no agreements with brokers or investment bankers except as set forth in a schedule attached to the Offer Agreement, board approval of the Offer, the Company's filings with the Commission not containing an untrue statement of a material fact or omitting to state a material fact, and the Company's financials included in its Form 10-Ks and Form 10-Qs being prepared in accordance with generally accepted accounting principles consistently applied and presenting fairly the financial condition of the Company. The Offer Agreement also contains representations and warranties by Clear Channel regarding its organization and power and authority to enter into the Offer Agreement, the Offer Agreement being a valid and binding obligation of Clear Channel, no consents being necessary for Clear Channel to complete the transaction contemplated by the Offer Agreement other than the consents set forth in the Offer Agreement, no agreements with brokers or investment bankers, and Clear Channel having the funds, or commitments or agreements with financial institutions to provide the funds, in an aggregate amount of not less than the amount necessary to purchase shares of Company Common in the Offer, plus the amounts payable for shares received upon exercise of the Convertible Securities plus the aggregate amount of payments due to the co-chief executive officers of the Company in connection with termination of their employment agreements with the Company and their execution of agreements not to compete at the Closing. Conditions to Clear Channel's Obligations. The Offer Agreement provides the obligations of Clear Channel to consummate the Offer are subject to the fulfillment on or prior to the Closing Date of each of the following conditions: (a) The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") shall have expired or terminated. (b) The consent of the FCC to transfer of control of the Company FCC Licenses (the "FCC Consent") shall have become a final order; provided, however, if the primary lenders for Clear Channel do not require that the FCC Consent -10- 11 becomes a final order in order to consummate the Closing, then Clear Channel's condition shall be that the FCC shall have granted the FCC Consent and shall have given public notice of the grant of the FCC Consent. (c) No temporary restraining order, preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a government, regulatory or administrative agency or commission shall be in effect which restrains or prohibits the transactions contemplated by the Offer Agreement. (d) All representations and warranties of the Company contained in the Offer Agreement shall be true and correct in all material respects at and as of the Closing Date, except those representations and warranties which address matters only as of a particular date shall remain true and correct in all material respects as of such date and except the representation and warranty regarding the Company's Board of Directors adopting a resolution to recommend acceptance of the Offer need only be true as of June 1, 1996. The Company shall have performed in all material respects all agreements and covenants required by the Offer Agreement to be performed by it prior to or at the Closing Date. Termination. The Offer Agreement provides it and the Offer may be terminated at any time prior to the Closing Date: (a) By mutual written consent of the parties; (b) By either Clear Channel or the Company, if the FCC denies or dismisses the applications for approval of the transfer of control of the Company FCC Licenses and the time for reconsideration or court review under the Communications Act of 1934 with respect to such denial or dismissal has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review; or (c) By either the Company or Clear Channel, if the Board of Directors of the Company concludes, after taking into account the advice of outside legal counsel (which may be the Company's regularly engaged legal counsel), that accepting a proposed Competing Transaction is required under applicable law for the discharge of its fiduciary duties and the Company enters into an agreement for such Competing Transaction; provided, however, that the Company may not terminate the Offer Agreement pursuant to this subsection earlier than 48 hours after furnishing notice to Clear Channel of such Competing Transaction; (d) By either the Company or Clear Channel if (i) the Company shall have determined, pursuant to duly adopted resolutions of its Board of Directors, to recommend -11- 12 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 Clear Channel, 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 or (iii) the Company recommends, pursuant to duly adopted resolutions, any Takeover Proposal from a person or entity other than Clear Channel or its affiliates; provided, however, that Clear Channel shall not terminate the Offer 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; (e) By Clear Channel, if the Company fails to perform or breaches any of its material obligations or duties under the Offer Agreement and the Company has not cured such failure to perform or breach within 15 days after delivery of written notice from Clear Channel or upon a material breach of any representation and warranty of the Company contained in the Offer Agreement; (f) By the Company, if Clear Channel fails to perform or breaches any of its material obligations or duties under the Offer Agreement, and the defaulting party has not cured such failure to perform or breach within 15 days after delivery of written notice from the Company or upon a material breach of any representation and warranty of Clear Channel contained in the Offer Agreement; and (g) By either Clear Channel or the Company, if the Closing shall not have occurred on or before October 31, 1996 (the "Termination Date"); provided, however, the right to terminate the Offer Agreement under this subsection shall not be available to any party whose failure to fulfill any obligation under the Offer Agreement has been the cause of, or results in, the failure of the Closing to have occurred on or before the Termination Date. Effect of Termination. In the event of the termination of the Offer Agreement as provided therein, the Offer Agreement provides it shall forthwith become void and there shall be no liability or obligations on the part of any party thereto, except for the agreements regarding confidential information and indemnification by Clear Channel for claims arising out of the Offer Agreement and except (i) for liability for any wilful breach of any obligation, covenant or agreement contained therein or any intentional failure of the representations and warranties contained therein to have been true and (ii) (x) if the stockholders who are parties to the Stockholder Purchase -12- 13 Agreement terminate such agreement and (y) (1) the Company terminates the Offer Agreement pursuant to clause (c) or (d) under "Termination" above, or (2) Clear Channel terminates the Offer Agreement and the Offer pursuant to such clauses (c) or (d), the Company must pay to Clear Channel $13.5 million within five business days after the conditions contained in the foregoing clauses (x) and (y) are satisfied; provided, however, if the Company is prohibited by its principal senior lender or lenders from paying such sum in cash, then in lieu of such payment, the Company shall immediately issue to the Clear Channel a number of shares of Class A Common Stock having a fair market value equal to such sum (determined by taking the average closing price of the Class A Common Stock on the Nasdaq National Market for the ten (10) business days immediately following the public announcement of the termination of the Offer Agreement). If the Company issues shares to Clear Channel as contemplated in the preceding sentence, such shares shall be registered under the Securities Act of 1933, as amended, and freely tradeable upon delivery, or if the foregoing is not reasonably practicable, shall be subject to a registration rights agreement enabling Clear Channel to sell such shares without undue delay or expense. Clear Channel agrees in the Offer Agreement that recovery of damages shall be the sole and exclusive remedy of Clear Channel in connection with a termination of the Offer Agreement for the reasons set forth in clause (ii) of this paragraph, regardless of the actual damages sustained. The Offer Agreement provides Clear Channel waives the remedy of specific performance of the consummation of the transactions contemplated thereby. The Company acknowledges in the Offer Agreement that the agreements regarding payment of the $13.5 million termination fee are an integral part of the transactions contemplated in the Offer Agreement, and that, without these agreements, Clear Channel would not enter into the Offer Agreement. Accordingly, the Offer Agreement provides if the Company fails to promptly pay the $13.5 million termination fee when due, the Company shall in addition thereto pay to Clear Channel all costs and expenses (including fees and disbursements of counsel) incurred in collecting such amount together with interest on the unpaid amount from the date such payment was required to be made until the date such payment is received by the party entitled to such payment at a per annum rate equal to the prime rate, published in The Wall Street Journal under the heading "Money Rates" or a successor heading, as in effect from time to time during such period. Control of Stations. Until the grant of the FCC Consent, Clear Channel shall not directly or indirectly control, manage, supervise or direct the operation of the Company's radio stations or the conduct of the Company's business, including, but not limited to, matters relating to programming, personnel and finances, all of which shall remain and be solely the responsibility of and under the complete discretion and control of each licensee of the Company's radio stations. -13- 14 Expenses. The Offer Agreement provides all costs and expenses incurred in connection with the Offer and the Offer Agreement and the transactions contemplated thereby shall be paid by the party incurring such fees and expenses; provided, however, if the Closing occurs, Clear Channel guaranteed the Company would have sufficient cash to pay all of fees and costs payable to the investment bankers set forth on a schedule attached to the Offer Agreement and agreed to loan funds to the Company to pay such fees and costs if the Company does not have sufficient cash and provided further however the Company will be required to pay a termination fee under certain circumstances described under "Termination" above. Additional Agreements. Each of the parties to the Offer Agreement agreed to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Offer Agreement. Consents and Filings. The Offer Agreement provides each party will (a) within ten business days after the date thereof, make any required filings and submissions under the HSR Act with respect to the Offer, (b) substantially comply with any request for additional information issued by the Federal Trade Commission, the Department of Justice or any other antitrust authority in connection with the Offer, including the requests for production of documents and production of witnesses for interviews or depositions, and (c) take all reasonable actions to obtain any other consent, authorization, order or approval of, or any exemption by, any governmental entity required to be obtained or made in connection with the Offer and the other transactions contemplated by the Offer Agreement. In addition, each party is required to cooperate with and promptly furnish information to the other party in connection with obtaining such consents or making any such filings and will promptly furnish to the other party a copy of all filings made with a governmental agency, including, without limitation, any filings under the HSR Act. Stock Options. A schedule attached to the Offer Agreement lists all outstanding options to purchase Class A Common Stock and all warrants to purchase Class B Common Stock (individually, a "Convertible Security" and collectively, the "Convertible Securities). On the condition Clear Channel receives a consent from the holder of the applicable Convertible Security (the "Holder Consent"), each Convertible Security not exercised before the Closing Date will be deemed exercised on the Closing Date and the shares of Company Common underlying such Convertible Securities will be deemed to have been tendered in the Offer and accepted by Clear Channel. In settlement of such tenders so accepted, on the Closing Date, Clear Channel shall pay to the Company the exercise price for such Convertible Securities and shall pay to the holder thereof an amount equal to the Offer -14- 15 Price less (i) the exercise price for the Convertible Security and (ii) any taxes required to be withheld from such payment. The Offer Agreement provides the Board of Directors of the Company (or, if appropriate, any committee thereof) shall adopt such resolutions or take such other actions as are necessary, subject to obtaining any applicable security holder consent, to implement the terms and conditions of the prior sentence, including, without limitation, accelerating the vesting and exercisability of all Convertible Securities to the Closing Date; provided, however, that the vesting and exercisability of a Convertible Security shall not be accelerated if the holder thereof does not deliver the Holder Consent at or before the expiration of the Offer. Messrs. Cecil Heftel, Carl Parmer and Richard Heftel have consented to the treatment of their options to purchase Class A Common Stock set forth in the Offer Agreement. The Offer Agreement provides the Company and the Company Subsidiaries shall take such action as may be permitted under the Company's Stock Option Plan and/or the terms of the Convertible Securities to accelerate the vesting of the right to purchase all shares of Class A Common Stock subject to options included in the Convertible Securities on the Closing Date and shall comply with all requirements regarding income tax withholding in connection therewith. In addition to the foregoing, the Company will use its best efforts to obtain the Security Holder Consents and Acknowledgements referred to in Section 1.5 of the Offer Agreement and to provide Clear Channel with such other evidence requested by Clear Channel that no holder of any Convertible Security will have any right to acquire any equity interest in the Company, Clear Channel or any of their respective subsidiaries as a result of the exercise or conversion of any Convertible Security or other rights after the Closing Date. Amendment and Waiver. The Offer Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties thereto. Any party to the Offer Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party or (b) waive compliance with any of the agreements of any other party or with any conditions to its own obligations. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of the party making the waiver or granting the extension by a duly authorized officer. (2) Stockholder Purchase Agreement. The following is a summary of the material terms of the Stockholder Purchase Agreement, dated June 1, 1996 (the "Stockholder Purchase Agreement") among Clear Channel, Carl Parmer, Cecil Heftel and members of Cecil Heftel's family who own shares of Class B Common Stock or Series A Preferred Stock of the Company (Messrs. Parmer and Heftel and such members of Mr. Heftel's family collectively are referred to herein as the "Selling Stockholders"). This summary is not a complete -15- 16 description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof, which is incorporated herein by reference and a copy of which has been filed with the Commission as an Exhibit to Clear Channel's Schedule 14D-1. Purchase. Pursuant to the Stockholder Purchase Agreement, the Selling Stockholders agreed to sell each share of Company Common owned by them set forth on an exhibit to the Stockholder Purchase Agreement (collectively, the "Shares") to Clear Channel at the Offer Price. In addition, Ms. Catharine Rolph, the daughter of Cecil Heftel, agreed to sell all of the shares of Series A Preferred Stock owned by her to Clear Channel for a price of $1.00 per share, plus all accrued but unpaid dividends thereon (such purchase price equals the price the Company would pay if it redeemed such shares pursuant to the terms of such stock set forth in the Restated Certificate of Incorporation of the Company). Representations and Warranties. In the Stockholder Purchase Agreement, the Selling Stockholders make representations and warranties that the Stockholder Purchase Agreement is a valid and binding obligation of the Selling Stockholders, the execution and delivery of the Stockholder Purchase Agreement and the consummation of the transactions contemplated thereby do not violate any agreements, notes, leases, permits, licenses, judgments, orders, decrees or laws, no consent of a governmental authority is necessary for the Selling Stockholders to execute and deliver the Stockholder Purchase Agreement and consummate the transactions contemplated thereby, the Selling Stockholders have good title to the Shares and upon the sale thereof Clear Channel will acquire good title free and clear of all encumbrances and the Selling Stockholders do not own any Company Common other than the Shares. In the Stockholder Purchase Agreement, Clear Channel represents and warrants that it has the corporate power and authority to execute the Stockholder Purchase Agreement, the Stockholder Purchase Agreement is a valid and binding obligation of Clear Channel, Clear Channel is acquiring the Shares for investment only and not with a view to any public distribution thereof and Clear Channel will not offer to sell or otherwise dispose of the Shares in violation of any registration requirements of the Securities Act of 1933, as amended. Covenants of the Selling Stockholders. The Selling Stockholders made the following covenants in the Stockholder Purchase Agreement: (a) Each Selling Stockholder agreed in his capacity as a Selling Stockholder, until the termination of the Stockholder Purchase Agreement, not to: (i) sell, transfer, pledge, assign or otherwise dispose of, or tender or agree to tender into any -16- 17 tender offer with respect to, or enter into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of such Selling Stockholder's Shares to any person other than Clear Channel or Clear Channel's designee; (ii) acquire any additional shares of Company Common without the prior consent of Clear Channel; (iii) deposit any Shares into a voting trust or grant a proxy or enter into a voting agreement with respect to any Shares; (iv) hold discussions with any person other than Clear Channel and its affiliates with respect to any offer or potential offer for the Shares other than the Offer; or (v) solicit, encourage or take any other action to facilitate (including by way of furnishing information) any inquires or proposals for any merger or consolidation involving the Company, the acquisition of any shares of Company Common or the acquisition of all or substantially all the assets of the Company by any person other than Clear Channel or its sole stockholder. (b) To notify Clear Channel promptly and to provide all details requested by Clear Channel if such Selling Stockholder shall be approached or solicited, directly or indirectly, by any person with respect to any matter described in clauses (a)(iv) or (a)(v) above. (c) Unless the Stockholder Purchase Agreement has been terminated or Clear Channel has purchased all the Shares, at any annual or special meeting of the stockholders of the Company and in any action by written consent of the stockholders of the Company, such Selling Stockholder will vote such Selling Stockholder's Shares against any action or agreement which would result in a breach of any representation, warranty or covenant of the Company in the Offer Agreement or which would otherwise, in the sole judgment of Clear Channel, impede, interfere with or attempt to discourage the Offer. Conditions to Obligations of Certain Selling Stockholders. The obligations of Cecil Heftel, Chairman of the Board and Co-Chief Executive Officer of the Company ("Heftel"), and Carl Parmer, Co-Chief Executive Officer and President of the Company ("Parmer"), to consummate the transactions contemplated by the Stockholder Purchase Agreement are subject to the fulfillment on or prior to the date of the closing of the transactions contemplated by the Stockholder Purchase Agreement (the "Selling Stockholder Closing Date") of each of the following conditions: -17- 18 (a) the amounts set forth in Paragraph 1 of each of the Agreements Not to Compete entered into between the Company and Heftel and Parmer, dated June 1, 1996, shall have been paid. (b) the amounts set forth in Paragraph 1 of each of the Settlement Agreements between the Company and Heftel and Parmer, dated June 1, 1996, shall have been paid. Conditions to Obligations of Clear Channel. The obligations of Clear Channel to consummate the transactions contemplated by the Stockholder Purchase Agreement are subject to the fulfillment on or prior to the Selling Stockholder Closing Date of each of the following conditions: (a) The applicable waiting period under the HSR Act shall have expired or terminated. (b) The FCC Consent shall have become a Final Order; provided, however, if the primary lenders for Clear Channel do not require that the FCC Consent becomes a Final Order in order to consummate the closing of the transactions contemplated by the Stockholder Purchase Agreement (the "Selling Stockholder Closing"), then Clear Channel's condition shall be that the FCC shall have granted the FCC Consent and shall have given public notice of the grant of the FCC Consent. Notwithstanding the foregoing, in the event at the Closing the application for renewal of the license for WAMR-FM, Miami, Florida remains pending or has not become a Final Order, the parties agree the Selling Stockholder Closing shall occur. (c) No temporary restraining order, preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a government, regulatory or administrative agency or commission shall be in effect which restrains or prohibits the transactions contemplated by the Stockholder Purchase Agreement. (d) All representations and warranties of the Selling Stockholders contained in the Stockholder Purchase Agreement shall be true and correct in all material respects at and as of the Selling Stockholder Closing Date, except those representations and warranties which address matters only as of a particular date shall remain true and correct in all material respects as of such date. The Selling Stockholders shall have performed in all material respects agreements and covenants required by the Stockholder Purchase Agreement to be performed by them prior to or at the Selling Stockholder Closing Date. Indemnification. Pursuant to the Stockholder Purchase Agreement, Clear Channel agreed to indemnify each Selling Stockholder (the "Indemnified Party") against all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement with the approval of Clear -18- 19 Channel arising out of or related to any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the Stockholder Purchase Agreement or the Offer Agreement or the transactions contemplated therein; provided, however, that no indemnity shall be available to the extent a court of competent jurisdiction finally determines that the claim for indemnity is caused by the Indemnified Party knowingly or intentionally misrepresenting that he or she may enter into the Stockholder Purchase Agreement. Termination. The Stockholder Purchase Agreement may be terminated, by written notice promptly given to the other parties thereto, at any time prior to the Selling Stockholder Closing Date: (a) by mutual written consent of all of the parties thereto; (b) by any Selling Stockholder as to his individual obligations if the Company is able to terminate the Offer Agreement pursuant to any of subparagraphs 8.1(b), (c), (d), (f), or (g) of the Offer Agreement; and (c) by Clear Channel if Clear Channel has terminated the Offer Agreement pursuant to any of subparagraphs 8.1(b), (c), (d), (e), or (g) of the Offer Agreement. (3) Agreements with Cecil Heftel and Carl Parmer. Settlement Agreements. In December 1993, the Company entered into ten-year Employment Agreements with Cecil Heftel and Carl Parmer under which each of them is entitled to receive a base annual salary of $500,000 and bonuses based on the performance of the Company. Under those Employment Agreements, if the Company terminates the employment of Mr. Heftel or Mr. Parmer without cause, he will be entitled to receive a lump sum payment equal to the present value of all amounts remaining to be paid by the Company to him under his Employment Agreement. For purposes of calculating future bonuses, the Company will be deemed to have achieved the performance level necessary to pay the maximum bonus. Clear Channel has informed Mr. Heftel and Mr. Parmer that it intends to cause the Company to terminate their employment, without cause, immediately following the purchase of Shares pursuant to the Stockholder Purchaser Agreement. Concurrently with the execution of the Stockholder Purchase Agreement, Mr. Heftel and Mr. Parmer each entered into a Settlement Agreement (each, a "Settlement Agreement") with the Company. Pursuant to the respective Settlement Agreements, the employment by the Company of Mr. Heftel and Mr. Parmer will terminate immediately following the -19- 20 purchase of Shares pursuant to the Stockholder Purchase Agreement and the Company will pay Mr. Heftel $11,861,069 and Mr. Parmer $6,941,960 in exchange for releases by Mr. Heftel and Mr. Parmer from any claims resulting from termination of their Employment Agreements with the Company. Clear Channel has guaranteed the obligations of the Company under the Settlement Agreements. The total amount to be paid to each of Mr. Heftel and Mr. Parmer under his Settlement Agreement and Agreement Not to Compete (described below) does not exceed the present value of all amounts remaining to be paid to him by the Company under his Employment Agreement. Agreements Not To Compete. Concurrently with the execution of the Stockholder Purchase Agreement, each of Cecil Heftel and Carl Parmer entered into an Agreement Not To Compete with the Company. Pursuant to these agreements each of Messrs. Heftel and Parmer agreed that for a period of five years commencing on the Selling Stockholder Closing Date, without the prior written consent of the Company, he will not, directly or indirectly, own (except that he may own securities which constitute not more than five percent (5%) of a publicly traded company's issued and outstanding capital stock), work for, act as consultant or advisor to, manage, operate, or control or participate in the ownership, management, operation or control of, any radio station in the markets set forth in the Agreement Not To Compete which broadcasts predominantly in Spanish. In consideration of these agreements not to compete, the Company agreed to pay $4.5 million to Mr. Parmer and $2.5 million to Mr. Heftel on the Selling Stockholder Closing Date. Clear Channel guaranteed the obligations of the Company under each Agreement Not To Compete. (4) Confidentiality Agreement The following is a summary of the material terms of the Confidentiality Agreement, dated May 31, 1996, (the "Confidentiality Agreement") between the Company and Clear Channel. This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof, which is incorporated herein by reference and a copy of which has been filed with the Commission as an Exhibit to Clear Channel's Schedule 14D-1. Under the Confidentiality Agreement, Clear Channel agreed to use any information concerning the Company (whether prepared by the Company, its advisors, or otherwise) that is furnished to it by or on behalf of the Company (herein collectively referred to as the "Evaluation Material") solely for the purpose of evaluating a possible transaction between the Company and Clear Channel and to keep all Evaluation Material confidential. The term "Evaluation Material" does not include information that (i) was already in Clear Channel's possession, provided that it does not have reason to know that such -20- 21 information is subject to another confidentiality agreement with or other obligation of secrecy to the Company or another party, or (ii) becomes generally available to the public other than as a result of a disclosure by Clear Channel or its directors, officers, partners, employees, agents, advisors or representatives (collectively, the "Representatives") or (iii) has been independently acquired or developed by Clear Channel or its Representatives without violating Clear Channel's obligations under the Confidentiality Agreement. Clear Channel agreed that none of its officers, directors, employees or other Representatives who had access to Evaluation Material will, directly or indirectly, initiate or maintain contact (except for those contacts made in the ordinary course of business) with any officer, director, employee or agent of the Company, except with the express prior written permission of the Company, or solicit or cause to be solicited, based on use of the Evaluation Materials, the employment of any director, officer or employee of the Company or of any of its subsidiaries (whether employed by the Company or its subsidiaries prior to, during or following such period). The obligations under the Confidentiality Agreement expire on May 31, 1998. (5) Contracts with Officers, Directors or Affiliates. Certain contracts, agreements, arrangements or understandings between the Company or its affiliates and certain of its executive officers, directors or affiliates are described in the Company's Proxy Statement dated February 12, 1996 relating to the Company's Annual Meeting of Stockholders held on March 11, 1996 (the "Proxy Statement") under the heading "Executive Compensation and Other Matters," on pages 7 through 10 of the Proxy Statement, a copy of which has been filed as an Exhibit hereto. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) The Board of Directors of the Company has determined that the making of the Offer is in the best interests of the Company and its stockholders and has unanimously approved the Offer Agreement and the Offer, but is expressing no opinion and is remaining neutral with respect to whether stockholders should accept the Offer and tender their shares. (b) Set forth below are a summary of the history of the negotiations and the reasons for the position stated in Item 4(a). History of Negotiations. In the Fall of 1995, Mr. L. Lowry Mays, President and Chief Executive Officer of Clear Channel Communications, Inc., indirect owner of Clear Channel ("Parent"), informally inquired of Cecil Heftel whether the Company would have any interest in a possible acquisition by Parent. Mr. Heftel informed Mr. Mays that the Company was not -21- 22 interested in an acquisition at that time, and Parent did not pursue the matter further. In late January 1996, the board of directors of the Company, after meeting with the Company's financial advisor, Alex. Brown & Sons Incorporated ("ABS"), determined to investigate the sale of the Company. ABS and the Company identified certain companies in the broadcasting business as potential acquirors of the Company. In February 1996, the Company began entering into confidentiality agreements with certain of these potential acquirors and provided to such potential acquirors certain information regarding the Company, including reports filed with the Commission. ABS contacted Parent to determine whether Parent had any interest in pursuing a possible business combination with or acquisition of the Company and forwarded to Parent a form of confidentiality agreement, but Parent refused to enter into the confidentiality agreement and informed ABS that it was not interested in pursuing a transaction at that time on such terms. The Company and ABS limited parties contacted in order to avoid premature disclosure of the possibility of a sale of the Company, which the Board of Directors believed could adversely affect the Company's business. By March 18, 1996, the Company had received letters of interest from six potential acquirors which set forth general terms of a proposed transaction involving the Company. After reviewing these letters, the Company continued discussions with five potential acquirors. In late March, 1996, the Company began intensive negotiations with one potential acquiror. The Company caused its counsel to prepare drafts of a proposed acquisition agreement and the Company and its counsel spent numerous hours negotiating the terms and structure of the proposed acquisition. In addition, the Company and its counsel delivered various documents and information to the prospective acquiror in response to due diligence requests of such prospective acquiror. The price which this prospective acquiror was willing to pay under the last draft of the acquisition agreement circulated among the participants was $22.50 and was subject to upward or downward adjustment based on the results of operations of the Company through September 30, 1996, and the balance sheet of the Company at September 30, 1996. As of May 29, 1996, this prospective acquiror had not yet agreed to the terms of the proposed acquisition agreement. On the morning of May 29, 1996, Carl Parmer, Co- Chief Executive Officer and President of the Company, received a telephone call from Randall Mays, Vice President of Parent, in which he offered, on behalf of Parent or a subsidiary of Parent, to purchase the shares of Company Common held by Mr. Parmer, Cecil Heftel and the members of Cecil Heftel's family for the Offer Price and to make a tender offer for the remaining shares of the Company Common for the Offer Price. For the remainder of such day, the Company and its representatives had negotiations -22- 23 with Parent and its counsel with respect to the structure of the transaction proposed by Parent. On May 30, 1996, negotiations between the Company and Parent and their respective representatives continued, and counsel for the Company delivered to Parent a draft of a proposed Tender Offer Agreement. Parent and its legal counsel also commenced discussions on May 30, 1996, with representatives of the Selling Stockholders and their counsel. On May 30 and 31, 1996, the Company, Parent, representatives of the Selling Stockholders and their respective counsel had conference calls in which certain terms of the proposed Tender Offer Agreement, Stockholder Purchase Agreement, Settlement Agreements and Agreements Not to Compete were negotiated and resolved. On May 31, 1996, Clear Channel entered into a Confidentiality Agreement with the Company. In the late afternoon (Pacific time) of May 31, 1996, the Board of Directors of the Company unanimously approved the Offer and determined to recommend that the stockholders tender their shares of Company Common in response to the Offer. On June 1, 1996, Clear Channel and the Company entered into the Offer Agreement, Clear Channel and the Selling Stockholders entered into the Stockholder Purchase Agreement and Messrs. Heftel and Parmer entered into their respective Settlement Agreements and Agreements Not To Compete with the Company and Clear Channel. On several occasions during the following days, representatives of Clear Channel and the Company discussed the composition of the Company's Board of Directors following the closing of the Offer and Stockholder Purchaser Agreement but did not reach agreement with respect to such matter. On June 6, 1996, Clear Channel and the Company entered into an Amendment No. 1 to the Offer Agreement, which Amendment (a) provides for the treatment of options and warrants as described elsewhere in this Schedule 14D-9, rather than cancellation and payment for such options and warrants upon the closing of the Offer, (b) provides that upon the occurrence of the Closing Clear Channel shall guarantee that the Company will pay the investment banking firm fees and expenses incurred by the Company under agreements listed on a schedule to the Offer Agreement (including by loaning funds to the Company if necessary) rather than pay such fees and expenses directly, and (c) waives the provision which requires the Company to file its Schedule 14D-9 on June 7, 1996. On June 6, 1996, the Selling Stockholders who own options or warrants also consented to the treatment of their options and warrants as provided in Amendment No. 1 to the Offer Agreement. On June 6, 1996, the Board of Directors of the Company unanimously approved Amendment No. 1 to the Offer -23- 24 Agreement and discussed the effect the market price of Class A Common Stock may have on its previous determination to recommend acceptance of the Offer by the Company's stockholders. On June 20, 1996, Clear Channel and the Company entered into an Amendment No. 2 to the Offer Agreement, which Amendment (a) provides the Company may either recommend acceptance of the Offer by its stockholders or may remain neutral with respect to the Offer in its Schedule 14D-9, instead of the original provision which required the Company to recommend acceptance of the Offer, (b) provides the representation by the Company that its board of directors resolved to recommend acceptance of the Offer need only be true as of June 1, 1996, and (c) modified one of the termination sections to provide either the Company or Clear Channel may terminate the Offer Agreement 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 Clear Channel, 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 Clear Channel or its affiliates; provided, however, that Clear Channel shall not terminate the Offer 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. On June 20, 1996, the Board of Directors of the Company unanimously approved Amendment No. 2 to the Offer Agreement, confirmed that the making of the Offer was in the best interests of the Company and its stockholders and determined to refrain from expressing an opinion on, and instead remain neutral with respect to, whether stockholders should accept the Offer and tender their shares. Reasons for the Position. In arriving at its determination that the making of the Offer is in the best interests of the Company and its stockholders and its initial decision to recommend acceptance of the Offer, the Board of Directors considered, among other things, (i) the terms and conditions of the Offer, including (a) the amount and form of the consideration being offered to the Company's stockholders, (b) the fact that the Offer was being made for any and all shares of Company Common and at the same price per share at which the Selling Stockholders had agreed to sell their shares to Clear Channel, and (c) the fact that Clear Channel had agreed to use -24- 25 its best efforts, for a period of one year from and after the closing of the Offer, to cause the shares of Class A Common Stock to remain listed or quoted on a recognized national exchange or NASD quotation system; (ii) the recent and historical market prices and trading volume of the Shares, and historical and projected earnings of the Company; (iii) the Board of Directors' knowledge of the business, operations, prospects, properties, assets and earnings of the Company; (iv) the absence of any financing condition or any other term or condition which in the Board's view was unduly onerous or could materially impair the consummation of the Offer; (v) the financial condition and business reputation of Clear Channel, the representation from Clear Channel that it has funds or commitments for funds to pay for all shares tendered in the Offer and the ability of Clear Channel to complete the Offer in a timely manner; (vi) possible alternatives, which the Board concluded were not reasonably likely to result in a more favorable combination of price, form of consideration and likelihood of consummation than the Offer; (vii) the market trading multiples for selected broadcasting companies and prices paid in recent acquisitions in the broadcasting industry, (viii) the scope and level of the negotiating process that led to the finalization of the Offer Agreement; (ix) the fact that the Offer Agreement does not preclude the Company from reviewing, if after consultation with its outside legal counsel such action is required for the discharge of its fiduciary duties to the stockholders of the Company, an unsolicited proposal which may differ from the Offer; and (x) the oral presentations by ABS at the May 31, 1996, board meeting and the oral opinion, which was later confirmed in a written opinion dated June 3, 1996, to the effect that, as of the date of the opinion, the consideration to be received by the stockholders pursuant to the Offer was fair from a financial point of view to the stockholders (the full text of ABS's written opinion is attached as Exhibit (a)(3) hereto and is incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF ABS CAREFULLY AND IN ITS ENTIRETY). The Board of Directors did not assign relative weights to the foregoing factors or determine that any factor was of primary importance. Rather, the directors viewed their position as being based on the totality of the information presented to and considered by them. At the time the Company's Board of Directors approved the Offer on May 31, 1996, the Company's trading price for the Class A Common Stock on the Nasdaq National Market was less than $23 per share. Since the Company and Clear Channel jointly announced the Offer on June 2, 1996, the trading price for the Class A Common Stock on the Nasdaq National Market has increased to more than $23 per share. On June 19, 1996, the closing sale price per share of the Class A Common Stock on the Nasdaq National Market was $29. Although the Board of Directors of the Company has determined that the making of the Offer is in the best interests of the Company and its stockholders and has -25- 26 unanimously approved the Offer Agreement and the Offer, the Board of Directors is at this time expressing no opinion and is remaining neutral as to whether the stockholders should accept the Offer and tender their shares because the market price per share of Class A Common Stock in the Nasdaq National Market is currently higher than the Offer Price. Since the closing of the Offer and the closing of Clear Channel's purchase of Company Common and Series A Preferred Stock of the Company from the Selling Stockholders pursuant to the Stockholder Purchase Agreement are not conditioned on a specified minimum number of shares of Company Common being tendered pursuant to the Offer, stockholders of the Company other than the Selling Stockholders will have a choice of accepting the Offer and tendering their shares to Clear Channel in response thereto, retaining their shares or selling their shares in the public market or otherwise, as they may determine. The Company is informed that the average daily volume of shares of Class A Common Stock of the Company purchased and sold on the Nasdaq National Market since the Offer was publicly announced on June 2, 1996 through June 19, 1996 was 520,054. Pursuant to the Offer Agreement, Clear Channel has agreed to use its best efforts, for a period of one year from and after the closing of the Offer, to cause the shares of Class A Common Stock to remain listed or quoted on a recognized national exchange or NASD quotation system. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. Pursuant to a letter agreement dated February 16, 1996 (the "Engagement Letter"), the Company engaged ABS to provide investment banking advice and services to the Company in connection with the Company's review and analysis of potential business combinations. The Company agreed to pay ABS a retainer fee of $50,000 and a fee of $400,000 if ABS delivered a fairness opinion requested by the Company in connection with a proposed business combination. The Company also agreed to reimburse ABC for reasonable out-of-pocket expenses, including fees and disbursements of counsel, incurred by ABS in carrying out its duties under the Engagement Letter, and to pay ABS its customary per diem charges for the services of any officers that assist in, or provide testimony in connection with any action, suit or proceeding relating to the engagement of ABS by the Company. In addition, ABS will receive a fee upon completion of the Offer and consummation of the transactions contemplated by the Stockholder Purchase Agreement of $3.1 million. The terms of the fee arrangement with ABS, which ABS and the Company believe are customary in transactions of this nature, were negotiated at arm's length between the Company and ABS and the Board of Directors of the Company was aware of and approved such arrangement. ABS has provided certain investment banking services to the Company and Parent from time to time for which it has received customary compensation. In the ordinary course of its business, ABS may actively trade the equity securities of the Company -26- 27 and/or Parent for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. Except as disclosed herein the Company has not retained, employed or compensated, and does not plan to retain, employ or compensate, any persons to make solicitations or recommendations to security holders with regard to the Offer. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES. (a) Other than the following transactions completed on the Nasdaq National Market there are no transactions in Company Common known by the Company to have been effected by an executive officer, director, affiliate or subsidiary of the Company: (i) On June 5, 1996, Madison B. Graves, II, a director of the Company, sold 12,000 shares of Class A Common Stock; (ii) On June 13 and 17, 1996, John Kendrick, Senior Vice President and Chief Financial Officer of the Company, exercised options to purchase 8,333 and 5,000 shares of Class A Common Stock, respectively, and sold such shares; and (iii) On June 13, 1996, John E. Mason, a director of the Company, exercised an option to purchase 2,500 shares of Class A Common Stock and sold such shares. (b) All of the officers and directors who are parties to the Stockholder Purchase Agreement intend to sell their shares of Company Common to Clear Channel pursuant to the terms thereof. In addition, each of the officers and directors of the Company intends to consent to the treatment of their Convertible Securities set forth in the Offer Agreement described under Item 3(b). ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY. (a) None, except as disclosed in Items 3(b) and 4. (b) None. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. On June 14, 1996, Levine v. Cecil Heftel, H. Carl Parmer, Madison Graves, Richard Heftel, John Mason, Heftel Broadcasting Corporation and Clear Channel Communications, Inc. (Case No. 15066) was filed in the Court of Chancery of the State of Delaware in the County of New Castle. This complaint is a purported class action complaint on behalf of Jeffrey Levine and all other stockholders of the Company to enjoin the defendants -27- 28 from effectuating the Offer. The plaintiff alleges, inter alia, that the Offer is coercive to minority stockholders and manifestly unfair and that the Offer Price is substantially below the fair market value of the Class A Common Stock. The plaintiff also alleges that Cecil Heftel and Carl Parmer are breaching their fiduciary duties to the stockholders of the Company by entering into the Settlement Agreements and Agreements Not To Compete described under Item 3(b) hereof. The suit seeks to enjoin preliminarily and permanently the defendants from proceeding with or consummating the proposed transactions or in the event the Offer is completed, the rescission thereof and/or the grant of rescissory damages. In addition, plaintiff seeks unspecified compensatory damages and an award of attorneys' fees and costs. The Company believes this action is groundless and has no merit. The Company intends to oppose this action vigorously. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. Exhibit Description (a)(1) Text of Press Release dated June 2, 1996 (incorporated herein by reference to Exhibit 99(a)(6) of Clear Channel's Schedule 14D-1 filed on June 7, 1996) (a)(2) Summary Advertisement of Clear Channel (incorporated herein by reference to Exhibit 99(a)(3) of Clear Channel's Schedule 14D-1 filed on June 7, 1996) (a)(3) Opinion of Alex. Brown & Sons Incorporated dated June 3, 1996. (c)(1) Tender Offer Agreement, dated June 1, 1996, between the Company and Clear Channel (incorporated herein by reference to Exhibit 99(c)(1) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(2) Amendment No. 1 to Tender Offer Agreement dated June 6, 1996 (incorporated herein by reference to Exhibit 99(c)(9) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(3) Amendment No. 2 to Tender Offer Agreement dated June 20, 1996 -28- 29 (c)(4) Agreement Not To Compete, dated June 1, 1996, between the Company and Carl Parmer (incorporated herein by reference to Exhibit 99(c)(4) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(5) Agreement Not To Compete, dated June 1, 1996, between the Company and Cecil Heftel (incorporated herein by reference to Exhibit 99(c)(3) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(6) Settlement Agreement, dated June 1, 1996, between the Company and Carl Parmer (incorporated herein by reference to Exhibit 99(c)(6) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(7) Settlement Agreement, dated June 1, 1996, between the Company and Cecil Heftel (incorporated herein by reference to Exhibit 99(c)(5) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(8) Confidentiality Letter Agreement dated May 31, 1996, between the Company and Clear Channel (incorporated herein by reference to Exhibit 99(c)(12) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(9) Consents of Cecil Heftel, Carl Parmer and Richard Heftel to treatment of Options (incorporated herein by reference to Exhibit 99(c)(10) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(10) Consent of Stockholders dated as of June 20, 1996. (c)(11) Pages 7 through 10 of the Proxy Statement for the 1996 Annual Stockholders' Meeting. -29- 30 SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: June 20, 1996 HEFTEL BROADCASTING CORPORATION By: /s/ Carl Parmer ______________________________ Carl Parmer, Co-Chief Executive Officer and President -30- 31 EXHIBIT INDEX Exhibit Description Page (a)(1) Text of Press Release dated June 2, 1996 (incorporated herein by reference to Exhibit 99(a)(6) of Clear Channel's Schedule 14D-1 filed on June 7, 1996) (a)(2) Summary Advertisement of Clear Channel (incorporated herein by reference to Exhibit 99(a)(3) of Clear Channel's Schedule 14D-1 filed on June 7, 1996) (a)(3) Opinion of Alex. Brown & Sons Incorporated dated June 3, 1996. (c)(1) Tender Offer Agreement, dated June 1, 1996, between the Company and Clear Channel (incorporated herein by reference to Exhibit 99(c)(1) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(2) Amendment No. 1 to Tender Offer Agreement dated June 6, 1996 (incorporated herein by reference to Exhibit 99(c)(9) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(3) Amendment No. 2 to Tender Offer Agreement dated June 20, 1996 (c)(4) Agreement Not To Compete, dated June 1, 1996, between the Company and Carl Parmer (incorporated herein by reference to Exhibit 99(c)(4) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(5) Agreement Not To Compete, dated June 1, 1996, between the Company and Cecil Heftel (incorporated herein by reference to Exhibit 99(c)(3) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(6) Settlement Agreement, dated June 1, 1996, between the Company and Carl Parmer (incorporated herein by reference to Exhibit 99(c)(6) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). -31- 32 (c)(7) Settlement Agreement, dated June 1, 1996, between the Company and Cecil Heftel (incorporated herein by reference to Exhibit 99(c)(5) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(8) Confidentiality Letter Agreement dated May 31, 1996, between the Company and Clear Channel (incorporated herein by reference to Exhibit 99(c)(12) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(9) Consents of Cecil Heftel, Carl Parmer and Richard Heftel to treatment of Options (incorporated herein by reference to Exhibit 99(c)(10) of Clear Channel's Schedule 14D-1 filed on June 7, 1996). (c)(10) Consent of Stockholders dated as of June 20, 1996. (c)(11) Pages 7 through 10 of the Proxy Statement for the 1996 Annual Stockholders' Meeting. -32- EX-99.(A).(3) 2 OPINION OF ALEX. BROWN & SONS 1 Exhibit (a)(3) [ALEX. BROWN LETTERHEAD] June 3, 1996 The Board of Directors Heftel Broadcasting Corporation 6767 West Tropicana Avenue Las Vegas, NV 89103 Dear Sirs: Heftel Broadcasting Corporation ("Heftel" or the "Company") intends to enter into a Tender Offer Agreement (the "Agreement") with Clear Channel Communications, Inc. ("Clear Channel"), a Texas Corporation, on or about June 3, 1996. Pursuant to the Agreement, Clear Channel would promptly commence a tender offer (the "Offer") to purchase all of the outstanding shares of the Class A Common Stock, par value of $.001 per share, of the Company (the "Class A Common Stock") and Class B Common Stock, par value $.001 per share, of the Company (the "Class B Common Stock") for a price of $23.00 per share, in cash. You have requested our opinion as to whether the $23.00 per share, in cash, to be received by the holders of the Class A and Class B Common Stock pursuant to the Agreement is fair, from a financial point of view, to such holders. Alex. Brown & Sons Incorporated ("Alex. Brown"), as a customary part of its investment banking business, is engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, private placements and valuations for estate, corporate and other purposes. We have acted as financial advisor to the Board of Directors of Heftel in connection with the transaction described above and will receive a fee for our services, a portion of which is contingent upon the completion of the Offer and the transfer of Heftel shares held by certain Heftel executives. We also acted as manager of a public offering of the Class A Common Stock of Heftel in July of 1994. Alex. Brown regularly publishes research reports regarding the radio broadcasting industry and the businesses and securities of publicly owned companies in that industry. In the ordinary course of business, we may actively trade the securities of both the Company and the Buyer for our own account and the account of our customers and, accordingly, may at any time hold a long or short position in securities of the Company and the Buyer. we have also acted as a manager for a September 1993 public offering of Clear Channel Common Stock, and are currently acting as a manager for an anticipated public offering of Clear Channel common stock. In connection with our opinion, we have reviewed certain publicly available financial information concerning Heftel and certain internal financial analyses and other information furnished to us by Heftel. We have also held discussions with members of the senior management of Heftel regarding the business and prospects of the Company. In addition, we have (i) reviewed the reported price and trading activity for the Common Stock of Heftel, (ii) compared certain financial and stock market information for Heftel with similar information for certain radio 2 Heftel Broadcasting Corporation June 3, 1996 Page Two broadcasting companies whose securities are publicly traded, (iii) reviewed the financial terms of certain recent business combinations which we deemed comparable in whole or in part and (iv) performed such other studies and analyses and considered such other factors as we deemed appropriate. We have not independently verified the information described above and for purposes of this opinion have assumed the accuracy, completeness and fairness thereof. With respect to information relating to the prospects of Heftel, we have assumed that such information reflects the best currently available estimates and judgments of management of Heftel as to the likely future financial performance of Heftel. In addition, we have not made an independent evaluation or appraisal of the assets of Heftel, nor have we been furnished with any such evaluation or appraisal. Our opinion is based on market, economic and other conditions as they exist and can be evaluated as of the date of this letter. Our opinion expressed herein was prepared for the use of the Board of Directors of the Company and does not constitute a recommendation to the Company's stockholders as to whether or not to tender their shares pursuant to the Offer. We hereby, consent; however, to the inclusion of this letter as an exhibit to the Schedule 14D-9 to be filed with the Securities and Exchange Commission in connection with this Offer. Based upon and subject to the foregoing, it is our opinion that, as of the date of this letter, the $23.00 per share, in cash, to be received by the holders of the Class A and Class B Common Stock pursuant to the Agreement is fair, from a financial point of view, to such holders. Very truly yours, /s/ J. S. Amling ------------------------------- ALEX. BROWN & SONS INCORPORATED EX-99.(C).(3) 3 AMENDMENT #2 TO TENDER OFFER AGREEMENT 1 Exhibit (c)(3) 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).(10) 4 CONSENT OF STOCKHOLDERS 1 Exhibit (c)(10) 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.(C).(11) 5 PROXY STATEMENT PAGES 1 Exhibit (c)(11) Employment Agreements To replace the Company's Management Agreement with Heftel Management Group, the Company entered into ten-year Employment Agreements with each of Messrs. Cecil Heftel and Carl Parmer on December 1, 1993. These Employment Agreements are substantially similar and provide for each of Messrs. Heftel and Parmer to receive a base annual salary of $500,000 and bonuses based on the performance of the Company. Upon the occurrence of any Termination Event (as defined below) and the vote of a majority of the Board of Directors, which must include two-thirds of the members of the Board of Directors who are not employees of the Company (collectively, "Termination Conditions"), the Company may terminate the Employment Agreement. If such a termination occurs, Mr. Heftel or Mr. Parmer, as the case may be, will be entitled to receive all amounts payable by the Company under his Employment Agreement to the date of termination. If the Company terminates the Employment Agreement without satisfying the Termination Conditions or if Mr. Heftel or Mr. Parmer terminates the Employment Agreement because of a breach by the Company of its obligations thereunder, the assignment to him of duties substantially inferior to the duties of a Co-Chief Executive Officer or a change in control of the Company, Mr. Heftel or Mr. Parmer, as the case may be, will be entitled to receive a lump sum payment equal to the present value of all amounts remaining to be paid by the Company under the Employment Agreement. For purposes of calculating future bonuses, the Company will be deemed to have achieved the performance level necessary to pay the maximum bonus. Payments as a result of a Termination Event have been deferred by Messrs. Heftel and Parmer pursuant to an agreement with the Company's lender. In January 1994, KTNQ/KLVE and Mr. Richard Heftel entered into a seven-year Employment Agreement pursuant to which Mr. Heftel receives a yearly salary of $300,000 plus bonuses based on the performance of KTNQ/KLVE. Upon the occurrence of any Termination Event and the action of a majority of the Board of Directors who are not employees of KTNQ/KLVE or its affiliates (collectively, a "Termination Reason"), KTNQ/KLVE may terminate the Employment Agreement. If such a termination occurs, Mr. Heftel will be entitled to receive all amounts payable by KTNQ/KLVE under his Employment Agreement to the date of termination. If KTNQ/KLVE terminates the Employment Agreement for a reason other than the occurrence of a Termination Reason or if Mr. Heftel terminates the Employment Agreement because of a breach by KTNQ/KLVE of its obligations thereunder, the assignment to him of duties substantially inferior to the duties of a President and General Manager or a change in control of KTNQ/KLVE, Mr. Heftel will be entitled to receive a lump sum payment equal to the present value of all amounts remaining to be paid by KTNQ/KLVE under the Employment Agreement. For purposes of calculating future bonuses, KTNQ/KLVE will be deemed to have achieved the performance level reached in the fiscal year ended immediately prior to the termination. Payments as a result of a Termination Reason have been deferred by Mr. Heftel pursuant to an agreement with the Company's lender. "Termination Event" means any of the following: (i) the commission and proving of an act of fraud or embezzlement against the employer by the executive, (ii) the executive being convicted of a crime constituting a felony; (iii) the executive committing acts involving willful malfeasance or gross misconduct in connection with his employment which have the potential for causing a materially adverse effect on the business or licensing of the employer; (iv) mutual agreement of the employer and the executive to terminate the Employment Agreement; and (v) any material default in performance of the Employment Agreement by the executive which has not been cured within 30 days following written notice by the employer to the executive. On August 1, 1995, the Company and Mr. John Kendrick entered into a three-year Employment Agreement pursuant to which Mr. Kendrick currently receives a yearly salary of $180,000 (subject to increases in the second and third years) plus bonuses determined by the Company subject to a minimum bonus of $35,000 for the first year (the minimum bonus is increased in the second and third years). The Company may terminate the Employment Agreement upon the occurrence of certain events which are similar to Termination Events. If such a termination occurs, Mr. Kendrick will be entitled to receive all amounts payable by the Company under his Employment Agreement to the date of termination. If the Company terminates the Employment Agreement for a reason other than the occurrence of the events set forth in the Employment Agreement, Mr. Kendrick will be entitled to receive his salary and minimum bonus through the later of the one year anniversary of the termination date or the end of the term of the Employment Agreement (the "Period") (which the Company may pay in a lump sum payment equal to the present value of such amounts) and monthly premiums payable for allowing Mr. Kendrick and his family to participate in the Company's health insurance for the shorter of the Period or the maximum COBRA continuation coverage period mandated by law. At the end of the initial three year term, the Employment Agreement is -7- 2 automatically extended for one year unless the Company gives notice of non-renewal at least six months prior to the end of the initial three year period. If a change in control of the Company occurs, the term of the Employment Agreement is automatically extended for three years from the date of the change of control. Stock Option Plan The Company adopted a stock option Plan ("Stock Option Plan") in 1994, under which a maximum of 750,000 shares of Class A Common Stock may be issued upon exercise of options granted to directors, officers or other key employees of the Company or its subsidiaries. The Stock Option Plan is administered by the Board of Directors, or in the discretion of the Board of Directors, a committee of not less than two directors. The Board of Directors or this committee determines employees to whom options will be granted, the timing and manner of grant of options, the exercise price, the number of shares covered by and all of the terms of options, the duration of leaves of absence which may be granted to optionees without constituting termination of employment for purposes of the Stock Option Plan, and all other determinations necessary or advisable for administration of the plan. The Compensation Committee will function as the Stock Option Committee to administer the Stock Option Plan. The Stock Option Plan permits the grant of stock options which qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, ("ISOs") and stock options which do not so qualify ("NQSOs"). The purchase price for shares subject to any option must not be less than 100% of the fair market value of the shares of Class A Common Stock on the date the option is granted. No ISO shall be exercisable after the earliest of the expiration of ten years after the date the option is granted, three months after the date the optionee's employment with the Company terminates if termination is for any reason other than permanent disability or death, or one year after the date the optionee's employment terminates if termination is a result of death or permanent disability. Under the Stock Option Plan, each Eligible Director (as defined below) will receive a NQSO to purchase 5,000 shares of Class A Common Stock automatically on the date the person becomes an Eligible Director. An Eligible Director is a non-employee director who does not own directly or indirectly more than 1% of the outstanding shares of Class A or Class B Common Stock and who has not within the preceding three years received any stock option or other similar stock award from the Company or any of its subsidiaries. No NQSO shall be exercisable after the earliest of ten years after the date of grant, three months after the date the holder ceases to be a director for any reason other than permanent disability or death or one year after the holders ceases to be a director of the Company as a result of death or permanent disability. Unless sooner terminated by the Board of Directors, the Stock Option Plan expires in April 2004. DIRECTOR COMPENSATION Each member of the Board of Directors who is not an employee of the Company receives an annual fee of $10,000, payable in quarterly installments of $2,500, and a fee of $2,000 for each board or committee meeting attended. The Company also reimburses directors for expenses related to attending board or committee meetings. For options granted to certain directors, see "Stock Option Plan." CERTAIN TRANSACTIONS The Tower Comopany, Inc. ("TTC"), a wholly-subsidiary of the Company, previously loaned $293,303 to Mr. Christopher Heftel, the son of Mr. Cecil Heftel. This loan bears interest at 7% per annum, with principal and interest due on demand. At December 31, 1995, Mr. Heftel owed $386,773 to TTC. TTC previously loaned $100,000 to Mr. Cecil Heftel. This loan bears interest at 7% per annum, with principal and interest due on demand. At December 31, 1995, Mr. Heftel owed $135,695 to TTC. -8- 3 On February 11, 1992, the predecessor-in-interest to the Company granted to Mr. Carl Parmer as part of his employment agreement the right to purchase 188,925 shares of Class B Common Stock at a per share price of $4.51. In connection with entering into Mr. Parmer's Employment Agreement in December 1993, the Company issued to Mr. Parmer a warrant to purchase 188,925 shares of Class B Common Stock at the same exercise price as a replacement of the rights of Mr. Parmer to purchase the 188,925 shares of Class B Common Stock under his previous employment agreement. On August 3, 1994, Mr. Parmer exercised these warrants and in connection with such exercise, the Company made a loan in the amount of $1.25 million, approximately $852,000 of which was used to pay the exercise price of the warrants and the remainder of which was used to pay income taxes payable by Mr. Parmer upon exercise of the warrants. The loan bears interest at a rate of 7.67% per annum and is due on August 3, 2004. As of December 31, 1995, Mr. Parmer owed a total of $1,294,318 under this loan. On June 3, 1993, Messrs. Carl Parmer and Richard Heftel each borrowed $366,000 from the Company and used the proceeds to purchase 94,462 shares of Class B Common Stock from a third-party stockholder. These loans accrue interest at a rate of 4.5% per annum. Interest and principal are due on June 2, 2002. As of December 31, 1995, a total of $408,548 was owed by each of Messrs. Parmer and Heftel under this loan. On October 8, 1993, Mr. Carl Parmer borrowed $1 million from the Company and used the proceeds to purchase 226,695 shares of Class B Common Stock. This loan accrues interest at 4.5% per annum. Interest and principal are due on October 8, 2003. As of December 31, 1995, a total of $1,100,250 was owed by Mr. Parmer under this loan. Each of Messrs. Parmer and Heftel has agreed to use at least 50% of the after-tax proceeds of any future sales of stock of the Company owned by him to repay his loans. On December 30, 1993, the Company repurchased 220,000 shares of Class B Common Stock from the daughter of Mr. Cecil Heftel. The purchase price for these shares is payable in 60 installments of $10,000 beginning in August 1994 and one installment of $1 million on the first day of the month after the month in which the 60th installment is paid. From time to time, Messrs. Cecil Heftel and Carl Parmer have advanced funds to the Company and the Company has advanced funds to each of them. These advances do not bear interest. At December 31, 1995, the Company owed Mr. Heftel $33,317 and Mr. Parmer owed the Company $330,110. In the year ended September 30, 1995 and 1994, the Company advanced funds to Heftel Management Group, of which Mr. Cecil Heftel is the sole beneficial owner. These advances do not bear interest. At December 31, 1995, Heftel Management Group owed the Company $817,042. On August 19, 1994, Rodriguez-Heftel-Texas, Inc., a wholly-owned subsidiary of the Company ("RHT"), and Marcos A. Rodriguez, Jr. ("Rodriguez") entered into an Employment and Non-Competition Agreement. On November 16, 1994, the Company, Rodriguez Broadcasting, Inc., a wholly-owned subsidiary of the Company, RHT, Rodriguez and Metroplex Broadcasting, Ltd., which Rodriguez owns ("MBL"), entered into a Settlement Agreement pursuant to which, among other things, (a) Rodriguez ceased being an employee of RHT, (b) Rodriguez was paid a total of $200,000 in 12 equal monthly installments commencing on December 1, 1994, (c) Rodriguez and his affiliates were reimbursed for certain business expenses incurred prior to the date of the settlement, (d) RHT and MBL entered into a lease for the premises owned by RHT, which has an initial term of two years expiring on November 30, 1996, two options to extend the term for an additional two year period and a rent payment of $4,115 per month, (e) RHT reimbursed MBL up to $192,000 for tenant improvements made by MBL to the premises owned by RHT, and (f) Rodriguez agreed to the non-compete provisions of his employment agreement for a period five years from November 16, 1994. In June 1992, the Company repurchased and retired 2,115,468 shares of Series A Preferred Stock held by Mr. Cecil Heftel. Pursuant to an agreement with Mr. Heftel, $1,142,495 of cumulative unpaid dividends from the date of issuance through June 25, 1992 relating to the repurchased Series A Preferred Stock are to be declared and paid at such time as dividends are declared and paid on the remaining outstanding Series A Preferred Stock. In January 1995, the Company repurchased and retired 633,628 shares of the Series A Preferred Stock held by children of Mr. Heftel. A portion of the repurchase price represented unpaid cumulative dividends on such shares. At the same time, the Company used $3,449,976 of the net proceeds of its initial public offering to repurchase and retire 1,326,662 shares of the Series A Preferred Stock owned by Mr. Heftel, a portion of which represented the payment required under the June 1992 agreement with Mr. Heftel. 9 4 On January 10, 1995, the Company granted to Mr. Carl Parmer a warrant to purchase 160,000 shares of Class A Common Stock at an exercise price of $10.50 per share (which was the closing price for the Class A Common Stock on January 9, 1995). On January 24, 1995, Mr. Parmer exercised this warrant in full. The exercise price was payable on or before June 30, 1995. On June 30, 1995, Mr. Parmer borrowed $1,680,000 from the Company to pay the exercise price and granted to the Company a security interest in these shares to secure his obligation to repay the loan. This loan bears interest at 8.75% per annum. At December 31, 1995, Mr. Parmer owed the Company $1,729,000. On September 7, 1995, the Company, through a subsidiary, acquired from Mambisa Broadcasting Corporation ("Mambisa") the remaining 51% interest in Viva America Media Group, a Florida general partnership ("Viva Media"), which it did not own. Amancio Victor Suarez and Charles Fernandez, former directors of the Company, own part of Mambisa. The purchase price was $19.8 million. At the closing of the acquisition, Messrs. Suarez and Fernandez resigned as directors and officers of the Company. In connection with this transaction, the following were terminated for no additional consideration: (i) the Management Agreement, dated August 19, 1994, among the Company, Viva Media and SFS Management, Inc., an affiliate of Messrs. Suarez and Fernandez, pursuant to which SFS managed the two Miami stations owned by Viva Media and two other stations in Miami owned by the Company; (ii) the Joint Sales Agreement, dated August 19, 1994, between HBC Florida, Inc., a subsidiary of the Company ("HBC Florida"), and Mambisa relating to the sale of advertising on such four Miami stations; and (iii) the Warrant to purchase up to 237,600 shares of Class B Common Stock of the Company held by Mr. Fernandez and the employment arrangements between the Company, and any of its subsidiaries, and Mr. Fernandez. In addition, the Company granted Mr. Suarez a limited right of first refusal on a sale of WAQI-AM which right expires on September 7, 1997. On January 10, 1996, pursuant to an Agreement of Purchase and Sale, dated September 7, 1995, between the Company and Mambisa (the "Purchase Agreement") the Company, through HBC Florida, purchased the entire parcel of real property on which the radio transmission towers for WAQI-AM (the "WAQI Towers") are located for approximately $1.5 million in cash and a note for approximately $1.5 million (the "Note"). The Company has the right to subdivide such parcel and resell to Mambisa the portion of the parcel on which the WAQI Towers are not located for the same per acre price paid by the Company to Mambisa. The parties currently are attempting to complete such a subdivision. The Note is due on the later of the date on which all rights to subdivide the parcel expire or the date on which the resale of the subdivided portion of the parcel is completed. On December 3, 1995, the Company and Rodriguez entered into a Put, Option and Reorganization Agreement (the "Put/Option Agreement"). Pursuant to this agreement, in exchange for payment by the Company of $450,000, Rodriguez granted the Company the right to purchase his shares of Hispanic Coalition, Inc. ("HCI") for a period of eight years from the date a new FM radio station in Haltom City, Texas (for which HCI is seeking a construction permit from the Federal Communications Commission) (The "Haltom Station") commences operations. In addition, pursuant to this agreement, the Company granted to Rodriguez the right to sell his shares of common stock of HCI to the Company for a period of three years following the date the Haltom Station commences operations. In connection with the Put/Option Agreement, the Company entered into a Loan Commitment dated December 3, 1995, (the "Loan Agreement") with HCI which provided for loans to HCI by the Company. The Board of Directors of the Company subsequently approved these agreements. However, there are currently disputes relating to these agreements, and therefore, only $100,000 has been loaned under the Loan Agreement. Rodriguez has filed a notice of arbitration with respect to the disputes relating to these agreements. Cecil Heftel and the Company have entered into agreements under which Mr. Heftel will indemnify the Company against any losses arising out of these agreements and Mr. Heftel will be entitled to reimbursement of any indemnity amounts solely from the balance of any amounts received by the Company in connection with Haltom Station which remain after payment of all losses and expenses of the Company relating to such station and the agreements with Rodriguez and HCI. -----END PRIVACY-ENHANCED MESSAGE-----