-----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, MiBl9laSQY1EEx3HQRxJ7sXr17xbDGottt1oEovtRnkupgl5H3QsFCPHJbNxlPiW q4+Zo7wFe6tT5yE7qMQ0Tg== 0000912057-96-009818.txt : 19960702 0000912057-96-009818.hdr.sgml : 19960702 ACCESSION NUMBER: 0000912057-96-009818 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANCELLOR BROADCASTING CO /DE/ CENTRAL INDEX KEY: 0001002909 STANDARD INDUSTRIAL CLASSIFICATION: 4832 IRS NUMBER: 752538487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27726 FILM NUMBER: 96565811 BUSINESS ADDRESS: STREET 1: 12655 N CENTRAL EXPRESSWAY STREET 2: SUITE 405 CITY: DALLAS STATE: TX ZIP: 75243 BUSINESS PHONE: 2142396220 MAIL ADDRESS: STREET 1: 12655 N CENTRAL EXPRESSWAY STE 405 CITY: DALLAS STATE: TX ZIP: 75243 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR CORP/DE DATE OF NAME CHANGE: 19951031 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANCELLOR RADIO BROADCASTING CO CENTRAL INDEX KEY: 0000925744 STANDARD INDUSTRIAL CLASSIFICATION: 4832 IRS NUMBER: 752544623 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-80534 FILM NUMBER: 96565812 BUSINESS ADDRESS: STREET 1: 12655 N CENTRAL EXPRESSWY STREET 2: STE 405 CITY: DALLAS STATE: TX ZIP: 75243 BUSINESS PHONE: 2142396220 MAIL ADDRESS: STREET 2: 12655 N CENTRAL EXPWY SUITE 405 CITY: DALLAS STATE: TX ZIP: 75243 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR BROADCASTING CO DATE OF NAME CHANGE: 19940621 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANCELLOR BROADCASTING LICENSEE CO CENTRAL INDEX KEY: 0000925752 STANDARD INDUSTRIAL CLASSIFICATION: 4832 IRS NUMBER: 752544625 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-80534-01 FILM NUMBER: 96565813 BUSINESS ADDRESS: STREET 1: 12655 N CENTRAL EXPWY STREET 2: SUITE 405 CITY: DALLAS STATE: TX ZIP: 75243 BUSINESS PHONE: 2142396220 MAIL ADDRESS: STREET 1: 12655 N CENTRAL EXPRESSWAY STREET 2: SUITE 405 CITY: DALLAS STATE: TX ZIP: 75243 10-Q 1 FORM 10-Q - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10-Q Quarterly Report Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
Commission File No. 0-27726 Commission File No. 33-80534 Commission File No. 33-80534 CHANCELLOR BROADCASTING CHANCELLOR RADIO CHANCELLOR BROADCASTING COMPANY BROADCASTING COMPANY LICENSEE COMPANY (Exact Name of Registrant (Exact Name of Registrant (Exact Name of Registrant as Specified in Its Charter) as Specified in Its Charter) as Specified in Its Charter) DELAWARE DELAWARE DELAWARE (State or other jurisdiction of (State or other jurisdiction of (State or other jurisdiction of incorporation or organization) incorporation or organization) incorporation or organization) 75-2538487 75-2544623 75-2544625 (I.R.S. Employer Identification (I.R.S. Employer Identification (I.R.S. Employer Identification Number) Number) Number)
12655 N. CENTRAL EXPRESSWAY, SUITE 405, DALLAS, TEXAS 75243 (Address of Principal Executive Offices, Including Zip Code) AREA CODE (214) 239-6220 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether Chancellor Broadcasting Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes / / No /X/ Indicate by check mark whether Chancellor Radio Broadcasting Company and Chancellor Broadcasting Licensee Company (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes /X/ No / / As of May 14, 1996, 8,749,481 shares of the Class A Common Stock, par value $.01 per share, 63,500 shares of the Class B Common Stock, par value $.01 per share, and 8,484,411 shares of the Class C Common Stock, par value $.01 per share, of Chancellor Broadcasting Company were outstanding. As of May 14, 1996, 1,000 shares of common stock, par value $.01 per share, of Chancellor Radio Broadcasting Company and 1,000 shares of common stock, par value $.01 per share, of Chancellor Broadcasting Licensee Company were outstanding. - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- TABLE OF CONTENTS PART I FINANCIAL INFORMATION
PAGE ---- ITEM 1. FINANCIAL STATEMENTS CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets as of December 31, 1995 and March 31, 1996....................................................... 1 Consolidated Statements of Operations for the three months ended March 31, 1995 and 1996.............................................. 2 Consolidated Statements of Changes in Stockholders' Equity for the year ended December 31, 1995 and the three months ended March 31, 1996 ...................................................... 3 Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1996........................................ 4 Notes to Consolidated Financial Statements........................... 5 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets as of December 31, 1995 and March 31, 1996....................................................... 9 Consolidated Statements of Operations for the three months ended March 31, 1995 and 1996.............................................. 10 Consolidated Statements of Changes in Stockholder's Equity for the year ended December 31, 1995 and the three months ended March 31, 1996....................................................... 11 Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1996........................................ 12 Notes to Consolidated Financial Statements........................... 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................. 16 PART II OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES................................................ 18 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................... 18
PART I FINANCIAL INFORMATION ITEM 1.FINANCIAL STATEMENTS CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
DECEMBER 31, MARCH 31, 1995 1996 ------------- ------------- Current assets: Cash $ 1,314,214 $ 2,514,868 Accounts receivable, net of allowance for doubtful accounts of $263,528 and $600,000, respectively 13,243,292 28,452,064 Prepaid expenses and other 546,405 1,386,131 ------------- ------------- Total current assets 15,103,911 32,353,063 Property and equipment, net 17,925,845 67,217,827 Intangibles and other, net 203,808,395 554,268,416 Deferred financing costs, net 4,284,413 19,447,676 ------------- ------------- Total assets $ 241,122,564 $ 673,286,982 ------------- ------------- ------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,873,888 $ 3,603,589 Accrued liabilities 4,692,948 8,301,175 Accrued interest 2,710,891 6,279,140 Current portion of long-term debt 4,062,500 4,400,000 ------------- ------------- Total current liabilities 13,340,227 22,583,904 Long-term debt 168,107,242 352,727,945 Deferred income taxes 4,952,361 17,836,384 Other -- 767,319 ------------- ------------- Total liabilities 186,399,830 393,915,552 ------------- ------------- Redeemable Senior Cumulative Exchangeable Preferred Stock of subsidiary, par value $.01 per share; 1,000,000 shares authorized, issued and outstanding; preference in liquidation of $100,000,000, plus accumulated and unpaid dividends -- 97,652,032 Nonredeemable common stock and other stockholders' equity: Class A common stock, par value $.01 per share, 40,000,000 shares authorized, 302,289 and 8,749,481 shares issued and outstanding, respectively 3,023 87,495 Class B common stock, par value $.01 per share, 10,000,000 shares authorized, 63,500 shares issued and outstanding 635 635 Class C common stock, par value $.01 per share, 10,000,000 shares authorized, 8,484,411 shares issued and outstanding 84,844 84,844 Additional paid-in capital 66,271,498 206,453,059 Accumulated deficit (11,637,266) (23,868,501) Treasury stock -- (1,038,134) ------------- ------------- Total stockholders' equity 54,722,734 181,719,398 ------------- ------------- Total liabilities and stockholders' equity $ 241,122,564 $ 673,286,982 ------------- ------------- ------------- -------------
The accompanying notes are an integral part of the financial statements. 1 CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ----------- ------------ Gross broadcasting revenues $14,860,968 $ 29,089,515 Less agency commissions 1,779,413 3,447,276 ----------- ------------ Net revenues 13,081,555 25,642,239 ----------- ------------ Operating expenses: Programming, technical and news 2,762,245 5,144,760 Sales and promotion 3,600,241 6,943,078 General and administrative 2,173,704 4,403,750 Depreciation and amortization 2,358,655 5,027,608 Corporate expenses 369,567 1,007,597 Stock option compensation -- 950,000 ----------- ------------ 11,264,412 23,476,793 ----------- ------------ Income from operations 1,817,143 2,165,446 Other (income) expense: Interest expense 4,113,507 7,145,506 Other, net (7,933) 5,624 ----------- ------------ Loss before provision for income taxes, minority interest and extraordinary loss (2,288,431) (4,985,684) Provision for income taxes 1,194,938 939,361 Dividends and accretion on preferred stock of subsidiary -- 1,660,269 ----------- ------------ Net loss before extraordinary loss (3,483,369) (7,585,314) Extraordinary loss on early extinguishment of debt -- 4,645,921 ----------- ------------ Net loss (3,483,369) (12,231,235) Loss on repurchase of preferred stock of subsidiary -- 16,570,065 ----------- ------------ Net loss attributable to common stock $(3,483,369) $(28,801,300) ----------- ------------ ----------- ------------ Loss applicable to common stock: Loss before extraordinary loss $ (0.39) $ (1.83) ----------- ------------ ----------- ------------ Extraordinary loss $ -- $ (0.35) ----------- ------------ ----------- ------------ Net loss $ (0.39) $ (2.18) ----------- ------------ ----------- ------------ Weighted average number of shares outstanding 8,850,033 13,191,626 ----------- ------------ ----------- ------------
The accompanying notes are an integral part of the financial statements. 2 CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
CLASS A CLASS B CLASS C COMMON STOCK COMMON STOCK COMMON STOCK ADDITIONAL ------------------ ------------- ------------------ PAID-IN ACCUMULATED TREASURY SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT STOCK TOTAL --------- ------- ------ ------ --------- ------- ------------ ------------ ----------- ------------ Balance, January 1, 1995 302,289 $3,0236 3,500 $635 8,484,244 $84,842 $ 59,911,500 $ (105,970) $ -- $ 59,894,030 Stock option compensation -- -- -- -- -- -- 6,360,000 -- -- 6,360,000 Issuance of common stock on June 29, 1995 -- -- -- -- 167 2 (2) -- -- -- Net loss -- -- -- -- -- -- -- (11,531,296) -- (11,531,296) --------- ------- ------ ---- --------- ------- ------------ ------------ ----------- ------------ Balance, December 31, 1995 302,289 3,023 63,500 635 8,484,411 84,844 66,271,498 (11,637,266) -- 54,722,734 Stock option compensation -- -- -- -- -- -- 950,000 -- -- 950,000 Issuance of common stock on February 14, 1996 8,447,192 84,472 -- -- -- -- 155,801,626 -- -- 155,886,098 Loss on repurchase of preferred stock of subsidiary on February 21, 1996 -- -- -- -- -- -- (16,570,065) -- -- (16,570,065) Repurchase of common stock on February 21, 1996 -- -- -- -- -- -- -- -- (1,038,134) (1,038,134) Net loss -- -- -- -- -- -- -- (12,231,235) -- (12,231,235) --------- ------- ------ ---- --------- ------- ------------ ------------ ----------- ------------ Balance, March 31, 1996 8,749,481 $87,495 63,500 $635 8,484,411 $84,844 $206,453,059 $(23,868,501) $(1,038,134) $181,719,398 --------- ------- ------ ---- --------- ------- ------------ ------------ ----------- ------------ --------- ------- ------ ---- --------- ------- ------------ ------------ ----------- ------------
The accompanying notes are an integral part of the financial statements. 3 CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ----------- ------------- Cash flows from operating activities: Net loss $(3,483,369) $ (12,231,235) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,358,655 5,027,608 Provision for doubtful accounts 104,535 150,722 Stock option compensation -- 950,000 Deferred income taxes 1,194,938 939,361 Dividends and accretion on preferred stock of subsidiary -- 1,660,269 Extraordinary loss -- 4,645,921 Changes in assets and liabilities, net of the effects of acquired businesses: Accounts receivable (380,713) 2,798,074 Prepaids and other (62,293) 56,513 Accounts payable (675,805) 761,323 Accrued liabilities 102,658 458,404 Accrued interest 2,519,248 3,568,249 ----------- ------------- Net cash provided by operating activities 1,677,854 8,785,209 ----------- ------------- Cash flows from investing activities: Purchases of broadcasting properties (22,976) (405,566,199) Purchases of other property and equipment (337,437) (820,314) ----------- ------------- Net cash used in investing activities (360,413) (406,386,513) ----------- ------------- Cash flows from financing activities: Proceeds from issuance of long-term debt -- 277,957,527 Proceeds from borrowings under revolving debt facility 1,995,395 28,609,148 Repayments of long-term debt -- (89,784,500) Repayments of borrowings under revolving debt facility (3,659,093) (52,249,879) Issuance of preferred stock of subsidiary -- 175,389,677 Repurchase of preferred stock of subsidiary -- (95,462,423) Issuance of common stock -- 155,886,098 Repurchase of common stock -- (1,038,134) Payment of preferred stock dividends -- (505,556) ----------- ------------- Net cash provided by financing activities (1,663,698) 398,801,958 ----------- ------------- Net increase (decrease) in cash (346,257) 1,200,654 Cash, at beginning of period 1,516,808 1,314,214 ----------- ------------- Cash, at end of period $ 1,170,551 $ 2,514,868 ----------- ------------- ----------- -------------
The accompanying notes are an integral part of the financial statements. 4 CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Chancellor Broadcasting Company ("Chancellor") and its subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. 2. ACQUISITION On February 14, 1996, the Company acquired all of the outstanding capital stock of Trefoil Communications, Inc. ("Trefoil") for approximately $408.0 million, including acquisition costs. Trefoil is a holding company, the sole asset of which is the capital stock of Shamrock Broadcasting, Inc. ("Shamrock Broadcasting"). The acquisition of Trefoil was financed through the New Credit Agreement, the New Notes, the IPO and the offering of the Acquisition Preferred Stock and Class A Common Stock (all as defined). The acquisition of Trefoil was accounted for as a purchase. Accordingly, the purchase price was allocated to the net assets acquired based upon their estimated fair market values. The excess of the purchase price over the estimated fair value of net assets acquired amounted to approximately $368.0 million, which has been accounted for as goodwill and is being amortized over 40 years using the straight line method. This allocation was based on preliminary estimates. The following summarizes the unaudited consolidated pro forma data for the three months ended March 31, 1995 and 1996, as though the Company's acquisitions of KDWB-FM and Trefoil Communications, Inc. had occurred as of the beginning of 1995 (in thousands): THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 1995 MARCH 31, 1996 --------------------- --------------------- HISTORICAL PRO FORMA HISTORICAL PRO FORMA ---------- --------- ---------- --------- Net revenues $ 13,082 $32,853 $25,642 $33,572 Net loss before extraordinary loss (3,483) (11,158) (7,585) (10,596) Net loss (3,483) (13,380) (12,231) (10,596) Net loss per common share (0.39) (0.77) (2.18) (0.61) Pursuant to Local Marketing Agreements ("LMA"), the Company has outsourced certain limited functions of its Detroit and Houston stations to certain third parties and, has entered into an agreement with one of those third parties to exchange the Houston station, plus approximately $6.0 million in cash, for KIMN-FM and KALC-FM in Denver, Colorado. The Company began managing certain limited functions of these stations, pursuant to an LMA, effective April 1, 1996. Additionally, the Company also manages certain limited functions pursuant to an LMA and has entered into an asset purchase agreement to acquire certain assets of WKYN-AM in Florence, Kentucky. 3. LONG-TERM DEBT The Company's $70.0 million term loan facility and $35.0 million revolving loan facility were refinanced on February 14, 1996, in conjunction with the acquisition of Trefoil Communications, Inc. under a new bank credit agreement (the "New Credit Agreement") with Bankers Trust Company, as administrative agent, and other institutions party thereto. In connection with the refinancing of the term loan and revolving loan facility, the Company incurred an extraordinary charge to write-off deferred finance costs of approximately $1.8 million. The New Credit Agreement includes a $60.0 million term loan facility (the "A Term Loan Facility"), a $35.0 million term loan facility (the "B Term Loan Facility" and , together with the A Term Loan Facility, the "Term Loans") and a $40.0 million revolving loan facility (the "Revolving Loan Facility" and, together with the Term Loans, the "New Bank Financing"). The New Bank Financing is collateralized by (i) a first priority perfected pledge of all capital 5 CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) stock and notes owned by Chancellor and its subsidiaries and (ii) a first priority perfected security interest in all other assets (including receivables, contracts, contract rights, securities, patents, trademarks, other intellectual property, inventory, equipment and real estate) owned by Chancellor and its subsidiaries, excluding FCC licenses, leasehold interests in studio or office space and certain leasehold and partnership interests in tower or transmitter sites. The A and B Term Loan Facilities are due in increasing quarterly installments beginning in 1996 and mature in August 2002 and 2003, respectively. All outstanding borrowings under the Revolving Loan Facility mature in August 2002. The facilities bear interest, at the option of the Company, at rates based upon the prime rate of Bankers Trust Company, as announced from time to time, or the London Inter-Bank Offered Rate ("LIBOR") in effect form time to time, plus an applicable margin rate. The Company pays quarterly commitment fees in arrears equal to .5% per annum on the unused portion of the Revolving Loan Facility. As of March 31, 1996, the New Bank Financing facilities accrued interest at prime rate plus 1.50% ( 9.75%) and 1.75% (10.0%) on $62.1 million and $35.0 million of borrowings, respectively. In connection with the IPO (defined), the Company redeemed 25% of its Existing Notes (defined) for approximately $22.2 million. The redemption was completed in March 1996 and resulted in an extraordinary charge of $2.8 million. The remaining $60 million 12 1/2% Senior Subordinated Notes due 2004 (the "Existing Notes") mature October 1, 2004, and bear interest at 12.5% per annum. On February 14, 1996, in conjunction with the acquisition of Trefoil Communications, Inc., the Company issued $200 million aggregate principal amount of Senior Subordinated Notes due 2004 (the "New Notes" and, together with the Existing Notes, the "Notes"), which mature on October 1, 2004, and bear interest at 9 3/8% per annum. Interest on the Notes is paid semi-annually. The Existing and New Notes are redeemable, in whole or in part, at the option of the Company on or after October 1, 1999 and February 1, 2000, respectively. In addition, prior to January 31, 1999, the company may redeem up to 25% of the original aggregate principal amount of the New Notes with the net proceeds of one or more public equity offerings. The Notes are unsecured obligations of the Company, ranking subordinate in right of payment to all senior debt of the Company. The New Notes rank PARI PASSU in right of payment to the Existing Notes. The Notes are guaranteed on a senior subordinated basis by Chancellor Radio Broadcasting Company's subsidiaries. Both the Bank Financing and Notes indenture contain certain covenants, including, among others, limitations on the incurrence of additional debt, in the case of the Bank Financing; requirements to maintain certain financial ratios; and restrictions on the payment of dividends. 4. CAPITAL STRUCTURE In February 1996, Chancellor sold 7.7 million shares of Class A common stock in an initial public offering (the "IPO"), which generated net proceeds of $142.4 million, and in a private placement, issued $100.0 million of exchangeable redeemable preferred stock (the "Acquisition Preferred Stock") of Chancellor Radio Broadcasting Company and 742,192 shares of Class A common stock of Chancellor to an affiliated entity and other investors. In February 1996, subsequent to the IPO, the Company commenced a private placement of $100.0 million of newly authorized Senior Cumulative Exchangeable Preferred Stock (the "Old Preferred Stock"). Upon completion, the proceeds of the Old Preferred Stock were used to redeem the Acquisition Preferred Stock and 55,664 shares of Class A common stock. The redemption resulted in a charge to net loss applicable to common stock of approximately $16.6 million and an additional reduction of paid-in capital of approximately $1.0 million In March 1996, the Company commenced an exchange offering to exchange the Old Preferred Stock for 1,000,000 shares of public, 12 1/4% Senior Cumulative Exchangeable Preferred Stock (the "New Preferred Stock"). The terms of the New Preferred Stock are substantially identical to those of the Old Preferred Stock. Dividends on the New Preferred Stock will accrue from its date of issuance and will be payable quarterly commencing May 15, 1996, at a rate per annum of 12 1/4% of the then effective liquidation preference per share. Dividends may be paid, at the Company's option, on any dividend payment date occurring on or prior to February 15, 2001 either in cash or by adding such dividends to the then effective liquidation preference of the New Preferred Stock. The initial liquidation preference of the New Preferred Stock will be $100.00 per share. The New Preferred Stock is redeemable at the Company's option, in whole or in part at any time on or after February 15, 2001, at various 6 redemption prices (as defined), plus, accumulated and unpaid dividends to the date of redemption. In addition, prior to February 15, 1999, the Company may, at its option, redeem the New Preferred Stock with the net cash proceeds from one or more Public Equity Offerings (as defined), at various redemption prices (as defined), plus, accumulated and unpaid dividends to the redemption date; provided, however, that after any such redemption there is outstanding at least 75% of the number of shares of New Preferred Stock originally issued. The Company is required, subject to certain conditions, to redeem all of the New Preferred Stock outstanding on February 15, 2008, at a redemption price equal to 100% of the then effective liquidation preference thereof, plus, accumulated and unpaid dividends to the date of redemption. Upon the occurrence of a change of control (as defined), the Company will offer to purchase all of the then outstanding shares of New Preferred Stock at a price equal to 101% of the then effective liquidation preference thereof, plus, accumulated and unpaid dividends to the date of purchase. Subject to certain conditions, the New Preferred Stock is exchangeable in whole, but not in part, at the option of the Company, on any dividend payment date for the Company's 12 1/4% subordinated exchange debentures due 2008. In addition to the accrued dividends discussed above, the recorded value of the New Preferred Stock includes an amount for the accretion of the difference between the New Preferred Stock's fair value at date of issuance and its mandatory redemption amount, calculated using the effective interest method. Immediately prior to the IPO, Chancellor effected a recapitalization of its current capital stock. Pursuant to the recapitalization, each six shares of Chancellor's Nonvoting Stock were reclassified into one share of Class A Common Stock. Each six shares of Chancellor's Voting Stock were reclassified into one share of Class B Common Stock and each six shares of Convertible Nonvoting Stock were reclassified into one share of Class C Common Stock. In connection with the recapitalization, 63,333 shares of Class A Common Stock were exchanged for an equal number of shares of Class B Common Stock, and an additional 8,483,078 shares of Class A Common Stock were exchanged for an equal number of shares of Class C Common Stock. The recapitalization has been given retroactive effect in the financial statements. 5. EMPLOYEE STOCK OPTION PLAN On February 9, 1996, Chancellor's Board of Directors adopted a stock award plan for the Company's management, employees and non-employee directors providing for the grant of options and stock awards for up to 5% of Chancellor's Common Stock (on a fully-diluted basis). On that same date, the Board of Directors granted options to purchase 407,000 shares of Class A Common Stock with an exercise price equal to the initial public offering price of $20 per share. 6. INCOME TAXES Income tax expense differs from the amount computed by applying the federal statutory income tax rate of 34% to loss before income taxes and dividends and accretion on preferred stock of subsidiary for the following reasons:
THREE MONTHS ENDED MARCH 31, --------------------------- 1995 1996 ----------- ------------ U.S. federal income tax at statutory rate $ (778,067) $ (3,274,746) State income taxes, net of federal benefit (137,306) (577,896) Valuation allowance provided for loss carryforward generated during the current period 1,998,800 4,667,003 Other 111,511 125,000 ----------- ------------ $ 1,194,938 $ 939,361 ----------- ------------ ----------- ------------
7 The deferred tax valuation allowance has been established due to the uncertainty surrounding the Company's ability to generate taxable income in the immediate future. While the Company currently expects that its long-term profitability should ultimately be sufficient to enable it to realize full benefit of its future tax deductions, considering all factors to be relevant, the Company believes that a portion of the gross deferred tax assets may not currently meet a "more likely than not" realizability test. 7. NEW ACCOUNTING PRONOUNCEMENT Statement of Financial Accounting Standard No. 123, "Accounting for Stock Based Compensation" was issued in October 1995, which establishes financial accounting and reporting standards for stock based employee compensation plans, including stock purchase plans, stock options, restricted stock, and stock appreciation rights. The Company has elected to continue accounting for stock based compensation under Accounting Principles Board Opinion No. 25. The disclosure requirements of SFAS No. 123 will be effective for the Company's financial statements beginning with the annual report for 1996. Management does not believe that the implementation of SFAS 123 will have a material effect on its financial statements. 8 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31, 1995 1996 ------------ ------------ ASSETS Current assets: Cash $ 1,314,214 $ 2,514,868 Accounts receivable, net of allowance for doubtful accounts of $263,528 and $600,000, respectively 13,243,292 28,452,064 Prepaid expenses and other 546,405 1,386,131 ------------ ------------ Total current assets 15,103,911 32,353,063 Property and equipment, net 17,925,845 67,217,827 Intangibles and other, net 203,808,395 554,268,416 Deferred financing costs, net 4,284,413 19,447,676 ------------ ------------ Total assets $241,122,564 $673,286,982 ------------ ------------ ------------ ------------ LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 1,873,888 $ 3,603,589 Accrued liabilities 4,692,948 8,301,175 Accrued interest 2,710,891 6,279,140 Current portion of long-term debt 4,062,500 4,400,000 ------------ ------------ Total current liabilities 13,340,227 22,583,904 Long-term debt 168,107,242 352,727,945 Deferred income taxes 4,952,361 17,836,384 Other -- 767,319 ------------ ------------ Total liabilities 186,399,830 393,915,552 ------------ ------------ Redeemable Senior Cumulative Exchangeable Preferred Stock, par value $.01 per share; 1,000,000 shares authorized, issued and outstanding; preference in liquidation of $100,000,000, plus accumulated and unpaid dividends -- 97,652,032 Nonredeemable common stock and other stockholder's equity: Common stock, par value $.01 per share, 1,000 shares authorized, issued and outstanding 10 10 Additional paid-in capital 66,359,990 203,927,620 Accumulated deficit (11,637,266) (22,208,232) ------------ ------------ Total stockholder's equity 54,722,734 181,719,398 ------------ ------------ Total liabilities and stockholder's equity $241,122,564 $673,286,982 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of the financial statements. 9 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ----------- ------------ Gross broadcasting revenues $14,860,968 $ 29,089,515 Less agency commissions 1,779,413 3,447,276 ----------- ------------ Net revenues 13,081,555 25,642,239 ----------- ------------ Operating expenses: Programming, technical and news 2,762,245 5,144,760 Sales and promotion 3,600,241 6,943,078 General and administrative 2,173,704 4,403,750 Depreciation and amortization 2,358,655 5,027,608 Corporate expenses 369,567 1,007,597 Stock option compensation -- 950,000 ----------- ------------ 11,264,412 23,476,793 ----------- ------------ Income from operations 1,817,143 2,165,446 Other (income) expense: Interest expense 4,113,507 7,145,506 Other, net (7,933) 5,624 ----------- ------------ Loss before provision for income taxes and extraordinary loss (2,288,431) (4,985,684) Provision for income taxes 1,194,938 939,361 ----------- ------------ Net loss before extraordinary loss (3,483,369) (5,925,045) Extraordinary loss on early extinguishment of debt -- 4,645,921 ----------- ------------ Net loss (3,483,369) (10,570,966) Dividends and accretion on preferred stock -- 1,660,269 Loss on repurchase of preferred stock -- 16,570,065 ----------- ------------ Net loss attributable to common stock $(3,483,369) $(28,801,300) ----------- ------------ ----------- ------------
The accompanying notes are an integral part of the financial statements. 10 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
COMMON STOCK ADDITIONAL --------------- PAID-IN ACCUMULATED SHARES AMOUNT CAPITAL DEFICIT TOTAL ------ ------ ------------ ------------ ------------ Balance, January 1, 1995 2,000 $20 $ 59,999,980 $ (105,970) $ 59,894,030 Capital contributions -- -- 6,360,000 -- 6,360,000 Contribution of stock held by affiliate of Hicks, Muse, Tate & Furst (1,000) (10) 10 -- -- Net loss -- -- -- (11,531,296) (11,531,296) ------ ---- ------------- ------------ ------------ Balance, December 31, 1995 1,000 10 66,359,990 (11,637,266) 54,722,734 Loss on repurchase of preferred stock -- -- (16,570,065) -- (16,570,065) Dividends and accretion on preferred stock -- -- (1,660,269) -- (1,660,269) Capital contributions -- -- 155,797,964 -- 155,797,964 Net loss -- -- -- (10,570,966) (10,570,966) ------ ---- ------------- ------------ ------------ Balance, March 31, 1996 1,000 $ 10 $ 203,927,620 $(22,208,232) $181,719,398 ------ ---- ------------- ------------ ------------ ------ ---- ------------- ------------ ------------
The accompanying notes are an integral part of the financial statements. 11 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ----------- ------------ Cash flows from operating activities: Net loss $(3,483,369) $(10,570,966) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,358,655 5,027,608 Provision for doubtful accounts 104,535 150,722 Stock option compensation -- 950,000 Deferred income taxes 1,194,938 939,361 Extraordinary loss -- 4,645,921 Changes in assets and liabilities, net of the effects of acquired businesses: Accounts receivable (380,713) 2,798,074 Prepaids and other (62,293) 56,513 Accounts payable (675,805) 761,323 Accrued liabilities 102,658 458,404 Accrued interest 2,519,248 3,568,249 ----------- ------------- Net cash provided by operating activities 1,677,854 8,785,209 ----------- ------------- Cash flows from investing activities: Purchases of broadcasting properties (22,976) (405,566,199) Purchases of other property and equipment (337,437) (820,314) ----------- ------------- Net cash used in investing activities (360,413) (406,386,513) ----------- ------------- Cash flows from financing activities: Proceeds from issuance of long-term debt -- 277,957,527 Proceeds from borrowings under revolving debt facility 1,995,395 28,609,148 Repayments of long-term debt -- (89,784,500) Repayments of borrowings under revolving debt facility (3,659,093) (52,249,879) Issuance of preferred stock -- 175,389,677 Repurchase of preferred stock -- (95,462,423) Additional capital contributions -- 155,886,098 Distribution of additional paid in capital -- (1,038,134) Payment of preferred stock dividends -- (505,556) ----------- ------------- Net cash provided by financing activities (1,663,698) 398,801,958 ----------- ------------- Net increase (decrease) in cash (346,257) 1,200,654 Cash, at beginning of period 1,516,808 1,314,214 ----------- ------------- Cash, at end of period $ 1,170,551 $ 2,514,868 ----------- ------------- ----------- -------------
The accompanying notes are an integral part of the financial statements. 12 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Chancellor Radio Broadcasting Company ("Chancellor Radio Broadcasting") and its subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. Chancellor Radio Broadcasting is a wholly owned subsidiary of Chancellor Broadcasting Company ("Chancellor"). 2. ACQUISITION On February 14, 1996, the Company acquired all of the outstanding capital stock of Trefoil Communications, Inc. ("Trefoil") for approximately $408.0 million, including acquisition costs. Trefoil is a holding company, the sole asset of which is the capital stock of Shamrock Broadcasting, Inc. ("Shamrock Broadcasting"). The acquisition of Trefoil was financed through the New Credit Agreement, the New Notes, the IPO and the offering of the Acquisition Preferred Stock and Class A Common Stock (all as defined). The acquisition of Trefoil was accounted for as a purchase. Accordingly, the purchase price was allocated to the net assets acquired based upon their estimated fair market values. The excess of the purchase price over the estimated fair value of net assets acquired amounted to approximately $368.0 million, which has been accounted for as goodwill and is being amortized over 40 years using the straight line method. This allocation was based on preliminary estimates and may be revised at a later date. The following summarizes the unaudited consolidated pro forma data for the three months ended March 31, 1995 and 1996, as though the Company's acquisitions of KDWB-FM and Trefoil Communications, Inc. had occurred as of the beginning of 1995 (in thousands):
THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 1995 MARCH 31, 1996 --------------------- --------------------- HISTORICAL PRO FORMA HISTORICAL PRO FORMA ---------- --------- ---------- --------- Net revenues $13,082 $ 32,853 $ 25,642 $33,572 Net loss before extraordinary loss (3,483) (8,023) (5,925) (7,460) Net loss (3,483) (10,245) (10,571) (7,460)
Pursuant to Local Marketing Agreements ("LMA"), the Company has outsourced certain limited functions of its Detroit and Houston stations to certain third parties and, has entered into an agreement with one of those third parties to exchange the Houston station, plus approximately $6.0 million in cash, for KIMN-FM and KALC-FM in Denver, Colorado. The Company began managing certain limited functions of these stations, pursuant to an LMA, effective April 1, 1996. Additionally, the Company also manages certain limited functions pursuant to an LMA and has entered into an asset purchase agreement to acquire certain assets of WKYN-AM in Florence, Kentucky. 3. LONG-TERM DEBT The Company's $70.0 million term loan facility and $35.0 million revolving loan facility were refinanced on February 14, 1996, in conjunction with the acquisition of Trefoil Communications, Inc. under a new bank credit agreement (the "New Credit Agreement") with Bankers Trust Company, as administrative agent, and other institutions party thereto. In connection with the refinancing of the term loan and revolving loan facility, the Company incurred an extraordinary charge to write-off deferred finance costs of approximately $1.8 million. The New Credit Agreement includes a $60.0 million term loan facility (the "A Term Loan Facility"), a $35.0 million term loan facility (the "B Term Loan Facility" and , together with the A Term Loan Facility, the "Term Loans") and a $40.0 million revolving loan facility (the "Revolving Loan Facility" and, together with the Term Loans, the "New Bank Financing"). The New Bank Financing is collateralized by (i) a first priority perfected pledge of all capital stock and notes owned by Chancellor and its subsidiaries and (ii) a first priority perfected security interest in all 13 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) other assets (including receivables, contracts, contract rights, securities, patents, trademarks, other intellectual property, inventory, equipment and real estate) owned by Chancellor and its subsidiaries, excluding FCC licenses, leasehold interests in studio or office space and certain leasehold and partnership interests in tower or transmitter sites. The A and B Term Loan Facilities are due in increasing quarterly installments beginning in 1996 and mature in August 2002 and 2003, respectively. All outstanding borrowings under the Revolving Loan Facility mature in August 2002. The facilities bear interest, at the option of the Company, at rates based upon the prime rate of Bankers Trust Company, as announced from time to time, or the London Inter-Bank Offered Rate ("LIBOR") in effect form time to time, plus an applicable margin rate. The Company pays quarterly commitment fees in arrears equal to .5% per annum on the unused portion of the Revolving Loan Facility. As of March 31, 1996, the New Bank Financing facilities accrued interest at prime rate plus 1.50% ( 9.75%) and 1.75% (10.0%) on $62.1 million and $35.0 million of borrowings, respectively. In connection with the IPO (defined), the Company redeemed 25% of its Existing Notes (defined) for approximately $22.2 million. The redemption was completed in March 1996 and resulted in an extraordinary charge of $2.8 million. The remaining $60 million 12 1/2% Senior Subordinated Notes due 2004 (the "Existing Notes") mature October 1, 2004, and bear interest at 12.5% per annum. On February 14, 1996, in conjunction with the acquisition of Trefoil Communications, Inc., the Company issued $200 million aggregate principal amount of Senior Subordinated Notes due 2004 (the "New Notes" and, together with the Existing Notes, the "Notes"), which mature on October 1, 2004, and bear interest at 9 3/8% per annum. Interest on the Notes is paid semi-annually. The Existing and New Notes are redeemable, in whole or in part, at the option of the Company on or after October 1, 1999 and February 1, 2000, respectively. In addition, prior to January 31, 1999, the company may redeem up to 25% of the original aggregate principal amount of the New Notes with the net proceeds of one or more public equity offerings. The Notes are unsecured obligations of the Company, ranking subordinate in right of payment to all senior debt of the Company. The New Notes rank PARI PASSU in right of payment to the Existing Notes. The Notes are guaranteed on a senior subordinated basis by Chancellor Radio Broadcasting Company's subsidiaries. Both the Bank Financing and Notes indenture contain certain covenants, including, among others, limitations on the incurrence of additional debt, in the case of the Bank Financing; requirements to maintain certain financial ratios; and restrictions on the payment of dividends. 4. CAPITAL STRUCTURE In February 1996, Chancellor sold 7.7 million shares of Class A common stock in an initial public offering (the "IPO"), which generated net proceeds of $142.4 million, and in a private placement, issued $100.0 million of exchangeable redeemable preferred stock (the "Acquisition Preferred Stock") of Chancellor Radio Broadcasting and 742,192 shares of Class A common stock of Chancellor to an affiliated entity and other investors. In February 1996, subsequent to the IPO, the Company commenced a private placement of $100.0 million of newly authorized Senior Cumulative Exchangeable Preferred Stock (the "Old Preferred Stock"). Upon completion, the proceeds of the Old Preferred Stock were used to redeem the Acquisition Preferred Stock and 55,664 shares of Class A common stock. The redemption resulted in a charge to net loss applicable to common stock of approximately $16.6 million and an additional reduction of paid-in capital of approximately $1.0 million In March 1996, the Company commenced an exchange offering to exchange the Old Preferred Stock for 1,000,000 shares of public, 12 1/4% Senior Cumulative Exchangeable Preferred Stock (the "New Preferred Stock"). The terms of the New Preferred Stock are substantially identical to those of the Old Preferred Stock. Dividends on the New Preferred Stock will accrue from its date of issuance and will be payable quarterly commencing May 15, 1996, at a rate per annum of 12 1/4% of the then effective liquidation preference per share. Dividends may be paid, at the Company's option, on any dividend payment date occurring on or prior to February 15, 2001 either in cash or by adding such dividends to the then effective liquidation preference of the New Preferred Stock. The initial liquidation preference of the New Preferred Stock will be $100.00 per share. The New Preferred Stock is redeemable at the Company's option, in whole or in part at any time on or after February 15, 2001, at various redemption prices (as defined), plus, accumulated and unpaid dividends to the date of redemption. In addition, prior to February 15, 1999, the Company may, at its option, redeem the Senior exchangeable Preferred Stock with the net 14 CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) cash proceeds from one or more Public Equity Offerings (as defined), at various redemption prices (as defined), plus, accumulated and unpaid dividends to the redemption date; provided, however, that after any such redemption there is outstanding at least 75% of the number of shares of New Preferred Stock originally issued. The Company is required, subject to certain conditions, to redeem all of the New Preferred Stock outstanding on February 15, 2008, at a redemption price equal to 100% of the then effective liquidation preference thereof, plus, accumulated and unpaid dividends to the date of redemption. Upon the occurrence of a change of control (as defined), the Company will offer to purchase all of the then outstanding shares of New Preferred Stock at a price equal to 101% of the then effective liquidation preference thereof, plus, accumulated and unpaid dividends to the date of purchase. Subject to certain conditions, the New Preferred Stock is exchangeable in whole, but not in part, at the option of the Company, on any dividend payment date for the Company's 12 1/4% subordinated exchange debentures due 2008. In addition to the accrued dividends discussed above, the recorded value of the New Preferred Stock includes an amount for the accretion of the difference between the New Preferred Stock's fair value at date of issuance and its mandatory redemption amount, calculated using the effective interest method. 5. EMPLOYEE STOCK OPTION PLAN On February 9, 1996, Chancellor's Board of Directors adopted a stock award plan for the Company's management, employees and non-employee directors providing for the grant of options and stock awards for up to 5% of Chancellor's Common Stock (on a fully-diluted basis). On that same date, the Board of Directors granted options to purchase 407,000 shares of Class A Common Stock with an exercise price equal to the initial public offering price of $20 per share. 6. INCOME TAXES Income tax expense differs from the amount computed by applying the federal statutory income tax rate of 34% to loss before income taxes for the following reasons:
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ---------- ----------- U.S. federal income tax at statutory rate $ (778,067) $(3,274,746) State income taxes, net of federal benefit (137,306) (577,896) Valuation allowance provided for loss carryforward generated during the current period 1,998,800 4,667,003 Other 111,511 125,000 ---------- ----------- $1,194,938 $ 939,361 ---------- ----------- ---------- -----------
The deferred tax valuation allowance has been established due to the uncertainty surrounding the Company's ability to generate taxable income in the immediate future. While the Company currently expects that its long-term profitability should ultimately be sufficient to enable it to realize full benefit of its future tax deductions, considering all factors to be relevant, the Company believes that a portion of the gross deferred tax assets may not currently meet a "more likely than not" realizability test. 7. NEW ACCOUNTING PRONOUNCEMENT Statement of Financial Accounting Standard No. 123, "Accounting for Stock Based Compensation" was issued in October 1995, which establishes financial accounting and reporting standards for stock based employee compensation plans, including stock purchase plans, stock options, restricted stock, and stock appreciation rights. The Company has elected to continue accounting for stock based compensation under Accounting Principles Board Opinion No. 25. The disclosure requirements of SFAS No. 123 will be effective for the Company's financial statements beginning with the annual report for 1996. Management does not believe that the implementation of SFAS 123 will have a material effect on its financial statements. 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Chancellor Broadcasting Company and its subsidiaries (the "Company") have grown largely through acquisitions, as well as through internally generated growth. The Company completed its first acquisition in January 1994 with the purchase of KFBK-AM and KGBY-FM in Sacramento. In October 1994, the Company acquired the 11-station American Media Station Group. In July 1995, the Company acquired KDWB-FM in Minneapolis-St. Paul. On February 14, 1996, the Company acquired Trefoil Communications, Inc., and its wholly owned subsidiary Shamrock Broadcasting, Inc. ("Shamrock Broadcasting"), which owned and operated 19 radio stations. The Company now owns 33 radio stations serving the following top 40 markets: New York, New York; Los Angeles, California; San Francisco, California; Detroit, Michigan; Houston, Texas; Atlanta, Georgia; Riverside-San Bernardino, California; Minneapolis-St. Paul, Minnesota; Nassau-Suffolk (Long Island), New York; Phoenix, Arizona; Pittsburgh, Pennsylvania; Denver, Colorado; Cincinnati, Ohio; Sacramento, California; and Orlando, Florida. Pursuant to Local Marketing Agreements ("LMA"), the Company has outsourced certain limited functions of its Detroit and Houston stations to certain third parties and, has entered into an agreement with one of those third parties to exchange the Houston station, plus approximately $6.0 million in cash, for KIMN-FM and KALC-FM in Denver, Colorado. The Company began managing certain limited functions of these stations, pursuant to an LMA, effective April 1, 1996. Additionally, the Company also manages certain limited functions pursuant to an LMA and has entered into an asset purchase agreement to acquire certain assets of WKYN-AM in Florence, Kentucky. In the following analysis, management discusses the "broadcast cash flow" of the combined station group. Broadcast cash flow consists of operating income before depreciation and amortization, corporate expenses and non-cash stock option compensation expense. Although broadcast cash flow is not a measure of performance calculated in accordance with generally accepted accounting principles ("GAAP"), management believes that it is useful to an investor in evaluating the Company because it is a measure widely used in the broadcast industry to evaluate a radio company's operating performance. However, broadcast cash flow should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP or as a measure of liquidity or profitability. The discussion of broadcast cash flow appears as the last paragraph in the discussion of the results of operations. For ease of comprehension, the following table and analysis presents and discusses the combined historical net revenues, operating expenses and broadcast cash flow of the Company, Midcontinent Radio of Minnesota Inc. related to radio station KDWB-FM (where not already included in the Company's results of operations per the terms of the LMA) and Shamrock Broadcasting for the three months ended March 31, 1995 and 1996. Results related to the Company's Detroit and Houston stations are limited to those revenues and expenses attributable to the Company per the terms of the LMA agreements in 1996. No data for these stations prior to the LMA agreements in February 1996 or for 1995 have been included. This combined "same station basis" information is presented in a manner similar to a "pooling of interests"; however, it is not in accordance with GAAP which does not allow for the aggregation of financial data for entities which are not under common management and control. Nevertheless, management believes the financial information shown below is helpful in understanding past and current operations of the Company's stations. In the following information, the KDWB-FM LMA fee of $180,000, paid by the Company to Midcontinent Radio of Minnesota Inc. in 1995, for the three months ended March 31, 1995, has been eliminated from net revenues and operating expenses:
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ----------- ----------- Net revenues $31,269,460 $33,017,912 Operating expenses 23,154,286 22,917,506 ----------- ----------- Broadcast cash flow $ 8,115,174 $10,100,406 ----------- ----------- ----------- -----------
Because the Company incurred substantial indebtedness for its acquisitions for which it has significant debt service requirements, and because the Company has significant non-cash charges for stock option compensation and depreciation and amortization expense related to the fixed assets and intangibles acquired in the acquisitions, the Company expects that it will report net losses for the foreseeable future. 16 Periodically, the Company makes forward looking statements that are not historical facts. Actual results may differ materially from those projected in the forward looking statements. These forward looking statements involve risks and uncertainties, including but not limited to, the following: business conditions and growth in the radio broadcasting industry and general economy; competitive factors; that interest rates may increase rather than remain stable or decrease; that one or more of the Company's broadcasting licenses may not be renewed; and the risk factors listed from time to time in documents filed by the Company with the Securities and Exchange Commission. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995 Net revenues increased 96.0% to $25.6 million for the three months ended March 31, 1996 from $13.1 million for the same period in 1995. The majority of this increase was due to the acquisition of Shamrock Broadcasting. On a same station basis, net revenues increased 5.6% to $33.0 million for the first quarter of 1996 from $31.3 million for the first quarter of 1995. Station operating expenses increased 93.2% to $16.5 million for the quarter ended March 31, 1996 from $8.5 million for the quarter ended March 31, 1995. The majority of this increase was due to the acquisition of Shamrock Broadcasting. On a same station basis, station operating expenses decreased 1.0% to $22.9 million for the three months ended March 31, 1996 from $23.2 million for the same period of 1995. In the first quarter of 1996, the Company recorded non-cash stock option compensation expense related to compensatory stock options of Chancellor Broadcasting Company granted in 1994. Depreciation and amortization increased 113.2% to $5.0 million for the first quarter of 1996 from $2.4 million for the same period in the prior year. Interest expense increased 73.7% to $7.1 million from $4.1 million for the same periods. These increases, and the extraordinary loss on early extinguishment of debt of $4.6 million, were primarily attributable to the acquisition of Shamrock Broadcasting and the resulting change in capital structure from its financing. See the discussion of "Liquidity and Capital Resources" below. Corporate expenses increased 172.4% to $1.0 million for the first three months of 1996 from approximately $370,000 for the same period in 1995, as a result of additional personnel and overhead costs associated with the acquisition of Shamrock Broadcasting. During the first quarter of 1996, the Company incurred a one-time loss of $16.6 million on the repurchase of preferred stock of its subsidiary and incurred charges for dividends and accretion on the repurchased and newly issued preferred stock of its subsidiary of $0.5 million and $1.2 million, respectively. As a result of the foregoing, income from operations increased 19.2% to $2.2 million for the first quarter of 1996 from $1.8 million for the same period in 1995. The Company had a net loss of $12.2 million compared with a net loss of $3.5 million for the first quarter of the prior year. On a same station basis, broadcast cash flow increased 24.5% to $10.1 million for the three months ended March 31, 1996, from $8.1 million for the comparable 1995 period. Broadcast cash flow as a percentage of net revenues increased to 30.6% for 1996 from 26.0% for 1995. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity and capital resources have been significantly impacted by the acquisition, and the financing thereof, of Trefoil Communications, Inc. ("Trefoil"), on February 14, 1996. The acquisition of Trefoil was financed through the New Credit Agreement, the New Notes, the IPO and the offering of the Acquisition Preferred Stock and Class A Common Stock (all as defined and described in the notes to the financial statements included herewith). In connection with this financing, the Company refinanced its existing bank financing and redeemed 25% of its Existing Notes (as defined), resulting in a combined extraordinary charge of $4.6 million. HM Fund II has advised Chancellor and Chancellor Broadcasting that on or before September 30, 1996, it will sell all of its capital stock in its affiliate, HMW, or will cause HMW to sell all or substantially all of its assets (which consist primarily of eight radio broadcast stations), and that it or HMW will invest the net proceeds of such sale in Class A Common stock of Chancellor. Management believes that these proceeds, cash from operating activities and available revolving credit borrowings under its bank credit agreement should be sufficient to permit the Company to meet its financial obligations and fund its operations. 17 PART II OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES On February 14, 1996, Chancellor Broadcasting Company ("Chancellor") consummated an initial public offering (the "IPO") of its Class A Common Stock, par value $.01 per share. In connection with such offering, Chancellor reclassified its previously outstanding capital stock immediately prior to the IPO. Pursuant to such reclassification, Chancellor's Non-Voting Stock, Voting Stock and Convertible Non-Voting Stock were reclassified into its Class A Common Stock, Class B Common Stock, and Class C Common Stock, respectively, on a six-for-one basis. The holders of the Class A Common Stock are entitled to one vote per share on all matters submitted to the stock holders of Chancellor and, except as otherwise specified in the Second Restated Certificate of Incorporation of Chancellor, to elect, voting as a class, two members of the Board of Directors of Chancellor. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS EXHIBIT NO. DESCRIPTION OF DOCUMENT ------- ----------------------- 2.1 Stock Purchase Agreement dated as of August 3, 1995, among Chancellor Broadcasting, Trefoil Communications, Inc., and the Selling Securityholders named therein. (1) 2.2 Option Agreement dated January 9, 1996 by and between Chancellor Broadcasting and Evergreen Media Corporation. (1) 2.3 Option Agreement dated January 9, 1996 by and between Chancellor Broadcasting and Secret Communications. (1) 2.4 Exchange Agreement dated March 12, 1996 by and between Chancellor Broadcasting and Secret Communications. * 3.1 Certificate of Incorporation of Chancellor Broadcasting. (2) 3.2 Certificate of Incorporation of Broadcasting Licensee. (2) 3.3 Bylaws of Chancellor Broadcasting, as amended. (2) 3.4 Bylaws of Broadcasting Licensee. (2) 3.5 Certificate of Amendment of Chancellor Broadcasting. (3) 3.6 Certificate of Designation for the 14% Redeemable Exchangeable Preferred Stock of Chancellor Broadcasting. (4) 3.7 Certificate of Amendment to Certificate of Designation for the 14% Redeemable Exchangeable Preferred Stock of Chancellor Broadcasting. (3) 3.8 Certificate of Designation for the 12 1/4% Senior Cumulative Exchangeable Preferred Stock of Chancellor Broadcasting. (3) 3.9 Second Restated Certificate of Incorporation of Chancellor. (3) 3.10 Certificate of Amendment to Second Restated Certificate of Incorporation of Chancellor. (3) 3.11 Second Restated Bylaws of Chancellor. (3) 3.12 Certificate of Amendment to Certificate of Incorporation of Chancellor Broadcasting. (3) 4.1 First Supplemental Indenture to the Indenture dated October 1, 1994, governing the 12 1/2% Senior Subordinated Notes due 2004. (3) 4.2 Indenture dated October 1, 1994 governing the outstanding 12 1/2% Senior Subordinated Notes due 2004. (2) 18 EXHIBIT NO. DESCRIPTION OF DOCUMENT ------- ----------------------- 4.3 Indenture dated February 14, 1996 governing the outstanding 9 3/8% Senior Subordinated Notes due 2004. (4) 4.4 Indenture dated February 26, 1996 governing the Exchange Debentures. (3) 4.5 First Supplemental Indenture dated February 14, 1996 to the Indenture governing the 9 3/8% Senior Subordinated Notes due 2004. (3) 4.6 Second Supplemental Indenture dated February 14, 1996 to the Indenture governing the 12 1/2% Senior Subordinated Notes due 2004. (3) 10.1 Financial Advisory Agreement dated as of January 1, 1996 among Chancellor, Chancellor Broadcasting and HM2/Management Partners, L.P. (3) 10.2 Credit Agreement dated February 14, 1996 among Chancellor, Chancellor Broadcasting, various banks and Bankers Trust Company, as agent. (4) 10.3 Amended and Restated Monitoring and Oversight Agreement dated as of January 1, 1996 between Chancellor, Chancellor Broadcasting and HM2/Management Partners, L.P. (3) 10.4 Amended and Restated Stockholders Agreement dated February 14, 1996 among Chancellor and certain Holders named therein. (3) 10.5 Letter Agreement dated February 9, 1996 regarding Hicks Muse Equity Investment among Chancellor and HM Fund II. (3) 10.6 Employment Agreement dated February 14, 1996 between Chancellor, Chancellor Broadcasting and Steven Dinetz. * 11.1 Computation of Earnings Per Share. * 27.1 FDS - Chancellor Broadcsting Company * 27.2 FDS - Chancellor Radio Broadcasting Company * 27.3 FDS - Chancellor Broadcasting Licensee Company * _______________ * Filed herewith. (1) Incorporated by reference to Amendment No. 3 to the Registration Statement on Form S-1 (File No. 33-98334) of Chancellor Broadcasting as filed with the Securities and Exchange Commission. (2) Incorporated by reference to the Registration Statement on Form S-1 (File No. 33-80534) of Chancellor Broadcasting as filed with the Securities and Exchange Commission. (3) Incorporated by reference to the Annual Report on Form 10-K of Chancellor, Chancellor Broadcasting and Broadcasting Licensee for the fiscal year 1995. (4) Incorporated by reference from the Form 8-K of Chancellor (File No. 33-98336) and Chancellor Broadcasting (File No. 33-98334) as filed with the Securities and Exchange Commission on February 29, 1996. (b) REPORTS ON FORM 8-K. A Current Report on Form 8-K dated February 14, 1996 was filed with the Securities and Exchange Commission on February 29, 1996 on behalf of Chancellor and Chancellor Broadcasting relating to the acquisition by Chancellor Broadcasting of Trefoil Communications, Inc. and its subsidiaries. The audited financial statements of Trefoil Communications, Inc. and Subsidiaries as of December 31, 1994 and 1995, and for each of the three years ended December 31, 1995 and Malrite Communications Group, Inc. Radio Operation as of July 30, 1993 and the seven-month period then ended were filed with such report. In addition, an unaudited pro forma condensed statement of operations for the year ended December 31, 1995 and an unaudited pro forma balance sheet dated December 31, 1995 for Holdings and Trefoil Communications, Inc. combined were filed with such report. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant and each co-registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHANCELLOR BROADCASTING COMPANY AND EACH CO-REGISTRANT Date: May 14, 1996 By /s/ Jacques D. Kerrest ---------------------------------- Jacques D. Kerrest Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer of Registrant and each co-registrant) 20 EX-2.4 2 EXHIBIT 2.4 EXCHANGE AGREEMENT THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered into this 12th day of March, 1996 by and among Chancellor Radio Broadcasting Company, a Delaware corporation ("Chancellor"), Shamrock Broadcasting, Inc., a Delaware corporation and indirectly wholly owned subsidiary of Chancellor ("Shamrock") and Secret Communications, L.P., a Delaware limited partnership ("Secret"). W I T N E S S E T H: WHEREAS, Secret owns and operates radio stations KALC-FM and KIMN-FM (the "Denver Stations") in Denver, Colorado pursuant to a license issued by the Federal Communications Commission ("FCC"); WHEREAS, Secret desires to exchange the Denver Stations with Shamrock for radio station KTBZ-FM in Lake Jackson (Houston), Texas (the "Houston Station") in a transaction that qualifies as a like-kind exchange within the meaning of Section 1031 of the Internal Revenue Code and the regulations thereunder. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE 1 PURCHASE OF ASSETS 1.1 TRANSFER OF ASSETS. On the terms and subject to the conditions hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined), Secret shall assign, transfer, convey and deliver to Shamrock and Shamrock shall acquire and assume from Secret, all of the right, title and interest of Secret in and to all of the following assets, properties, interests and rights of Secret (collectively the "Denver Stations Assets"): 1.1.1 all of Secret's rights in and to the licenses, permits and other authorizations issued to Secret by any governmental authority including those issued by the FCC (the latter are hereafter referred to as the "Denver Stations Licenses") used in connection with the operation of the Denver Stations, along with renewals or modifications of such items between the date hereof and the Closing Date as well as all of Secret's rights in and to the call letters "KALC-FM" and "KIMN-FM"; 1.1.2 all equipment, office furniture and fixtures, office materials and supplies, inventory, spare parts and all other tangible personal property of every kind and description, and Secret's rights therein, owned, leased or held by Secret and used in connection with the operations of the Denver Stations, including but not limited to those items described or listed in Schedule 7.5 hereto, together with any replacements thereof and additions thereto, made between the date hereof and the Closing Date, and less any retirements or dispositions thereof made between the date hereof and the Closing Date in the ordinary course of business of Secret; 1.1.3 all of Secret's rights in and under contracts, agreements, leases and legally binding contractual rights of any kind, written or oral, relating to the operation of the Denver Stations ("Contracts"), listed in Schedules 7.7 hereto or entered into by Secret between the date hereof and the Closing Date in the ordinary course of business of Secret; 1.1.4 all of Secret's rights in and to all trademarks, trade names, service marks, franchises, copyrights, including registrations and applications for registration of any of them, computer software, programs and programming material of whatever form or nature, jingles, slogans, the Denver Stations' logos and all other logos or licenses to use same and all other intangible property rights of Secret, which are used exclusively in connection with the operation of the Denver Stations, including but not limited to those listed in Schedule 7.11 hereto (collectively, the "Intellectual Property") together with any associated good will and any additions thereto between the date hereof and the Closing Date; 1.1.5 all of Secret's rights in and to all the files, documents, records, and books of account relating to the operation of the Denver Stations or to the Denver Stations Assets, including, without limitation, the Denver Stations' public file, programming information and studies, technical information and engineering data, news and advertising studies or consulting reports, marketing and demographic data, sales correspondence, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC, copies of all written Contracts to be assigned hereunder, logs, software programs and books and records relating to employees, financial, accounting and operation matters; but excluding records relating solely to any Excluded Asset (as hereinafter defined); 1.1.6 all of Secret's rights under manufacturers' and vendors' warranties relating to items included in the Denver Stations Assets and all similar rights against third parties relating to items included in the Denver Stations Assets; 1.1.7 all real property owned in fee by Secret together with all appurtenant easements thereunto and all structures, fixtures and improvements located thereon as more fully described in Schedule 7.7 hereto, together with any additions thereto between the date hereof and the Closing Date ("Real Estate"); and 1.1.8 except for Excluded Assets, such other assets, properties, interests and rights owned by Secret that are used exclusively in connection with the operation of the Denver Stations or that are located as of the Closing Date on the Real Estate. 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained herein, it is expressly understood and agreed that the Denver Stations Assets shall not include the following assets along with all rights, title and interest therein (the "Excluded Assets"): -2- 1.2.1 all cash and cash equivalents of Secret on hand and/or in banks; 1.2.2 all cash accounts receivable or notes receivable of Secret; 1.2.3 all tangible and intangible personal property of Secret disposed of or consumed in the ordinary course of business of Secret between the date hereof and the Closing Date, or as permitted under the terms hereof; 1.2.4 all Contracts that have terminated or expired prior to the Closing Date in the ordinary course of business of Secret and as permitted hereunder; 1.2.5 Secret's corporate seal, minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of Secret and duplicate copies of such records as are necessary to enable Secret to file its tax returns and reports as well as any other records or materials relating to Secret generally and not involving or relating to the Denver Stations Assets or the operation or operations of the Denver Stations; 1.2.6 Contracts of insurance and all insurance proceeds or claims made by Secret; 1.2.7 all pension, profit sharing or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by Secret; and 1.2.8 any right, property or asset described in Schedule 1.2.8 hereto. 1.3 NONASSIGNABLE CONTRACTS. 1.3.1 NONASSIGNABILITY. Without limiting or otherwise affecting the rights of Shamrock pursuant to Articles 11 or 15, to the extent that any Contract to be assigned pursuant to the terms of Section 1.1.3 is not capable of being assigned without the consent, approval or waiver of a third person or entity, nothing in this Agreement will constitute an assignment or require the assignment thereof except to the extent provided in this Section 1.3. 1.3.2 SECRET TO USE REASONABLE EFFORTS Notwithstanding anything contained in this Agreement to the contrary, Secret will not be obligated to assign to Shamrock any of its rights and obligations in and to any of the Contracts referred to in Section 1.3.1 without first having obtained all consents, approvals and waivers necessary for such assignment; provided, however, that Secret shall use reasonable efforts to obtain all such consents, approvals and waivers prior to and, if the Closing occurs, after the Closing Date (as defined in Section 4.1). -3- 1.3.3 IF WAIVERS OR CONSENTS CANNOT BE OBTAINED. To the extent that the consents, approvals and waivers referred to in Section 1.3.1 are not obtained by Secret, Secret shall use its best efforts to (a) provide to Shamrock the financial and business benefits of any Contract referred to in Section 1.3.1 and (b) enforce, at the request of Shamrock, for the account of Shamrock, any rights of Secret arising from any such Contract (including without limitation the right to elect to terminate in accordance with the terms thereof upon the advice of Shamrock). ARTICLE 2 ASSUMPTION OF OBLIGATIONS 2.1 ASSUMPTION OF OBLIGATIONS. Subject to the provisions of this Section 2.1, Section 2.2 and Section 3.4, on the Closing Date, Shamrock shall assume the obligations of Secret arising or to be performed on or after the Closing Date under all Contracts, including without limitation (i) the Contracts listed in Schedule 2.1 hereto; (ii) all Contracts for the sale of advertising time; and (iii) all Contracts for consideration other than cash, such as merchandise, services or promotional consideration ("Trade Agreements"). All of the foregoing liabilities and obligations shall be referred to herein collectively as the "Assumed Liabilities." 2.2 RETAINED LIABILITIES. Notwithstanding anything contained in this Agreement to the contrary, Shamrock expressly does not, and shall not, assume or agree to pay, satisfy, discharge or perform and will not be deemed by virtue of the execution and delivery of this Agreement to have assumed or to have agreed to pay, satisfy, discharge or perform, any liabilities, obligations or commitments of Secret of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed to Shamrock, other than the Assumed Liabilities. All of such liabilities and obligations shall be referred to herein collectively as the "Retained Liabilities." ARTICLE 3 CONSIDERATION 3.1 DELIVERY OF CONSIDERATION. In exchange for the Denver Stations Assets, in addition to the assumption of certain obligations of Secret pursuant to Section 2.1 above, Shamrock shall, subject to Article 11 hereof, at the Closing (as hereinafter defined) deliver to Secret: (i) the Houston Station and (ii) $5,650,000 plus an additional amount equal to the product of $150,000 multiplied by the number of months (including fractions thereof) between July 31, 1996 and the earlier of the Closing or December 31, 1996, by wire transfer of immediately available funds (collectively, the "Cash Payment"), subject to adjustment pursuant to the provisions of Section 3.3 below and subject to the provisions of Section 4.1 hereof (collectively, the "Exchange Price"). Shamrock will deliver the Houston Station to Secret in accordance with the terms of an Asset Purchase Agreement among Secret, Shamrock and -4- Chancellor dated the date hereof (the "Asset Purchase Agreement"), which is being executed concurrently herewith and is attached hereto as Exhibit A. 3.2 ALLOCATION OF EXCHANGE PRICE. Secret and Chancellor mutually agree upon the allocation of the Exchange Price among the Denver Stations Assets as set forth on Schedule 3.2 hereto (the "Allocation"). Chancellor and Secret agree to prepare and file all income tax returns (including, if applicable, Form 8594) in a manner consistent with the Allocation and will not in connection with the filing of such returns make any allocation of the Exchange Price which is contrary to the respective Allocation. Chancellor and Secret agree to consult with each other with respect to all issues related to the Allocation in connection with any tax audits, controversy or litigation. 3.3 ALLOCATIONS AND PRORATIONS. 3.3.1 For purposes of calculating the net payment to be made pursuant to Section 3.3.2, all real property and personal property taxes with respect to the Denver Stations Assets for the current tax year will be prorated as of the Closing Date. 3.3.2 Allocation and proration of the items set forth in Subsection 3.3.1 above shall be made by Chancellor and a statement thereof given to Secret within thirty (30) days after the Closing Date. Secret shall give written notice of any objection thereto within twenty (20) days after delivery of such statement, detailing the reason for such objection. If timely objection is made and the parties cannot reach agreement within thirty (30) days thereafter as to amounts claimed by one of the parties which total at least $2,000 in the aggregate, the parties shall confer with regard to the matter and an appropriate adjustment and payment shall be made as agreed upon by the parties (or, if they are unable to resolve the matter, they shall select a firm of independent certified public accountants to resolve the matter). If the parties cannot agree on an accountant, each party shall select an accounting firm, both of which shall review the apportionment and agree on an appropriate adjustment, and payment shall be made as agreed upon by the accounting firms. If the two accounting firms selected by the parties are unable to resolve the matter, the two accounting firms shall select a third firm of independent certified public accountants, which shall review the apportionments and make a determination of an appropriate adjustment, and whose decision will be final and binding on the parties, and whose fees and expenses shall be borne by Chancellor and Secret in accordance with the following sentence; provided, however, in no event shall the adjustment resulting from such third accountant's review fall outside the range of adjustments proposed by the accountants chosen by the parties. Payment of the fees and expenses of all accounting firms shall be apportioned between the parties as follows: each party shall pay an amount equal to the sum of all fees and expenses of the accounting firm multiplied by a fraction, the numerator of which is equal to (i) the net difference between the amount claimed by such party and the amount owed by or awarded to such party divided by (ii) the sum of (A) the net difference between the amount claimed by the successful party and the amount awarded to such party, plus (B) the net difference between the amount claimed by the unsuccessful party and the amount awarded to the successful party. The net cash payment to Chancellor or Secret, as the case may be, shall be -5- made within ten (10) days after the statement is delivered, if no timely objection is made, or otherwise within ten (10) days after the parties reach agreement as to all disputed amounts. ARTICLE 4 CLOSING 4.1 CLOSING. The parties hereto intend that the consummation of the transactions contemplated herein (the "Closing") shall occur simultaneously with the consummation of the transactions relating to the Houston Station, and agree to cooperate to achieve such consummations in a transaction that qualifies as a like-kind exchange within the meaning of Section 1031 of the Internal Revenue Code and the regulations thereunder (a "Like-Kind Exchange"). Except as otherwise mutually agreed upon by Chancellor and Secret and as otherwise set forth herein, the Closing shall occur within five (5) business days after the FCC Consent has become a Final Order (as hereinafter defined) or such other date as may be mutually agreed to by the parties ("Closing Date"); provided, that either Secret or Chancellor may delay the Closing until five (5) business days after such time as the FCC Consent relating to the Houston Station has become a Final Order (as defined in the Asset Purchase Agreement) (the "Houston Order") so long as the Closing hereunder occurs by December 20, 1996. (A) If the Final Order or the Houston Order is not in effect by December 20, 1996 and the Asset Purchase Agreement has not been terminated by that date, the parties agree that the December 20, 1996 date set forth in the immediately preceding sentence shall be extended until June 20, 1997. If both the Final Order and the Houston Order are not in effect by June 20, 1997, the June 20, 1997 date set forth in the immediately preceding sentence shall be extended until February 14, 1998. If the Final Order is in effect and the Houston Order is not in effect by June 20, 1997, and the Asset Purchase Agreement has not been terminated by that date, the June 20, 1997 date set forth in the immediately preceding sentence shall be extended until February 14, 1998 and, at its option, Secret can identify one or more radio stations (the "Exchange Stations") and Secret, Chancellor and Shamrock agree to cooperate and take all actions reasonably requested by the other in order to qualify the exchange of the Denver Stations for the Exchange Stations as a transaction qualifying, in whole or in part, as a Like-Kind Exchange. The election by Secret to effect a Like-Kind Exchange shall not change the $33,400,000 effective exchange price for the Denver Stations; however, appropriate adjustments shall be made to such exchange price in respect of the Exchange Stations. If the Houston Order is in effect and the Final Order is not in effect by June 20, 1997, the June 20, 1997 date set forth in the immediately preceding sentence shall be extended until February 14, 1998 and, at its option, Chancellor can identify the Exchange Stations, and Secret, Chancellor and Shamrock agree to cooperate and take all actions reasonably requested by the other in order to qualify the exchange of the Houston Station for the Exchange Stations as a transaction qualifying, in whole or in part, as a Like-Kind Exchange. The election by Chancellor to effect a Like-Kind Exchange shall not change the $27,000,000 effective exchange price for the Houston Station; however, appropriate adjustments shall be made to the exchange price in respect of the Exchange Stations. In no event shall both Secret and Chancellor have the right to identify Exchange Stations. Each party shall be entitled to reimbursement of the reasonable acquisition costs incurred by it in acquiring -6- the Exchange Stations at the direction of the other party (including any liquidated damages actually paid as a result of such party's breach or termination of a purchase agreement at the other party's direction). (B) If the Asset Purchase Agreement is terminated as a result of Chancellor's or Shamrock's material breach thereof, at Secret's option, (i) Chancellor or Shamrock shall deliver to Secret at the Closing, in lieu of the Houston Station, $27,000,000 plus the Cash Payment by wire transfer of immediately available funds or (ii) Secret can terminate this Agreement subject to Secret's reservation of its rights to liquidated damages set forth in Article 17 hereof. (C) If the Asset Purchase Agreement is terminated as a result of Secret's material breach thereof, at Chancellor's option, (i) Chancellor shall deliver to Secret at the Closing, in lieu of the Houston Station, $27,000,000 plus the Cash Payment by wire transfer of immediately available funds or (ii) Chancellor can terminate this Agreement subject to Chancellor's reservation of its rights to liquidated damages set forth in Article 17 hereof. (D) In the event that Secret is required to proceed with the Closing on a cash basis, Chancellor will permit Secret to take any and all reasonable steps to effectuate a deferred Like-Kind Exchange transaction as long as such steps do not (i) relieve Secret of any of its obligations hereunder and Secret remains fully obligated hereunder, (ii) delay the Closing, or (iii) increase Chancellor's financial obligations hereunder. Secret agrees to reimburse Chancellor for any reasonable costs and expenses (including reasonable attorney's fees) incurred as a result of this accommodation to Secret. (E) For purposes of the Agreement, "Final Order" means action by the FCC consenting to the assignments contemplated by this Agreement which is not reversed, stayed, enjoined, set aside, annulled or suspended, and with respect to which action no timely request for stay, petition for rehearing, or reconsideration, application for review or appeal is pending, and as to which the time for filing any such request, petition or appeal or reconsideration by the FCC on its own motion has expired. The Closing shall be held in the offices of Chancellor Radio Broadcasting Company, 12655 North Central Expressway, Suite 405, Dallas, Texas 75243, or at such place as the parties hereto may agree. ARTICLE 5 GOVERNMENTAL CONSENTS 5.1 FCC CONSENT. It is specifically understood and agreed by Chancellor and Secret that the Closing and the assignment of the Denver Stations Licenses and the transfer of the Denver Stations Assets are expressly conditioned on and are subject to the prior consent and approval of the FCC ("FCC Consent"). 5.2 FCC APPLICATION. Within five business days after the execution of this Agreement or such earlier time as shall be agreed to by all of the parties hereto, Chancellor and Secret shall file the application with the FCC for the FCC Consent ("FCC Application"). Chancellor and Secret shall prosecute the FCC Application with all reasonable diligence and otherwise use their best efforts to obtain the FCC Consent as expeditiously as practicable (but neither Chancellor nor Secret shall have any obligation to satisfy complainants or the FCC by taking any steps which would have a material adverse effect upon Chancellor or Secret or upon any of their Affiliates). If the FCC Consent imposes any condition on Chancellor or Secret, -7- such party shall use its best efforts to comply with such condition; provided, however, that neither Chancellor nor Secret shall be required hereunder to comply with any condition that would have a material adverse effect upon it or any of its Affiliates. If reconsideration or judicial review is sought with respect to the FCC Consent, the party affected shall vigorously oppose such efforts for reconsideration or judicial review; provided, however, that nothing herein shall be construed to limit either party's right to terminate this Agreement pursuant to Article 16 hereof. 5.3 FILINGS. As promptly as practicable after the execution of this Agreement, Chancellor and Secret shall use their reasonable efforts to obtain, and to cooperate with each other in obtaining, all authorizations, consents, orders and approvals of any governmental authority that may be or become necessary in connection with the consummation of the transactions contemplated by this Agreement, and to take all reasonable actions to avoid the entry of any order or decree by any governmental authority prohibiting the consummation of the transactions contemplated hereby, including without limitation, any reports or notifications that may be required to be filed by it under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (the "HSR Act") with the Federal Trade Commission and the Antitrust Division of the Department of Justice, and each shall furnish to one another all such information in its possession as may be necessary for the completion of the reports or notifications to be filed by the other. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF CHANCELLOR Chancellor and Shamrock, jointly and severally, make the following representations and warranties to Secret. 6.1 ORGANIZATION AND STANDING. Each of Chancellor and Shamrock is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 6.2 AUTHORIZATION AND BINDING OBLIGATION. Each of Chancellor and Shamrock has all necessary corporate power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and to own or lease the Denver Stations Assets and to carry on the business of the Denver Stations upon the consummation of the transactions contemplated by this Agreement. Each of Chancellor's and Shamrock's execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action behalf of each of Chancellor and Shamrock. This Agreement has been duly executed and delivered by each of Chancellor and Shamrock and, assuming the due authorization, execution and delivery of this Agreement by Secret, this Agreement constitutes the valid and binding obligation of each of Chancellor and Shamrock, enforceable against it in accordance with its terms, except as limited by laws affecting creditors, rights or equitable principles generally. -8- 6.3 QUALIFICATION. To each of Chancellor's and Shamrock's knowledge, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the FCC, would disqualify or prohibit Chancellor or Shamrock as an assignee of the Denver Stations Licenses. 6.4 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set forth in Article 5 hereof with respect to governmental consents or otherwise disclosed in Schedule 6.4 hereto, the execution, delivery and performance of this Agreement by Chancellor and Shamrock: (a) do not violate or conflict with any of the terms, conditions or provisions of the Certificate of Incorporation or By-Laws of Chancellor or Shamrock; (b) do not require the consent of any third party not affiliated with Chancellor or Shamrock; (c) will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which Chancellor or Shamrock is a party; and (d) will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any agreement, instrument, license or permit to which Chancellor or Shamrock is now subject. 6.5 LITIGATION: COMPLIANCE WITH LAW. There is no litigation, administrative actions, arbitration or other proceeding, or petition, complaint or investigation before any court or governmental body, pending against Chancellor or Shamrock that would adversely affect Chancellor's or Shamrock's ability to perform its obligations pursuant to this Agreement or the agreements to be executed by Chancellor or Shamrock in connection herewith. Neither Chancellor nor Shamrock has committed no violation of any applicable law, regulation or ordinance or any other requirement of any governmental body or court which would have a material adverse effect on Chancellor or Shamrock or their respective ability to perform their respective obligations pursuant to this Agreement or the agreements to be executed in connection herewith. 6.6 FINANCIAL CAPACITY. Each of Chancellor and Shamrock has the financial capacity to satisfy all of its obligations under this Agreement. 6.7 COMMISSION OR FINDER'S FEES. Neither Chancellor or Shamrock nor any person or entity acting on behalf of Chancellor or Shamrock has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity. ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SECRET Secret hereby makes the following representations and warranties to Chancellor and Shamrock: -9- 7.1 ORGANIZATION AND STANDING. Secret is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware and has the partnership power and authority to own, lease and operate the Denver Stations Assets and to carry on the business of the Denver Stations as now being conducted. 7.2 AUTHORIZATION AND BINDING OBLIGATION. Secret has the partnership power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and the execution, delivery and performance of this Agreement, and the transactions contemplated hereby have been duly and validly authorized by all necessary action on its part. This Agreement has been duly executed and delivered by Secret and, assuming the due authorization, execution and delivery of this Agreement by Chancellor and Shamrock, constitutes the valid and binding obligation of Secret enforceable against it in accordance with its terms, except as limited by laws affecting the enforcement of creditor's rights or equitable principles generally. 7.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set forth in Article 5 with respect to governmental consents and as set forth in Schedule 7.8 with respect to consents required in connection with the assignment of certain Contracts, the execution, delivery and performance of this Agreement by Secret: (a) will not conflict with, result in a breach of, or constitute a violation of or default under, the provisions of Secret's certificate of incorporation or by-laws or any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which Secret is a party or by which Secret or any of the Denver Stations Assets are bound; or (b) will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any material Contract, Trade Agreement, agreement, instrument, license or permit to which either Secret or any of the Denver Stations Assets is now subject; other than in the case of (a) or (b) any such conflicts, violations or defaults which would not, individually or in the aggregate have a material adverse effect on the Denver Stations. 7.4 COMPLIANCE WITH FCC REGULATIONS. (a) The operation of the Denver Stations and all of the Denver Stations Assets are in compliance in all material respects with (i) all applicable engineering standards required to be met under applicable FCC rules, (ii) all Denver Stations Licenses and (iii) all other applicable federal, state and local rules, regulations, requirements and policies, including, but not limited to, equal employment opportunity policies of the FCC, all applicable painting and lighting requirements of the FCC and the Federal Aviation Administration and ANSI Radiation Standards C95.1 - 1982 to the extent required to be met under applicable FCC rules and regulations. (b) The Denver Stations Licenses are in full force and effect and constitute the only licenses and authorizations required from the FCC and necessary for the operations of the Denver Stations as conducted by Secret. -10- 7.5 PERSONAL PROPERTY. Schedule 7.5 hereto contains a list of all material tangible personal property and assets owned or held by Secret and used or useful in the conduct of the business and operations of the Denver Stations. Except as disclosed in Schedule 7.5, Secret owns and has, and following the Closing, Shamrock will have, good and indefeasible title to all such property (and to all other tangible personal property and assets to be transferred to Shamrock hereunder), and none of such property is, or at the Closing will be, subject to any material security interest, mortgage, pledge, conditional sales agreement, lease, license, or other lien or encumbrance other than Permitted Encumbrances (as hereinafter defined). 7.6 REAL PROPERTY. 7.6.1 Schedule 7.6 hereto contains a complete and accurate list and description of all material real property owned and leased by Secret and used by the Denver Stations and all agreements, leases and contracts of Secret relating to the tower, transmitter, studio site and offices of the Denver Stations (collectively the "Real Estate Contracts"). The Real Estate Contracts requiring the consent of a third party to assignment are identified by an asterisk in Schedule 7.6. 7.6.2 The Real Estate Contracts listed on Schedule 7.6 are in full force and effect and are valid, binding and enforceable in accordance with their terms. 7.6.3 Secret has and shall convey to Chancellor good and indefeasible fee simple title to the owned Real Estate free and clear of any mortgages, liens, charges and encumbrances, except the liens and encumbrances described in Schedule 7.6 hereto and such other liens and encumbrances which, in the aggregate, will not have a material adverse effect on the Denver Stations Assets or the operation of the Denver Stations ("Permitted Encumbrances"). 7.7 CONTRACTS. Schedule 7.7 hereto lists all material Contracts to which Secret is a party as of the date of this Agreement. Those Contracts requiring the consent of a third party to assignment are identified by an asterisk in Schedule 7.7. Secret has delivered to Chancellor true and complete copies of all written contracts listed on Schedule 7.7. 7.8 STATUS OF CONTRACTS. Except as set forth in Schedule 7.8, Secret is not in default under any of the Contracts set forth on Schedule 7.7, except such defaults which, in the aggregate, will not have a material adverse effect on the Denver Stations Assets or the operation of the Denver Stations. 7.9 ENVIRONMENTAL. (i) The real property and facilities owned, operated and leased by Secret in the operation of the Denver Stations and the operations of the Denver Stations thereon are in substantial compliance with all applicable federal, state and local statutes, -11- codes, rules, or regulations relating to the environment, natural resources and public or employee health and safety ("Environmental Laws"); (ii) No judicial proceedings are pending or, to Secret's knowledge, threatened against Secret alleging the violation of any Environmental Law (and, to Secret's knowledge, there are no administrative proceedings alleging the violation of any Environmental Law pending or threatened against Secret in respect of the operation of the Denver Stations) and no notice from any Governmental Entity or other person has been given to Secret claiming any violation of any Environmental Laws in connection with any real property or facility owned, operated or leased by Secret and used in the operation of the Denver Stations, or requiring any repairs, work, construction, alterations or installations on or in connection with any real property or facility owned, operated or leased by Secret and used in the operation of the Denver Stations that are needed in order to comply with any Environmental Laws and that have not been complied with or otherwise resolved to satisfaction of the party giving notice; (iii) All substances, materials or wastes that are regulated by federal, state or local government, including without limitation, any substance, material or waste that is defined as a "hazardous waste," "hazardous material," "hazardous substance," "toxic waste" or "toxic substance," under any provision of Environmental Law, used or generated by Secret in the operation of the Denver Stations or, to Secret's knowledge, any of its predecessors ("Hazardous Substances"), on any of the owned or leased real property or facilities of Secret used in the operation of the Denver Stations have been stored, used, treated, and disposed of by such persons or on their behalf in such manner as not to result in any Environmental Costs or Liabilities. "Environmental Costs and Liabilities" means any losses, liabilities, obligations, damages, fines, penalties, judgments, actions, claims, costs and expenses (including, without limitation, reasonable fees, disbursements and expenses of legal counsel, experts, engineers and consultants, and the costs of investigation or feasibility studies, remedial or removal actions and cleanup activities) arising from or under any Environmental Law, order of, or contract of Secret with, any Governmental Entity or other person and exceeding $100,000 individually or in the aggregate; and (iv) There are not now, nor have there been in the past, on, in or under any real property or facilities when owned, leased or operated by Secret in the operation of the Denver Stations or, to Secret's knowledge, when owned, leased or operated by any of its predecessors and used in the operation of the Denver Stations, any of the following that are in a condition that violates any Environmental Law in any material respect or that reasonably could be expected to require remediation under customary broadcast industry standards: any (w) underground storage tanks, aboveground storage tanks, dikes or impoundments, (x) asbestos containing materials, (y) polychlorinated biphenyls or (z) radioactive substances; and -12- (v) The Denver Stations's operations do not have a significant environmental impact, as defined by 47 C.F.R. Section 1.1307. Notwithstanding anything herein to the contrary, no representations or warranties shall be deemed to have been made in this Section 7.9 by Secret with respect to any "multi-tenant" facilities and the real property on which such facilities are located where Secret or its subsidiaries or predecessors are or were lessees and do not have any liability or responsibility for any matters arising under Environmental Laws with respect to those portions of the multi- tenant facilities not leased by them. 7.10 INTELLECTUAL PROPERTY. Schedule 7.10 hereto is a true and complete list of all material Intellectual Property applied for, issued to or owned by Secret or under which Secret is a licensee and used exclusively in the conduct of the business and operations of the Denver Stations. To the knowledge of Secret, the operation of the Denver Stations as now conducted does not conflict with any valid patents, trademarks, trade names, service marks or copyrights of others in any way which is reasonably likely to have a material adverse effect on the Denver Stations Assets or the operation of the Denver Stations. 7.11 PERSONNEL INFORMATION. Secret has previously delivered to Chancellor a true and complete list of all persons employed by the Denver Stations and a list of all material compensation arrangements with such employees (other than Employee Benefit Plans listed on Schedule 7.13). Secret is not a party to any Contract with any labor organization, nor has Secret agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any employees of Secret. Secret has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of Secret. 7.12 LITIGATION. Except as set forth in Schedule 7.12 hereto, Secret is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree relating to the conduct of the business or the operation of the Denver Stations or any of the Denver Stations Assets, and there is no litigation, administrative action, proceeding or investigation pending or, to the knowledge of Secret, threatened against Secret or the Denver Stations in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Denver Stations Licenses), or before any other tribunal duly authorized to resolve disputes which, if determined adversely, will have a material adverse effect on the Denver Stations Assets or the operation of the Denver Stations. 7.13 EMPLOYEE BENEFIT PLANS. Schedule 7.13 hereto contains a true and complete list as of the date of this Agreement of all employee benefit plans applicable to the employees of Secret employed at the Denver Stations ("Employee Benefit Plans"). Secret does not maintain any other employee benefit plan as the term is defined in Section 3 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), applicable to the employees -13- of Secret employed at the Denver Stations. None of the Employee Benefit Plans constitutes a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. 7.14 COMMISSIONS OR FINDER'S FEES. Neither Secret nor any person or entity acting on behalf of Secret has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity. 7.15 INSURANCE. Secret has insurance policies in full force and effect for such amounts as are sufficient for material compliance with all requirements of law and all agreements to which Secret is a party or by which it is bound. 7.16 FINANCIAL STATEMENTS. Secret has previously delivered to Chancellor unaudited financial statements of the Denver Stations for the year ending December 31, 1995. The financial statements have been prepared in accordance with generally accepted accounting procedures applied on a consistent basis throughout the periods covered thereby, and present fairly, in all material respects, the financial position, the results of operations and cash flow as of the dates and for the periods then ending, subject to normal and customary year- end adjustments. 7.17 KNOWLEDGE. As used in this Article 7, the terms "to Secret's knowledge and "to the knowledge of Secret" shall mean the actual knowledge of the persons listed on Schedule 7.17. ARTICLE 8 COVENANTS OF CHANCELLOR AND SHAMROCK 8.1 CLOSING. Subject to Article 11 hereof, on the Closing Date, Shamrock shall acquire the Denver Stations Assets from Secret as provided in Article 1 hereof and shall assume the Assumed Liabilities of Secret as provided in Article 2 hereof. 8.2 NOTIFICATION. Chancellor and Shamrock shall notify Secret of any litigation, arbitration or administrative proceeding pending or, to its knowledge, threatened against Chancellor or Shamrock which challenges the transactions contemplated hereby. 8.3 NO INCONSISTENT ACTION. Neither Chancellor nor Shamrock shall not take any other action which is materially inconsistent with its obligations under this Agreement. 8.4 SECRET'S POST-CLOSING ACCESS. Chancellor and Shamrock, for a period of five (5) years following the Closing Date, shall make available during normal business hours for audit and inspection by Secret and its representatives for any reasonable purpose and upon reasonable notice all records, files, documents and correspondence transferred to it hereunder with respect to taxes, regulations, and litigations. Chancellor and Shamrock shall at no time dispose of or destroy any such records, files, documents and correspondence without giving -14- thirty (30) days prior notice to Secret to permit Secret, at its expense, to examine, duplicate or take possession of and title to such records, files, documents and correspondence. All personnel records shall be maintained as confidential if required by any applicable state or federal law. Chancellor and Shamrock shall make available to Secret during normal business hours upon reasonable notice in writing: (i) personnel of Chancellor and Shamrock to assist Secret in locating and obtaining records and files with respect to the Denver Stations for periods prior to the Closing Date; and (ii) any personnel of Chancellor and Shamrock whose assistance or participation is reasonably required by Secret in anticipation of, preparation for, or the prosecution or defense of existing or future litigation, tax returns or other matters, in which Secret is involved with respect to the Denver Stations; provided, however, that nothing in this Section 8.4 shall obligate Chancellor and Shamrock to take actions that would unreasonably disrupt the normal course of its business, violate the terms of any contract or agreement to which it is a party or to which it or any of its assets is subject or grant access to any of its proprietary, confidential or classified information. 8.5 EMPLOYEE MATTERS. (a) Secret shall make available each Station's personnel during normal business hours for Chancellor to interview and within fifteen (15) days after the execution of this Agreement, Chancellor shall notify Secret of the names of the employees whom Chancellor shall offer employment. Secret hereby consents to Chancellor making such offers of employment subject to the effectiveness of a Time Brokerage Agreement relating to the Stations between the parties of even date herewith. Secret shall be responsible for all obligations or liabilities to those employees not offered employment by Chancellor, and Chancellor shall have no obligations with respect to those employees. (b) No portion of the assets of any Plan, fund, program or arrangement, written or unwritten, heretofore sponsored or maintained by Secret (and no amount attributable to any such plan, fund, program or arrangement) shall be transferred to Chancellor or Shamrock, and Chancellor and Shamrock shall not be required to continue, nor shall Chancellor and Shamrock assume any obligation under, any such plan, fund, program or arrangements after the Closing Date. ARTICLE 9 COVENANTS OF SECRET 9.1 SECRET'S PRE-CLOSING COVENANTS. Secret covenants and agrees with respect to the Denver Stations that between the date hereof and the Closing Date, except as expressly permitted by this Agreement or with the prior written consent of Chancellor or Shamrock, it shall act in accordance with the following: 9.1.1 Secret shall conduct the business and operations of the Denver Stations in the ordinary course of business. -15- 9.1.2 Secret shall operate the Denver Stations in all material respects in accordance with FCC rules and regulations and the Denver Stations Licenses and with all other laws, regulations, rules and orders. 9.1.3 Secret shall give or cause the Denver Stations to give Chancellor and Chancellor's counsel, accountants, engineers and other representatives, with Secret's prior consent (which consent shall not be unreasonably withheld), full and reasonable access during normal business hours to all of Secret's properties, books, Contracts, Trade Agreements, reports and records including financial information and tax returns relating to the Denver Stations, and to all real estate, buildings and equipment relating to the Denver Stations, in order that Chancellor may have full opportunity to make such investigation as it desires of the affairs of the Denver Stations and to furnish Chancellor with information, and copies of all documents and agreements including but not limited to financial and operating data and other information concerning the financial condition, results of operations and business of the Denver Stations, that Chancellor may reasonably request. The rights of Chancellor under this Section shall not be exercised in such a manner as to interfere unreasonably with the business of the Denver Stations. 9.1.4 CONSENTS. Secret will use reasonable efforts to obtain the third-party consents listed on Schedule 9.1.4. 9.2 NO INCONSISTENT ACTION. Secret shall not take any action which is materially inconsistent with its obligations under this Agreement. 9.3 CLOSING COVENANT. On the Closing Date, Secret shall transfer, convey, assign and deliver to and Shamrock the Denver Stations Assets and the Assumed Liabilities as provided in Articles 1 and 2 of this Agreement. ARTICLE 10 JOINT COVENANTS Chancellor, Shamrock and Secret covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 10.1 CONFIDENTIALITY. Each of Chancellor, Shamrock and Secret shall each keep confidential all information obtained by it with respect to the other parties hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement, and if the transactions contemplated hereby are not consummated for any reason, each shall return to each other party hereto, without retaining a copy thereof, any schedules, documents or other written information obtained from such other party in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, not bound by a confidentiality agreement with the disclosing party, or (ii) is or becomes -16- publicly known through no fault of the receiving party or its agents, or (iii) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice), or (iv) is developed by the receiving party independently of the disclosure by the disclosing party. 10.2 COOPERATION. Chancellor, Shamrock and Secret shall cooperate fully with one another in taking any actions, including actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement; provided, however, that no party shall be required to take any action which would have a material adverse effect upon it or any Affiliate. 10.3 CONTROL OF DENVER STATIONS. Chancellor and Shamrock shall not, directly or indirectly, control or direct the operations of the Denver Stations. Such operations, including complete control over Denver Stations programming, employees and policies, shall be the sole responsibility of Secret. 10.4 BULK SALES LAWS. Chancellor and Shamrock hereby waives compliance by Secret with the provisions of the "bulk sales" or similar laws of any state. Secret agrees to indemnify Chancellor and Shamrock and hold them harmless from any and all loss, cost, damage and expense (including but not limited to, reasonable attorney's fees) sustained by Chancellor and Shamrock as a result of any failure of Secret to comply with any "bulk sales" or similar laws. 10.5 PUBLIC ANNOUNCEMENTS. Neither Chancellor or Shamrock nor Secret shall issue any press release or make any disclosure with respect to the transaction contemplated by this Agreement without the prior written approval of the other party, except as may be required by applicable law or by obligations pursuant to any listing agreement with any securities exchange or any stock exchange regulations. ARTICLE 11 CONDITIONS OF CLOSING BY CHANCELLOR The obligations of Chancellor and Shamrock hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. 11.1.1 All representations and warranties of Secret made in this Agreement or in any Exhibit, Schedule or document delivered pursuant hereto, shall be true and complete as of the date hereof and on and as of the Closing Date as if made on and as of that date, except for changes expressly permitted or contemplated by the terms of this Agreement and for such breaches of representations and warranties that, in the aggregate, will not have a material adverse effect on the Denver Stations Assets or the operation of the Denver Stations. -17- 11.1.2 All of the terms, covenants and conditions to be complied with and performed by Secret on or prior to the Closing Date shall have been complied with or performed in all material respects. 11.1.3 Chancellor shall have received a certificate, dated as of the Closing Date, from Secret, executed by an officer of Secret to the effect that the conditions set forth in Sections 11.1.1 and 11.1.2 have been fulfilled. 11.2 GOVERNMENTAL CONSENTS. The conditions specified in Section 5.1 of this Agreement shall have been satisfied. 11.3 ADVERSE PROCEEDINGS. No order, decree or judgment of any court, agency or other governmental authority shall have been rendered against any party hereto which would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms. 11.4 CLOSING DOCUMENTS. Secret shall have delivered or caused to be delivered to Shamrock, on the Closing Date, all deeds, bills of sale, endorsements, assignments and other instruments of conveyance and transfer consistent with the terms hereof and otherwise reasonably satisfactory in form and substance to Shamrock, effecting the sale, transfer, assignment and conveyance of the Denver Stations Assets to Shamrock, including, without limitation, each of the documents required to be delivered pursuant to Article 14. 11.5 PRE-MERGER NOTIFICATION. Any waiting period under the HSR Act with respect to the transactions contemplated by this Agreement shall have elapsed. ARTICLE 12 CONDITIONS OF CLOSING BY SECRET The obligations of Secret hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 12.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. 12.1.1 All representations and warranties of Chancellor and Shamrock shall be true and complete on and as of the Closing Date, except for changes expressly permitted or contemplated by the terms of this Agreement and for such breaches of representations and warranties that, in the aggregate, will not have a material adverse effect on the ability of Chancellor and Shamrock to discharge their obligations hereunder. -18- 12.1.2 All the terms, covenants and conditions to be complied with and performed by Chancellor and Shamrock on or prior to the Closing Date shall have been complied with or performed in all material respects. 12.1.3 Secret shall have received a certificate, dated as of the Closing Date, executed by an officer of Chancellor and Shamrock, to the effect that the conditions set forth in Sections 12.1.1 and 12.1.2 have been satisfied on and as of the Closing Date. 12.2 GOVERNMENTAL CONSENTS. The conditions specified in Section 5.1 of this Agreement shall have been satisfied. For purposes of this Section 12.2, the condition specified in Section 5.1 shall be deemed to be satisfied whether or not the FCC Consent has become a Final Order, unless a petition to deny has been filed against the FCC assignment applications for the proposed transaction. 12.3 ADVERSE PROCEEDINGS. No order, decree or judgment of any court, agency or other governmental authority shall have been rendered against any party hereto which would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms. ARTICLE 13 TRANSFER TAXES: FEES AND EXPENSES 13.1 EXPENSES. Except as set forth in Sections 13.2, 13.3 and 16.2 hereof, each party hereto shall be solely responsible for all costs and expense incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement, including, but not limited to, the costs and expenses incurred pursuant to Article 5 hereof. 13.2 TRANSFER TAXES AND SIMILAR CHARGES. All costs of transferring the Denver Stations Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne by Chancellor or Shamrock. 13.3 GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees imposed by any governmental authority the consent of which is required for the consummation of the transactions contemplated hereby shall be borne by Chancellor or Shamrock. -19- ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING 14.1 SECRET'S DOCUMENTS. At the Closing, Secret shall deliver or cause to be delivered to Chancellor or Shamrock the following: 14.1.1 Certified resolutions of the Board of Directors of Secret approving the execution and delivery of this Agreement and each of the other documents and authorizing the consummation of the transactions contemplated hereby and thereby; 14.1.2 Certificates, dated the Closing Date, by Secret in the form described in Section 11.1.3; and 14.1.3 Bills of Sale, assignments and other good and sufficient instruments of conveyance, transfer and assignment, all in form and substance consistent with the terms hereof and otherwise reasonably satisfactory to Shamrock, as shall be effective to vest in Shamrock or its permitted assignees, good and marketable title in and to the Denver Stations Assets transferred pursuant to this Agreement in accordance with the terms of this Agreement. 14.1.4 The consents listed on Schedule 9.1.4. 14.1.5 A legal opinion of counsel for Secret in form and substance reasonably satisfactory to Chancellor. 14.2 CHANCELLOR'S AND SHAMROCK'S DOCUMENTS. At the Closing, Chancellor shall deliver or cause to be delivered to Secret the following: 14.2.1 The Exchange Price in accordance with Section 3.1 hereof; 14.2.2 A certificate, dated the Closing Date, by Chancellor and Shamrock in the form described in Section 12.1.3; 14.2.3 Long-Form Certificate of Good Standing (including tax certification) of Chancellor and Shamrock and certified charter of Chancellor from the State of Delaware dated not more than forty-five (45) days before the Closing Date; 14.2.4 An assignment and assumption agreement or agreements reasonably satisfactory in form and substance to counsel to Secret effecting the assumption of the Assumed Liabilities; and 14.2.5 Certified resolutions of the Board of Directors of Chancellor and Shamrock approving the execution and delivery of this Agreement and each of the other documents and agreements referred to herein and authorizing the consummation of the transactions contemplated hereby and thereby. -20- 14.2.6 A legal opinion of counsel for Chancellor in form and substance reasonably satisfactory to Secret. 14.3 DENVER STATIONS ASSETS. At the Closing, Secret will put Shamrock into full possession and control of the Denver Stations Assets. ARTICLE 15 INDEMNIFICATION 15.1 INDEMNIFICATION BY SECRET. Secret hereby agrees to indemnify, defend and hold harmless Chancellor and Shamrock, with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including, without limitation, interest, penalties, court costs and reasonable attorneys' fees) ("Damages") asserted against, resulting from, imposed upon or incurred by Chancellor and Shamrock directly or indirectly relating to or arising out of: 15.1.1 The breach by Secret of any of its representations or warranties, or failure by Secret to perform any covenants or agreements of Secret, set forth in this Agreement or in any certificate, or in any document or schedule delivered hereunder; 15.1.2 The Retained Liabilities; 15.1.3 The use or ownership of the Denver Stations Assets or operation of the Denver Stations prior to the Closing Date; and 15.1.4 A claim by any person or entity based on any arrangement or agreement to pay a commission, finder's fee or similar payment in connection with this Agreement made or alleged to have been made by Secret. 15.2 INDEMNIFICATION BY CHANCELLOR. Chancellor and Shamrock, jointly and severally, hereby agree to indemnify, defend and hold harmless Secret with respect to any and all Damages asserted against, resulting from, imposed upon or incurred by Secret directly or indirectly relating to or arising out of: 15.2.1 The breach by Chancellor or Shamrock of any of their representations or warranties, or failure by Chancellor or Shamrock to perform any covenants or agreements of Chancellor or Shamrock set forth in this Agreement; 15.2.2 The Assumed Liabilities; 15.2.3 The use or ownership of the Denver Stations Assets or operation of the Denver Stations after the Closing Date; and -21- 15.2.4 A claim by any person or entity based on any arrangement or agreement to pay a commission, finder's fee or similar payment in connection with this Agreement made or alleged to have been made by Chancellor or Shamrock. 15.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties contained herein shall survive the Closing and remain in full force and effect for nine months after the Closing Date. Any claim for indemnification with respect to any of such matters which is not asserted by notice given as herein provided which specifically identifies a particular breach and the underlying facts and Damages relating thereto within such specified period of survival may not be pursued and is hereby irrevocably waived after such time. 15.4 PROCEDURES. 15.4.1 Promptly (within ten days) after the receipt by any party (the "Indemnified Party") of notice of (a) any claim or (b) the commencement of any action or proceeding which may entitle such party to indemnification under this Article 15, such party shall give the party from whom indemnification may be sought (the "Indemnifying Party") written notice of such claim or the commencement of such action or proceeding and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting from such claim. 15.4.2 If the Indemnifying Party assumes the defense of any such claim or litigation resulting therefrom with counsel reasonably acceptable to the Indemnified Party, the obligations of the Indemnifying Party as to such claim shall be limited to taking all steps necessary in the defense or settlement of such claim or litigation resulting therefrom and to holding the Indemnified Party harmless from and against any losses, damages and liabilities caused by or arising out of any settlement approved by the Indemnifying Party or any judgment in connection with such claim or litigation resulting therefrom; however, the Indemnified Party may participate, at its expense, in the defense of such claim or litigation provided that the Indemnifying Party shall direct and control the defense of such claim or litigation. The Indemnified Party shall cooperate and make available all books and records reasonably necessary and useful in connection with the defense. The Indemnifying Party shall not, in the defense of such claim or any litigation resulting therefrom, consent to entry of any judgment, except with the written consent of the Indemnified Party, or enter into any settlement, except with the written consent of the Indemnified Party. Any settlement must include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party of a release from all liability in respect of such claim or litigation. 15.4.3 If the Indemnifying Party shall not assume the defense of any such claim or litigation resulting therefrom, the Indemnified Party may, but shall have no obligation to, defend against such claim or litigation in such manner as it may deem appropriate, and the Indemnified Party may compromise or settle such claim or litigation without the Indemnifying Party's consent. The Indemnifying Party shall promptly reimburse the Indemnified Party for the amount of all expenses, legal or otherwise, incurred by the Indemnified Party in -22- connection with the defense against or settlement of such claim or litigation. If no settlement of the claim or litigation is made, the Indemnifying Party shall promptly reimburse the Indemnified Party for the amount of any judgment rendered with respect to such claim or in such litigation and of all expenses, legal or otherwise, incurred by the Indemnified Party in the defense against such claim or litigation. 15.5 LIMITS ON AND CONDITIONS OF INDEMNIFICATION. 15.5.1 THRESHOLD AMOUNT: CAP. Notwithstanding any other provision hereof, no Indemnified Party shall be entitled to make a claim against an Indemnifying Party in respect of any breach of a representation or warranty under Sections 15.1.1 or 15.2.1 except to the extent that the aggregate amount of such Damages exceeds the amount of $118,400 (the "Threshold Amount"); provided, however, that once such aggregate has been exceeded, such Indemnifying Party shall only be liable for the amount that such Damages exceed the Threshold Amount. Notwithstanding any other provision of this Agreement, neither the indemnity obligation of Secret under Section 15.1 nor the indemnity obligation of Chancellor under Section 15.2 will exceed $1,600,000. 15.5.2 ASSIGNMENT OF CLAIMS. In the event that any of the Damages for which an Indemnifying Party is responsible or allegedly responsible hereunder are recoverable or potentially recoverable against any third party at the time when payment is due under this Article 15, then, the Indemnified Party shall assign any and all rights that it may have that are related in any fashion to the Damages or the facts or circumstances giving rise thereto to the Indemnifying Party as a condition to any payment due under this Article 15, or, if such rights are not assignable under applicable law or otherwise, the Indemnified Party hereunder shall attempt in good faith to collect any and all damages and losses on account thereof from such third party for the benefit of, and at the expense and direction of, the Indemnifying Party. 15.5.3 INDEMNITY PAYMENTS. The parties agree that any payments made pursuant to this Article 15 will be treated by the parties on all applicable tax returns as an adjustment to the purchase price payable hereunder. 15.5.4 EXCLUSIVE REMEDY POST-CLOSING. As between Secret, on the one hand, and Chancellor, on the other hand, after the Closing, the rights and obligations set forth in this Article 15 will be the exclusive rights and obligations with respect to this Agreement, the events giving rise to this Agreement and the transaction provided for herein or contemplated thereby. Without limiting the generality or effect of the foregoing, as a material inducement to the other parties hereto entering into this Agreement, each of the parties to this Agreement hereby (i) waives any claim or cause of action which it otherwise might assert, including without limitation under the common law or federal or state securities, trade regulation or other laws, by reason of this Agreement, the event giving rise to this Agreement and the transactions provided for herein or contemplated hereby or thereby, except for claims or causes of action brought under and subject to the terms and conditions of this Article 15 and (ii) agrees that, regardless of the foregoing provisions, no party will have any liability in respect of any -23- claim or cause of action that is or may be brought except in respect of damages, and then only to the extent expressly provided in this Article 15. Nothing contained in this Section 15.5.4 shall preclude any party hereto from obtaining the remedies set forth in Section 17.1 of this Agreement in the event this Agreement is terminated. ARTICLE 16 TERMINATION RIGHTS 16.1 TERMINATION. This Agreement may be terminated at any time prior to Closing as follows: (a) by written notice of Chancellor to Secret if Secret breaches in any material respect any of its representations or warranties or defaults in any material respect in the observance or in the due and timely performance of any of its covenants or agreements herein contained and such breach or default shall not be cured within thirty (30) days of the date of notice of breach or default served by Chancellor or by written notice of Secret to the Chancellor if Chancellor or Shamrock breaches in any material respect any of its representations or warranties or defaults in any material respect in the observance or in the due and timely performance of any of its covenants or agreements herein contained and such breach or default shall not be cured within thirty (30) days of the date of notice of breach or default served by Secret; or (b) by written notice of Chancellor to Secret, or by Secret to Chancellor, if the FCC denies the FCC Application or designates it for a trial- type hearing; or (c) by written notice of Chancellor to Secret, or by Secret to Chancellor, if there shall be in effect any judgment, final decree or order that would prevent or make unlawful the consummation of the transactions contemplated by this Agreement; (d) by written notice of Chancellor to Secret, or by Secret to the Chancellor, if the Closing shall not have been consummated on or before February 14, 1998. (e) by written notice of Secret to Chancellor pursuant to Section 4.1(B) hereof; or (f) by written notice of Chancellor to Secret pursuant to Section 4.1(C) hereof. Notwithstanding the foregoing, no party hereto may effect a termination hereof if such party is in material default or breach of this Agreement. 16.2 SCHEDULES. Secret will deliver to Shamrock, within 10 days immediately following the date of this Agreement, all schedules required to be delivered under this -24- Agreement and certain financial information requested by Shamrock. Shamrock shall be permitted, for a period of 10 days immediately following its receipt of such schedules and information, to terminate this Agreement if it is not satisfied with such schedules and information in its reasonable judgment exercised in good faith. Following such termination, the parties shall have no further obligation to one another in respect of this Agreement. ARTICLE 17 MISCELLANEOUS PROVISIONS 17.1 LIQUIDATED DAMAGES: SPECIFIC PERFORMANCE. (a) In the event this Agreement is terminated as a result of Chancellor's or Shamrock's breach of this Agreement, Secret shall be entitled to (i) receive $1,600,000 from Chancellor, which amount shall constitute liquidated damages or (ii) subject to Section 17.1(b) below, obtain specific performance of the terms of this Agreement. In the event this Agreement is terminated as a result of Secret's breach of this Agreement, Chancellor shall be entitled to (i) receive $1,600,000 from Secret, which amount shall constitute liquidated damages or (ii) obtain specific performance of the terms of this Agreement. In the event this Agreement is terminated pursuant to Section 16.1(e) above, Secret shall be entitled to receive $1,600,000 from Chancellor, which amount shall constitute liquidated damages. In the event this Agreement is terminated pursuant to Section 16.1(f) above, Chancellor shall be entitled to receive $1,600,000 from Secret, which amount shall constitute liquidated damages. It is understood and agreed that such liquidated damage amount represents Chancellor's, Shamrock's and Secret's reasonable estimate of actual damages and does not constitute a penalty. Except as set forth in this Section 17.1, recovery of liquidated damages shall be the sole and exclusive remedy of Secret against Chancellor and of Chancellor and Shamrock against Secret for failing to consummate this Agreement on the Closing Date and shall be applicable regardless of the actual amount of damages sustained and, subject to this Section 17.1, all other remedies are deemed waived by each of Chancellor, Shamrock and Secret, except the right of either party to sue the other party for failure to pay the liquidated damages. (b) The parties hereto agree that in the event Chancellor seeks to enforce its right to specific performance in accordance with this Section 17.1, Secret shall then be entitled to obtain specific performance of the terms of this Agreement. In the event of a default by either Chancellor or Secret which results in the filing of a lawsuit for liquidated damages or specific performance, the successful party in such lawsuit shall be entitled to reimbursement by the unsuccessful party of reasonable legal fees and expenses incurred by the successful party. 17.2 CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the -25- meaning assigned to it in accordance with generally accepted accounting principles as in effect on the date hereof, (iv) "or" is disjunctive but not necessarily exclusive, (v) words in the singular include the plural and VICE VERSA, and (vi) the term "Affiliate" has the meaning given it in Rule 12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as amended. All references to "$" or dollar amounts will be to lawful currency of the United States of America. 17.3 FURTHER ASSURANCES. After the Closing, Secret shall from time to time, at the request of and without further cost or expense to Chancellor and Shamrock, execute and deliver such other instruments of conveyance and transfer and take such other actions as may reasonably be requested in order to more effectively consummate the transactions contemplated hereby to vest in Shamrock good and marketable title to the assets being transferred hereunder, and Chancellor and Shamrock shall from time to time, at the request of and without further cost or expense to Secret, execute and deliver such other instruments and take such other actions as may reasonably be requested in order to more effectively relieve Secret of any obligations being assumed by Shamrock hereunder. 17.4 BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may voluntarily or involuntarily assign its interest under this Agreement without the prior written consent of the other parties hereto, except for any assignment to an Affiliate of Chancellor or Secret in which case Chancellor or Secret, as appropriate, shall remain fully obligated under this Agreement as an assignor. 17.5 AMENDMENTS. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 17.6 HEADINGS. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. 17.7 GOVERNING LAW. The construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the choice of law provisions thereof. 17.8 NOTICES. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, including by telecopy, and shall be deemed to have been duly delivered and received on the date of personal delivery, on the third day after deposit in the U.S. mail if mailed by registered or certified mail, postage prepaid and return receipt requested, on the day after delivery to a nationally recognized overnight courier service if sent by an overnight delivery service for next morning delivery or when dispatched by facsimile transmission and shall be addressed to the following addresses, or to such other -26- address as any party may request, in the case of Secret, by notifying Chancellor, and in the case of Chancellor, by notifying Secret: To Chancellor: Chancellor Radio Broadcasting Company or Shamrock 12655 North Central Expressway Suite 405 Dallas, Texas 75243 Attention: Steven Dinetz Fax: (214) 239-0220 Copy to: Matthew L. Leibowitz Leibowitz & Associates, P.A. One S.E. Third Avenue, Suite 1450 Miami, Florida 33131 Fax: (305) 530-9417 To Secret: Secret Communications, L.P. 312 Walnut Street Suite 3550 Cincinnati, Ohio 45202 Attn: Frank E. Wood Fax: (513) 621-3299 Copy to: Frost & Jacobs 2500 PNC Center 201 East Fifth Street Cincinnati, OH 45202 Attention: Neil Ganulin Fax: (513) 651-6981 Secret Communications c/o Lane Industries 1200 Shermer Road Northbrook, IL 60062 Attention: Arthur J. Schiller Fax: (708) 498-2104 17.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. 17.10 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the -27- parties hereto and their successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 17.11 SEVERABILITY. The parties agree that if one or more provisions contained in this Agreement shall be deemed or held to be invalid, illegal or unenforceable in any respect under any applicable law, this Agreement shall be construed with the invalid, illegal or unenforceable provision deleted, and the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby. 17.12 SOLICITATION OF EMPLOYEES. During the period from the Closing Date through the third anniversary thereof, Secret will not initiate contact with any employee of Shamrock in the Denver, Colorado market for the purpose of soliciting, hiring, attempting to hire or in any manner attempting to induce such employee to leave the employment of Shamrock to be employed in any capacity with Secret. 17.13 UNDERTAKING. Chancellor hereby agrees to cause Shamrock to perform all of its obligations under this Agreement and hereby guarantees the performance of such obligations by Shamrock. 17.14 ENTIRE AGREEMENT. This Agreement and the exhibits hereto embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. -28- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. CHANCELLOR BROADCASTING COMPANY By: /s/ STEVEN DINETZ ------------------------------- Steven Dinetz President SHAMROCK BROADCASTING, INC. By: /s/ STEVEN DINETZ ------------------------------- Steven Dinetz President SECRET COMMUNICATIONS, L.P. By: /s/ FRANK E. WOOD ------------------------------- Frank E. Wood President & CEO -29- EX-10.6 3 EXHIBIT 10.6 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into effective as of February 14, 1996, between Chancellor Broadcasting Company, a Delaware corporation (the "Company"), Chancellor Radio Broadcasting Company, a Delaware corporation (the "Broadcasting Subsidiary"), and Steven Dinetz (the "EMPLOYEE)"; W I T N E S S E T H: WHEREAS, the Company and the Broadcasting Subsidiary desire to employ Employee, and Employee desires to be employed by the Company and the Broadcasting Subsidiary, in accordance with the terms and conditions set forth herein; WHEREAS, the Broadcasting Subsidiary has entered into a Stock Purchase Agreement dated as of August 3, 1995, pursuant to which the Broadcasting Subsidiary is to acquire all of the capital stock of Trefoil Communications, Inc. (the "Acquisition" and the date on which the Acquisition is consummated being the "Acquisition Date"); WHEREAS, Employee is currently employed by Chancellor pursuant to an Employment Agreement dated as of October 12, 1994 (the "ORIGINAL EMPLOYMENT AGREEMENT"); NOW, THEREFORE, subject to the consummation of the Acquisition (it being understood and agreed that if the Acquisition shall not have been consummated on or before February 29, 1996, this Agreement shall be void and of no force and effect, AB INITIO) the Company, the Broadcasting Subsidiary and the Employee hereby agree as follows: 1. EMPLOYMENT. The Company and the Broadcasting Subsidiary hereby employ Employee for the Employment Period specified in Section 2 below in the capacity of President and Chief Executive Officer or such other comparable management position or positions as designated by the Board of Directors of the Company (the "BOARD OF DIRECTORS") from time to time. The Employee hereby accepts such employment and, unless otherwise agreed to by the Board of Directors, agrees to devote his full business time and efforts to the performance of his duties hereunder and as an employee of the Company and the Broadcasting Subsidiary or their respective subsidiaries, as directed by the Board of Directors; provided, however, that nothing contained in this Section 1 shall be construed to prevent the Employee from devoting a reasonable amount of time to personal business and civic activities. Subject to approval by the Board of Directors, Employee shall be responsible for supervising the day-to-day operations of the Company and the Broadcasting Subsidiary, and in such capacity his duties shall include, without limitation, (a) preparing an annual budget, business plan, and financial projections, all in reasonable detail and setting forth the principal assumptions upon which such information was based; (b) hiring, firing, and managing the performance of all employees of the Company, the Broadcasting Subsidiary and their subsidiaries; (c) directing matters relating to public relations and promotions of the Company's and the Broadcasting Subsidiary's radio stations; (d) establishing a programming format for the Company's and the Broadcasting Subsidiary's radio stations; (e) establishing a pricing policy for advertising; (f) ensuring compliance with all applicable laws, including but not limited to the rules and regulations of the Federal Communications Commission; and (g) signing checks and entering into agreements in the ordinary course of business. 2. EMPLOYMENT PERIOD. The period of the Employee's employment under this Agreement (the "EMPLOYMENT PERIOD") shall commence on the date of the Acquisition and shall end upon the earliest of (i) the attainment of age 65 by the Employee, (ii) the termination of this Agreement as contemplated by Section 6 below and (iii) December 31, 2000; provided, however, that unless the Company or the Employee gives the other written notice to the contrary not more than 90 days and not less than 30 days prior to December 31 of each year, commencing December 31, 1996, the term of this Agreement automatically shall be extended so that, as of each December 31, the remaining term of this Agreement, subject to clauses (i) and (ii) above, shall be five years. 3. COMPENSATION. As compensation for all services rendered and to be rendered pursuant to this Agreement, the Company and the Broadcasting Subsidiary agree to pay Employee: (i) a base salary (pro rata for any partial year) at the rate of $500,000 per year (the "BASE SALARY"); and (ii) an annual bonus of up to $200,000 for each fiscal year of the Company subsequent to 1995 calculated based upon criteria established by the Board of Directors at the beginning of each fiscal year and adjusted from time to time to reflect acquisitions or dispositions of the 2 Company's and the Broadcasting Subsidiary's assets (the "BONUS"). The Base Salary, when payable pursuant to the terms hereof, shall be payable in semi-monthly installments in accordance with the payroll practices of the Company and the Broadcasting Subsidiary as in effect from time to time. The Bonuses, when payable pursuant to the terms hereof, shall be payable within ninety days after the end of the applicable periods. To the extent the Company and the Broadcasting Subsidiary desire, the amounts payable under this Agreement may be paid by one or more subsidiaries of the Company or the Broadcasting Subsidiary. The party making such payment shall have the right to deduct from any compensation and other amounts paid under this Agreement all taxes and other amounts which may be required to be deducted or withheld by law (including, but not limited to, income tax withholding and social security payments), whether such laws are now in effect or become effective after the date of this Agreement. Notwithstanding anything herein to the contrary, on December 31, 1996, and on each December 31 thereafter during the term of this Agreement (each an "Adjustment Date"), the Base Salary for the next succeeding year shall be adjusted to be equal to (i) the amount of the Base Salary in effect for the year ended on such Adjustment Date multiplied by (ii) a fraction (A) the numerator of which shall be equal to the Consumer Price Index for all Urban Consumers, U.S. City Average, for All Items (1982-84 = 100), as published in the Bureau of Labor Statistics of the Department of Labor (the "CPI") and as reflected in the most recent such publication prior to the Adjustment Date and (B) the denominator of which shall be equal to the CPI as reflected in the most recent such publication prior to the immediately preceding Adjustment Date, or in the case of the initial Adjustment Date, as reflected in the most recent such publication prior to the date of this Agreement; PROVIDED that the Base Salary shall in no event be less than $500,000 per year. 4. BUSINESS EXPENSES. The Company and the Broadcasting Subsidiary shall reimburse Employee for all reasonable and necessary business expenses incurred by Employee on behalf of or for the benefit of the Company, the Broadcasting Subsidiary or their radio stations, upon presentation of proof of such expenses. Such expenses may include, but shall not necessarily be limited to, the following: use of a luxury automobile (and attendant costs), travel and entertainment, promotions, professional or industry licenses and membership fees and attendance at conventions. Employee agrees to comply with all Internal 3 Revenue Service regulations relating to documentation of such expenses. In the event of termination of Employee's employment hereunder for any reason, Employee shall have the right to use such luxury automobile for thirty (30) days following termination. 5. EMPLOYMENT BENEFITS. During the Employment Period, Employee shall be entitled to participate, at the Company's and the Broadcasting Subsidiary's expense (subject to any employee contribution requirements applicable to employees generally) in all employee benefit programs maintained by the Company and/or the Broadcasting Subsidiary, which shall include a major medical policy for Employee and his dependents that shall provide disability insurance of not less than $5,000 per month with no more than a 30-day waiting period. In addition, during the Employment Period, the Company and the Broadcasting Subsidiary will reimburse Employee for the premium cost of a term life insurance policy for the benefit of Employee's beneficiary or beneficiaries with a death benefit of not less than $1,000,000. 6. TERMINATION OF EMPLOYMENT. (a) The Employment Period shall terminate on the fifth anniversary of the Acquisition Date (the "BASE TERM") unless earlier terminated pursuant to any, singularly or in combination, of the following provisions in this Section 6. (b) The Employment Period may be terminated at any time by the Company and the Broadcasting Subsidiary by written notice to the Employee. Notwithstanding anything to the contrary contained herein, if such termination is with Cause (as defined below), all of the Employee's rights to compensation and other rights under Sections 3, 4 and 5 above shall terminate upon such termination, except the right to payment for amounts accrued in respect of periods prior to such termination, which amounts, if any, shall be paid in a lump sum. If such termination is with Financial Cause (as defined below) (but without Cause), the Company and the Broadcasting Subsidiary shall pay to the Employee, in monthly installments equal to Employee's monthly Base Salary at the time of termination, an amount equal to (x) any amounts accrued in respect of periods prior to such termination plus (y) one years' Base Salary. If such termination is without Cause or Financial Cause, the Company and the Broadcasting Subsidiary shall pay to the Employee, in a lump sum, an amount equal to (x) any amounts accrued in respect of periods prior to such termination plus (y) his aggregate Base Salary for two years from the date of termination. "CAUSE" shall mean (i) fraud, dishonesty, 4 unethical practices or gross misconduct in office on the part of the Employee, (ii) a material breach by the Employee of any of his obligations hereunder which is not cured within 30 days after written notice from the Company to Employee, (iii) a material failure to perform Employee's duties as an employee of the Company, the Broadcasting Subsidiary or any of their subsidiaries, as determined by the Board of Directors, which failure is not cured within 60 days after written notice from the Board of Directors to Employee, or (iv) conviction of the Employee for fraud, misappropriation, embezzlement or any felony. "FINANCIAL CAUSE" shall mean (i) that either (A) the Company, the Broadcasting Subsidiary or any of their subsidiaries shall violate any financial covenant contained in any debt instrument or agreement to which the Company, the Broadcasting Subsidiary or any of its subsidiaries is a party or by which it may be bound or (B) the Employee shall act or fail to act with respect to a matter for which Employee is directly responsible, in either case with the result that such violation, action, or failure to act (x) results in the acceleration of the maturity of any debt of the Company, the Broadcasting Subsidiary or any of their subsidiaries or (y) enables (or, with the giving of notice or lapse of time or both, would enable) the holder or holders of such debt to accelerate the maturity thereof and such violation, action or failure to act remains uncured for a period of 91 consecutive days, or (ii) the Company or the Broadcasting Subsidiary shall fail to meet at least 90% of its budgeted operating income, as approved by the Board of Directors, for two consecutive fiscal years. (c) The Employment Period may be terminated at any time by the Employee for Good Reason (as defined below) by written notice to the Company and the Broadcasting Subsidiary. "GOOD REASON" shall mean: (i) any change in the Employee's functions, duties or responsibilities from his position on the Employment Date without Employee's consent if such change would (A) reduce the Employee's functions, duties, or responsibilities from those in effect on the Employment Date or the date of amendment, whichever is applicable, to a level that is not commensurate with those of an executive in the Employee's position prior to such change (it being understood that the reassignment of any of Employee's functions, duties, or responsibilities (other than those customarily performed by a chief executive officer of a business of comparable size and complexity) to one or more other persons who report directly or indirectly to Employee shall not be considered a reduction of Employee's functions, duties or responsibilities), or (B) cause the Employee's position with the Company and the 5 Broadcasting Subsidiary to become one of lesser importance or scope; and (ii) any material breach of this Agreement by the Company or the Broadcasting Subsidiary which is not cured within 30 days after written notice from Employee to the Company and the Broadcasting Subsidiary. If the Employment Period is terminated by the Employee for Good Reason, the Company and the Broadcasting Subsidiary shall pay to the Employee, in monthly installments equal to Employee's monthly Base Salary at the time of termination, the same amount Employee would have been paid had the Company and the Broadcasting Subsidiary terminated his employment without Cause or Financial Cause. If Employee voluntarily terminates his employment without Good Reason, all his rights to compensation and other rights under Sections 3, 4 and 5 shall terminate immediately. (d) If Employee shall die during the Employment Period, the Employment Period shall terminate, and the Company and the Broadcasting Subsidiary shall pay, in monthly installments equal to Employee's monthly Base Salary at the time of termination, to any beneficiary or beneficiaries designated by the Employee in writing or, if none, to his estate or legal representative an amount equal to (x) any amounts accrued in respect of periods prior to Employee's death plus (y) six months' Base Salary. (e) If Employee is unable to discharge his duties hereunder for a period of six consecutive months, or for a total of six months in any 12-month period, by reason of physical or mental illness, injury or incapacity, the Company and the Broadcasting Subsidiary may, by written notice to Employee, terminate the Employment Period. In such case, the Company and the Broadcasting Subsidiary shall pay to the Employee, in monthly installments equal to Employee's monthly Base Salary at the time of termination, an amount equal to (x) any amounts accrued in respect of periods prior to Employee's death plus (y) six months' Base Salary less (z) the amount of any and all proceeds received or receivable by the Employee from any disability insurance policies maintained by the Company and the Broadcasting Subsidiary. (f) Any amounts payable to the Employee in installments pursuant to this Section 6 may, at the Company's and the Broadcasting Subsidiary's option, be paid in a lump sum rather than installments as provided above. In any event, all such amounts (whether paid in installments or in a lump sum) shall be considered severance payments and be in full and complete satisfaction of the obligation of the Company and the Broadcasting Subsidiary to Employee in 6 connection with the termination of the Employee. For purposes of this Section 6, Employee's right to Bonus payments shall accrue only on the date the Board of Directors awards such Bonus. During the period any payments are being made to Employee pursuant to this Section 6, Employee shall be entitled to continue to participate in all employee benefit plans available to employees of the Company and the Broadcasting Subsidiary generally and to continuation of any perquisites provided the Employee by the Company and the Broadcasting Subsidiary at the time of termination (except that Employee will be required to return the automobile provided by the Company and the Broadcasting Subsidiary pursuant hereto within 30 days of Employee's termination). 7. NONCOMPETITION; CONFIDENTIALITY. (a) During the Employment Period and for an additional period of two years (or with respect to item (iii) below for that period of time for which Employee receives or is scheduled to receive payment pursuant to Section 6 unless Employee is terminated (i) with Cause, in which case for six months or (ii) without Cause or Financial Cause, in which case for two years, notwithstanding the lump sum severance payment required by Section 6) immediately following the Employment Period (the "RESTRICTION PERIOD"), Employee shall not, directly or indirectly, (i) induce any employee of the Company or any of its subsidiaries to terminate his or her employment with the Company or any of its subsidiaries, (ii) hire any such employee of the Company or any of its subsidiaries, or (iii) directly or indirectly (as an employee, owner, operator, consultant, or otherwise) engage in any aspect of the radio broadcasting business (AM or FM) in competition with any radio station (AM or FM) owned by the Company or any subsidiary of the Company at the time the Employee's employment terminates (the "PROTECTED STATIONS"); provided, that nothing in this sentence shall prevent Employee from owning 1% or less of any class of securities of a corporation having securities registered under the Securities Exchange Act of 1934, as amended. A radio station shall be deemed in competition with a Protected Station if such station competes principally in the same "area of dominant influence" (as reflected in the Arbitron ratings) as any Protected Station. (b) During the Employment Period and for an additional period of five years thereafter, Employee shall not use for his personal benefit, or disclose, communicate or divulge to, or use for the direct or indirect benefit of any person, firm, association or company other than the Company or its subsidiaries, any Confidential Information. "CONFIDENTIAL 7 INFORMATION" means information relating to the services or operations of the Company or any subsidiary thereof that is not generally known, is proprietary to the Company or such subsidiary and is made known to Employee or learned or acquired by Employee while in the employ of the Company or the Broadcasting Subsidiary, including, without limitation, (i) information relating to research, development, purchasing, accounting, marketing, merchandising, advertising, selling, leasing, finance and business methods and techniques and (ii) customer lists and other information relating to past, present or prospective customers. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters that becomes publicly available through no fault of Employee or is available to Employee from other sources who have not secured such information on a confidential basis from the Company or any affiliate thereof. All materials or articles of information of any kind furnished to Employee by the Company or any of its subsidiaries or developed by Employee in the course of his employment hereunder are and shall remain the sole property of the Company or such subsidiary, as applicable; and if the Company or such subsidiary, as applicable, requests the return of such information at any time during, upon or after the termination of Employee's employment, Employee shall immediately deliver the same to the Company or such subsidiary, as applicable. (c) Employee acknowledges that, in view of the nature of the business in which the Company and its subsidiaries are engaged, the restrictions contained in Sections 7(a) and 7(b) above (the "RESTRICTIONS") are reasonable and necessary in order to protect the legitimate interests of the Company and its subsidiaries, and that any violation thereof would result in irreparable injuries to the Company and its subsidiaries, and Employee therefore further acknowledges that, in the event Employee violates, or threatens to violate, any of such Restrictions, the Company and its subsidiaries shall be entitled to obtain from any court of competent jurisdiction, without the posting of any bond or other security, preliminary and permanent injunctive relief as well as damages and an equitable accounting of all earnings, profits and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights or remedies in law or equity to which the Company or its subsidiaries may be entitled. (d) If any Restriction, or any part thereof, shall be determined in any judicial or administrative proceeding to be invalid or unenforceable, the remainder of the 8 Restrictions shall not thereby be affected and shall be given full effect, without regard to the invalid provisions. If the period of time or the area specified in the Restrictions shall be determined in any judicial or administrative proceeding to be unreasonable, then the court or administrative body shall have the power to reduce the period of time or the area covered and, in its reduced form, such provisions shall then be enforceable and shall be enforced. (e) If Employee violates any of the Restrictions, the applicable Restrictive Period shall be tolled from the time of the commencement of any such violation until such time as such violation shall be cured by Employee to the reasonable satisfaction of the Company or its subsidiaries, as applicable. 8. REPRESENTATIONS BY EMPLOYEE. The Employee hereby represents and warrants to the Company and the Broadcasting Subsidiary that (a) the Employee's execution and delivery of this Agreement and his performance of his duties and obligations hereunder will not conflict with, or cause a default under, or give any party a right to damages under, or to terminate, any other agreement to which the Employee is a party or by which he is bound, and (b) there are no agreements or understandings that would make unlawful the Employee's execution or delivery of this Agreement or his employment hereunder. 9. NOTICES. All notices and other communications required or permitted hereunder will be in writing and, unless otherwise provided in this Agreement, will be deemed to have been duly given when delivered in person or when dispatched by electronic facsimile transfer (confirmed in writing by mail simultaneously dispatched) or one business day (if sent to and from locations in the same country) or three business days (if sent to or from the United States from or to any other territory) after having been dispatched by a nationally recognized overnight courier service to the appropriate party at the address specified below: If to the Company or the Broadcasting Company: 12655 N. Central Expressway, Suite 405 Dallas, Texas 75243 Fax No.: 214/239-0220 with copies to: Hicks, Muse, Tate & Furst Incorporated 9 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attention: Eric C. Neuman Fax No.: 214/740-7355 and Weil, Gotshal & Manges LLP 100 Crescent Court, Suite 1300 Dallas, Texas 75201-6950 Attention: R. Scott Cohen Fax No.: 214/746-7777 and, in the case of the Employee, at his business address at: 12655 N. Central Expressway, Suite 405 Dallas, Texas 75243 Fax No.: 214/239-0220 with a copy to: Leibowitz & Associates, P.A. One SE Third Avenue, Suite 1450 Miami, Florida 33131-1715 Attention: Matthew Leibowitz Fax No.: 305/530-1322 Either party may designate a different address by giving notice of change of address in the manner provided above. 10. WAIVER. No waiver or modification in whole or in part of this Agreement, or any term or condition hereof, shall be effective against any party unless in writing and duly signed by the party sought to be bound. Any waiver of any breach of any provisions hereof or any right or power by any party on one occasion shall not be construed as a waiver of, or a bar to, the exercise of such right or power on any other occasion or as a waiver of any subsequent breach. 11. BINDING EFFECT; SUCCESSORS. This Agreement shall be binding upon and shall inure to the benefit of the Company and the Broadcasting Subsidiary and their respective successors and assigns, and shall inure to the benefit of and be binding on upon the Employee and his executors, administrators, heirs and legal representatives. Because the Employee's duties and services hereunder are special, personal and unique in nature, the Employee may not 10 transfer, sell or otherwise assign his rights, obligations or benefits under this Agreement. 12. CONTROLLING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas applicable to contracts made and to be performed therein. 13. SEVERABILITY. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect or impair the validity or enforceability of the remaining provisions of this Agreement, which shall remain in full force and effect and the parties hereto shall continue to be bound thereby. 14. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and shall supersede all previous agreements (including the Original Employment Agreement) between the parties, whether written or oral, with respect to the subject matter hereof. This Agreement cannot be modified, altered or amended except by a writing signed by all the parties hereto. [Remainder of Page Left Blank Intentionally]. 11 IN WITNESS WHEREOF, the Company, the Broadcasting Subsidiary and the Employee have executed this Agreement as of the day and year first above written. COMPANY: CHANCELLOR BROADCASTING COMPANY By: /S/ JACQUES D. KERREST ------------------------------------ Name: Jacques D. Kerrest Title: Senior Vice President and Chief Financial Officer BROADCASTING SUBSIDIARY: CHANCELLOR RADIO BROADCASTING COMPANY By: /S/ JACQUES D. KERREST ------------------------------------ Name: Jacques D. Kerrest Title: Senior Vice President and Chief Financial Officer EMPLOYEE: /s/ Steven Dinetz ----------------------------------------- Steven Dinetz 12 EX-11.1 4 EXHIBIT 11.1 EXHIBIT 11.1 CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1995 1996 ----------- ------------ Computation for statements of operations: Net loss before extraordinary loss $(3,483,369) $ (7,585,314) Loss on repurchase of preferred stock of subsidiary -- (16,570,065) ----------- ------------ Loss before extraordinary loss applicable to common stock (3,483,369) (24,155,379) Extraordinary loss -- (4,645,921) ----------- ------------ Net loss applicable to common stock $(3,483,369) $(28,801,300) ----------- ------------ ----------- ------------ Computation for weighted average common shares outstanding: Weighted average common shares outstanding 8,850,033 13,191,626 Incremental common shares applicable to common stock options based on the estimated fair value of the stock 16,557 199,935 Common stock options excluded based on anti-dilutive effect (16,557) (199,935) ----------- ------------ Weighted average common shares 8,850,033 13,191,626 ----------- ------------ ----------- ------------ Loss per common share: Primary and fully diluted Loss before extraordinary loss $ (0.39) $ (1.83) Extraordinary loss -- (0.35) ----------- ------------ Net loss $ (0.39) $ (2.18) ----------- ------------ ----------- ------------
EX-27.1 5 FDS - CHANC. BROADCASTING
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001002909 CHANCELLOR BROADCASTING COMPANY 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 2,515 0 28,052 600 0 32,353 72,108 4,890 673,387 22,584 260,000 97,652 0 173 161,546 873,287 0 25,642 0 23,477 6 151 7,146 (4,986) 838 (7,585) 0 4,646 0 (12,231) (2.18) (2.18)
EX-27.2 6 FDS - CHANC. RADIO
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000925744 CHANCELLOR RADIO BROADCASTING COMPANY 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 2,515 0 29,052 600 0 32,353 72,108 4,890 673,287 22,584 260,000 97,652 0 1 181,546 673,287 0 25,642 0 23,477 6 151 7,146 (4,986) 939 (7,585) 0 4,646 0 (10,571) 0 0
EX-27.3 7 FDS - CHANC. LICENSEE CO.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000925752 CHANCELLOR BRAODCASTING LICENSEE COMPANY 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 2,515 0 29,052 600 0 32,353 72,108 4,890 673,287 22,584 260,000 97,652 0 1 181,718 673,287 0 25,642 0 23,477 6 151 7,146 (4,986) 939 (5,925) 0 4,646 0 (10,571) 0.00 0.00
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