FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999 Commission file number 1-9645
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1787539
(State of Incorporation) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216-6940
(210) 822-2828
(Address and telephone number
of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __x__ No _____
Indicate the number of shares outstanding of each class of the issuers
classes of common stock, as of the latest practicable date.
Class Outstanding at November 12, 1999
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Common Stock, $.10 par value 338,499,925
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
Page No.
- - - - - - -
Part I -- Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at September 30, 1999 and
December 31, 1998 3
Consolidated Statements of Operations for the nine and
three months ended September 30, 1999 and 1998 5
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 8
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Part II -- Other Information
Item 6. Exhibits and reports on Form 8-K 20
(a) Exhibits
(b) Reports on Form 8-K
Signatures 20
Index to Exhibits 21
Page 2 of 25
PART I
Item 1. UNAUDITED FINANCIAL STATEMENTS
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands of dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) (*)
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 82,678 $ 36,498
Income tax receivable 6,083 --
Accounts receivable, less allowance of $34,046 at
September 30, 1999 and $13,508 at December 31, 1998 686,684 307,372
Other current assets 154,262 66,090
--------------- -------------
Total Current Assets 929,707 409,960
Property, Plant and Equipment
Land, buildings and improvements 301,059 158,089
Structures and site leases 1,828,730 1,627,704
Transmitter and studio equipment 441,466 235,099
Furniture and other equipment 151,659 101,681
Construction in progress 104,927 52,038
--------------- -------------
2,827,841 2,174,611
Less accumulated depreciation (412,911) (258,824)
--------------- --------------
2,414,930 1,915,787
Intangible Assets
Contracts 746,567 393,748
Licenses and goodwill 11,810,385 4,223,432
Other intangible assets 78,919 89,577
--------------- -------------
12,635,871 4,706,757
Less accumulated amortization (603,457) (315,275)
--------------- -------------
12,032,414 4,391,482
Other Assets
Restricted cash 113,470 --
Notes receivable 53,675 53,675
Investments in, and advances to, nonconsolidated affiliates 353,374 324,835
Other assets 230,906 109,269
Other investments 313,414 334,910
--------------- -------------
Total Assets $ 16,441,890 $ 7,539,918
=============== =============
* From audited financial statements
</TABLE>
See Notes to Consolidated Financial Statements
Page 3 of 25
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS EQUITY
(In thousands of dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) (*)
Current Liabilities
<S> <C> <C>
Accounts payable and accrued expenses $ 555,849 $ 209,173
Accrued interest 7,029 13,168
Accrued income taxes -- 4,554
Current portion of long-term debt 40,351 7,964
Other current liabilities 71,861 23,285
--------------- -------------
Total Current Liabilities 675,090 258,144
Long-term debt 3,917,442 2,323,643
Liquid Yield Option Notes 487,093 --
Deferred income taxes 1,238,768 383,564
Other long-term liabilities 171,844 75,533
Minority interest 19,554 15,605
Shareholders Equity
Common stock 33,848 26,370
Additional paid-in capital 9,239,112 4,067,297
Common stock warrants 253,428 --
Retained earnings 318,950 223,662
Other (4,008) 6,888
Unrealized gain on investments 91,481 161,185
Cost of shares held in treasury (712) (1,973)
--------------- -------------
Total shareholders equity 9,932,099 4,483,429
--- --------------- -------------
Total Liabilities and
Shareholders Equity $ 16,441,890 $ 7,539,918
=============== =============
* From audited financial statements
</TABLE>
See Notes to Consolidated Financial Statements
Page 4 of 25
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1999 1998 1999 1998
--------- --------- ---------- --------
<S> <C> <C> <C> <C>
Gross revenue $ 2,005,591 $ 1,025,407 $ 887,854 $ 434,597
Less: agency commissions 214,956 115,852 91,697 48,712
------------ ----------- ---------- -----------
Net revenue 1,790,635 909,555 796,157 385,885
Operating expenses 1,097,171 517,562 495,800 228,220
Depreciation and amortization 473,654 201,422 208,627 87,982
Corporate expenses 44,585 25,739 16,254 11,960
------------ ----------- ---------- -----------
Operating income 175,225 164,832 75,476 57,723
Interest expense 132,932 94,555 54,090 40,822
Gain on sale of stations 136,925 - - -
Other income (expense) - net 15,874 13,416 907 3,218
------------ ----------- ---------- -----------
Income before income taxes 195,092 83,693 22,293 20,119
Income taxes 106,546 48,766 23,695 12,147
------------ ----------- ---------- -----------
Income (loss) before equity in earnings
of nonconsolidated affiliates 88,546 34,927 (1,402) 7,972
Equity in earnings of nonconsolidated affiliates 6,742 10,063 2,925 3,530
----------- ----------- ---------- -----------
Net income 95,288 44,990 1,523 11,502
Other comprehensive income, net of tax:
Foreign currency translation adjustments (8,275) -- 44,671 --
Unrealized gains on securities:
Unrealized holding gain (loss) arising during period (54,799) 144,569 (27,159) 125,719
Less: reclassification adjustment for gains
included in net income (14,905) (13,681) - (1,453)
------------ ----------- ----------- ------------
Comprehensive income $ 17,309 $ 175,878 $ 19,035 $ 135,768
============ ============ =========== ===========
Net income per common share:
Basic $ .31 $ .19 $ .00 $ .05
============ =========== =========== ===========
Diluted $ .31 $ .19 $ .00 $ .05
============ =========== =========== ===========
See Notes to Consolidated Financial Statements
</TABLE>
Page 5 of 25
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 95,288 $ 44,990
Reconciling Items:
Depreciation 169,123 86,988
Amortization of intangibles 304,531 114,434
Deferred taxes 64,665 22,983
Amortization of film rights 13,112 12,811
Amortization of deferred financing charges 2,895 --
Amortization of bond premiums (8,758) --
Accretion of note discounts 6,507 --
Payments on film liabilities (12,527) (13,262)
(Recognition) deferral of deferred income 3,509 (914)
(Gain) loss on disposal of assets (128,953) 4,777
Gain on sale of other investments (22,930) (21,047)
Equity (loss) in earnings of nonconsolidated affiliates (2,950) (5,611)
Payments from nonconsolidated affiliates, net 2,193 1,807
Charitable donation of treasury shares 4,102 --
Increase minority interest 1,503 127
Changes in operating assets and liabilities:
(Increase) decrease accounts receivable (62,916) (27,989)
(Decrease) increase accounts payable, accrued expenses and other (102,633) (13,489)
Increase (decrease) accrued interest (6,138) 4,218
Increase (decrease) accrued income and other taxes (10,924) 5,371
------------ -------------
Net cash provided by operating activities 308,699 216,194
</TABLE>
Page 6 of 25
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1999 1998
Cash flows from investing activities:
<S> <C> <C>
Increase in restricted cash $ (113,470) $ --
Increase in notes receivable - net -- (18,302)
Increase in investments in and advances to
nonconsolidated affiliates - net (26,414) (93,020)
Purchases of investments (87,103) (42,931)
Proceeds from sale of investments 29,659 29,184
Purchases of property, plant and equipment (127,516) (78,876)
Proceeds from disposal of assets 211,187 5,692
Acquisition of broadcasting assets (136,655) (204,453)
Acquisition of outdoor assets (799,444) (1,047,851)
Increase in other intangible assets (5,061) (12,555)
(Increase) decrease in other-net (9,219) 24,974
------------- -------------
Net cash used in investing activities (1,064,036) (1,438,138)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,880,338 2,130,143
Payments on long-term debt (1,667,939) (2,035,236)
Payments of current maturities of long-term debt (3,528) (586)
Proceeds from exercise of stock options 79,729 7,899
Proceeds from issuance of common stock 512,917 577,250
Proceeds from issuance of convertible debt -- 566,009
------------ ------------
Net cash provided by financing activities 801,517 1,245,479
Net increase in cash and cash equivalents 46,180 23,535
Cash and cash equivalents at beginning of period 36,498 24,657
------------- ------------
Cash and cash equivalents at end of period $ 82,678 $ 48,192
============= ============
See Notes to Consolidated Financial Statements
Page 7 of 25
</TABLE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: PREPARATION OF INTERIM FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by Clear Channel
Communications, Inc. (the Company) pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in the opinion of
management, include all adjustments (consisting only of normal recurring
accruals and adjustments necessary for adoption of new accounting standards)
necessary to present fairly the results of the interim periods shown. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. Management
believes that the disclosures made are adequate to make the information
presented not misleading. The results for the interim periods are not
necessarily indicative of results for the full year. The financial statements
contained herein should be read in conjunction with the consolidated financial
statements and notes thereto included in the Companys 1998 Annual Report on
Form 10-K.
The consolidated financial statements include the accounts of the Company and
its subsidiaries, the majority of which are wholly-owned. Investments in
companies in which the Company owns 20 percent to 50 percent of the voting
common stock or otherwise exercises significant influence over operating and
financial policies of the company are accounted for under the equity method. All
significant intercompany transactions are eliminated in the consolidation
process. Certain reclassifications have been made to the 1998 consolidated
financial statements to conform to the 1999 presentation.
Note 2: RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 Accounting for Derivative Instruments and
Hedging Activities. Statement 133 establishes new rules for the recognition and
measurement of derivatives and hedging activities. Statement 133 is amended by
Statement 137 Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, and is effective for
years beginning after June 15, 2000. The Company plans to adopt this statement
in fiscal year 2001. Management does not believe adoption of this statement will
materially impact the Companys financial position or results of operations.
Note 3: RECENT DEVELOPMENTS
On October 2, 1999, the Company entered into a definitive agreement to merge
with AMFM Inc. (AMFM). This merger will create the worlds largest out-of-home
media entity. After anticipated divestitures required to gain regulatory
approval, the combined company will own or program approximately 830 domestic
radio stations. This merger is structured as a tax-free, stock-for-stock
transaction. Each share of AMFM common stock will be exchanged for 0.94 shares
of the Companys common stock, valuing the merger at approximately $17.1 billion
plus the assumption of AMFMs debt. Consummation of this merger, which is
subject to regulatory approval and various closing conditions, is expected
during the second half of 2000.
On July 1, 1999 the Company closed its merger with Dame Media, Inc. (Dame
Media). Pursuant to the terms of the agreement, the Company exchanged
approximately 954.1 thousand shares of its common stock for 100% of the
outstanding stock of Dame Media. In addition the Company assumed $32.7 million
of long term debt, which was immediately refinanced utilizing the domestic
credit facility. Dame Medias operations include 21 radio stations in 5 markets
located in New York and Pennsylvania. The Company consolidated the assets and
liabilities of Dame Media as of September 30, 1999 and began consolidating the
results of operations on July 1, 1999.
On June 11, 1999 the Company acquired a 50.5% equity interest in Dauphin OTA,
(Dauphin) a French company engaged in outdoor advertising. In August 1999 the
Company completed its tender offer for all the remaining shares outstanding. At
the date of this report, over 99% of the shares have been surrendered for an
aggregate cost of approximately $461.7 million. Dauphins operations include
approximately 103,000 outdoor advertising display faces in France, Spain, Italy,
and Belgium. This acquisition is being accounted for as a purchase with
resulting goodwill of approximately $438.9 million, which is being amortized
over 25 years on a straight-line basis. The purchase price allocation is
preliminary pending completion of appraisals and other fair value analysis of
assets and liabilities. The Company consolidated the assets and liabilities of
Dauphin as of June 30, 1999 and began consolidating the results of operations on
July 1, 1999.
On May 4, 1999, the Company closed its merger with Jacor Communications, Inc.
(Jacor). Pursuant to the terms of the agreement, each share of Jacor common
stock was exchanged for 1.1573151 shares of the Companys common stock or
approximately 60.9 million shares valued at $4.2 billion. In addition, the
Company assumed approximately $1.4 billion of Jacors long-term debt, as well as
Jacors Liquid Yield Option Notes with an accreted value of approximately $309.4
million. Jacor options and stock appreciation rights outstanding at the time of
the merger are exercisable for approximately 3.7 million shares of the Companys
common stock. In addition, Jacor common stock purchase warrants and Liquid Yield
Option Notes are exercisable or convertible into approximately 12.6 million
shares of the Companys common stock. The Company refinanced $850.0 million of
Jacors long-term debt at the closing of the merger using the Companys credit
facility. Subsequent to the merger, the Company tendered an additional $22.1
million of Jacors long-term debt. Included in the purchase price of Jacor is
$83 million of restricted cash related to the disposition of Jacor assets in
connection with the merger. This merger has been accounted for as a purchase
with resulting goodwill of approximately $3.3 billion, which is being amortized
over 25 years on a straight-line basis. This purchase price allocation is
preliminary pending completion of appraisals and other fair value analysis of
assets and liabilities. The results of operations of Jacor have been included in
the Companys financial statements beginning May 4, 1999.
In addition, the Company swapped assets valued at $35 million in a transaction
with a third party in order to comply with governmental directives regarding the
Jacor merger. The Company also divested certain assets in connection with the
Jacor merger and governmental directives resulting in a gain on sale of stations
of $136.9 million and an increase in income tax expense (at the Companys
statutory rate of 38%) of $52.0 million in the second quarter of 1999. The
Company anticipates deferring the majority of this tax expense based on its
ability to replace the stations sold with qualified assets. The proceeds from
divestitures are being held in restricted trusts until suitable replacement
properties are identified. The following table details the reconciliation of
divestiture and acquisition activity in the restricted trust accounts.
In thousands of dollars
Restricted cash resulting from Clear Channel divestitures $ 201,500
Restricted cash purchased in Jacor Merger 83,000
Restricted cash from disposition of assets held in trust 4,300
Restricted cash used in acquisitions (177,872)
Other changes to restricted cash 2,542
---------
Restricted cash balance at September 30, 1999 $ 113,470
The results of operations for the nine month periods ending September 30, 1999
and 1998 include the operations of Universal Outdoor Holding, Inc.
(Universal), More Group Plc. (More Group), Jacor, Dauphin and Dame Media
from the respective dates of acquisition or merger as appropriate. Assuming the
mergers and acquisitions of Universal, More Group, Jacor, Dauphin and Dame Media
had occurred at January 1, 1998, unaudited pro forma consolidated results of
operations for the nine months ended September 30, 1999 and 1998 would have been
as follows:
Page 8 of 25
Pro Forma (Unaudited)
Nine Months Ended September 30
In thousands, except per share data
1999 1998
---- ----
Net revenue $ 2,195,115 $ 1,837,938
Net income (loss) $ 117,476 $ (101,072)
Net income (loss) per share:
Basic $ .34 $ (.31)
Diluted $ .33 $ (.31)
The pro forma information above is presented in response to applicable
accounting rules relating to business acquisitions and is not necessarily
indicative of the actual results that would have been achieved had the mergers
and acquisitions of Universal, More Group, Jacor, Dauphin and Dame Media
occurred at the beginning of 1998, nor is it indicative of future results of
operations. The Company had other acquisitions during the first nine months of
1999 and during 1998, the effects of which, individually and in the aggregate,
were not material to the Companys consolidated financial position or results of
operations.
On January 21, 1999 the Company completed an equity offering of 1,725,000 shares
of common stock. The net proceeds to the Company of $80.2 million were used to
reduce the outstanding balance on the Companys credit facility.
To facilitate possible future acquisitions as well as public offerings, the
Company filed a registration statement on Form S-3 on April 12, 1999 covering a
combined $2 billion of debt securities, junior subordinated debt securities,
preferred stock, common stock, warrants, stock purchase contracts and stock
purchase units (the shelf registration statement). The shelf registration
statement also covers preferred securities that may be issued from time to time
by the Companys three Delaware statutory business trusts and guarantees of such
preferred securities by the Company.
On May 20, 1999 and June 23, 1999 the Company completed equity offerings of
4,997,457 shares and 1,325,300 shares of common stock, respectively. The net
proceeds to the Company of $342.6 million and $90.1 million were used to reduce
the outstanding balance on the Companys credit facility.
On November 12, 1999 the Company launched a tender offer for any and all of its
10.125% Senior Subordinated Notes due June 15, 2006; 9.75% Senior Subordinated
Notes due December 15, 2006; 8.75% Senior Subordinated Notes due June 15, 2007;
and 8.0% Senior Subordinated Notes due February 15, 2010. The tender offer
expires at 11:59 p.m. EST on December 10, 1999.
Page 9 of 25
Note 4 SEGMENT DATA
<TABLE>
<CAPTION>
In thousands of dollars
Nine Months Ended Three Months Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
-------- --------- --------- --------
Net revenue
<S> <C> <C> <C> <C>
Broadcasting $ 946,988 $ 462,461 $ 447,652 $ 159,315
Outdoor 843,647 447,094 348,505 226,570
------------ ----------- ------------ -----------
Consolidated $ 1,790,635 $ 909,555 $ 796,157 $ 385,885
Operating expenses
Broadcasting $ 572,467 $ 272,372 $ 273,528 $ 92,442
Outdoor 524,704 245,190 222,272 135,778
------------ ----------- ------------ -----------
Consolidated $ 1,097,171 $ 517,562 $ 495,800 $ 228,220
Depreciation and Amortization
Broadcasting $ 224,758 $ 79,956 $ 119,005 $ 27,509
Outdoor 248,896 121,466 89,622 60,473
------------ ----------- ------------ -----------
Consolidated $ 473,654 $ 201,422 $ 208,627 $ 87,982
Operating income
Broadcasting $ 123,524 $ 96,187 $ 45,098 $ 33,722
Outdoor 51,701 68,645 30,378 24,001
------------ ----------- ------------ -----------
Consolidated $ 175,225 $ 164,832 $ 75,476 $ 57,723
Total identifiable assets
Broadcasting $ 11,593,181 $ 4,243,241 $ 11,593,181 $ 4,243,241
Outdoor 4,848,709 3,018,044 4,848,709 3,018,044
------------ ----------- ------------ -----------
Consolidated $ 16,441,890 $7,261,285 $ 16,441,890 $ 7,261,285
</TABLE>
Net revenue of $346,773 and $172,798 for the nine and three months ended
September 30, 1999, respectively, and identifiable assets of $1,242,843 and
$730,340 as of September 30, 1999 and 1998, respectively, are included in the
data above and were derived from the Companys foreign operations.
Page 10 of 25
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Comparison of Three and Nine Months Ended September 30, 1999 to Three and Nine
Months Ended September 30, 1998.
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Nine Months As-Reported Pro Forma
Ended Sept. 30, % Increase % Increase
Consolidated 1999 1998 (Decrease) (Decrease)
------------ ---- ---- ---------- ----------
<S> <C> <C> <C> <C>
Net revenue $ 1,790,635 $ 909,555 96.9% 19.4%
Operating expenses 1,097,171 517,562 112.0% 18.6%
Depreciation and
amortization 473,654 201,422 135.2% 25.3%
Operating income 175,225 164,832 6.3% 10.5%
Interest expense 132,932 94,555 40.6%
Net income 95,288 44,990 111.8%
Net income per share:
Basic $ .31 $ .19 63.2%
Diluted $ .31 $ .19 63.2%
Three Months As-Reported Pro Forma
Ended Sept. 30, % Increase % Increase
Consolidated 1999 1998 (Decrease) (Decrease)
------------ ---- ---- ---------- ----------
Net revenue $ 796,157 $ 385,885 106.3% 21.3%
Operating expenses 495,800 228,220 117.2% 20.6%
Depreciation and
amortization 208,627 87,982 137.1% 30.4%
Operating income 75,476 57,723 30.8% 11.1%
Interest expense 54,090 40,822 32.5%
Net income 1,523 11,502 (86.8%)
Net income per share:
Basic $ .00 $ .05 (100.0%)
Diluted $ .00 $ .05 (100.0%)
</TABLE>
The majority of the growth in the as reported net revenue and operating
expenses for the nine months ended September 30, 1999 was due to the
acquisitions of Universal Outdoor Holding, Inc. (Universal) in April of 1998,
More Group Plc (More Group) in July 1998, Jacor Communications, Inc. (Jacor)
in May 1999 and Dame Media, Inc. (Dame Media) and Dauphin OTA (Dauphin) in
July 1999. The majority of the growth in the as reported net revenue and
operating expenses for the three months ended September 30, 1999 was due to the
acquisitions of Jacor in May 1999, Dame Media in July 1999 and Dauphin in August
1999. In addition to the assets acquired through the above listed acquisitions,
the Company divested 12 radio stations, acquired 25 radio stations and acquired
58,419 outdoor display faces during the first nine months of 1999, the effects
of which, individually and in the aggregate, were not material to the Companys
consolidated financial position or results of operations.
The majority of the increase in as reported depreciation and amortization was
primarily due to the acquisition of the tangible and intangible assets
associated with the above-mentioned business combinations. The majority of the
increase in operating income for the nine months and three months ended
September 30 was due to improved operations during the third quarter for both
the broadcasting and outdoor segments, which was partially offset by an increase
in depreciation and amortization. Interest expense increased primarily due to an
increase in the average amount of debt outstanding, which resulted from the
above-mentioned business combinations. The majority of the increase in net
income for the nine months ended September 30 was due to a $136.9 million gain
realized during the second quarter of 1999 relating to the sale of stations the
Company was required to divest by governmental directives regarding the Jacor
merger. The majority of the decrease in net income for the three months ended
September 30 was due to the increased depreciation and amortization expense
associated with the above mentioned business combinations.
Pro forma presentation referred to above assumes the acquisition and/or merger
of Universal, More Group, Jacor, Dauphin and Dame Media occurred on January 1,
1998. Pro forma net revenue increased due to improved advertising rates in the
broadcasting segment. Excluding the effect of acquisitions made during the last
twelve months, the broadcasting segment experienced a 9.1% and 10.3% increase in
net revenues during the nine months and three months ended September 30, 1999,
respectively, as compared to the same periods in 1998. In addition, improved
occupancy, increased advertising rates and other less significant acquisitions
within the outdoor segment also contributed to the increase in pro forma net
revenue. Pro forma operating expenses increased primarily from the incremental
selling costs related to the additional revenues. The majority of the increase
in pro forma operating income was due to improved operations within the
broadcasting segment. Excluding the effect of acquisitions made during the last
twelve months, the broadcasting segment experienced a 14.4% and 17.6% increase
in operating income during the nine months and three months ended September 30,
1999, respectively, as compared to the same periods of 1998.
Liquidity and Capital Resources
The major sources of capital for the Company have been cash flow from
operations, advances on its revolving long-term line of credit (the credit
facility), and funds provided by various equity and debt offerings, and other
borrowings. As of September 30, 1999 and December 31, 1998, the Company had the
following debt outstanding:
<TABLE>
<CAPTION>
(In millions of dollars)
September 30, 1999 December 31, 1998
<S> <C> <C>
Credit facility - domestic $ 1,818.8 $ 1,007.5
Credit facility - multi-currency 245.0 --
Credit facility - international 110.8 103.7
Senior convertible notes 575.0 575.0
Liquid Yield Option Notes 487.1 --
Long-term bonds 1,145.5 600.0
Other borrowings 62.7 45.4
---------- ----------
Total $ 4,444.9 $ 2,331.6
========== ==========
</TABLE>
In addition, the Company had $82.7 million in unrestricted cash and cash
equivalents on hand at September 30, 1999. The Company also had $113.5 million
in restricted cash on hand at September 30, 1999. This cash is restricted for
use in connection with the acquisition of replacement properties as a result of
the Jacor merger.
On April 12, 1999 the Company filed a registration statement on Form S-3
covering a combined $2 billion of debt securities, junior subordinated debt
securities, preferred stock, common stock, warrants, stock purchase contracts
and stock purchase units (the shelf registration statement). The shelf
registration statement also covers preferred securities that may be issued from
time to time by the Companys three Delaware statutory business trusts and
guarantees of such preferred securities by the Company.
Credit Facility:
Domestic: The Company has a revolving credit facility for $2 billion, of which
$1.8 billion is outstanding and, taking into account other letters of credit,
$164.5 million is available for future borrowings. The credit facility converts
into a reducing revolving line of credit on the last business day of September
2000, with quarterly repayment of the outstanding principal balance to begin the
last business day of September 2000 and continue during the subsequent five year
period, with the entire balance to be repaid by the last business day of June
2005. During the first nine months of the year, the Company made principal
payments on the credit facility totaling $720.8 million and drew down $1.5
billion.
Multi-Currency: On August 11, 1999 the Company entered into a 364-day
multi-currency revolving credit facility for $1 billion. This credit facility
matures on August 10, 2000 at which time the Company has the option to convert
this facility to a four year term loan. This credit facility allows for
borrowings in various foreign currencies, which the Company intends to use to
hedge net assets in those currencies. At September 30, 1999, the Company had
$245.0 million outstanding and $755.0 million available for future borrowings
under this facility.
International: The Company has a(pound)100 million, or approximately $164.2
million, revolving credit facility with a group of international banks. This
international credit facility allows for borrowings in various foreign
currencies, which are used to hedge net assets in those currencies. At September
30, 1999, approximately $53.4 million, was available for future borrowings and
$110.8 million, was outstanding. This credit facility converts into a reducing
revolving facility on January 10, 2000 with annual payments of(pound)19 million
due in 2000 and 2001. The credit facility expires on January 10, 2002. At
September 30, 1999, interest rates varied from 3.25% to 7.40%.
Liquid Yield Option Notes: The Company assumed Liquid Yield Option Notes
(LYONs) as a part of the merger with Jacor. The Company assumed 43/4% LYONs
due 2018 and 51/2% LYONs due 2011 with an aggregated fair value of $490.1
million. Each LYON has a principal amount at maturity of $1,000 and is
convertible, at the option of the holder, at any time on or prior to maturity,
into the Companys common stock at a conversion rate of 7.227 shares per LYON
and 15.522 shares per LYON for the 2018 and 2011 issues, respectively. The LYONs
aggregated balance at September 30, 1999 was $487.1 million.
Long Term Bonds: The Company has various bond issues outstanding. In addition,
the Company assumed several issues of senior subordinated notes as part of the
merger with Jacor, which are summarized as follows:
In millions of dollars
<TABLE>
<CAPTION>
Interest
Bond Issue Interest Rate Face Value Fair Value Maturity Date Payment Terms
---------- ------------- ---------- ---------- ------------- -------------
Assumed in Jacor Merger:
<S> <C> <C> <C> <C> <C>
Senior subordinated notes 10.125% $ 100.0 $107.0 6/15/06 Semi-annual
Senior subordinated notes 9.750% 170.0 182.4 12/15/06 Semi-annual
Senior subordinated notes 8.750% 150.0 156.2 6/15/07 Semi-annual
Senior subordinated notes 8.000% 119.6 124.5 2/15/10 Semi-annual
</TABLE>
Subsequent to the merger with Jacor, the Company redeemed $22.1 million of the
senior subordinated notes.
On November 12, 1999 the Company launched a tender offer for any and all of its
10.125% Senior Subordinated Notes due June 15, 2006; 9.75% Senior Subordinated
Notes due December 15, 2006; 8.75% Senior Subordinated Notes due June 15, 2007;
and 8.0% Senior Subordinated Notes due February 15, 2010. The tender offer
expires at 11:59 p.m. EST on December 10, 1999.
Equity Offerings: On January 21, 1999 the Company completed an equity offering
of 1,725,000 shares of common stock. The net proceeds to the Company of $80.2
million were used to reduce the outstanding balance on the Companys credit
facility.
On May 20, 1999 and June 23, 1999 the Company completed equity offerings of
4,997,457 shares and 1,325,300 shares of common stock, respectively. The net
proceeds to the Company of $342.7 million and $90.1 million were used to reduce
the outstanding balance on the Companys credit facility.
Jacor Purchase:
On May 4, 1999, the Company closed its merger with Jacor. Pursuant to the terms
of the agreement, each share of Jacor common stock was exchanged for 1.1573151
shares of the Companys common stock or approximately 60.9 million shares valued
at $4.2 billion. In addition, the Company assumed approximately $1.4 billion of
Jacors long-term debt, as well as Jacors Liquid Yield Option Notes with an
accreted value of approximately $309.4 million. Jacor options and stock
appreciation rights outstanding at the time of the merger are exercisable for
approximately 3.7 million shares of the Companys common stock. In addition,
Jacor common stock purchase warrants and Liquid Yield Option Notes are
exercisable or convertible into approximately 12.6 million shares of the
Companys common stock. The Company refinanced $850.0 million of Jacors
long-term debt at the closing of the merger using the Companys credit facility.
Subsequent to the merger, the Company tendered an additional $22.1 million of
Jacors long-term debt. Included in the purchase price of Jacor is $83 million
of restricted cash related to the disposition of Jacor assets in connection with
the merger.
Dame Media Purchase:
On July 1, 1999 the Company closed its merger with Dame Media. Pursuant to the
terms of the agreement, the Company exchanged approximately 954.1 thousand
shares of its common stock for 100% of the outstanding stock of Dame Media. In
addition the Company assumed $32.7 million of long term debt, which was
immediately refinanced utilizing the domestic credit facility.
Dauphin Purchase: On June 11, 1999 the Company acquired a 50.5% equity interest
in Dauphin a French company engaged in outdoor advertising. In August 1999 the
Company completed its tender offer for all the remaining shares outstanding. At
the date of this report, over 99% of the shares have been surrendered for an
aggregate cost of approximately $461.7 million.
Other:
During the first nine months of 1999, in addition to the acquisitions of Jacor
and Dame Media, the Company divested the broadcasting assets of 12 radio
stations in 3 markets receiving proceeds of $205.8 million in connection with
Jacor merger and governmental directives. The proceeds from these divestitures
are being held in restricted trusts until suitable replacement properties can be
identified and purchased. The following table details the reconciliation of the
divestiture and acquisition activity
in the restricted trust accounts.
In thousands of dollars
Restricted cash resulting from Clear Channel divestitures $ 201,500
Restricted cash purchased in Jacor Merger 83,000
Restricted cash from disposition of assets held in trust 4,300
Restricted cash used in acquisitions (177,872)
Other changes in restricted cash 2,542
----------
Restricted cash balance at September 30, 1999 $ 113,470
The Clear Channel and Jacor divestiture proceeds have been used to purchase the
broadcasting assets of 16 radio stations in 8 domestic markets. In addition to
the above mentioned broadcast acquisitions, the Company has purchased the
broadcasting assets of 7 radio stations in 3 domestic markets and 2 radio
stations in 2 international markets.
In addition to the acquisition of Dauphin, the Company has acquired
approximately 779 additional outdoor faces in 23 domestic markets, 1,375 display
faces located in malls throughout the U.S. and 56,265 additional display faces
in 9 international markets for a total of $337.7 million.
In addition, the Company purchased capital equipment totaling $127.5 million.
Future acquisitions of broadcasting stations, outdoor advertising facilities and
other media-related properties affected in connection with the implementation of
the Companys acquisition strategy are expected to be financed from increased
borrowings under the credit facility, additional public equity and debt
offerings and cash flow from operations. The Company believes that cash flow
from operations as well as the proceeds from securities offerings made by the
Company from time to time will be sufficient to make all required future
interest and principal payments on the credit facility, senior convertible notes
and bonds, and will be sufficient to fund all anticipated capital expenditures.
The ratio of earnings to fixed charges is as follows:
9 Months ended
September 30, Year Ended
------------------ ---------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
2.32 1.91 1.83 2.32 3.63 3.32 5.54
The ratio of earnings to fixed charges has been computed on a total enterprise
basis. Earnings represent income from continuing operations before income taxes
less equity in undistributed net income (loss) of unconsolidated affiliates plus
fixed charges. Fixed charges represent interest, amortization of debt discount
and expense, and the estimated interest portion of rental charges. The Company
had no Preferred Stock outstanding and paid no dividends thereon for any period
presented.
Year 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using 00 as the year 1900 rather than the year 2000. This
could cause a system failure or miscalculations in the Companys broadcasting,
outdoor and corporate locations which could cause disruptions of operations,
including, among other things, a temporary inability to produce broadcast
signals, process financial transactions, or engage in similar normal business
activities.
Based on system evaluations, surveys, and on-site inventories, the Company
determined that it would be required to modify or replace portions of its
software and certain hardware so that those systems will properly utilize dates
beyond December 31, 1999. The Company presently believes that with modifications
or replacements of existing software and certain hardware, the Year 2000 issue
can be mitigated. If such modifications and replacements are not made, or are
not completed in time, the Year 2000 issue could have a material impact on the
Companys operations.
The Year 2000 issue involves the identification and assessment of the existing
problem, plan of remediation, as well as a testing and implementation plan. To
date, the Company has completed the identification and assessment process and
substantially completed the remediation, testing and implementation process,
with the following significant financial and operational components identified
as being affected by the Year 2000 issue:
Computer hardware running critical financial accounting and information system
software that is not capable of recognizing a four-digit code for the applicable
year.
Advertising inventory management software responsible for managing, scheduling
and billing customers broadcasting and outdoor advertising purchases.
Broadcasting studio equipment and software necessary to deliver radio and
television programming.
Significant non-technical systems and equipment that may contain micro
controllers which are not Year 2000 compliant.
The Company has instituted the following remediation plan to address the Year
2000 issues:
A computer hardware replacement plan for computers running essential broadcast,
operational and financial software applications with Year 2000 compatible
computers has been instituted. As of September 30, 1999, approximately 90% of
all essential computers related to broadcast or studio equipment, one hundred
percent (100%) of all essential financial based computers and 98% of all
advertising inventory management software was Year 2000 compatible.
Furthermore, the Company has received assurances from its software vendors, with
a few minor exceptions, that supply its advertising inventory management
software, that their software is Year 2000 compliant. For those non-compliant
vendors, the Company has installed inventory management software from a
compliant vendor. All of the outdoor advertising inventory management software
is currently being upgraded and has received manufacturer assurances that it is
Year 2000 compliant. The Company expects that remaining remediation for
advertising inventory management will be complete by December 31, 1999.
The Company has received assurances from its software vendors that supply
broadcasting digital automation systems that the software used by the Company is
currently compliant or has upgrades currently available that are compliant.
Broadcast software and studio equipment was considered to be 93% compliant as of
September 30, 1999 and is anticipated to be 100% compliant by December 31, 1999.
Financial accounting software for the broadcasting segment has been replaced and
is Year 2000 compliant. Financial accounting software for the outdoor segment
has been upgraded to be Year 2000 compliant.
The Company believes its efforts will provide a reasonable assurance that
material disruptions will not occur due to internal failure. However,
disruptions could occur as a result of failures by external agents (third
parties) with which the Company does business, specifically, telecommunication
companies and utilities. Interruption of such services, in managements view,
could materially impact the operation of the Company. The Company continues to
survey these external agents to their state of Year 2000 readiness, but has no
means of ensuring that external agents will be Year 2000 ready.
Furthermore, the Companys international operations may be impacted directly or
through adverse general economic conditions in countries whose core
infrastructures such as energy, water, telecommunications and transportation are
affected by the Year 2000 issue. The Senate Special Committee on the Year 2000
Technology Problem issued The 100 Day Report, September 22, 1999, that included
a list of countries assessed as having a high risk of Y2K-related failures. The
countries identified as posing extreme risk by the International Monitoring
consultancy and the Special Committee in which the Company has operations are:
Russia, Italy and Taiwan. The effect of non-compliance by external agents or by
non-compliant infrastructures in foreign countries is undeterminable. Therefore,
the Company cannot provide any assurance that there will not be an effect on the
Companys business, financial condition, cash flows and operations due to the
Year 2000 issue.
In the ordinary course of business, the Company acquired a significant amount of
Year 2000 compliant hardware and software. These purchases are part of specific
operational and financial system enhancements with completion dates during 1998
and 1999 and were planned without specific regard to the Year 2000 issue. These
system enhancements resolve many Year 2000 problems and have not been delayed as
a result of any additional efforts addressing the Year 2000 issue. Accordingly,
these costs have not been included as part of the costs of Year 2000
remediation. However, there are several hardware and software expenditures that
have been or will be incurred to specifically remediate Year 2000
non-compliance. Incremental hardware and software costs that the Company has
attributed to the Year 2000 issue are estimated at $4,000,000 plus or minus 10%.
Of this cost, approximately 15% will be expensed as modification or upgrade
costs with the remaining costs being capitalized as new hardware or software. As
of September 30, 1999, approximately $490,000 has been charged to expense and
$3,500,000 capitalized as a result of expenditures. Sources of funds for these
expenditures have been supplied through cash flow generated from operations
and/or available borrowings from the Companys credit facility. The Companys
accounting policy is to expense costs incurred due to maintenance, modification
or upgrade costs and to capitalize the cost of new hardware and software.
The Company believes it has an effective program in place to resolve the Year
2000 issue in a timely manner. In the event that the Company does not complete
the remaining phases of its Year 2000 plan, it could experience disruptions in
its operations, including among other things, a temporary inability to produce
broadcast signals, process financial transactions, or engage in similar normal
business activities. In addition, disruptions in the economy generally resulting
from the Year 2000 issues could also materially adversely affect the Company.
The Company could be subject to litigation for computer systems failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated.
The Company has contingency plans for certain critical applications in sites
deemed significant to operations. These contingency plans involve, among other
actions, manual work around for on-air and financial systems, a store of Year
2000 compliant computers available for rapid deployment, backup generators at
key broadcast and transmitter sites and staffing strategies to affect such
contingency plans.
Risks Regarding Forward Looking Statements
Except for the historical information, this report contains various
forward-looking statements which represent the Companys expectations or
beliefs concerning future events, including the future levels of cash flow from
operations. The Company cautions that these forward-looking statements involve a
number of risks and uncertainties and are subject to many variables which could
have an adverse effect upon the Companys financial performance. These variables
include economic conditions, the ability of the Company to integrate the
operations of Universal, More Group, Jacor, and Dauphin, shifts in population
and other demographics, level of competition for advertising dollars,
fluctuations in operating costs, technological changes and innovations, changes
in labor conditions, changes in governmental regulations and policies, effects
from the Year 2000 issue and certain other factors set forth in the Companys
SEC filings. Actual results in the future could differ materially from those
described in the forward-looking statements.
Page 11 of 25
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
At September 30, 1999, approximately 49.7% of the Companys long-term debt bears
interest at variable rates. Accordingly, the Companys earnings and after tax
cash flow are affected by changes in interest rates. Assuming the current level
of borrowings at variable rates and assuming a two percentage point change in
the first nine months of 1999 average interest rate under these borrowings, it
is estimated that the Companys first nine months of 1999 interest expense would
have changed by $44.1 million and that the Companys first nine months of 1999
net income would have changed by $28.7 million. In the event of an adverse
change in interest rates, management would likely take actions to further
mitigate its exposure. However, due to the uncertainty of the actions that would
be taken and their possible effects, this analysis assumes no such actions.
Further this analysis does not consider the effects of the change in the level
of overall economic activity that could exist in such an environment.
The Company currently hedges a portion of its outstanding debt with interest
rate swap agreements that effectively fix the interest at rates from 4.5% to
8.0% on $688.6 million of its current borrowings. These agreements expire from
October 1999 to December 2000. The fair value of these agreements at September
30, 1999 and settlements of interest during the first nine months of 1999 were
not material.
Equity Price Risk
The carrying value of the Companys available-for-sale equity securities is
affected by changes in their quoted market prices. It is estimated that a 20%
change in the market prices of these securities would change their carrying
value at September 30, 1999 by $39.6 million.
Foreign Currency
The Company has operations in 32 countries throughout Europe and Asia. All
foreign operations are measured in their local currencies. As a result, the
Companys financial results could be affected by factors such as changes in
foreign currency exchange rates or weak economic conditions in the foreign
markets in which the Company has operations. To mitigate a portion of the
exposure to risk of currency fluctuations throughout Europe and Asia to the
British pound, the Company has a natural hedge through borrowings in some other
currencies. This hedge position is reviewed monthly. The Company maintains no
derivative instruments to mitigate the exposure to translation and/or
transaction risk. However, this does not preclude the adoption of specific
hedging strategies in the future. The Companys foreign operations reported a
loss of $42.4 million for the first nine months of 1999. It is estimated that a
5% change in the value of the U.S. dollar to the British pound would change net
income for the first nine months of 1999 by $2.1 million.
Part II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on Page 21
(b) Reports on Form 8-K
Filing Date Items Reported Financial Statements Reported
8-K/A 8/18/99 Item 2. Business None
acquisition of Dauphin
on 6/11/99.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLEAR CHANNEL COMMUNICATIONS, INC.
November 15, 1999 /s/ Herbert W. Hill, Jr.
Herbert W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer
INDEX TO EXHIBITS
Exhibit Number
Description
2.1 Agreement and Plan of Merger dated as of October 8, 1998, as amended on
November 11, 1998, among Clear Channel Communications, Inc., CCU Merger
Sub, Inc. and Jacor Communications, Inc. (incorporated by reference to
Annex A to the Companys Registration Statement on Form S-4 (Reg. No.
333-72839) dated February 23, 1999).
2.2 Agreement and Plan of Merger dated October 2, 1999, among Clear Channel
Communications, Inc., AMFM Inc., and CCU Merger Sub, Inc. (incorporated by
reference to the exhibits of the Companys Current Report on Form 8-K filed
on October 5, 1999).
3.1 Current Articles of Incorporation of the Company (incorporated by reference
to the exhibits of the Companys Registration Statement on Form S-3 (Reg.
No. 333-33371) dated September 9, 1997).
3.2 Second Amended and Restated Bylaws of the Company (incorporated by
reference to the exhibits of the Companys Registration Statement on Form
S-3 (Reg. No. 333-33371) dated September 9, 1997).
3.3 Amendment to the Companys Articles of Incorporation (incorporated by
reference to the exhibits to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998). 3.4 Second Amendment to the
Companys Articles of Incorporation (incorporated by reference to the
exhibits to the Companys Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999).
4.1 Buy-Sell Agreement by and between Clear Channel Communications, Inc., L.
Lowry Mays, B. J. McCombs, John M. Schaefer and John W. Barger, dated May
31, 1977 (incorporated by reference to the exhibits of the Companys
Registration Statement on Form S-1 (Reg. No. 33-289161) dated April 19,
1984).
4.2 Third Amended and Restated Credit Agreement by and among Clear Channel
Communications, Inc., NationsBank of Texas, N.A., as administrative lender,
the First National Bank of Boston, as documentation agent, the Bank of
Montreal and Toronto Dominion (Texas), Inc., as co-syndication agents, and
certain other lenders dated April 10, 1997 (the Credit Facility)
(incorporated by reference to the exhibits of the Companys Amendment No. 1
to the Registration Statement on Form S-3 (Reg. No. 333-25497) dated May 9,
1997).
4.3 Senior Indenture dated October 1, 1997, by and between Clear Channel
Communications, Inc. and The Bank of New York as Trustee (incorporated
by reference to exhibit 4.2 of the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).
4.4 First Supplemental Indenture dated March 30, 1998 to Senior Indenture
dated October 1, 1997, by and between the Company and The Bank of New York,
as Trustee (incorporated by reference to the exhibits to the Companys
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998).
4.5 Second Supplemental Indenture dated June 16, 1998 to Senior Indenture
dated October 1, 1997, by and between Clear Channel Communications, Inc.
and the Bank of New York, as Trustee (incorporated by reference to the
exhibits to the Companys Current Report on Form 8-K dated August 27,
1998).
4.6 Third Supplemental Indenture dated June 16, 1998 to Senior Indenture dated
October 1, 1997, by and between Clear Channel Communications, Inc. and
the Bank of New York, as Trustee (incorporated by reference to the
exhibits to the Companys Current Report on Form 8-K dated August 27,
1998).
4.7 Credit Agreement by and among Clear Channel Communications, Inc., Bank of
America, N.A. as administrative agent, BankBoston, N.A. as documentation
agent, the Bank of Montreal and Chase Manhattan Bank, as co-syndication
agents, and certain other lenders dated August 11, 1999 (incorporated by
reference to the exhibits to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998).
10.1 Employment Agreement by and between Clear Channel Communications, Inc. and
L. Lowry Mays dated October 1, 1999.
10.2 Employment Agreement by and between Clear Channel Communications, Inc. and
Mark P. Mays dated October 1, 1999.
10.3 Employment Agreement by and between Clear Channel Communications, Inc. and
Randall T. Mays dated October 1, 1999.
11 Statement re: Computation of Per Share Earnings.
12 Statement re: Computation of Ratios.
27.1 Financial Data Schedule at September 30, 1999
27.2 Financial Data Schedule at September 30, 1998 (incorporated by reference to
exhibit 27 of the Companys Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998).
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
In thousands of dollars, except per share data
Nine months ended
September 30,
1999 1998
Numerator:
<S> <C> <C>
Net income (loss) $ 95,288 $ 44,990
Effect of dilutive securities:
Eller put/call option agreement (2,300) (2,843)
Convertible debt 11,566 4,905
---------- ----------
Numerator for net income per
common share - diluted $ 104,554 $ 47,052
========== ==========
Denominator:
Weighted average common shares 303,970 231,362
Effect of dilutive securities:
Common stock options and warrants 7,649 4,238
Eller put/call option agreement 1,129 1,995
Convertible debt 13,083 6,222
---------- ----------
Denominator for net income
per common share - diluted 325,831 243,817
---------- ----------
Net income (loss) per common share:
Basic $ .31 $ .19
========== ==========
Diluted $ .31 $ .19
========== ==========
</TABLE>
EXHIBIT 12 - COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
9 months ended
September 30, Year Ended
---------------------- -----------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
Income (loss) before income
<S> <C> <C> <C> <C> <C> <C> <C>
taxes 201,834 93,756 117,922 104,077 71,240 49,817 36,396
Dividends and other received from
nonconsolidated affiliates 5,800 1,807 9,168 4,624 10,430 1,432 0
------- ------ ------- -------- -------- ------ -------
Total 207,634 95,563 127,090 108,701 81,670 51,249 36,396
Fixed Charges
Interest expense 132,932 94,555 135,766 75,076 30,080 20,752 7,669
Amortization of loan fees 1,553 1,571 2,220 1,451 506 1,004 82
Interest portion of rentals 17,350 8,853 16,044 6,120 424 361 262
------- ------ ------- ------- ------- ------- ------
Total fixed charges 151,835 104,979 154,030 82,647 31,010 22,117 8,013
Preferred stock dividends
Tax effect of preferred dividends 0 0 0 0 0 0 0
After tax preferred dividends 0 0 0 0 0 0 0
--- --- --- --- --- --- ---
Total fixed charges and
preferred dividends 151,835 104,979 154,030 82,647 31,010 22,117 8,013
Total earnings available for
payment of fixed charges 359,469 200,542 281,120 191,348 112,680 73,366 44,409
======= ======= ======= ======= ======= ======= ======
Ratio of earnings to fixed
Charges 2.37 1.91 1.83 2.32 3.63 3.32 5.54
======= ======= ======= ======= ======= ======= ======
Rental fees and charges 216,880 110,659 200,550 76,500 5,299 4,510 3,273
Interest rate 8% 8% 8% 8% 8% 8% 8%
</TABLE>
EXHIBIT 27.1 - FINANCIAL DATA SCHEDULE
FISCAL-YEAR-END DEC-31-1999
PERIOD-END SEPT-30-1999
CASH 82677982
SECURITIES 0
RECEIVABLES 720730354
ALLOWANCES 34045876
INVENTORY 0
CURRENT-ASSETS 929706846
PP&E 2827804917
DEPRECEATION 412911264
TOTAL-ASSETS 16472889572
CURRENT-LIABILITIES 715857366
BONDS 1145478673
PREFERRED-MANDATORY 0
PREFERRED 0
COMMON 33847661
OTHER-SE -4007694
TOTAL-LIABILITY-AND-EQUITY 16472889572
SALES 0
TOTAL-REVENUES 1790634937
CGS 0
TOTAL-COSTS 1097171250
OTHER-EXPENSES 15873523
LOSS-PROVISION 0
INTEREST-EXPENSE 132932023
INCOME-PRETAX 195092234
INCOME-TAX 106546342
INCOME-CONTINUING 95287598
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME 95287598
EPS-BASIC .31
EPS-DILUTED .31
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1999, by and between Clear
Channel Communications, Inc., a Texas corporation (the Company), and L. Lowry
Mays (Executive).
IN CONSIDERATION of the premises and the mutual covenants set
forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue to employ
Executive as the Chairman and Chief Executive Officer of the Company, and
Executive hereby accepts such continued employment, on the terms and conditions
hereinafter set forth.
2. Term. The period of employment of Executive by the Company
under this Agreement (the Employment Period) shall commence on October 1, 1999
(the Commencement Date) and shall continue through the seventh anniversary
thereof; provided, that, the Employment Period shall automatically be extended
for one (1) additional day each day during the Employment Period unless either
party gives written notice not to extend this Agreement. The Employment Period
may be sooner terminated by either party in accordance with Section 6 of this
Agreement.
3. Position and Duties. During the Employment Period,
Executive shall serve as Chairman and Chief Executive Officer of the Company,
and shall report solely and directly to the Companys Board of Directors of the
Company (the Board). Executive shall have those powers and duties normally
associated with the position of Chairman and Chief Executive Officer of entities
comparable to the Company and such other powers and duties as may be prescribed
by the Board; provided that, such other powers and duties are consistent with
Executives position as Chairman and Chief Executive Officer. Executive shall
devote as much of his working time, attention and energies during normal
business hours (other than absences due to illness or vacation) to
satisfactorily perform his duties for the Company. Notwithstanding the above,
Executive shall be permitted, to the extent such activities do not substantially
interfere with the performance by Executive of his duties and responsibilities
hereunder to (i) manage Executives personal, financial and legal affairs, (ii)
to serve on civic or charitable boards or committees (it being expressly
understood and agreed that Executives continuing to serve on any such board
and/or committees on which Executive is serving, or with which Executive is
otherwise associated, as of the Commencement Date shall be deemed not to
interfere with the performance by Executive of his duties and responsibilities
under this Agreement) and (iii) deliver lectures or fulfill speaking
engagements. During the Employment Period, Executive shall also serve as a
director of the Company.
4. Place of Performance. The principal place of employment of
Executive shall be at the Companys principal executive offices in San Antonio,
Texas.
5. Compensation and Related Matters.
(a) Base Salary and Bonus. During the Employment Period, the Company shall
pay Executive a base salary at the rate of not less than $1,000,000 per year
(Base Salary). Executives Base Salary shall be paid in approximately equal
installments in accordance with the Companys customary payroll practices. The
Compensation Committee of the Board (the Committee) shall review Executives
Base Salary for increase (but not decrease) no less frequently than annually and
consistent with the compensation practices and guidelines of the Company. If
Executives Base Salary is increased by the Company, such increased Base Salary
shall then constitute the Base Salary for all purposes of this Agreement. In
addition to Base Salary, Executive shall be paid an annual bonus (the Bonus)
as provided for under the Performance Based Compensation Plan of the Company and
any other annual incentive plan maintained by the Company or any successor plans
thereto as determined by the Committee.
(b) Expenses. The Company shall promptly reimburse Executive for all
reasonable business expenses upon the presentation of reasonably itemized
statements of such expenses in accordance with the Companys policies and
procedures now in force or as such policies and procedures may be modified with
respect to all senior executive officers of the Company. In addition, during the
Employment Period, Executive shall be entitled to, at the sole expense of the
Company, the use of an automobile appropriate to his position and no less
favorable than the automobile provided immediately prior to the date of this
Agreement.
(c) Vacation. Executive shall be entitled to the number of weeks of paid
vacation per year that he was eligible for immediately prior to the date of this
Agreement, but in no event less than four (4) weeks annually. Unused vacation
may be carried forward from year to year. In addition to vacation, Executive
shall be entitled to the number of sick days and personal days per year that
other senior executive officers of the Company with similar tenor are entitled
under the Companys policies.
(d) Services Furnished. During the Employment Period, the Company shall
furnish Executive, with office space, stenographic and secretarial assistance
and such other facilities and services no less favorable than those that he was
receiving immediately prior to the date of this Agreement or, if better, as
provided to other senior executive officers of the Company.
(e) Welfare, Pension and Incentive Benefit Plans. During the Employment
Period, Executive (and his spouse and dependents to the extent provided therein)
shall be entitled to participate in and be covered under all the welfare benefit
plans or programs maintained by the Company from time to time for the benefit of
its senior executives including, without limitation, all medical,
hospitalization, dental, disability, accidental death and dismemberment and
travel accident insurance plans and programs. The Company shall at all times
provide to Executive (and his spouse and dependents to the extent provided under
the applicable plans or programs) (subject to modifications affecting all senior
executive officers) the same type and levels of participation and benefits as
are being provided to other senior executives (and their spouses and dependents
to the extent provided under the applicable plans or programs) on the
Commencement Date. In addition, during the Employment Period, Executive shall be
eligible to participate in all pension, retirement, savings and other employee
benefit plans and programs maintained from time to time by the Company for the
benefit of its senior executives.
(f) Stock Options.
(i) During each calendar year of the Employment Period occurring after
December 31, 1999, the Committee shall cause the Company to grant Executive a
stock option to acquire at least 100,000 shares of the Companys common stock
(each, an Option and collectively the Options) at such time(s) as the
Company has historically granted stock options to its senior executive officers
during the year; provided, that, such grants shall be made by at least December
31 of each calendar year occurring after December 31, 1999. Notwithstanding the
foregoing, unless otherwise waived by Executive in his sole discretion,
Executive shall receive no less than the number of Options granted during any
prior year of employment. In addition, to the extent necessary to carry out the
intended terms of this paragraph (f)(i), such number of options shall be
adjusted as is necessary to take into account any change in the common stock of
the Company in a manner consistent with adjustments made to other option holders
of the Company.
(ii) All Options described in paragraph (i) above shall be granted subject
to the following terms and conditions: (A) except as provided below, the Options
shall be granted under and subject to the Companys stock option plan; (B) the
exercise price per share of each Option shall be equal to the last reported sale
price of the Companys common stock on the New York Stock Exchange (or such
other principal trading market for the Companys common stock) at the close of
the trading day immediately preceding the date as of which the grant is made;
(C) each Option shall be vested and exercisable as determined by the Committee;
(D) each Option shall be exercisable for the ten (10) year period following the
date of grant whether or not Executive is then employed; and (E) each Option
shall be evidenced by, and subject to, a stock option agreement whose terms and
conditions are consistent with the terms hereof.
6. Termination. Executives employment hereunder may be terminated during the
Employment Period under the following circumstances:
(a) Death. Executives employment hereunder shall terminate upon his death.
(b) Disability. If, as a result of Executives incapacity due to physical
or mental illness, Executive shall have been substantially unable to perform his
duties hereunder for an entire period of six (6) consecutive months, and within
thirty (30) days after written Notice of Termination is given after such six (6)
month period, Executive shall not have returned to the substantial performance
of his duties on a full-time basis, the Company shall have the right to
terminate Executives employment hereunder for Disability, and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.
(c) Cause. The Company shall have the right to terminate Executives
employment for Cause, and such termination in and of itself shall not be, nor
shall it be deemed to be, a breach of this Agreement. For purposes of this
Agreement, the Company shall have Cause to terminate Executives employment
upon Executives:
(i) final conviction of a felony involving moral turpitude; or
(ii) willful misconduct that is materially and demonstrably injurious
economically to the Company.
For purposes of this Section 6(c), no act, or failure to act, by Executive shall
be considered willful unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company or any
entity in control of, controlled by or under common control with the Company
(Affiliates) thereof. Cause shall not exist under paragraph (ii) unless and
until the Company has delivered to Executive a copy of a resolution duly adopted
by three-quarters of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after reasonable (but in no event less than
thirty (30) days) notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in paragraph
(ii) and specifying the particulars thereof in detail. This Section 6(c) shall
not prevent Executive from challenging in any arbitration or court of competent
jurisdiction the Boards determination that Cause exists or that Executive has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Boards determination.
(d) Good Reason. Executive may terminate his employment for Good Reason
anytime after Executive has actual knowledge of the occurrence, without the
written consent of Executive, of one of the following events:
(i) (A) any change in the duties or responsibilities (including reporting
responsibilities) of Executive that is inconsistent in any adverse respect with
Executives position(s), duties, responsibilities or status with the Company
immediately prior to such change (including any diminution of such duties or
responsibilities) or (B) an adverse change in Executives titles or offices
(including, membership on the Board) with the Company;
(ii) a reduction in Executives Base Salary or Bonus opportunity;
(iii) (A) any requirement that Executive travel on Company business to an
extent substantially greater than the travel obligations of Executive
immediately prior to the date of this Agreement or (B) the relocation of the
Companys principal executive offices or Executives own office location to a
location more than fifteen (15) miles from their location immediately prior to
the date hereof;
(iv) the failure of the Company or any Affiliate to continue in effect any
material employee benefit plan, compensation plan, welfare benefit plan or
fringe benefit plan in which Executive is participating immediately prior to the
date of this Agreement or the taking of any action by the Company or any
Affiliate which would adversely affect Executives participation in or reduce
Executives benefits under any such plan, unless Executive is permitted to
participate in other plans providing Executive with substantially equivalent
benefits;
(v) any refusal by the Company or any Affiliate to continue to permit
Executive to engage in activities not directly related to the business of the
Company which Executive was permitted to engage in prior to the date of this
Agreement;
(vi) any purported termination of Executives employment for Cause which is
not effected pursuant to the procedures of Section 6(c) (and for purposes of
this Agreement, no such purported termination shall be effective);
(vii) the Companys or any Affiliates failure to provide in all material
respects the indemnification set forth in Section 11 of this Agreement;
(viii) a Change in Control of the Company; provided, that, the transaction
contemplated by the Company and AMFM, Inc. shall not be deemed to be a Change in
Control for purposes of this clause (viii);
(ix) the failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 13(a);
(x) the Company or any Affiliate providing Executive
the notice not to renew the Employment Period as contemplated by
Section 2 hereof;
(xi) any other breach of a material provision of this Agreement by the
Company or any Affiliate.
For purposes of clauses (i) through (vii) and (xi) above, an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company within ten (10) days after receipt of notice thereof given by
Executive shall not constitute Good Reason. Executives right to terminate
employment for Good Reason shall not be affected by Executives incapacity due
to mental or physical illness and Executives continued employment shall not
constitute consent to, or a waiver of rights with respect to, any event or
condition constituting Good Reason.
(e) Without Cause. The Company shall have the right to terminate
Executives employment hereunder without Cause by providing Executive with a
Notice of Termination at least thirty (30) days prior to such termination, and
such termination shall not in and of itself be, nor shall it be deemed to be, a
breach of this Agreement.
(f) Without Good Reason. Executive shall have the right to terminate his
employment hereunder without Good Reason by providing the Company with a Notice
of Termination at least thirty (30) days prior to such termination, and such
termination shall not in and of itself be, nor shall it be deemed to be, a
breach of this Agreement.
For purposes of this Agreement, a Change in Control of the Company means
the occurrence of one of the following events:
(1) individuals who, on the Commencement Date, constitute the Board (the
Incumbent Directors) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to the
Commencement Date whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Director;
(2) any person (as such term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934 (the Exchange Act) and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes, after the Commencement Date, a beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Companys then outstanding securities eligible to
vote for the election of the Board (the Company Voting Securities);
provided, however, that an event described in this paragraph (2) shall
not be deemed to be a Change in Control if any of following becomes
such a beneficial owner: (A) the Company or any majority-owned
subsidiary (provided, that this exclusion applies solely to the
ownership levels of the Company or the majority-owned subsidiary), (B)
any tax-qualified, broad-based employee benefit plan sponsored or
maintained by the Company or any majority-owned subsidiary, (C) any
underwriter temporarily holding securities pursuant to an offering of
such securities, (D) any person pursuant to a Non-Qualifying
Transaction (as defined in paragraph (3)), or (E) Executive or any
group of persons including Executive (or any entity controlled by
Executive or any group of persons including Executive).
(3) the approval by the shareholders of the Company
of a merger, consolidation, share exchange or similar form of
transaction involving the Company or any of its subsidiaries, or the
sale of all or substantially all of the Companys assets (a Business
Transaction), unless immediately following such Business Transaction
(i) more than 65% of the total voting power of the entity resulting
from such Business Transaction or the entity acquiring the Companys
assets in such Business Transaction (the Surviving Corporation) is
beneficially owned, directly or indirectly, by the Companys
shareholders immediately prior to any such Business Transaction, and
(ii) no person (other than the persons set forth in clauses (A), (B),
or (C) of paragraph (2) above or any tax-qualified, broad-based
employee benefit plan of the Surviving Corporation or its Affiliates)
beneficially owns, directly or indirectly, 20% or more of the total
voting power of the Surviving Corporation (a Non-Qualifying
Transaction); or
(4) Board approval of a liquidation or dissolution of
the Company, unless the voting common equity interests of an ongoing
entity (other than a liquidating trust) are beneficially owned,
directly or indirectly, by the Companys shareholders in substantially
the same proportions as such shareholders owned the Companys
outstanding voting common equity interests immediately prior to such
liquidation and such ongoing entity assumes all existing obligations of
the Company to Executive under this Agreement.
7. Termination Procedure.
(a) Notice of Termination. Any termination of Executives employment by the
Company or by Executive during the Employment Period (other than termination
pursuant to Section 6(a)) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14. For purposes of this
Agreement, a Notice of Termination shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executives employment under the provision so
indicated.
(b) Date of Termination. Date of Termination shall mean (i) if
Executives employment is terminated by his death, the date of his death, (ii)
if Executives employment is terminated pursuant to Section 6(b), thirty (30)
days after Notice of Termination (provided that Executive shall not have
returned to the substantial performance of his duties on a full-time basis
during such thirty (30) day period), and (iii) if Executives employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
8. Compensation Upon Termination or During Disability. In the event
Executive is disabled or his employment terminates during the Employment
Period, the Company shall provide Executive with the payments and benefits
set forth below. Executive acknowledges and agrees that the payments set
forth in this Section 8 constitute liquidated damages for termination of
his employment during the Employment Period.
(a) Termination By Company without Cause or By Executive for Good
Reason. If Executives employment is terminated by the Company without
Cause or by Executive for Good Reason:
(i) within five (5) days following such termination,
the Company shall pay to Executive (A) his Base Salary, Bonus and
accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, and (B) a lump-sum cash
payment equal to seven (7) times (the Severance Multiple) the sum of
Executives Base Salary and highest Bonus paid to Executive in the
three year period preceding such termination (including, for this
purpose, any and all bonuses paid to Executive prior to the date of
this Agreement); provided, that, for purposes of this Section 8(a)(i),
Executives Bonus shall be deemed to be no less than $3,000,000; and
(ii) the Company shall maintain in full force and
effect, for the continued benefit of Executive, his spouse and his
dependents for a period of seven (7) years following the Date of
Termination the medical, hospitalization, dental, and life insurance
programs in which Executive, his spouse and his dependents were
participating immediately prior to the Date of Termination at the level
in effect and upon substantially the same terms and conditions
(including without limitation contributions required by Executive for
such benefits) as existed immediately prior to the Date of Termination;
provided, that, if Executive, his spouse or his dependents cannot
continue to participate in the Company programs providing such
benefits, the Company shall arrange to provide Executive, his spouse
and his dependents with the economic equivalent of such benefits which
they otherwise would have been entitled to receive under such plans and
programs (Continued Benefits), provided, that, such Continued
Benefits shall terminate on the date or dates Executive receives
equivalent coverage and benefits, without waiting period or
pre-existing condition limitations, under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage or benefit-by-benefit, basis); and
(iii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance
with the terms and provisions of any agreements, plans or programs of
the Company; and
(v) As of the Date of Termination, Executive shall be
granted a stock option to acquire 1,000,000 shares of the Companys
common stock (Termination Option) under the following conditions, (A)
except as provided below, the Termination Option shall be granted under
and subject to the Companys stock option plan; (B) the exercise price
per share of the Termination Option shall be equal to the last reported
sale price of the Companys common stock on the New York Stock Exchange
(or such other principal trading market for the Companys common stock)
at the close of the trading day immediately preceding the Date of
Termination; (C) the Termination Option shall be 100% vested and
exercisable on the date of grant; (D) the Termination Option shall be
exercisable for the ten (10) year period following the Date of
Termination whether or not Executive is still providing services to the
Company; and (E) each Option shall be evidenced by, and subject to, a
stock option agreement whose terms and conditions are consistent with
the terms hereof. In addition, to the extent necessary to carry out the
intended terms of this paragraph (a)(v), such number of Termination
Options shall be adjusted as is necessary to take into account any
change in the common stock of the Company in a manner consistent with
adjustments made to other option holders of the Company. The Company
shall take all action necessary such that the shares of common stock
issuable upon exercise of the Termination Options (and all other shares
of common stock held by Executive) are registered on Form S-4 or Form
S-8 (or any successor or other appropriate forms).
(vi) Notwithstanding the terms or conditions of any
stock option, stock appreciation right or similar agreements between
the Company and Executive to the contrary, and for purposes thereof,
such agreements shall be deemed to be amended in accordance with this
Section 8(a)(vi) if need be as of the Date of Termination and neither
the Company, the Board nor the Committee shall take or assert any
position contrary to the foregoing, Executive shall vest, as of the
Date of Termination, in all rights under such agreements (i.e., stock
options that would otherwise vest after the Date of Termination) and
thereafter shall be permitted to exercise any and all such rights until
the end of the term of such awards (regardless of any termination of
employment restrictions therein contained) and restricted stock held by
Executive shall become immediately vested as of the Date of
Termination; and
(vii) Executive shall be paid a lump sum payment
equal to the amount of compensation or contributions (as the case may
be) by the Company that Executive would have been entitled to receive
(assuming he would have received the maximum amount payable or
contributable under each plan or arrangement for any year) under any
plan or arrangement he was then participating (or entitled to
participate in) for a seven (7) year period following the Date of
Termination; and
(viii) Any and all insurance benefits or policies for
the benefit of Executive shall become the sole property of Executive
and, to the extent applicable, all of the Companys rights therein
(including repayment of premiums) shall be forfeited by the Company
and, to the extent not already made, the Company shall make all
contributions or payments required of such policies for the year of
termination; and
(ix) Any amount payable under this Section 8(a) shall
also include an additional cash payment which shall equal any and all
federal, state and local taxes due upon the provision of any such
benefits or payments thereunder (other than taxes due under the
operation of Section 4999 of the Code which Section of the Code is
addressed in Section 8(e) hereof and, if applicable, shall work in
conjunction with this Section 8(a)(ix)), which shall be payable to
Executive within five (5) business days following his Date of
Termination and such additional payment shall be grossed-up for any
additional taxes due thereon (and any taxes thereon, etc.) in a manner
consistent with the manner set forth in Section 8(e) of this Agreement,
whether or not such Section 8(e) is applicable.
(b) Cause or By Executive Without Good Reason. If Executives
employment is terminated by the Company for Cause or by Executive (other
than for Good Reason):
(i) the Company shall pay Executive his Base Salary,
Bonus and his accrued vacation pay through the Date of Termination, as
soon as practicable following the Date of Termination; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company.
(c) Disability. During any period that Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental
illness (Disability Period), Executive shall continue to receive his full
Base Salary set forth in Section 5(a) until his employment is terminated
pursuant to Section 6(b). In the event Executives employment is terminated
for Disability pursuant to Section 6(b):
(i) the Company shall pay to Executive (A) his Base
Salary, Bonus and accrued vacation pay through the Date of Termination,
as soon as practicable following the Date of Termination, and (B)
continued Base Salary (as provided for in Section 5(a)) and Continued
Benefits for seven (7) years; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company; and
(iv) Executive shall be paid the amount of
compensation or contributions (as the case may be) by the Company that
Executive would have been entitled to receive (assuming he would have
received the maximum amount payable or contributable under each plan or
arrangement for any year) under any plan or arrangement he was then
participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(d) Death. If Executives employment is terminated by his death:
(i) the Company shall pay in a lump sum to
Executives beneficiary, legal representatives or estate, as the case
may be, Executives Base Salary, Bonus and accrued vacation pay through
the Date of Termination and $3,750,000 (which may be paid through
insurance) and shall provide Executives spouse and dependents with
Continued Benefits for seven (7) year; and
(ii) the Company shall reimburse Executives
beneficiary, legal representatives, or estate, as the case may be,
pursuant to Section 5 for reasonable expenses incurred, but not paid
prior to such termination of employment; and
(iii) Executives beneficiary, legal representatives
or estate, as the case may be, shall be entitled to any other rights,
compensation and benefits as may be due to any such persons or estate
in accordance with the terms and provisions of any agreements, plans or
programs of the Company; and
(iv) Executives beneficiary, legal representatives
or estate, as the case may be shall be paid the amount of compensation
or contributions (as the case may be) by the Company that Executive
would have been entitled to receive (assuming he would have received
the maximum amount payable or contributable under each plan or
arrangement for any year) under any plan or arrangement he was then
participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(e) Additional Payments. (i) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any
payment, award, benefit or distribution (or any acceleration of any
payment, award, benefit or distribution) by the Company or any entity which
effectuates a Change in Control (or other change in ownership) to or for
the benefit of Executive (the Payments) would be subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the Excise Tax), then the Company shall pay to Executive
an additional payment (a Gross-Up Payment) in an amount such that after
payment by Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in Executives adjusted gross income and the highest
applicable marginal rate of federal income taxation for the calendar year
in which the Gross-Up Payment is to be made. For purposes of determining
the amount of the Gross-Up Payment, Executive shall be deemed to (A) pay
federal income taxes at the highest marginal rates of federal income taxes
at the highest marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, (B) pay applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes and (C) have otherwise allowable deductions for federal
income tax purposes at least equal to those which could be disallowed
because of the inclusion of the Gross-Up Payment in Executives adjusted
gross income.
(ii) Subject to the provisions of Section 8(e)(i), all
determinations required to be made under this Section
8(e), including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such
determinations, shall be made by a nationally recognized public accounting firm
that is selected by Executive (the Accounting Firm) which shall provide
detailed supporting calculations both to the Company and Executive within
fifteen (15) business days of the receipt of notice from the Company or
Executive that there has been a Payment, or such earlier time as is requested by
the Company or Executive (collectively, the Determination). All fees and
expenses of the Accounting Firm shall be borne solely by the Company and the
Company shall enter into any agreement requested by the Accounting Firm in
connection with the performance of the services hereunder. The Gross-Up Payment
under this Section 8(e) with respect to any Payments made to Executive shall be
made no later than thirty (30) days following such Payment. If the Accounting
Firm determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on Executives applicable federal income tax
return should not result in the imposition of a negligence or similar penalty.
(iii) As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
Determination, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (Underpayment) or Gross-Up Payments
are made by the Company which should not have been made (Overpayment),
consistent with the calculations required to be made hereunder. In the event
that Executive thereafter is required to make payment of any Excise Tax or
additional Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly
paid by the Company to or for the benefit of Executive. In the event the amount
of the Gross-Up Payment exceeds the amount necessary to reimburse Executive for
his Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by Executive (to the extent he has received a refund if the applicable Excise
Tax has been paid to the Internal Revenue Service) to or for the benefit of the
Company. Executive shall cooperate, to the extent his expenses are reimbursed by
the Company, with any reasonable requests by the Company in connection with any
contest or disputes with the Internal Revenue Service in connection with the
Excise Tax.
9. Mitigation. Executive shall not be required to mitigate
amounts payable under this Agreement by seeking other employment or otherwise,
and there shall be no offset against amounts due Executive under this Agreement
on account of subsequent employment except as specifically provided herein.
Additionally, amounts owed to Executive under this Agreement shall not be offset
by any claims the Company may have against Executive and the Companys
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder, shall not be affected by any other
circumstances, including, without limitation, any counterclaim, recoupment,
defense or other right which the Company may have against Executive or others.
10. Restrictive Covenants.
(a) Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets and confidential
information, knowledge or data relating to the Company and its businesses
and investments, which shall have been obtained by Executive during
Executives employment by the Company and which is not generally available
public knowledge (other than by acts by Executive in violation of this
Agreement). Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, Executive shall not, without
the prior written consent of the Company or as may otherwise be required by
law or any legal process, or as is necessary in connection with any
adversarial proceeding against the Company (in which case Executive shall
use his reasonable best efforts in cooperating with the Company in
obtaining a protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by
the Company or on behalf of the Company in the furtherance of its business
or to perform duties hereunder.
(b) Non-Solicitation.Executive hereby agrees, in
consideration of his employment hereunder and in view of the
confidential position to be held by Executive hereunder, that after his
termination of employment in which he is entitled to the benefits set forth in
Section 8(a) hereof and through the second anniversary thereof, Executive shall
not directly or indirectly induce any employee of the Company to terminate such
employment or to become employed by any other radio broadcasting station.
(c) Non-Competition. Executive hereby agrees, in
consideration of his employment hereunder and in view of the
confidential position to be held by Executive hereunder, that after his
termination of employment in which he is entitled to the benefits set forth in
Section 8(a) hereof and through the second anniversary thereof, he shall not be
employed by or perform activities on behalf of, or have an ownership interest
in, any person, firm, corporation or other entity, or in connection with any
business enterprise, that is directly or indirectly engaged in any of the radio,
television, or related business activities in which the Company and its
subsidiaries have significant involvement (other than direct or beneficial
ownership of up to five percent (5%) of any entity whether or not in the same or
competing business.
(e) Blue Pencil. The parties hereby acknowledge that the restrictions
in this Section 10 have been specifically negotiated and agreed to by the
parties hereto and are limited only to those restrictions necessary to
protect the Company and its subsidiaries from unfair competition. The
parties hereby agree that if the scope or enforceability of any provision,
paragraph or subparagraph of this Section 10 is in any way disputed at any
time, and should a court find that such restrictions are overly broad, the
court may modify and enforce the covenant to the extent that it believes to
be reasonable under the circumstances. Each provision, paragraph and
subparagraph of this Section 10 is separable from every other provision,
paragraph, and subparagraph and constitutes a separate and distinct
covenant. Executive acknowledges that the Company operates in major, medium
and small sized markets throughout the United States and North America and
that the effect of Section 10(c) may be to prevent him from working in a
competitive business after his termination of employment hereunder.
(f) Remedies. Executive hereby expressly acknowledges that
any breach or threatened breach by Executive
of any of the terms set forth in Section 10 of this Agreement may result in
significant and continuing injury to the Company, the monetary value of which
would be impossible to establish. Therefore, Executive agrees that the Company
shall be entitled to apply for injunctive relief in a court of appropriate
jurisdiction.
11. Indemnification.
(a) General. The Company agrees that if Executive is made a party or a
threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a Proceeding), by
reason of the fact that Executive is or was a trustee, director or officer
of the Company or any subsidiary of the Company or is or was serving at the
request of the Company or any subsidiary as a trustee, director, officer,
member, employee or agent of another corporation or a partnership, joint
venture, trust or other enterprise, including, without limitation, service
with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a trustee,
director, officer, member, employee or agent while serving as a trustee,
director, officer, member, employee or agent, Executive shall be
indemnified and held harmless by the Company to the fullest extent
authorized by Texas law, as the same exists or may hereafter be amended,
against all Expenses incurred or suffered by Executive in connection
therewith, and such indemnification shall continue as to Executive even if
Executive has ceased to be an officer, director, trustee or agent, or is no
longer employed by the Company and shall inure to the benefit of his heirs,
executors and administrators.
(b) Expenses. As used in this Agreement, the term Expenses shall
include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys fees,
accountants fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Agreement.
(c) Enforcement. If a claim or request under this Agreement is not
paid by the Company or on its behalf, within thirty (30) days after a
written claim or request has been received by the Company, Executive may at
any time thereafter bring suit against the Company to recover the unpaid
amount of the claim or request and if successful in whole or in part,
Executive shall be entitled to be paid also the expenses of prosecuting
such suit. All obligations for indemnification hereunder shall be subject
to, and paid in accordance with, applicable Texas law.
(d) Partial Indemnification. If Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof,
the Company, shall nevertheless indemnify Executive for the portion of such
Expenses to which Executive is entitled.
(e) Advances of Expenses. Expenses incurred by Executive in connection
with any Proceeding shall be paid by the Company in advance upon request of
Executive that the Company pay such Expenses; but, only in the event that
Executive shall have delivered in writing to the Company (i) an undertaking
to reimburse the Company for Expenses with respect to which Executive is
not entitled to indemnification and (ii) an affirmation of his good faith
belief that the standard of conduct necessary for indemnification by the
Company has been met.
(f) Notice of Claim. Executive shall give to the Company notice of any
claim made against him for which indemnification will or could be sought
under this Agreement. In addition, Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be
within Executives power and at such times and places as are convenient for
Executive.
(g) Defense of Claim. With respect to any Proceeding as to which
Executive notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at its own
expense; and
(ii) Except as otherwise provided below, to the extent that it may
wish, the Company will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Executive, which in the Companys sole
discretion may be regular counsel to the Company and may be counsel to
other officers and directors of the Company or any subsidiary. Executive
also shall have the right to employ his own counsel in such action, suit or
proceeding if he reasonably concludes that failure to do so would involve a
conflict of interest between the Company and Executive, and under such
circumstances the fees and expenses of such counsel shall be at the expense
of the Company.
(iii) The Company shall not be liable to indemnify Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any penalty or limitation
on Executive without Executives written consent. Neither the Company nor
Executive will unreasonably withhold or delay their consent to any proposed
settlement.
(h) Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any
other right which Executive may have or hereafter may acquire under any
statute, provision of the declaration of trust or certificate of
incorporation or by-laws of the Company or any subsidiary, agreement, vote
of shareholders or disinterested directors or trustees or otherwise.
12. Arbitration. Except as provided for in Section 10 of this
Agreement, if any contest or dispute arises between the parties with respect to
this Agreement, such contest or dispute shall be submitted to binding
arbitration for resolution in San Antonio, Texas in accordance with the rules
and procedures of the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect. The decision of the arbitrator shall be
final and binding on both parties, and any court of competent jurisdiction may
enter judgment upon the award. The Company shall pay all expenses relating to
such arbitration, including, but not limited to, Executives legal fees and
expenses, regardless of outcome.
13. Successors; Binding Agreement.
(a) Companys Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, Company shall mean the Company as herein before defined and any
successor to its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the agreement provided for in this Section 13 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) Executives Successors. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon Executives death, this
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executives beneficiary or beneficiaries, personal or
legal representatives, or estate, to the extent any such person succeeds to
Executives interests under this Agreement. Executive shall be entitled to
select and change a beneficiary or beneficiaries to receive any benefit or
compensation payable hereunder following Executives death by giving the Company
written notice thereof. In the event of Executives death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or
other legal representative(s). If Executive should die following his Date of
Termination while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to such person or persons so
appointed in writing by Executive, or otherwise to his legal representatives or
estate.
14. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
L. Lowry Mays
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
If to the Company:
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: President
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas
Attention: Michael Dillard
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is agreed to
in writing signed by Executive and by a duly authorized officer of the Company,
and such waiver is set forth in writing and signed by the party to be charged.
No waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive Executives termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas without regard to its conflicts of law
principles.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
18. Entire Agreement. Except as other provided herein, this Agreement
sets forth the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of such subject matter.
Except as other provided herein, any prior agreement of the parties hereto
in respect of the subject matter contained herein is hereby terminated and
cancelled.
20. Withholding. All payments hereunder shall be subject to any
required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.
21. Noncontravention. The Company represents that the Company is not
prevented from entering into, or performing this Agreement by the terms of
any law, order, rule or regulation, its by-laws or declaration of trust, or
any agreement to which it is a party, other than which would not have a
material adverse effect on the Companys ability to enter into or perform
this Agreement.
22. Section Headings. The section headings in this Employment
Agreement are for convenience of reference only, and they form no part of
this Agreement and shall not affect its interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/Randall Mays
Name: Randall Mays
Title: Vice President
/s/L Lowry Mays
L. Lowry Mays
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1999, by and between Clear
Channel Communications, Inc., a Texas corporation (the Company), and Mark Mays
(Executive).
IN CONSIDERATION of the premises and the mutual covenants set
forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue to employ
Executive as the President and Chief Operating Officer of the Company, and
Executive hereby accepts such continued employment, on the terms and conditions
hereinafter set forth.
2. Term. The period of employment of Executive by the Company
under this Agreement (the Employment Period) shall commence on October 1, 1999
(the Commencement Date) and shall continue through the seventh anniversary
thereof; provided, that, the Employment Period shall automatically be extended
for one (1) additional day each day during the Employment Period unless either
party gives written notice not to extend this Agreement. The Employment Period
may be sooner terminated by either party in accordance with Section 6 of this
Agreement.
3. Position and Duties. During the Employment Period,
Executive shall serve as President and Chief Operating Officer of the Company,
and shall report solely and directly to the Companys Chairman and Chief
Executive Officer and Board of Directors of the Company (the Board). Executive
shall have those powers and duties normally associated with the position of
President and Chief Operating Officer of entities comparable to the Company and
such other powers and duties as may be prescribed by the Board; provided that,
such other powers and duties are consistent with Executives position as
President and Chief Operating Officer of the Company. Executive shall devote as
much of his working time, attention and energies during normal business hours
(other than absences due to illness or vacation) to satisfactorily perform his
duties for the Company. Notwithstanding the above, Executive shall be permitted,
to the extent such activities do not substantially interfere with the
performance by Executive of his duties and responsibilities hereunder to (i)
manage Executives personal, financial and legal affairs, (ii) to serve on civic
or charitable boards or committees (it being expressly understood and agreed
that Executives continuing to serve on any such board and/or committees on
which Executive is serving, or with which Executive is otherwise associated, as
of the Commencement Date shall be deemed not to interfere with the performance
by Executive of his duties and responsibilities under this Agreement) and (iii)
deliver lectures or fulfill speaking engagements. During the Employment Period,
Executive shall also serve as a director of the Company. If L. Lowry Mays ceases
to serve as Chairman and Chief Executive Officer of the Company at any time
during the Employment Period by reason of his death or incapacity, it is the
intention of the Board, that either Mark Mays or Randall Mays shall be appointed
as the Chairman and Chief Executive Officer of the Company and the Board,
subject only to its fiduciary duties to the Company and its stockholders and
applicable law, shall take all action necessary to carry out such intention.
4. Place of Performance. The principal place of employment of
Executive shall be at the Companys principal executive offices in San Antonio,
Texas.
5. Compensation and Related Matters.
(a) Base Salary and Bonus. During the Employment Period, the Company
shall pay Executive a base salary at the rate of not less than $350,000 per
year (Base Salary). Executives Base Salary shall be paid in
approximately equal installments in accordance with the Companys customary
payroll practices. The Compensation Committee of the Board (the
Committee) shall review Executives Base Salary for increase (but not
decrease) no less frequently than annually and consistent with the
compensation practices and guidelines of the Company. If Executives Base
Salary is increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of this Agreement. In addition
to Base Salary, Executive shall be paid an annual bonus (the Bonus) as
provided for under the annual incentive plan maintained by the Company
and/or as the Committee so determines.
(b) Expenses. The Company shall promptly reimburse Executive for all
reasonable business expenses upon the presentation of reasonably itemized
statements of such expenses in accordance with the Companys policies and
procedures now in force or as such policies and procedures may be modified
with respect to all senior executive officers of the Company. In addition,
during the Employment Period, Executive shall be entitled to, at the sole
expense of the Company, the use of an automobile appropriate to his
position and no less favorable than the automobile provided immediately
prior to the date of this Agreement.
(c) Vacation. Executive shall be entitled to the number of weeks of
paid vacation per year that he was eligible for immediately prior to the
date of this Agreement, but in no event less than four (4) weeks annually.
Unused vacation may be carried forward from year to year. In addition to
vacation, Executive shall be entitled to the number of sick days and
personal days per year that other senior executive officers of the Company
with similar tenor are entitled under the Companys policies.
(d) Services Furnished. During the Employment Period, the Company
shall furnish Executive, with office space, stenographic and secretarial
assistance and such other facilities and services no less favorable than
those that he was receiving immediately prior to the date of this Agreement
or, if better, as provided to other senior executive officers of the
Company (other than the Chairman and Chief Executive Officer).
(e) Welfare, Pension and Incentive Benefit Plans. During the
Employment Period, Executive (and his spouse and dependents to the extent
provided therein) shall be entitled to participate in and be covered under
all the welfare benefit plans or programs maintained by the Company from
time to time for the benefit of its senior executives (other than benefits
maintained exclusively for the Chairman and Chief Executive Officer)
including, without limitation, all medical, hospitalization, dental,
disability, accidental death and dismemberment and travel accident
insurance plans and programs. The Company shall at all times provide to
Executive (and his spouse and dependents to the extent provided under the
applicable plans or programs) (subject to modifications affecting all
senior executive officers) the same type and levels of participation and
benefits as are being provided to other senior executives (and their
spouses and dependents to the extent provided under the applicable plans or
programs) (other than benefits maintained exclusively for the Chairman and
Chief Executive Officer) on the Commencement Date. In addition, during the
Employment Period, Executive shall be eligible to participate in all
pension, retirement, savings and other employee benefit plans and programs
maintained from time to time by the Company for the benefit of its senior
executives.
(f) Stock Options.
(i) During each calendar year of the Employment Period occurring after
December 31, 1999, the Committee shall cause the Company to grant Executive
a stock option to acquire at least 50,000 shares of the Companys common
stock (each, an Option and collectively the Options) at such time(s) as
the Company has historically granted stock options to its senior executive
officers during the year; provided, that, such grants shall be made by at
least December 31 of each calendar year occurring after December 31, 1999.
Notwithstanding the foregoing, unless otherwise waived by Executive in his
sole discretion, Executive shall receive no less than the number of Options
granted during any prior year of employment. In addition, to the extent
necessary to carry out the intended terms of this paragraph (f)(i), such
number of options shall be adjusted as is necessary to take into account
any change in the common stock of the Company in a manner consistent with
adjustments made to other option holders of the Company.
(ii) All Options described in paragraph (i) above shall be granted
subject to the following terms and conditions: (A) except as provided
below, the Options shall be granted under and subject to the Companys
stock option plan; (B) the exercise price per share of each Option shall be
equal to the last reported sale price of the Companys common stock on the
New York Stock Exchange (or such other principal trading market for the
Companys common stock) at the close of the trading day immediately
preceding the date as of which the grant is made; (C) each Option shall be
vested and exercisable as determined by the Committee; (D) each Option
shall be exercisable for the ten (10) year period following the date of
grant whether or not Executive is then employed; and (E) each Option shall
be evidenced by, and subject to, a stock option agreement whose terms and
conditions are consistent with the terms hereof.
6. Termination. Executives employment hereunder may be
terminated during the Employment Period under the following circumstances:
(a) Death. Executives employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Executives incapacity due to
physical or mental illness, Executive shall have been substantially unable
to perform his duties hereunder for an entire period of six (6) consecutive
months, and within thirty (30) days after written Notice of Termination is
given after such six (6) month period, Executive shall not have returned to
the substantial performance of his duties on a full-time basis, the Company
shall have the right to terminate Executives employment hereunder for
Disability, and such termination in and of itself shall not be, nor shall
it be deemed to be, a breach of this Agreement.
(c) Cause. The Company shall have the right to terminate Executives
employment for Cause, and such termination in and of itself shall not be,
nor shall it be deemed to be, a breach of this Agreement. For purposes of
this Agreement, the Company shall have Cause to terminate Executives
employment upon Executives:
(i) final conviction of a felony involving moral turpitude; or
(ii) willful misconduct that is materially and demonstrably injurious
economically to the Company.
For purposes of this Section 6(c), no act, or failure to act, by Executive shall
be considered willful unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company or any
entity in control of, controlled by or under common control with the Company
(Affiliates) thereof. Cause shall not exist under paragraph (ii) unless and
until the Company has delivered to Executive a copy of a resolution duly adopted
by three-quarters of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after reasonable (but in no event less than
thirty (30) days) notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in paragraph
(ii) and specifying the particulars thereof in detail. This Section 6(c) shall
not prevent Executive from challenging in any arbitration or court of competent
jurisdiction the Boards determination that Cause exists or that Executive has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Boards determination.
(d) Good Reason. Executive may terminate his employment for Good
Reason anytime after Executive has actual knowledge of the occurrence,
without the written consent of Executive, of one of the following events:
(i) (A) any change in the duties or responsibilities (including
reporting responsibilities) of Executive that is inconsistent in any
adverse respect with Executives position(s), duties, responsibilities or
status with the Company immediately prior to such change (including any
diminution of such duties or responsibilities) or (B) an adverse change in
Executives titles or offices (including, membership on the Board) with the
Company;
(ii) a reduction in Executives Base Salary or Bonus opportunity;
(iii) (A) any requirement that Executive travel on Company business to
an extent substantially greater than the travel obligations of Executive
immediately prior to the date of this Agreement or (B) the relocation of
the Companys principal executive offices or Executives own office
location to a location more than fifteen (15) miles from their location
immediately prior to the date hereof;
(iv) the failure of the Company or any Affiliate to continue in effect
any material employee benefit plan, compensation plan, welfare benefit plan
or fringe benefit plan in which Executive is participating immediately
prior to the date of this Agreement or the taking of any action by the
Company or any Affiliate which would adversely affect Executives
participation in or reduce Executives benefits under any such plan, unless
Executive is permitted to participate in other plans providing Executive
with substantially equivalent benefits;
(v) any refusal by the Company or any Affiliate to continue to permit
Executive to engage in activities not directly related to the business of
the Company which Executive was permitted to engage in prior to the date of
this Agreement;
(vi) any purported termination of Executives employment for Cause
which is not effected pursuant to the procedures of Section 6(c) (and for
purposes of this Agreement, no such purported termination shall be
effective);
(vii) the Companys or any Affiliates failure to provide in all
material respects the indemnification set forth in Section 11 of this
Agreement;
(viii) a Change in Control of the Company; provided, that, the
transaction contemplated by the Company and AMFM, Inc. shall not be deemed
to be a Change in Control for purposes of this clause (viii);
(ix) the failure of the Company to obtain the assumption agreement
from any successor as contemplated in Section 13(a);
(x) the Company or any Affiliate providing Executive the notice not to
renew the Employment Period as contemplated by Section 2 hereof;
(xi) any time that neither L. Lowry Mays, Mark Mays nor Randall Mays
is the Chairman and Chief Executive Officer of the Company;
(xii) any other breach of a material provision of this Agreement by
the Company or any Affiliate.
For purposes of clauses (i) through (vii) and (xii) above, an
isolated, insubstantial and inadvertent action taken in good faith and
which is remedied by the Company within ten (10) days after receipt of
notice thereof given by Executive shall not constitute Good Reason.
Executives right to terminate employment for Good Reason shall not be
affected by Executives incapacity due to mental or physical illness and
Executives continued employment shall not constitute consent to, or a
waiver of rights with respect to, any event or condition constituting Good
Reason.
(e) Without Cause. The Company shall have the right to terminate
Executives employment hereunder without Cause by providing Executive with
a Notice of Termination at least thirty (30) days prior to such
termination, and such termination shall not in and of itself be, nor shall
it be deemed to be, a breach of this Agreement. Notwithstanding any other
provision of this Agreement to the contrary, in the event that Executives
employment is terminated by the Company without Cause within six (6) months
prior to the date that, or on or one (1) year after the date that, L. Lowry
Mays or Randall Mays is no longer the Chairman and Chief Executive Officer
of the Company for any reason, then Executive shall automatically be deemed
to have terminated his employment for Good Reason under Section 6(d)(xi)
and the Severance Multiple (as defined below) shall be fourteen (14) and
the Company shall make all of the payments due under Section 8(a) of this
Agreement to Executive, off-set only by amounts, if any, already paid under
Section 8(a).
(f) Without Good Reason. Executive shall have the right to terminate
his employment hereunder without Good Reason by providing the Company with
a Notice of Termination at least thirty (30) days prior to such
termination, and such termination shall not in and of itself be, nor shall
it be deemed to be, a breach of this Agreement.
For purposes of this Agreement, a Change in Control of the Company
means the occurrence of one of the following events:
(1) individuals who, on the Commencement Date, constitute the Board
(the Incumbent Directors) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to the Commencement Date whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is named as a
nominee for director, without objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual initially elected
or nominated as a director of the Company as a result of an actual or
threatened election contest with respect to directors or as a result of any
other actual or threatened solicitation of proxies by or on behalf of any
person other than the Board shall be an Incumbent Director;
(2) any person (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the Exchange Act) and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after
the Commencement Date, a beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Companys then
outstanding securities eligible to vote for the election of the Board (the
Company Voting Securities); provided, however, that an event described in
this paragraph (2) shall not be deemed to be a Change in Control if any of
following becomes such a beneficial owner: (A) the Company or any
majority-owned subsidiary (provided, that this exclusion applies solely to
the ownership levels of the Company or the majority-owned subsidiary), (B)
any tax-qualified, broad-based employee benefit plan sponsored or
maintained by the Company or any majority-owned subsidiary, (C) any
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (3)), or (E) Executive or any group of persons
including Executive (or any entity controlled by Executive or any group of
persons including Executive).
(3) the approval by the shareholders of the Company
of a merger, consolidation, share exchange or similar form of
transaction involving the Company or any of its subsidiaries, or the
sale of all or substantially all of the Companys assets (a Business
Transaction), unless immediately following such Business Transaction
(i) more than 65% of the total voting power of the entity resulting
from such Business Transaction or the entity acquiring the Companys
assets in such Business Transaction (the Surviving Corporation) is
beneficially owned, directly or indirectly, by the Companys
shareholders immediately prior to any such Business Transaction, and
(ii) no person (other than the persons set forth in clauses (A), (B),
or (C) of paragraph (2) above or any tax-qualified, broad-based
employee benefit plan of the Surviving Corporation or its Affiliates)
beneficially owns, directly or indirectly, 20% or more of the total
voting power of the Surviving Corporation (a Non-Qualifying
Transaction); or
(4) Board approval of a liquidation or dissolution of
the Company, unless the voting common equity interests of an ongoing
entity (other than a liquidating trust) are beneficially owned,
directly or indirectly, by the Companys shareholders in substantially
the same proportions as such shareholders owned the Companys
outstanding voting common equity interests immediately prior to such
liquidation and such ongoing entity assumes all existing obligations of
the Company to Executive under this Agreement.
7. Termination Procedure.
(a) Notice of Termination. Any termination of Executives employment
by the Company or by Executive during the Employment Period (other than
termination pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section
14. For purposes of this Agreement, a Notice of Termination shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executives
employment under the provision so indicated.
(b) Date of Termination. Date of Termination shall mean (i) if
Executives employment is terminated by his death, the date of his death,
(ii) if Executives employment is terminated pursuant to Section 6(b),
thirty (30) days after Notice of Termination (provided that Executive shall
not have returned to the substantial performance of his duties on a
full-time basis during such thirty (30) day period), and (iii) if
Executives employment is terminated for any other reason, the date on
which a Notice of Termination is given or any later date (within thirty
(30) days after the giving of such notice) set forth in such Notice of
Termination.
8. Compensation Upon Termination or During Disability. In the
event Executive is disabled or his employment terminates during the Employment
Period, the Company shall provide Executive with the payments and benefits set
forth below. Executive acknowledges and agrees that the payments set forth in
this Section 8 constitute liquidated damages for termination of his employment
during the Employment Period.
(a) Termination By Company without Cause or By Executive for Good
Reason. If Executives employment is terminated by the Company without
Cause or by Executive for Good Reason:
(i) within five (5) days following such termination,
the Company shall pay to Executive (A) his Base Salary, Bonus and
accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, and (B) a lump-sum cash
payment equal to seven (7) times (the Severance Multiple) the sum of
Executives Base Salary and highest Bonus paid to Executive in the
three year period preceding such termination (including, for this
purpose, any and all bonuses paid to Executive prior to the date of
this Agreement); provided, that, for purposes of this Section 8(a)(i),
Executives Bonus shall be deemed to be no less than $1,000,000;
provided, further, that, if Executive terminates his employment for the
Good Reason event (whether or not in conjunction with any other Good
Reason event) set forth in Section 6(d)(xi) (or is deemed to have
terminated his employment under Section 6(d)(xi) in accordance with
Section 6(e) of this Agreement), the Severance Multiple shall be equal
to fourteen (14); and
(ii) the Company shall maintain in full force and
effect, for the continued benefit of Executive, his spouse and his
dependents for a period of seven (7) years following the Date of
Termination the medical, hospitalization, dental, and life insurance
programs in which Executive, his spouse and his dependents were
participating immediately prior to the Date of Termination at the level
in effect and upon substantially the same terms and conditions
(including without limitation contributions required by Executive for
such benefits) as existed immediately prior to the Date of Termination;
provided, that, if Executive, his spouse or his dependents cannot
continue to participate in the Company programs providing such
benefits, the Company shall arrange to provide Executive, his spouse
and his dependents with the economic equivalent of such benefits which
they otherwise would have been entitled to receive under such plans and
programs (Continued Benefits), provided, that, such Continued
Benefits shall terminate on the date or dates Executive receives
equivalent coverage and benefits, without waiting period or
pre-existing condition limitations, under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage or benefit-by-benefit, basis); and
(iii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance
with the terms and provisions of any agreements, plans or programs of
the Company; and
(v) As of the Date of Termination, Executive shall be
granted a stock option to acquire 1,000,000 shares of the Companys
common stock (Termination Option) under the following conditions, (A)
except as provided below, the Termination Option shall be granted under
and subject to the Companys stock option plan; (B) the exercise price
per share of the Termination Option shall be equal to the last reported
sale price of the Companys common stock on the New York Stock Exchange
(or such other principal trading market for the Companys common stock)
at the close of the trading day immediately preceding the Date of
Termination; (C) the Termination Option shall be 100% vested and
exercisable on the date of grant; (D) the Termination Option shall be
exercisable for the ten (10) year period following the Date of
Termination whether or not Executive is still providing services to the
Company; and (E) each Option shall be evidenced by, and subject to, a
stock option agreement whose terms and conditions are consistent with
the terms hereof; provided, that, if Executive terminates his
employment for the Good Reason event (whether or not in conjunction
with any other Good Reason event) set forth in Section 6(d)(xi) (or is
deemed to have terminated his employment under Section 6(d)(xi) in
accordance with Section 6(e) of this Agreement), the number of
Termination Options Executive shall receive shall be equal to
2,000,000. In addition, to the extent necessary to carry out the
intended terms of this paragraph (a)(v), such number of Termination
Options shall be adjusted as is necessary to take into account any
change in the common stock of the Company in a manner consistent with
adjustments made to other option holders of the Company. The Company
shall take all action necessary such that the shares of common stock
issuable upon exercise of the Termination Options (and all other shares
of common stock held by Executive) are registered on Form S-4 or Form
S-8 (or any successor or other appropriate forms).
(vi) Notwithstanding the terms or conditions of any
stock option, stock appreciation right or similar agreements between
the Company and Executive to the contrary, and for purposes thereof,
such agreements shall be deemed to be amended in accordance with this
Section 8(a)(vi) if need be as of the Date of Termination and neither
the Company, the Board nor the Committee shall take or assert any
position contrary to the foregoing, Executive shall vest, as of the
Date of Termination, in all rights under such agreements (i.e., stock
options that would otherwise vest after the Date of Termination) and
thereafter shall be permitted to exercise any and all such rights until
the end of the term of such awards (regardless of any termination of
employment restrictions therein contained) and restricted stock held by
Executive shall become immediately vested as of the Date of
Termination; and
(vii) Executive shall be paid a lump sum payment
equal to the amount of compensation or contributions (as the case may
be) by the Company that Executive would have been entitled to receive
(assuming he would have received the maximum amount payable or
contributable under each plan or arrangement for any year) under any
plan or arrangement he was then participating (or entitled to
participate in) for a seven (7) year period following the Date of
Termination; and
(viii) Any and all insurance benefits or policies for
the benefit of Executive shall become the sole property of Executive
and, to the extent applicable, all of the Companys rights therein
(including repayment of premiums) shall be forfeited by the Company
and, to the extent not already made, the Company shall make all
contributions or payments required of such policies for the year of
termination; and
(ix) Any amount payable under this Section 8(a) shall
also include an additional cash payment which shall equal any and all
federal, state and local taxes due upon the provision of any such
benefits or payments thereunder (other than taxes due under the
operation of Section 4999 of the Code which Section of the Code is
addressed in Section 8(e) hereof and, if applicable, shall work in
conjunction with this Section 8(a)(ix)), which shall be payable to
Executive within five (5) business days following his Date of
Termination and such additional payment shall be grossed-up for any
additional taxes due thereon (and any taxes thereon, etc.) in a manner
consistent with the manner set forth in Section 8(e) of this Agreement,
whether or not such Section 8(e) is applicable.
(b) Cause or By Executive Without Good Reason. If Executives
employment is terminated by the Company for Cause or by Executive (other
than for Good Reason):
(i) the Company shall pay Executive his Base Salary,
Bonus and his accrued vacation pay through the Date of Termination, as
soon as practicable following the Date of Termination; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company.
(c) Disability. During any period that Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness (Disability Period), Executive shall continue to receive his full Base
Salary set forth in Section 5(a) until his employment is terminated pursuant to
Section 6(b). In the event Executives employment is terminated for Disability
pursuant to Section 6(b):
(i) the Company shall pay to Executive (A) his Base
Salary, Bonus and accrued vacation pay through the Date of Termination,
as soon as practicable following the Date of Termination, and (B)
continued Base Salary (as provided for in Section 5(a)) and Continued
Benefits for seven (7) years; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company; and
(iv) Executive shall be paid the amount of
compensation or contributions (as the case may be) by the Company that
Executive would have been entitled to receive (assuming he would have
received the maximum amount payable or contributable under each plan or
arrangement for any year) under any plan or arrangement he was then
participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(d) Death. If Executives employment is terminated by his
death:
(i) the Company shall pay in a lump sum to
Executives beneficiary, legal representatives or estate, as the case
may be, Executives Base Salary, Bonus and accrued vacation pay through
the Date of Termination and $1,000,000 (which may be paid through
insurance) and shall provide Executives spouse and dependents with
Continued Benefits for seven (7) year; and
(ii) the Company shall reimburse Executives
beneficiary, legal representatives, or estate, as the case may be,
pursuant to Section 5 for reasonable expenses incurred, but not paid
prior to such termination of employment; and
(iii) Executives beneficiary, legal representatives
or estate, as the case may be, shall be entitled to any other rights,
compensation and benefits as may be due to any such persons or estate
in accordance with the terms and provisions of any agreements, plans or
programs of the Company; and
(iv) Executives beneficiary, legal representatives
or estate, as the case may be shall be paid the amount of compensation
or contributions (as the case may be) by the Company that Executive
would have been entitled to receive (assuming he would have received
the maximum amount payable or contributable under each plan or
arrangement for any year) under any plan or arrangement he was then
participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(e) Additional Payments. (i) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any
payment, award, benefit or distribution (or any acceleration of any
payment, award, benefit or distribution) by the Company or any entity which
effectuates a Change in Control (or other change in ownership) to or for
the benefit of Executive (the Payments) would be subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the Excise Tax), then the Company shall pay to Executive
an additional payment (a Gross-Up Payment) in an amount such that after
payment by Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in Executives adjusted gross income and the highest
applicable marginal rate of federal income taxation for the calendar year
in which the Gross-Up Payment is to be made. For purposes of determining
the amount of the Gross-Up Payment, Executive shall be deemed to (A) pay
federal income taxes at the highest marginal rates of federal income taxes
at the highest marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, (B) pay applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes and (C) have otherwise allowable deductions for federal
income tax purposes at least equal to those which could be disallowed
because of the inclusion of the Gross-Up Payment in Executives adjusted
gross income.
(ii) Subject to the provisions of Section 8(e)(i), all
determinations required to be made under this Section 8(e), including
whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at
such determinations, shall be made by a nationally recognized public
accounting firm that is selected by Executive (the Accounting Firm)
which shall provide detailed supporting calculations both to the
Company and Executive within fifteen (15) business days of the receipt
of notice from the Company or Executive that there has been a Payment,
or such earlier time as is requested by the Company or Executive
(collectively, the Determination). All fees and expenses of the
Accounting Firm shall be borne solely by the Company and the Company
shall enter into any agreement requested by the Accounting Firm in
connection with the performance of the services hereunder. The
Gross-Up Payment under this Section 8(e) with respect to any Payments
made to Executive shall be made no later than thirty (30) days
following such Payment. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall furnish Executive with a
written opinion to such effect, and to the effect that failure to
report the Excise Tax, if any, on Executives applicable federal
income tax return should not result in the imposition of a negligence
or similar penalty.
(iii) As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is
possible that Gross-Up Payments which will not have been made by the
Company should have been made (Underpayment) or Gross-Up Payments
are made by the Company which should not have been made
(Overpayment), consistent with the calculations required to be made
hereunder. In the event that Executive thereafter is required to make
payment of any Excise Tax or additional Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
Company to or for the benefit of Executive. In the event the amount of
the Gross-Up Payment exceeds the amount necessary to reimburse
Executive for his Excise Tax, the Accounting Firm shall determine the
amount of the Overpayment that has been made and any such Overpayment
(together with interest at the rate provided in Section 1274(b)(2) of
the Code) shall be promptly paid by Executive (to the extent he has
received a refund if the applicable Excise Tax has been paid to the
Internal Revenue Service) to or for the benefit of the Company.
Executive shall cooperate, to the extent his expenses are reimbursed
by the Company, with any reasonable requests by the Company in
connection with any contest or disputes with the Internal Revenue
Service in connection with the Excise Tax.
9. Mitigation. Executive shall not be required to mitigate
amounts payable under this Agreement by seeking other employment or otherwise,
and there shall be no offset against amounts due Executive under this Agreement
on account of subsequent employment except as specifically provided herein.
Additionally, amounts owed to Executive under this Agreement shall not be offset
by any claims the Company may have against Executive and the Companys
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder, shall not be affected by any other
circumstances, including, without limitation, any counterclaim, recoupment,
defense or other right which the Company may have against Executive or others.
10. Restrictive Covenants.
(a) Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the Company
and its businesses and investments, which shall have been obtained by
Executive during Executives employment by the Company and which is
not generally available public knowledge (other than by acts by
Executive in violation of this Agreement). Except as may be required
or appropriate in connection with his carrying out his duties under
this Agreement, Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or any legal
process, or as is necessary in connection with any adversarial
proceeding against the Company (in which case Executive shall use his
reasonable best efforts in cooperating with the Company in obtaining a
protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets,
information, knowledge or data to anyone other than the Company and
those designated by the Company or on behalf of the Company in the
furtherance of its business or to perform duties hereunder.
(b) Non-Solicitation.Executive hereby agrees, in consideration of
his employment hereunder and in view of the confidential position to
be held by Executive hereunder, that after his termination of
employment in which he is entitled to the benefits set forth in
Section 8(a) hereof and through the second anniversary thereof,
Executive shall not directly or indirectly induce any employee of the
Company to terminate such employment or to become employed by any
other radio broadcasting station.
(c) Non-Competition. Executive hereby agrees, in consideration of
his employment hereunder and in view of the confidential position to
be held by Executive hereunder, that after his termination of
employment in which he is entitled to the benefits set forth in
Section 8(a) hereof and through the second anniversary thereof, he
shall not be employed by or perform activities on behalf of, or have
an ownership interest in, any person, firm, corporation or other
entity, or in connection with any business enterprise, that is
directly or indirectly engaged in any of the radio, television, or
related business activities in which the Company and its subsidiaries
have significant involvement (other than direct or beneficial
ownership of up to five percent (5%) of any entity whether or not in
the same or competing business.
(e) Blue Pencil. The parties hereby acknowledge that the
restrictions in this Section 10 have been specifically negotiated and
agreed to by the parties hereto and are limited only to those
restrictions necessary to protect the Company and its subsidiaries
from unfair competition. The parties hereby agree that if the scope or
enforceability of any provision, paragraph or subparagraph of this
Section 10 is in any way disputed at any time, and should a court find
that such restrictions are overly broad, the court may modify and
enforce the covenant to the extent that it believes to be reasonable
under the circumstances. Each provision, paragraph and subparagraph of
this Section 10 is separable from every other provision, paragraph,
and subparagraph and constitutes a separate and distinct covenant.
Executive acknowledges that the Company operates in major, medium and
small sized markets throughout the United States and North America and
that the effect of Section 10(c) may be to prevent him from working in
a competitive business after his termination of employment hereunder.
(f) Remedies. Executive hereby expressly acknowledges that any
breach or threatened breach by Executive of any of the terms set forth
in Section 10 of this Agreement may result in significant and
continuing injury to the Company, the monetary value of which would be
impossible to establish. Therefore, Executive agrees that the Company
shall be entitled to apply for injunctive relief in a court of
appropriate jurisdiction.
11. Indemnification.
(a) General. The Company agrees that if Executive is made a party
or a threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a
Proceeding), by reason of the fact that Executive is or was a
trustee, director or officer of the Company or any subsidiary of the
Company or is or was serving at the request of the Company or any
subsidiary as a trustee, director, officer, member, employee or agent
of another corporation or a partnership, joint venture, trust or other
enterprise, including, without limitation, service with respect to
employee benefit plans, whether or not the basis of such Proceeding is
alleged action in an official capacity as a trustee, director,
officer, member, employee or agent while serving as a trustee,
director, officer, member, employee or agent, Executive shall be
indemnified and held harmless by the Company to the fullest extent
authorized by Texas law, as the same exists or may hereafter be
amended, against all Expenses incurred or suffered by Executive in
connection therewith, and such indemnification shall continue as to
Executive even if Executive has ceased to be an officer, director,
trustee or agent, or is no longer employed by the Company and shall
inure to the benefit of his heirs, executors and administrators.
(b) Expenses. As used in this Agreement, the term Expenses
shall include, without limitation, damages, losses, judgments,
liabilities, fines, penalties, excise taxes, settlements, and costs,
attorneys fees, accountants fees, and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.
(c) Enforcement. If a claim or request under this Agreement is
not paid by the Company or on its behalf, within thirty (30) days
after a written claim or request has been received by the Company,
Executive may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim or request and if successful in
whole or in part, Executive shall be entitled to be paid also the
expenses of prosecuting such suit. All obligations for indemnification
hereunder shall be subject to, and paid in accordance with, applicable
Texas law.
(d) Partial Indemnification. If Executive is entitled under any
provision of this Agreement to indemnification by the Company for some
or a portion of any Expenses, but not, however, for the total amount
thereof, the Company, shall nevertheless indemnify Executive for the
portion of such Expenses to which Executive is entitled.
(e) Advances of Expenses. Expenses incurred by Executive in
connection with any Proceeding shall be paid by the Company in advance
upon request of Executive that the Company pay such Expenses; but,
only in the event that Executive shall have delivered in writing to
the Company (i) an undertaking to reimburse the Company for Expenses
with respect to which Executive is not entitled to indemnification and
(ii) an affirmation of his good faith belief that the standard of
conduct necessary for indemnification by the Company has been met.
(f) Notice of Claim. Executive shall give to the Company notice
of any claim made against him for which indemnification will or could
be sought under this Agreement. In addition, Executive shall give the
Company such information and cooperation as it may reasonably require
and as shall be within Executives power and at such times and places
as are convenient for Executive.
(g) Defense of Claim. With respect to any Proceeding as to which
Executive notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at its
own expense; and
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company will be entitled to assume the
defense thereof, with counsel reasonably satisfactory to Executive,
which in the Companys sole discretion may be regular counsel to the
Company and may be counsel to other officers and directors of the
Company or any subsidiary. Executive also shall have the right to
employ his own counsel in such action, suit or proceeding if he
reasonably concludes that failure to do so would involve a conflict of
interest between the Company and Executive, and under such
circumstances the fees and expenses of such counsel shall be at the
expense of the Company.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle any action or claim in any manner which would impose
any penalty or limitation on Executive without Executives written
consent. Neither the Company nor Executive will unreasonably withhold
or delay their consent to any proposed settlement.
(h) Non-exclusivity. The right to indemnification and the payment
of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any
other right which Executive may have or hereafter may acquire under
any statute, provision of the declaration of trust or certificate of
incorporation or by-laws of the Company or any subsidiary, agreement,
vote of shareholders or disinterested directors or trustees or
otherwise.
12. Arbitration. Except as provided for in Section 10 of this
Agreement, if any contest or dispute arises between the parties with respect to
this Agreement, such contest or dispute shall be submitted to binding
arbitration for resolution in San Antonio, Texas in accordance with the rules
and procedures of the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect. The decision of the arbitrator shall be
final and binding on both parties, and any court of competent jurisdiction may
enter judgment upon the award. The Company shall pay all expenses relating to
such arbitration, including, but not limited to, Executives legal fees and
expenses, regardless of outcome.
13. Successors; Binding Agreement.
(a) Companys Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, Company shall mean the Company as herein before defined and any
successor to its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the agreement provided for in this Section 13 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) Executives Successors. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon Executives death, this
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executives beneficiary or beneficiaries, personal or
legal representatives, or estate, to the extent any such person succeeds to
Executives interests under this Agreement. Executive shall be entitled to
select and change a beneficiary or beneficiaries to receive any benefit or
compensation payable hereunder following Executives death by giving the Company
written notice thereof. In the event of Executives death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or
other legal representative(s). If Executive should die following his Date of
Termination while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to such person or persons so
appointed in writing by Executive, or otherwise to his legal representatives or
estate.
14. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Mark Mays
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
If to the Company:
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Chief Executive Officer
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas
Attention: Michael Dillard
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is agreed to
in writing signed by Executive and by a duly authorized officer of the Company,
and such waiver is set forth in writing and signed by the party to be charged.
No waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive Executives termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas without regard to its conflicts of law
principles.
16. Validity. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
17. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
18.Entire Agreement. Except as other provided herein, this Agreement sets forth
the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in
respect of such subject matter. Except as other provided herein, any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
20. Withholding. All payments hereunder shall be subject to any required
withholding of Federal, state and local taxes pursuant to any applicable law or
regulation.
21. Noncontravention. The Company represents that the Company is not prevented
from entering into, or performing this Agreement by the terms of any law, order,
rule or regulation, its by-laws or declaration of trust, or any agreement to
which it is a party, other than which would not have a material adverse effect
on the Companys ability to enter into or perform this Agreement.
22. Section Headings. The section headings in this Employment Agreement are for
convenience of reference only, and they form no part of this Agreement and shall
not affect its interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/Randall Mays
Name: Randall Mays
Title: Vice President
/s/Mark Mays
Mark Mays
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1999, by and between Clear Channel
Communications, Inc., a Texas corporation (the
Company), and Randall Mays (Executive).
IN CONSIDERATION of the premises and the mutual covenants set forth below,
the parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue to employ Executive as
the Executive Vice President and Chief Financial Officer of the Company, and
Executive hereby accepts such continued employment, on the terms and conditions
hereinafter set forth.
2. Term. The period of employment of Executive by the Company under this
Agreement (the Employment Period) shall commence on October 1, 1999 (the
Commencement Date) and shall continue through the seventh anniversary thereof;
provided, that, the Employment Period shall automatically be extended for one
(1) additional day each day during the Employment Period unless either party
gives written notice not to extend this Agreement. The Employment Period may be
sooner terminated by either party in accordance with Section 6 of this
Agreement.
3. Position and Duties. During the Employment Period, Executive shall serve
as Executive Vice President and Chief Financial Officer of the Company, and
shall report solely and directly to the Companys Chairman and Chief Executive
Officer and Board of Directors of the Company (the Board). Executive shall
have those powers and duties normally associated with the position of Executive
Vice President and Chief Financial Officer of entities comparable to the Company
and such other powers and duties as may be prescribed by the Board; provided
that, such other powers and duties are consistent with Executives position as
Executive Vice President and Chief Financial Officer of the Company. Executive
shall devote as much of his working time, attention and energies during normal
business hours (other than absences due to illness or vacation) to
satisfactorily perform his duties for the Company. Notwithstanding the above,
Executive shall be permitted, to the extent such activities do not substantially
interfere with the performance by Executive of his duties and responsibilities
hereunder to (i) manage Executives personal, financial and legal affairs, (ii)
to serve on civic or charitable boards or committees (it being expressly
understood and agreed that Executives continuing to serve on any such board
and/or committees on which Executive is serving, or with which Executive is
otherwise associated, as of the Commencement Date shall be deemed not to
interfere with the performance by Executive of his duties and responsibilities
under this Agreement) and (iii) deliver lectures or fulfill speaking
engagements. During the Employment Period, Executive shall also serve as a
director of the Company. If L. Lowry Mays ceases to serve as Chairman and Chief
Executive Officer of the Company at any time during the Employment Period by
reason of his death or incapacity, it is the intention of the Board, that either
Mark Mays or Randall Mays shall be appointed as the Chairman and Chief Executive
Officer of the Company and the Board, subject only to its fiduciary duties to
the Company and its stockholders and applicable law, shall take all action
necessary to carry out such intention.
4. Place of Performance. The principal place of employment of Executive
shall be at the Companys principal executive offices in San Antonio, Texas.
5. Compensation and Related Matters.
(a) Base Salary and Bonus. During the Employment Period, the Company shall
pay Executive a base salary at the rate of not less than $325,000 per year
(Base Salary). Executives Base Salary shall be paid in approximately equal
installments in accordance with the Companys customary payroll practices. The
Compensation Committee of the Board (the Committee) shall review Executives
Base Salary for increase (but not decrease) no less frequently than annually and
consistent with the compensation practices and guidelines of the Company. If
Executives Base Salary is increased by the Company, such increased Base Salary
shall then constitute the Base Salary for all purposes of this Agreement. In
addition to Base Salary, Executive shall be paid an annual bonus (the Bonus)
as provided for under the annual incentive plan maintained by the Company and/or
as the Committee so determines.
(b) Expenses. The Company shall promptly reimburse Executive for all
reasonable business expenses upon the presentation of reasonably itemized
statements of such expenses in accordance with the Companys policies and
procedures now in force or as such policies and procedures may be modified with
respect to all senior executive officers of the Company. In addition, during the
Employment Period, Executive shall be entitled to, at the sole expense of the
Company, the use of an automobile appropriate to his position and no less
favorable than the automobile provided immediately prior to the date of this
Agreement.
(c) Vacation. Executive shall be entitled to the number of weeks of paid
vacation per year that he was eligible for immediately prior to the date of this
Agreement, but in no event less than four (4) weeks annually. Unused vacation
may be carried forward from year to year. In addition to vacation, Executive
shall be entitled to the number of sick days and personal days per year that
other senior executive officers of the Company with similar tenor are entitled
under the Companys policies.
(d) Services Furnished. During the Employment Period, the Company shall
furnish Executive, with office space, stenographic and secretarial assistance
and such other facilities and services no less favorable than those that he was
receiving immediately prior to the date of this Agreement or, if better, as
provided to other senior executive officers of the Company (other than the
Chairman and Chief Executive Officer).
(e) Welfare, Pension and Incentive Benefit Plans. During the Employment
Period, Executive (and his spouse and dependents to the extent provided therein)
shall be entitled to participate in and be covered under all the welfare benefit
plans or programs maintained by the Company from time to time for the benefit of
its senior executives (other than benefits maintained exclusively for the
Chairman and Chief Executive Officer) including, without limitation, all
medical, hospitalization, dental, disability, accidental death and dismemberment
and travel accident insurance plans and programs. The Company shall at all times
provide to Executive (and his spouse and dependents to the extent provided under
the applicable plans or programs) (subject to modifications affecting all senior
executive officers) the same type and levels of participation and benefits as
are being provided to other senior executives (and their spouses and dependents
to the extent provided under the applicable plans or programs) (other than
benefits maintained exclusively for the Chairman and Chief Executive Officer) on
the Commencement Date. In addition, during the Employment Period, Executive
shall be eligible to participate in all pension, retirement, savings and other
employee benefit plans and programs maintained from time to time by the Company
for the benefit of its senior executives.
(f) Stock Options.
(i) During each calendar year of the Employment Period occurring after
December 31, 1999, the Committee shall cause the Company to grant Executive a
stock option to acquire at least 50,000 shares of the Companys common stock
(each, an Option and collectively the Options) at such time(s) as the
Company has historically granted stock options to its senior executive officers
during the year; provided, that, such grants shall be made by at least December
31 of each calendar year occurring after December 31, 1999. Notwithstanding the
foregoing, unless otherwise waived by Executive in his sole discretion,
Executive shall receive no less than the number of Options granted during any
prior year of employment. In addition, to the extent necessary to carry out the
intended terms of this paragraph (f)(i), such number of options shall be
adjusted as is necessary to take into account any change in the common stock of
the Company in a manner consistent with adjustments made to other option holders
of the Company.
(ii) All Options described in paragraph (i) above shall be granted subject
to the following terms and conditions: (A) except as provided below, the Options
shall be granted under and subject to the Companys stock option plan; (B) the
exercise price per share of each Option shall be equal to the last reported sale
price of the Companys common stock on the New York Stock Exchange (or such
other principal trading market for the Companys common stock) at the close of
the trading day immediately preceding the date as of which the grant is made;
(C) each Option shall be vested and exercisable as determined by the Committee;
(D) each Option shall be exercisable for the ten (10) year period following the
date of grant whether or not Executive is then employed; and (E) each Option
shall be evidenced by, and subject to, a stock option agreement whose terms and
conditions are consistent with the terms hereof.
6. Termination. Executives employment hereunder may be terminated during
the Employment Period under the following circumstances:
(a) Death. Executives employment hereunder shall terminate upon his death.
(b) Disability. If, as a result of Executives incapacity due to physical
or mental illness, Executive shall have been substantially unable to perform his
duties hereunder for an entire period of six (6) consecutive months, and within
thirty (30) days after written Notice of Termination is given after such six (6)
month period, Executive shall not have returned to the substantial performance
of his duties on a full-time basis, the Company shall have the right to
terminate Executives employment hereunder for Disability, and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.
(c) Cause. The Company shall have the right to terminate Executives
employment for Cause, and such termination in and of itself shall not be, nor
shall it be deemed to be, a breach of this Agreement. For purposes of this
Agreement, the Company shall have Cause to terminate Executives employment
upon Executives:
(i) final conviction of a felony involving moral turpitude; or
(ii) willful misconduct that is materially and demonstrably injurious
economically to the Company.
For purposes of this Section 6(c), no act, or failure to act, by Executive shall
be considered willful unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company or any
entity in control of, controlled by or under common control with the Company
(Affiliates) thereof. Cause shall not exist under paragraph (ii) unless and
until the Company has delivered to Executive a copy of a resolution duly adopted
by three-quarters of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after reasonable (but in no event less than
thirty (30) days) notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in paragraph
(ii) and specifying the particulars thereof in detail. This Section 6(c) shall
not prevent Executive from challenging in any arbitration or court of competent
jurisdiction the Boards determination that Cause exists or that Executive has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Boards determination.
(d) Good Reason. Executive may terminate his employment for Good Reason
anytime after Executive has actual knowledge of the occurrence, without the
written consent of Executive, of one of the following events:
(i) (A) any change in the duties or responsibilities (including reporting
responsibilities) of Executive that is inconsistent in any adverse respect with
Executives position(s), duties, responsibilities or status with the Company
immediately prior to such change (including any diminution of such duties or
responsibilities) or (B) an adverse change in Executives titles or offices
(including, membership on the Board) with the Company;
(ii) a reduction in Executives Base Salary or Bonus opportunity;
(iii) (A) any requirement that Executive travel on Company business to an
extent substantially greater than the travel obligations of Executive
immediately prior to the date of this Agreement or (B) the relocation of the
Companys principal executive offices or Executives own office location to a
location more than fifteen (15) miles from their location immediately prior to
the date hereof;
(iv) the failure of the Company or any Affiliate to continue in effect any
material employee benefit plan, compensation plan, welfare benefit plan or
fringe benefit plan in which Executive is participating immediately prior to the
date of this Agreement or the taking of any action by the Company or any
Affiliate which would adversely affect Executives participation in or reduce
Executives benefits under any such plan, unless Executive is permitted to
participate in other plans providing Executive with substantially equivalent
benefits;
(v) any refusal by the Company or any Affiliate to continue to permit
Executive to engage in activities not directly related to the business of the
Company which Executive was permitted to engage in prior to the date of this
Agreement;
(vi) any purported termination of Executives employment for Cause which is
not effected pursuant to the procedures of Section 6(c) (and for purposes of
this Agreement, no such purported termination shall be effective);
(vii) the Companys or any Affiliates failure to provide in all material
respects the indemnification set forth in Section 11 of this Agreement;
(viii) a Change in Control of the Company; provided, that, the transaction
contemplated by the Company and AMFM, Inc. shall not be deemed to be a Change in
Control for purposes of this clause (viii);
(ix) the failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 13(a);
(x) the Company or any Affiliate providing Executive the notice not to
renew the Employment Period as contemplated by Section 2 hereof;
(xi) any time that neither L. Lowry Mays, Mark Mays nor Randall Mays is the
Chairman and Chief Executive Officer of the Company;
(xii) any other breach of a material provision of this Agreement by the
Company or any Affiliate.
For purposes of clauses (i) through (vii) and (xii) above, an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company within ten (10) days after receipt of notice thereof given by
Executive shall not constitute Good Reason. Executives right to terminate
employment for Good Reason shall not be affected by Executives incapacity due
to mental or physical illness and Executives continued employment shall not
constitute consent to, or a waiver of rights with respect to, any event or
condition constituting Good Reason.
(e) Without Cause. The Company shall have the right to terminate
Executives employment hereunder without Cause by providing Executive with a
Notice of Termination at least thirty (30) days prior to such termination, and
such termination shall not in and of itself be, nor shall it be deemed to be, a
breach of this Agreement. Notwithstanding any other provision of this Agreement
to the contrary, in the event that Executives employment is terminated by the
Company without Cause within six (6) months prior to the date that, or on or one
(1) year after the date that, L. Lowry Mays or Mark Mays is no longer the
Chairman and Chief Executive Officer of the Company for any reason, then
Executive shall automatically be deemed to have terminated his employment for
Good Reason under Section 6(d)(xi) and the Severance Multiple (as defined below)
shall be fourteen (14) and the Company shall make all of the payments due under
Section 8(a) of this Agreement to Executive, off-set only by amounts, if any,
already paid under Section 8(a).
(f) Without Good Reason. Executive shall have the right to terminate his
employment hereunder without Good Reason by providing the Company with a Notice
of Termination at least thirty (30) days prior to such termination, and such
termination shall not in and of itself be, nor shall it be deemed to be, a
breach of this Agreement.
For purposes of this Agreement, a Change in Control of the Company means
the occurrence of one of the following events:
(1) individuals who, on the Commencement Date, constitute the Board (the
Incumbent Directors) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to the
Commencement Date whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Director;
(2) any person (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the Exchange Act) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the Commencement
Date, a beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Companys then outstanding securities eligible
to vote for the election of the Board (the Company Voting Securities);
provided, however, that an event described in this paragraph (2) shall not be
deemed to be a Change in Control if any of following becomes such a beneficial
owner: (A) the Company or any majority-owned subsidiary (provided, that this
exclusion applies solely to the ownership levels of the Company or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee benefit
plan sponsored or maintained by the Company or any majority-owned subsidiary,
(C) any underwriter temporarily holding securities pursuant to an offering of
such securities, (D) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (3)), or (E) Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of persons
including Executive).
(3) the approval by the shareholders of the Company of a merger,
consolidation, share exchange or similar form of transaction involving the
Company or any of its subsidiaries, or the sale of all or substantially all of
the Companys assets (a Business Transaction), unless immediately following
such Business Transaction (i) more than 65% of the total voting power of the
entity resulting from such Business Transaction or the entity acquiring the
Companys assets in such Business Transaction (the Surviving Corporation) is
beneficially owned, directly or indirectly, by the Companys shareholders
immediately prior to any such Business Transaction, and (ii) no person (other
than the persons set forth in clauses (A), (B), or (C) of paragraph (2) above or
any tax-qualified, broad-based employee benefit plan of the Surviving
Corporation or its Affiliates) beneficially owns, directly or indirectly, 20% or
more of the total voting power of the Surviving Corporation (a Non-Qualifying
Transaction); or
(4) Board approval of a liquidation or dissolution of the Company, unless
the voting common equity interests of an ongoing entity (other than a
liquidating trust) are beneficially owned, directly or indirectly, by the
Companys shareholders in substantially the same proportions as such
shareholders owned the Companys outstanding voting common equity interests
immediately prior to such liquidation and such ongoing entity assumes all
existing obligations of the Company to Executive under this Agreement.
7. Termination Procedure.
(a) Notice of Termination. Any termination of Executives employment by the
Company or by Executive during the Employment Period (other than termination
pursuant to Section 6(a)) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14. For purposes of this
Agreement, a Notice of Termination shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executives employment under the provision so
indicated.
(b) Date of Termination. Date of Termination shall mean (i) if
Executives employment is terminated by his death, the date of his death, (ii)
if Executives employment is terminated pursuant to Section 6(b), thirty (30)
days after Notice of Termination (provided that Executive shall not have
returned to the substantial performance of his duties on a full-time basis
during such thirty (30) day period), and (iii) if Executives employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
8. Compensation Upon Termination or During Disability. In the event
Executive is disabled or his employment terminates during the Employment Period,
the Company shall provide Executive with the payments and benefits set forth
below. Executive acknowledges and agrees that the payments set forth in this
Section 8 constitute liquidated damages for termination of his employment during
the Employment Period.
(a) Termination By Company without Cause or By Executive for Good Reason.
If Executives employment is terminated by the Company without Cause or by
Executive for Good Reason:
(i) within five (5) days following such termination, the Company shall pay
to Executive (A) his Base Salary, Bonus and accrued vacation pay through the
Date of Termination, as soon as practicable following the Date of Termination,
and (B) a lump-sum cash payment equal to seven (7) times (the Severance
Multiple) the sum of Executives Base Salary and highest Bonus paid to
Executive in the three year period preceding such termination (including, for
this purpose, any and all bonuses paid to Executive prior to the date of this
Agreement); provided, that, for purposes of this Section 8(a)(i), Executives
Bonus shall be deemed to be no less than $1,000,000; provided, further, that, if
Executive terminates his employment for the Good Reason event (whether or not in
conjunction with any other Good Reason event) set forth in Section 6(d)(xi) (or
is deemed to have terminated his employment under Section 6(d)(xi) in accordance
with Section 6(e) of this Agreement), the Severance Multiple shall be equal to
fourteen (14); and
(ii) the Company shall maintain in full force and effect, for the continued
benefit of Executive, his spouse and his dependents for a period of seven (7)
years following the Date of Termination the medical, hospitalization, dental,
and life insurance programs in which Executive, his spouse and his dependents
were participating immediately prior to the Date of Termination at the level in
effect and upon substantially the same terms and conditions (including without
limitation contributions required by Executive for such benefits) as existed
immediately prior to the Date of Termination; provided, that, if Executive, his
spouse or his dependents cannot continue to participate in the Company programs
providing such benefits, the Company shall arrange to provide Executive, his
spouse and his dependents with the economic equivalent of such benefits which
they otherwise would have been entitled to receive under such plans and programs
(Continued Benefits), provided, that, such Continued Benefits shall terminate
on the date or dates Executive receives equivalent coverage and benefits,
without waiting period or pre-existing condition limitations, under the plans
and programs of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage or benefit-by-benefit, basis); and
(iii) the Company shall reimburse Executive pursuant to Section 5 for
reasonable expenses incurred, but not paid prior to such termination of
employment; and
(iv) Executive shall be entitled to any other rights, compensation and/or
benefits as may be due to Executive in accordance with the terms and provisions
of any agreements, plans or programs of the Company; and
(v) As of the Date of Termination, Executive shall be granted a stock
option to acquire 1,000,000 shares of the Companys common stock (Termination
Option) under the following conditions, (A) except as provided below, the
Termination Option shall be granted under and subject to the Companys stock
option plan; (B) the exercise price per share of the Termination Option shall be
equal to the last reported sale price of the Companys common stock on the New
York Stock Exchange (or such other principal trading market for the Companys
common stock) at the close of the trading day immediately preceding the Date of
Termination; (C) the Termination Option shall be 100% vested and exercisable on
the date of grant; (D) the Termination Option shall be exercisable for the ten
(10) year period following the Date of Termination whether or not Executive is
still providing services to the Company; and (E) each Option shall be evidenced
by, and subject to, a stock option agreement whose terms and conditions are
consistent with the terms hereof; provided, that, if Executive terminates his
employment for the Good Reason event (whether or not in conjunction with any
other Good Reason event) set forth in Section 6(d)(xi) (or is deemed to have
terminated his employment under Section 6(d)(xi) in accordance with Section 6(e)
of this Agreement), the number of Termination Options Executive shall receive
shall be equal to 2,000,000. In addition, to the extent necessary to carry out
the intended terms of this paragraph (a)(v), such number of Termination Options
shall be adjusted as is necessary to take into account any change in the common
stock of the Company in a manner consistent with adjustments made to other
option holders of the Company. The Company shall take all action necessary such
that the shares of common stock issuable upon exercise of the Termination
Options (and all other shares of common stock held by Executive) are registered
on Form S-4 or Form S-8 (or any successor or other appropriate forms).
(vi) Notwithstanding the terms or conditions of any stock option, stock
appreciation right or similar agreements between the Company and Executive to
the contrary, and for purposes thereof, such agreements shall be deemed to be
amended in accordance with this Section 8(a)(vi) if need be as of the Date of
Termination and neither the Company, the Board nor the Committee shall take or
assert any position contrary to the foregoing, Executive shall vest, as of the
Date of Termination, in all rights under such agreements (i.e., stock options
that would otherwise vest after the Date of Termination) and thereafter shall be
permitted to exercise any and all such rights until the end of the term of such
awards (regardless of any termination of employment restrictions therein
contained) and restricted stock held by Executive shall become immediately
vested as of the Date of Termination; and
(vii) Executive shall be paid a lump sum payment equal to the amount of
compensation or contributions (as the case may be) by the Company that Executive
would have been entitled to receive (assuming he would have received the maximum
amount payable or contributable under each plan or arrangement for any year)
under any plan or arrangement he was then participating (or entitled to
participate in) for a seven (7) year period following the Date of Termination;
and
(viii) Any and all insurance benefits or policies for the benefit of
Executive shall become the sole property of Executive and, to the extent
applicable, all of the Companys rights therein (including repayment of
premiums) shall be forfeited by the Company and, to the extent not already made,
the Company shall make all contributions or payments required of such policies
for the year of termination; and
(ix) Any amount payable under this Section 8(a) shall also include an
additional cash payment which shall equal any and all federal, state and local
taxes due upon the provision of any such benefits or payments thereunder (other
than taxes due under the operation of Section 4999 of the Code which Section of
the Code is addressed in Section 8(e) hereof and, if applicable, shall work in
conjunction with this Section 8(a)(ix)), which shall be payable to Executive
within five (5) business days following his Date of Termination and such
additional payment shall be grossed-up for any additional taxes due thereon (and
any taxes thereon, etc.) in a manner consistent with the manner set forth in
Section 8(e) of this Agreement, whether or not such Section 8(e) is applicable.
(b) Cause or By Executive Without Good Reason. If Executives employment is
terminated by the Company for Cause or by Executive (other than for Good
Reason):
(i) the Company shall pay Executive his Base Salary, Bonus and his accrued
vacation pay through the Date of Termination, as soon as practicable following
the Date of Termination; and
(ii) the Company shall reimburse Executive pursuant to Section 5 for
reasonable expenses incurred, but not paid prior to such termination of
employment; and
(iii) Executive shall be entitled to any other rights, compensation and/or
benefits as may be due to Executive in accordance with the terms and provisions
of any agreements, plans or programs of the Company.
(c) Disability. During any period that Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
(Disability Period), Executive shall continue to receive his full Base Salary
set forth in Section 5(a) until his employment is terminated pursuant to Section
6(b). In the event Executives employment is terminated for Disability pursuant
to Section 6(b):
(i) the Company shall pay to Executive (A) his Base Salary, Bonus and
accrued vacation pay through the Date of Termination, as soon as practicable
following the Date of Termination, and (B) continued Base Salary (as provided
for in Section 5(a)) and Continued Benefits for seven (7) years; and
(ii) the Company shall reimburse Executive pursuant to Section 5 for
reasonable expenses incurred, but not paid prior to such termination of
employment; and
(iii) Executive shall be entitled to any other rights, compensation and/or
benefits as may be due to Executive in accordance with the terms and provisions
of any agreements, plans or programs of the Company; and
(iv) Executive shall be paid the amount of compensation or contributions
(as the case may be) by the Company that Executive would have been entitled to
receive (assuming he would have received the maximum amount payable or
contributable under each plan or arrangement for any year) under any plan or
arrangement he was then participating (or entitled to participate in) for a
seven (7) year period following the Date of Termination.
(d) Death. If Executives employment is terminated by his death:
(i) the Company shall pay in a lump sum to Executives beneficiary, legal
representatives or estate, as the case may be, Executives Base Salary, Bonus
and accrued vacation pay through the Date of Termination and $1,000,000 (which
may be paid through insurance) and shall provide Executives spouse and
dependents with Continued Benefits for seven (7) year; and
(ii) the Company shall reimburse Executives beneficiary, legal
representatives, or estate, as the case may be, pursuant to Section 5 for
reasonable expenses incurred, but not paid prior to such termination of
employment; and
(iii) Executives beneficiary, legal representatives or estate, as the case
may be, shall be entitled to any other rights, compensation and benefits as may
be due to any such persons or estate in accordance with the terms and provisions
of any agreements, plans or programs of the Company; and
(iv) Executives beneficiary, legal representatives or estate, as the case
may be shall be paid the amount of compensation or contributions (as the case
may be) by the Company that Executive would have been entitled to receive
(assuming he would have received the maximum amount payable or contributable
under each plan or arrangement for any year) under any plan or arrangement he
was then participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(e) Additional Payments. (i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company or any entity which effectuates a Change in Control
(or other change in ownership) to or for the benefit of Executive (the
Payments) would be subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the Excise Tax), then the Company
shall pay to Executive an additional payment (a Gross-Up Payment) in an amount
such that after payment by Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in Executives adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made. For purposes of determining the amount of the
Gross-Up Payment, Executive shall be deemed to (A) pay federal income taxes at
the highest marginal rates of federal income taxes at the highest marginal rate
of taxation for the calendar year in which the Gross-Up Payment is to be made,
(B) pay applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes and (C) have otherwise allowable
deductions for federal income tax purposes at least equal to those which could
be disallowed because of the inclusion of the Gross-Up Payment in Executives
adjusted gross income.
(ii) Subject to the provisions of Section 8(e)(i), all determinations
required to be made under this Section 8(e), including whether and when a
Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determinations, shall be made by
a nationally recognized public accounting firm that is selected by Executive
(the Accounting Firm) which shall provide detailed supporting calculations
both to the Company and Executive within fifteen (15) business days of the
receipt of notice from the Company or Executive that there has been a Payment,
or such earlier time as is requested by the Company or Executive (collectively,
the Determination). All fees and expenses of the Accounting Firm shall be
borne solely by the Company and the Company shall enter into any agreement
requested by the Accounting Firm in connection with the performance of the
services hereunder. The Gross-Up Payment under this Section 8(e) with respect to
any Payments made to Executive shall be made no later than thirty (30) days
following such Payment. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion to such
effect, and to the effect that failure to report the Excise Tax, if any, on
Executives applicable federal income tax return should not result in the
imposition of a negligence or similar penalty.
(iii) As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
(Underpayment) or Gross-Up Payments are made by the Company which should not
have been made (Overpayment), consistent with the calculations required to be
made hereunder. In the event that Executive thereafter is required to make
payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the
benefit of Executive. In the event the amount of the Gross-Up Payment exceeds
the amount necessary to reimburse Executive for his Excise Tax, the Accounting
Firm shall determine the amount of the Overpayment that has been made and any
such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Executive (to the extent he
has received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company. Executive shall
cooperate, to the extent his expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contest or disputes
with the Internal Revenue Service in connection with the Excise Tax.
9. Mitigation. Executive shall not be required to mitigate amounts payable
under this Agreement by seeking other employment or otherwise, and there shall
be no offset against amounts due Executive under this Agreement on account of
subsequent employment except as specifically provided herein. Additionally,
amounts owed to Executive under this Agreement shall not be offset by any claims
the Company may have against Executive and the Companys obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder, shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense or other right which the
Company may have against Executive or others.
10. Restrictive Covenants.
(a) Confidential Information. Executive shall hold in a fiduciary capacity
for the benefit of the Company all trade secrets and confidential information,
knowledge or data relating to the Company and its businesses and investments,
which shall have been obtained by Executive during Executives employment by the
Company and which is not generally available public knowledge (other than by
acts by Executive in violation of this Agreement). Except as may be required or
appropriate in connection with his carrying out his duties under this Agreement,
Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or any legal process, or as is necessary in
connection with any adversarial proceeding against the Company (in which case
Executive shall use his reasonable best efforts in cooperating with the Company
in obtaining a protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by the
Company or on behalf of the Company in the furtherance of its business or to
perform duties hereunder.
(b) Non-Solicitation.Executive hereby agrees, in consideration of his
employment hereunder and in view of the confidential position to be held by
Executive hereunder, that after his termination of employment in which he is
entitled to the benefits set forth in Section 8(a) hereof and through the second
anniversary thereof, Executive shall not directly or indirectly induce any
employee of the Company to terminate such employment or to become employed by
any other radio broadcasting station.
(c) Non-Competition. Executive hereby agrees, in consideration of his
employment hereunder and in view of the confidential position to be held by
Executive hereunder, that after his termination of employment in which he is
entitled to the benefits set forth in Section 8(a) hereof and through the second
anniversary thereof, he shall not be employed by or perform activities on behalf
of, or have an ownership interest in, any person, firm, corporation or other
entity, or in connection with any business enterprise, that is directly or
indirectly engaged in any of the radio, television, or related business
activities in which the Company and its subsidiaries have significant
involvement (other than direct or beneficial ownership of up to five percent
(5%) of any entity whether or not in the same or competing business.
(e) Blue Pencil. The parties hereby acknowledge that the restrictions in
this Section 10 have been specifically negotiated and agreed to by the parties
hereto and are limited only to those restrictions necessary to protect the
Company and its subsidiaries from unfair competition. The parties hereby agree
that if the scope or enforceability of any provision, paragraph or subparagraph
of this Section 10 is in any way disputed at any time, and should a court find
that such restrictions are overly broad, the court may modify and enforce the
covenant to the extent that it believes to be reasonable under the
circumstances. Each provision, paragraph and subparagraph of this Section 10 is
separable from every other provision, paragraph, and subparagraph and
constitutes a separate and distinct covenant. Executive acknowledges that the
Company operates in major, medium and small sized markets throughout the United
States and North America and that the effect of Section 10(c) may be to prevent
him from working in a competitive business after his termination of employment
hereunder.
(f) Remedies. Executive hereby expressly acknowledges that any breach or
threatened breach by Executive of any of the terms set forth in Section 10 of
this Agreement may result in significant and continuing injury to the Company,
the monetary value of which would be impossible to establish. Therefore,
Executive agrees that the Company shall be entitled to apply for injunctive
relief in a court of appropriate jurisdiction.
11. Indemnification.
(a) General. The Company agrees that if Executive is made a party or a
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a Proceeding), by reason of the
fact that Executive is or was a trustee, director or officer of the Company or
any subsidiary of the Company or is or was serving at the request of the Company
or any subsidiary as a trustee, director, officer, member, employee or agent of
another corporation or a partnership, joint venture, trust or other enterprise,
including, without limitation, service with respect to employee benefit plans,
whether or not the basis of such Proceeding is alleged action in an official
capacity as a trustee, director, officer, member, employee or agent while
serving as a trustee, director, officer, member, employee or agent, Executive
shall be indemnified and held harmless by the Company to the fullest extent
authorized by Texas law, as the same exists or may hereafter be amended, against
all Expenses incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if Executive has ceased to
be an officer, director, trustee or agent, or is no longer employed by the
Company and shall inure to the benefit of his heirs, executors and
administrators.
(b) Expenses. As used in this Agreement, the term Expenses shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements, and costs, attorneys fees, accountants fees, and
disbursements and costs of attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under this Agreement.
(c) Enforcement. If a claim or request under this Agreement is not paid by
the Company or on its behalf, within thirty (30) days after a written claim or
request has been received by the Company, Executive may at any time thereafter
bring suit against the Company to recover the unpaid amount of the claim or
request and if successful in whole or in part, Executive shall be entitled to be
paid also the expenses of prosecuting such suit. All obligations for
indemnification hereunder shall be subject to, and paid in accordance with,
applicable Texas law.
(d) Partial Indemnification. If Executive is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of any
Expenses, but not, however, for the total amount thereof, the Company, shall
nevertheless indemnify Executive for the portion of such Expenses to which
Executive is entitled.
(e) Advances of Expenses. Expenses incurred by Executive in connection with
any Proceeding shall be paid by the Company in advance upon request of Executive
that the Company pay such Expenses; but, only in the event that Executive shall
have delivered in writing to the Company (i) an undertaking to reimburse the
Company for Expenses with respect to which Executive is not entitled to
indemnification and (ii) an affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Company has been met.
(f) Notice of Claim. Executive shall give to the Company notice of any
claim made against him for which indemnification will or could be sought under
this Agreement. In addition, Executive shall give the Company such information
and cooperation as it may reasonably require and as shall be within Executives
power and at such times and places as are convenient for Executive.
(g) Defense of Claim. With respect to any Proceeding as to which Executive
notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at its own expense;
and
(ii) Except as otherwise provided below, to the extent that it may wish,
the Company will be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Executive, which in the Companys sole discretion may
be regular counsel to the Company and may be counsel to other officers and
directors of the Company or any subsidiary. Executive also shall have the right
to employ his own counsel in such action, suit or proceeding if he reasonably
concludes that failure to do so would involve a conflict of interest between the
Company and Executive, and under such circumstances the fees and expenses of
such counsel shall be at the expense of the Company.
(iii) The Company shall not be liable to indemnify Executive under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. The Company shall not settle any action or claim in
any manner which would impose any penalty or limitation on Executive without
Executives written consent. Neither the Company nor Executive will unreasonably
withhold or delay their consent to any proposed settlement.
(h) Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in this Section 11 shall not be exclusive of any other right which
Executive may have or hereafter may acquire under any statute, provision of the
declaration of trust or certificate of incorporation or by-laws of the Company
or any subsidiary, agreement, vote of shareholders or disinterested directors or
trustees or otherwise.
12. Arbitration. Except as provided for in Section 10 of this Agreement, if
any contest or dispute arises between the parties with respect to this
Agreement, such contest or dispute shall be submitted to binding arbitration for
resolution in San Antonio, Texas in accordance with the rules and procedures of
the Employment Dispute Resolution Rules of the American Arbitration Association
then in effect. The decision of the arbitrator shall be final and binding on
both parties, and any court of competent jurisdiction may enter judgment upon
the award. The Company shall pay all expenses relating to such arbitration,
including, but not limited to, Executives legal fees and expenses, regardless
of outcome.
13. Successors; Binding Agreement.
(a) Companys Successors. No rights or obligations of the Company under
this Agreement may be assigned or transferred except that the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
Company shall mean the Company as herein before defined and any successor to
its business and/or assets (by merger, purchase or otherwise) which executes and
delivers the agreement provided for in this Section 13 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) Executives Successors. No rights or obligations of Executive under
this Agreement may be assigned or transferred by Executive other than his rights
to payments or benefits hereunder, which may be transferred only by will or the
laws of descent and distribution. Upon Executives death, this Agreement and all
rights of Executive hereunder shall inure to the benefit of and be enforceable
by Executives beneficiary or beneficiaries, personal or legal representatives,
or estate, to the extent any such person succeeds to Executives interests under
this Agreement. Executive shall be entitled to select and change a beneficiary
or beneficiaries to receive any benefit or compensation payable hereunder
following Executives death by giving the Company written notice thereof. In the
event of Executives death or a judicial determination of his incompetence,
reference in this Agreement to Executive shall be deemed, where appropriate, to
refer to his beneficiary(ies), estate or other legal representative(s). If
Executive should die following his Date of Termination while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
unless otherwise provided herein shall be paid in accordance with the terms of
this Agreement to such person or persons so appointed in writing by Executive,
or otherwise to his legal representatives or estate.
14. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered either personally or by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive:
Randall Mays
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
If to the Company:
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: Chief Executive Officer
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas
Attention: Michael Dillard
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by Executive and by a duly authorized officer of the Company, and
such waiver is set forth in writing and signed by the party to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive Executives termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas without regard to its conflicts of law
principles.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Entire Agreement. Except as other provided herein, this Agreement sets
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in
respect of such subject matter. Except as other provided herein, any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
20. Withholding. All payments hereunder shall be subject to any required
withholding of Federal, state and local taxes pursuant to any applicable law or
regulation.
21. Noncontravention. The Company represents that the Company is not
prevented from entering into, or performing this Agreement by the terms of any
law, order, rule or regulation, its by-laws or declaration of trust, or any
agreement to which it is a party, other than which would not have a material
adverse effect on the Companys ability to enter into or perform this Agreement.
22. Section Headings. The section headings in this Employment Agreement are
for convenience of reference only, and they form no part of this Agreement and
shall not affect its interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/Mark Mays
Name: Mark Mays
Title: President
/s/Randall Mays
Randall Mays