Shareholder's Agreement - Clear Channel Communications Inc. and L. Lowry Mays
SHAREHOLDER'S AGREEMENT
This SHAREHOLDER'S AGREEMENT (this "AGREEMENT") is entered into this 10th
day of March, 2004 by and among CLEAR CHANNEL COMMUNICATIONS, INC., a Texas
corporation (the "COMPANY"), and L. LOWRY MAYS (the "SHAREHOLDER").
WITNESSETH:
WHEREAS, the Company, CCU Merger Sub, Inc., a Delaware corporation
("MERGER SUB"), and AMFM INC., a Delaware corporation ("AMFM"), entered into an
Agreement and Plan of Merger, dated October 2, 1999, pursuant to which the
parties thereto agreed, upon the terms and subject to the conditions set forth
therein, to merge the Merger Sub with and into AMFM (the "MERGER");
WHEREAS, the Merger was consummated on August 30, 2000;
WHEREAS, in connection with the Merger, the Company, the Shareholder and
certain other shareholders party thereto (the "HMTF SHAREHOLDERS") entered into
that certain Shareholders Agreement, dated October 2, 1999 (the "ORIGINAL
SHAREHOLDERS AGREEMENT");
WHEREAS, pursuant to Section 6.1 of the Original Shareholders Agreement,
the Original Shareholders Agreement is being terminated concurrently herewith;
and
WHEREAS, the Company and the Shareholder wish to provide for and
acknowledge certain arrangements and understandings respecting the share
ownership of the Shareholder and certain other matters by entering into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and the Shareholder hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
The following terms, as used in this Agreement, shall have the respective
meanings set forth in this Article 1:
"AFFILIATE" of any Person, means (i) another Person that, directly or
indirectly, through one or more intermediaries controls, is controlled by, or is
under common control with, such first Person; (ii) another Person whose assets
are attributable to such first Person pursuant to the attribution rules and
regulations of the Communications Act; or (iii) another Person who is a member
of a 13d Group with such first Person. Notwithstanding the foregoing, for
purposes of this Agreement, no HMTF Shareholder shall constitute an "Affiliate"
of the Shareholder, and the Shareholder shall not constitute an "Affiliate" of
any HMTF Shareholder.
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"BENEFICIAL OWNER" or "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" shall
have the meaning assigned to such term in Rule 13d-3 under the Exchange Act.
"BOARD" or "BOARD OF DIRECTORS" means the board of directors of the
Company, as constituted from time to time.
"BUSINESS COMBINATION TRANSACTION" shall mean (A) a (i) merger, (ii)
consolidation, (iii) "business combination" as defined in Part Thirteen of the
Texas Business Corporation Act as in effect on the date hereof, (iv) compulsory
share exchange, (v) recapitalization or (vi) a transaction in which the Company
or any successor or Subsidiary of the Company is a constituent corporation or to
which the Company or any successor or Subsidiary of the Company is a party or
(B) a sale of a substantial portion of the assets of the Company or any
successor, division or Subsidiary of the Company; provided, however, for
purposes of this Agreement, none of the foregoing shall constitute a "Business
Combination Transaction" if the beneficial ownership of the capital stock of the
Company or the surviving entity (following a merger in which the Company ceases
to exist) immediately after the consummation of the transaction is substantially
the same as the beneficial ownership of the capital stock of the Company
immediately prior to the transaction.
"BUY-SELL AGREEMENT" means that certain Buy-Sell Agreement, dated May 31,
1977, by and among the Company, L. Lowry Mays and B.J. McCombs.
"COMMON STOCK" means the common stock of the Company, par value $0.10 per
share.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended, and
any regulations promulgated thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, as in effect from time to time.
"GOVERNMENTAL ENTITY" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"INDEPENDENT DIRECTOR" means, with respect to a matter presented to the
Board of Directors for approval, any member of the Board of Directors who has
been determined to be "independent" as defined in the listing standards of the
New York Stock Exchange.
"PERSON" means any natural person, firm, individual, business trust,
trust, association, corporation, partnership, joint venture, company,
unincorporated entity or Governmental Entity.
"SUBSIDIARY" or "SUBSIDIARIES" of any Person means another Person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first Person.
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"13d GROUP" means a group within the meaning of Section 13(d)(3) of the
Exchange Act.
"VOTING POWER" means, with respect to Voting Securities, the maximum
number of votes that the holders of Voting Securities are entitled (at the time
of determination of Voting Power) to vote in the election of directors (except
to the extent such voting rights are contingent upon dividend arrearages or
similar circumstances).
"VOTING SECURITIES" means the Common Stock and any other securities of the
Company or its successors that are entitled by their terms to vote generally in
the election of directors of the Company or its successors and all options,
rights, warrants and other securities convertible into, or exercisable or
exchangeable for, any shares of the Common Stock or other securities possessing
such voting rights.
ARTICLE 2
SHAREHOLDER ACTIVITIES
Section 2.1 Certain Agreements of the Shareholder.
(a) General. The Shareholder covenants and agrees that from and
after the date hereof, except as specifically permitted or contemplated by this
Agreement or unless previously approved in writing by the Company upon the
approval of a majority of the Independent Directors, the Shareholder will not in
any manner, directly or indirectly acting alone or in concert with others:
(i) beneficially own or seek to beneficially own, directly or
indirectly, Voting Securities of the Company such that the aggregate beneficial
ownership of the Shareholder exceeds 20% of the total Voting Securities of the
Company outstanding at any time (such 20% limitation of the total Voting
Securities outstanding from time to time shall be referred to as the "PERCENTAGE
LIMITATION");
(ii) acquire or offer, agree, attempt, seek, propose or
announce an intention to acquire, directly or indirectly, by purchase or
otherwise, any Voting Securities (or any direct or indirect beneficial
ownership, rights, options or interests therein), if after the consummation of
such acquisition the Shareholder would have an aggregate beneficial ownership of
Voting Securities in excess of the Percentage Limitation;
(iii) acquire or offer, agree, attempt, seek, propose or
announce an intention to acquire, directly or indirectly, by purchase or
otherwise, any assets of the Company or any of its successors or Subsidiaries;
(iv) (A) solicit proxies or consents or become a "participant"
in a "solicitation" (as such terms are defined or used in Regulation 14A under
the Exchange Act) of proxies or consents with respect to securities of the
Company or any of its successors or Subsidiaries; (B) initiate any shareholder
proposal or "election contest" (as such term is defined or used in Rule 14a-11
under Exchange Act) with respect to the Company or any of its
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successors or Subsidiaries; or (C) directly or indirectly, advise, assist,
encourage, induce or act as a financing source for others to take any such
action;
(v) take any action for the purpose of (A) convening a meeting
of the shareholders of the Company or any of its successors or Subsidiaries; (B)
taking action by written consent of the shareholders of the Company or any of
its successors or Subsidiaries; or (C) directly or indirectly, advise, assist,
encourage, induce or act as a financing source for others to take such action;
(vi) except in connection with actions otherwise permitted by
this Agreement, make any public announcement or disclosure relating to (A) the
acquisition of Voting Securities that would result in the aggregate beneficial
ownership of Voting Securities of the Shareholder exceeding the Percentage
Limitation; (B) a proposal for a Business Combination Transaction; or (C) a
tender offer or exchange offer for Voting Securities;
(vii) except as permitted by Section 3.1, enter into or agree,
offer, commence, propose or seek to enter into, discuss or otherwise be involved
in or part of, directly or indirectly, any (A) tender offer or exchange offer
for Voting Securities or (B) any Business Combination Transaction;
(viii) request or solicit any Person or negotiate with any
Person to (A) make a tender offer or exchange offer for Voting Securities or (B)
make a Business Combination Transaction;
(ix) make any proposal for (A) any Business Combination
Transaction to the Company or its Board of Directors or (B) a tender offer or
exchange offer for Voting Securities;
(x) except in connection with bona fide estate planning
activities undertaken by a Shareholder who is an individual, deposit Voting
Securities into a voting trust or subject Voting Securities to voting agreements
or grant any proxy with respect to any Voting Securities to any person not
designated by the Company's Board of Directors, other than in connection with a
bona fide pledge of Voting Securities by a Shareholder who is an individual;
(xi) form, join or in any way participate in a 13d Group for
the purpose of taking any action restricted or prohibited under any clause of
this Subsection (a) of Section 2.1;
(xii) disclose publicly any intention, plan or arrangement
inconsistent with the foregoing or the other provisions of this Agreement
relating to any Voting Securities; or
(xiii) enter into any discussions, negotiations, arrangements
or understandings with any third party with a view to, or advise, aid, abet,
solicit, induce, encourage or finance in whole or in part, any action prohibited
by any clause of this Subsection (a) of Section 2.1 if such action were taken by
a Shareholder or which action would be prohibited by any clause of this
Subsection (a) of Section 2.1 if such third party were a Shareholder.
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(b) Suspension. The agreements contained in Subsection (a) of this
Section 2.1 shall not apply to prevent the parties to the Buy-Sell Agreement
from exercising any and all rights thereunder and shall not apply during the
pendency of a Business Combination Transaction approved by a majority of the
Independent Directors.
ARTICLE 3
RESTRICTIONS ON TRANSFER
Section 3.1 Transfer Restrictions Applicable to the Shareholder. The
parties hereto agree that from and after the date hereof the Shareholder may, at
any time, directly or indirectly, sell, transfer any beneficial interest in,
pledge, hypothecate or otherwise dispose, or offer or enter into any agreement
or understanding to sell, any Voting Securities; provided, however, the
Shareholder agrees that he may not sell Voting Securities to a Person, who after
consummation of such sale, will beneficially own, directly or indirectly, more
than 20% of the outstanding Voting Securities of the Company, except (a) upon
the prior consent of a majority of the Independent Directors specifically
expressed in a resolution; (b) in connection with a tender offer or exchange
offer, Business Combination Transaction, or a similar transaction recommended by
a majority of the Independent Directors; (c) in response to a tender offer or
exchange offer not approved by the Independent Directors if (X) no Shareholder,
directly or indirectly, initiated or commenced or advised, assisted, encouraged,
induced or acted as a financing source for others to commence such tender offer
or exchange offer; (Y) holders of no less than 51% (excluding the Voting
Securities beneficially owned by the Shareholder) of the total outstanding
Voting Securities (including the Voting Securities beneficially owned by the
Shareholder) subject to the tender offer or exchange offer have affirmatively
accepted such offer and deposited the Voting Securities in accordance with the
terms of the offer; and (Z) no Shareholder made any public or private disclosure
of its intention to participate in the tender offer or exchange offer prior to
acceptance by no less than 51% of the total outstanding Voting Securities as
described in (Y) above; or (d) in connection with a Business Combination
Transaction, whether or not recommended by a majority of the Independent
Directors, that occurred by operation of law, provided that the Shareholder was
otherwise in compliance with this Agreement.
Section 3.2 Voting Restrictions.
(a) Non-Class Voting. In connection with any matter in which a
Shareholder has voting rights related to Voting Securities not entitled to vote
separately as a class but that vote together with all other Voting Securities
not entitled to vote separately as a class on such matter, the number of votes
which such Shareholder shall be entitled to cast at its sole discretion with
respect to such matter shall not exceed one vote fewer than twenty percent (20%)
of the aggregate number of votes entitled to be cast thereon by all securities
of the Company entitled to vote on such matter, less the votes entitled to be
cast by any other Shareholder not entitled to vote separately as a class.
(b) Class Voting. In connection with any matter in which the
Shareholder has voting rights which are entitled to be counted separately as
part of a class of securities entitled to vote as a class on such matter, the
number of votes which the Shareholder shall be entitled to cast at his sole
discretion with respect to such matter shall not exceed one vote fewer than
twenty
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percent (20%) of the aggregate number of votes entitled to be cast thereon by
all securities of such class.
(c) Limitation. If the Shareholder would otherwise be entitled to
cast votes in excess of the number calculated pursuant to clauses (a) and (b)
above, then the balance of such votes shall be cast for, against or abstain in
respect of such matter in the same proportion as the votes cast for, against or
abstain by all other shareholders of the Company entitled to vote on the matter.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Shareholder.
(a) Binding Agreement. The Shareholder represents and warrants as
follows: (i) the Shareholder has the capacity to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and (ii) the
Shareholder has duly and validly executed and delivered this Agreement, and this
Agreement constitutes a legal, valid and binding obligation of the Shareholder,
enforceable against the Shareholder in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(b) No Conflict. The Shareholder represents and warrants that
neither the execution and delivery of this Agreement, nor the compliance with
any of the provisions hereof in each case by the Shareholder (i) requires any
consent, approval, authorization or permit of, registration, declaration or
filing with, or notification to, any Governmental Entity (except for filings
under the Exchange Act or Communications Act), (ii) results in a default (or an
event which, with notice or lapse of time or both, will result in a default) or
gives rise to any right of termination by any third party, cancellation,
amendment or acceleration under any material contract, agreement, instrument,
commitment, arrangement or understanding or results in the creation of a
security interest, lien, charge, encumbrance, equity or claim with respect to
any of the securities of the Company beneficially owned by the Shareholder,
(iii) requires any material consent, authorization or approval of any person
other than a Governmental Entity which has not been obtained, (iv) violates or
conflicts with any order, writ, injunction, decree or law applicable to the
Shareholder or the securities of the Company beneficially owned by the
Shareholder or (v) violates or conflicts with the organizational documents, if
any, of the Shareholder.
(c) Share Ownership. The Shareholder represents and warrants that
(i) except as set forth in Schedule 4.1, the Shareholder is the record owner of
the number of shares of Common Stock of the Company set forth on Schedule 4.1
(the "SHAREHOLDER SHARES"), free and clear of any restriction on the right to
vote the Shareholder Shares; (ii) the Shareholder holds exclusive power to vote
the Shareholder Shares, subject to the limitations set forth in that certain
Voting Agreement, dated October 2, 1999, by and between the Shareholder and the
Company; and (iii) the Shareholder Shares represent all of the shares of capital
stock of the Company owned of record by the Shareholder.
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ARTICLE 5
MISCELLANEOUS
Section 5.1 Termination. This Agreement shall terminate upon the earlier
to occur of the following: (i) August 30, 2005, (ii) the agreement of the
parties hereto to terminate this Agreement, or (iii) the date on which a person
or group (not including the Shareholder or his Affiliates) beneficially owns
more than 50% of the Voting Power, whether by way of tender or exchange offer or
otherwise.
Section 5.2 Survival. The representations and warranties herein contained
shall survive indefinitely following the termination of this Agreement, subject
to applicable statutes of limitation, if any; provided, however, that no
representations and warranties shall survive the termination of this Agreement
pursuant to Section 5.1(ii).
Section 5.3 Specific Enforcement. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur and it
would be extremely impracticable and difficult to measure damages. Accordingly,
in addition to any other rights and remedies to which the parties may be
entitled by law or equity, each party shall be entitled to seek specific
performance of the terms hereof. Further, the parties hereto expressly waive (a)
the defense that a remedy in damages will be adequate and (b) any requirement,
in an action for specific performance, for the posting of a bond.
Section 5.4 No Waiver. The parties hereby agree that no failure or delay
by a party to this Agreement, in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will a single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder.
Section 5.5 Governing Law. This Agreement shall be governed and construed
in all respects in accordance with the laws of the State of Texas (without
giving effect to the provisions thereof relating to conflicts of law). The
Company and the Shareholder hereby consent to personal jurisdiction in any
action brought with respect to this Agreement and the transactions contemplated
hereby in the United States District Court for the Western District of Texas
sitting in Bexar County, Texas.
Section 5.6 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of and be binding upon, the
successors, permitted assigns, heirs, executors and administrators of the
parties hereto.
Section 5.7 Entire Agreement; Amendment. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof, and no
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the
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party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
Section 5.8 Third Party Beneficiaries. The terms and provisions of this
Agreement are enforceable by only the parties hereto. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity (including persons or entities subject to similar agreements)
not a party to this Agreement.
Section 5.9 Interpretation. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 5.10 Notices. Unless otherwise provided, any notice, request,
demand or other communication required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified, or when sent by telex or telecopier (with receipt
confirmed), or one business day following deposit with overnight courier or
three business days following deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed as follows (or at
such other address as a party may designate by notice to the other):
If to the Company:
Clear Channel Communications, Inc.
200 East Basse Road
San Antonio, Texas 78209
Attention: Randall T. Mays
Telephone: (210) 822-2828
Facsimile: (210) 822-2299
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201-4675
Attention: Kenneth J. Menges, P.C.
Telephone: (214) 969-2800
Facsimile: (214) 969-4343
If to the Shareholder:
L. Lowry Mays
c/o Clear Channel Communications, Inc.
200 East Basse Road
San Antonio, Texas 78209
Telephone: (210) 822-2828
Facsimile: (210) 822-2299
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Section 5.11 Assignment. Without the prior written consent of the other
parties hereto, no party hereto may assign this Agreement or any of its rights
or obligations hereunder, in whole or in part, by operation of law or otherwise
except that the Company may, without the prior written consent of the other
parties, assign this Agreement upon a merger, consolidation, "business
combination" as defined in Part Thirteen of the Texas Business Corporation Act
as in effect on the date hereof, compulsory share exchange, recapitalization or
other similar transaction, provided that holders of the capital stock of the
Company or the surviving entity immediately prior to such transaction hold at
least a majority of the capital stock of the Company or the surviving entity
immediately after such transaction.
Section 5.12 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 5.13 Facsimile Signatures. Any signature page delivered by a fax
machine or telecopy machine shall be binding to the same extent as an original
signature page, with regard to any agreement subject to the terms hereof or any
amendment thereto. Any party who delivers such a signature page agrees to later
deliver an original counterpart to any party which requests it.
Section 5.14 Counterparts. This Agreement may be executed in counterpart,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
Section 5.15 Shareholder Capacity. No covenant or agreement of the
Shareholder contained herein is made by the Shareholder in his capacity as a
director or officer.
Section 5.16 No Recourse Against Others. No past, present or future
partner, director, officer, employee, member or stockholder of a Shareholder or
any of their respective partners, directors, officers, employees, members or
stockholders (unless such person has executed this Agreement) shall have any
liability for any obligations of the Shareholder under this Agreement for any
claim based on, in respect of or by reason of such obligations or their
creation.
[signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CLEAR CHANNEL COMMUNICATIONS, INC.,
A TEXAS CORPORATION
By: /s/ RANDALL T. MAYS
------------------------------
Name: Randall T. Mays
Title: Executive Vice President and
Chief Financial Officer
SHAREHOLDER:
/s/ L. LOWRY MAYS
---------------------------------
L. Lowry Mays
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SCHEDULE 4.1
Share Ownership
Shareholder Shares Owned Class
----------- ------------ -----
L. Lowry Mays 31,840,668(1) Common
----------
(1) Includes 2,395,000 shares subject to options held by Mr. Mays, 48,456
shares held by trusts of which Mr. Mays is the trustee, but not a beneficiary,
9,826,354 shares held by certain grantor retained annuity trusts of which Mr.
Mays is not the trustee, but is the beneficiary, 16,698,566 held by the LLM
Partners Ltd of which Mr. Mays is the general partner, and 174,123 shares held
by the Mays Family 2000 Charitable Lead Annuity Trust, over which Mr. Mays has
either sole or shared investment or voting authority.
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