Document:

exv10w21

Exhibit 10.21

Execution Version

BT Triple Crown Merger Co., Inc.

(to be merged with and into

Clear Channel Communications, Inc.)

$980,000,000

10.75% Senior Cash Pay Notes due 2016

$1,330,000,000

11.00%/11.75% Senior Toggle Notes due 2016

PURCHASE AGREEMENT

May 13, 2008

DEUTSCHE BANK SECURITIES INC.

MORGAN STANLEY & CO. INCORPORATED

CITIGROUP GLOBAL MARKETS INC.

CREDIT SUISSE SECURITIES (USA) LLC

GREENWICH CAPITAL MARKETS, INC.

WACHOVIA CAPITAL MARKETS, LLC

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, New York 10005

Ladies and Gentlemen:

          BT Triple Crown Merger Co., Inc., a Delaware corporation (“Merger Sub”), proposes to
sell to the several parties named in Schedule I hereto (each an “Initial Purchaser”
and together, the “Initial Purchasers”) $980,000,000 aggregate principal amount of its
10.75% senior cash pay notes due 2016 (the “Senior Cash Pay Notes”) and $1,330,000,000
aggregate principal amount of its 11.00%/11.75% senior toggle notes due 2016 (the “Senior
Toggle Notes” and, together with the Senior Cash Pay Notes, the “Notes”). The Notes
will be issued by Clear Channel Communications, Inc., a Texas corporation (the “Company”),
pursuant to an indenture (the “Indenture”), to be dated as of the Closing Date (as defined
below), containing the terms set forth in the “Description of Notes” attached as Exhibit A
hereto (and such other provisions substantially in the form of the Indenture, dated as of October
26, 2006, among West Corporation, the guarantors signatory thereto and The Bank of New York, the
Indenture, dated as of October 31, 2006, among Michaels Stores, Inc., the guarantors signatory
thereto and Wells Fargo Bank, National Association, or otherwise usual and customary in recent high
yield indentures for the sponsors of the portfolio companies under those indentures (the
“Sponsors”), in each case, as determined by

 

 

Merger Sub in its sole judgment), among the Company, Law Debenture Trust Company of New York,
as trustee (the “Trustee”), and Deutsche Bank Trust Company Americas, as paying agent and
registrar (“Paying Agent”), or such other Trustee and/or Paying Agent as may be selected by
the Company.

          The Notes will be initially guaranteed (the “Guarantees” and, together with the Notes,
the “Securities”) by each of the wholly-owned domestic subsidiaries of the Company which
are guarantors under the Senior Secured Credit Facilities (collectively, the “Guarantors”)
on an unsecured basis and will be subordinated only to the Guarantors’ guarantees under the Senior
Secured Credit Facilities. The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the “Act”), in
reliance on exemptions therefrom.

          The Securities are being issued and sold as part of the financing necessary to effect the
Transactions (as defined below), including the merger (the “Merger”) of Merger Sub with and
into the Company, with the Company as the surviving entity. The Merger will be effected pursuant
to an agreement and plan of merger (the “Merger Agreement”), dated as of November 16, 2006,
as amended on April 18, 2007, May 17, 2007 and the date hereof, among Merger Sub, B Triple Crown
Finco, LLC, a Delaware limited liability company, T Triple Crown Finco, LLC, a Delaware limited
liability company, CC Media Holdings, Inc. (formerly known as BT Triple Crown Capital Holdings III,
Inc.), a Delaware corporation, and the Company. For the purposes of this Agreement, the term
“Transactions” has the same meaning given to such term in the Senior Secured Credit Agreements.

          Substantially concurrently with the consummation of the Merger, the Company shall become party
to this Purchase Agreement (this “Agreement”) pursuant to a joinder agreement substantially
in the form of the joinder agreement attached as Annex A hereto (the “Joinder
Agreement”). The representations, warranties and agreements of the Company shall become
effective on and as of the Merger, and the representations, warranties and agreements of the
Guarantors shall become effective on and as of the execution by the Guarantors of a joinder to this
Agreement, substantially in the form of the Joinder Agreement (but if specified to be given as of a
prior specified date, shall be given as of such date). Certain other terms used herein are defined
in Section 16 hereof.

          1. Representations and Warranties. As of the date hereof, Merger Sub, the Company and
the Guarantors jointly and severally represent and warrant to each of the Initial Purchasers as
follows (in the case of any representation or warranty made by Merger Sub regarding the Company or
any Guarantor, any such representation or warranty shall be to the knowledge of Merger Sub, and in
the case of any representation or warranty made by the Company and the Guarantors regarding Merger
Sub, any such representation or warranty shall be to the knowledge of the Company and such
Guarantors; capitalized terms used in this Section 1 and not otherwise defined in this Agreement
shall have the meanings assigned thereto in the Senior Secured Credit Agreements):

     (a) Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 4 and their compliance with the agreements set forth

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therein, none of Merger Sub, the Company, any Guarantor, nor any of their respective
subsidiaries or their respective Affiliates, nor any person acting on their behalf, has,
directly or indirectly, made offers or sales of, or solicited offers to buy, any security
under circumstances that would require the registration of the Securities under the Act.

     (b) Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 4 and their compliance with the agreements set forth
therein, none of Merger Sub, the Company, any Guarantor, nor any of their respective
subsidiaries nor any of their respective Affiliates, nor any person acting on their behalf,
has: (i) engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of the Securities or (ii)
engaged in any directed selling efforts (within the meaning of Regulation S) with respect to
the Securities; and Merger Sub, the Company and the Guarantors and each of their respective
subsidiaries and each of their respective Affiliates and each person acting on their behalf
has complied with the offering restrictions requirement of Regulation S. Any sale of the
Securities by Merger Sub pursuant to Regulation S is not part of a plan or scheme to evade
the registration provisions of the Act.

     (c) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the
Act.

     (d) Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 4 and their compliance with the agreements set forth
therein, no registration of the Securities under the Act is required for the offer and sale
of the Securities to the Initial Purchasers or by the Initial Purchasers to the initial
purchasers therefrom, in each case in the manner contemplated herein, and it is not
necessary to qualify the Indenture under the Trust Indenture Act. The Indenture, as of the
Closing Date, will conform in all material respects to the requirements of the Trust
Indenture Act.

     (e) None of Merger Sub, the Company, any Guarantor or any of their respective
subsidiaries is or, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as contemplated by the Merger Agreement, will be an
“investment company” as defined in the Investment Company Act and the rules and regulations
promulgated thereunder.

     (f) None of Merger Sub, the Company, any Guarantor or any of their respective
subsidiaries has paid or agreed to pay to any person any compensation for soliciting another
to purchase any Securities (except as contemplated in this Agreement).

     (g) None of Merger Sub, the Company, any Guarantor nor any of their respective
subsidiaries or their respective Affiliates has taken or will take, directly or indirectly,
any action designed to or that has constituted or that would reasonably be expected to cause
or result, under the Exchange Act or otherwise, in stabilization or manipulation of the
price of any security of Merger Sub or the Company or any of their respective subsidiaries
to facilitate the sale or resale of the Securities.

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     (h) None of Merger Sub, the Company or any Guarantor is engaged nor will it engage
principally in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any issuance of Securities will be used for any
purpose that violates Regulation U.

          Any certificate signed by any officer of Merger Sub, the Company or the Guarantors and
delivered to the Initial Purchasers or counsel for the Initial Purchasers in connection with the
offering of the Securities and, when issued, the Guarantees shall be deemed a joint and several
representation and warranty by each of Merger Sub, the Company and the Guarantors as to matters
covered thereby, to each Initial Purchaser.

          2. Purchase and Sale. Merger Sub (subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth) agrees to issue and sell to each Initial
Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from Merger
Sub, at a purchase price of (A) 98.0% of the principal amount thereof, the principal amount of
Senior Cash Pay Notes set forth opposite such Initial Purchaser’s name in Schedule I hereto
and (B) 98.0% of the principal amount thereof, the principal amount of Senior Toggle Notes set
forth opposite such Initial Purchaser’s name in Schedule I hereto.

          3. Delivery and Payment. Delivery of and payment for the Securities shall be made at
the offices of Ropes & Gray LLP, 1211 Avenue of the Americas, New York, New York 10036, on the date
on which the conditions set forth in Section 6 of this Agreement are satisfied, which date and time
may be postponed by agreement between the Initial Purchasers and Merger Sub (such date and time of
delivery and payment for the Securities being herein called the “Closing Date”). Delivery
of the Senior Cash Pay Notes and the Senior Toggle Notes shall be made to the Initial Purchasers
for the respective accounts of the several Initial Purchasers against payment by the several
Initial Purchasers through the Initial Purchasers of the purchase price thereof in accordance with
the Settlement Agreement, or if the Settlement Agreement does not specify payment instructions for
the Senior Cash Pay Notes and Senior Toggle Notes, upon the order of Merger Sub or the Company.
Delivery of the Senior Cash Pay Notes and the Senior Toggle Notes shall be made through the
facilities of The Depository Trust Company unless the Initial Purchasers shall otherwise instruct.

          4. Offering by Initial Purchasers.

          (a) Each Initial Purchaser acknowledges that the Securities have not been and will not be
registered under the Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Act.

          (b) Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees
with Merger Sub and the Company that:

     (i) it has not offered or sold, and will not offer or sell, any Securities within the
United States or to, or for the account or benefit of, U.S. persons (x) as part of their

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     distribution at any time or (y) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date except:

          (A) to those persons whom it reasonably believes to be “qualified institutional
buyers” (as defined in Rule 144A under the Act) or if any such person is buying for
one or more institutional accounts for which such person is acting as a fiduciary or
agent, only when such person has represented to it that each such account is a
qualified institutional buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and, in each case, in transactions
in accordance with Rule 144A or

          (B) in accordance with Rule 903 of Regulation S;

     (ii) neither it nor any person acting on its behalf has made or will make offers or
sales of the Securities in the United States by means of any form of general solicitation or
general advertising (within the meaning of Regulation D) in the United States or in any
manner involving a public offering within the meaning of Section 4(2) of the Act;

     (iii) in connection with each sale pursuant to Section 4(b)(i)(A), it has taken or will
take reasonable steps to ensure that the purchaser of such Securities is aware that such
sale is being made in reliance on Rule 144A;

     (iv) neither it, nor any of its Affiliates nor any person acting on its or their behalf
has engaged or will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Securities;

     (v) it has not entered and will not enter into any contractual arrangement with any
distributor (within the meaning of Regulation S) with respect to the distribution of the
Securities, except with its Affiliates or with the prior written consent of Merger Sub;

     (vi) it and its Affiliates and any person acting on its behalf have complied and will
comply with the offering restrictions requirement of Regulation S;

     (vii) at or prior to the confirmation of sale of Securities sold in reliance of
Regulation S (other than a sale of Securities pursuant to Section 4(b)(i)(A) of this
Agreement), it shall have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it during the
distribution compliance period (within the meaning of Regulation S) a confirmation or notice
to substantially the following effect:

	 	 	 	“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Act”), and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
offering and the date of closing of the offering, except in either case in
accordance with 

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	 	 	 	Regulation S or Rule 144A under the Act. Terms used in this paragraph have the
meanings given to them by Regulation S”; and

     (viii) it is an institutional “accredited investor” (as defined in Rule 501(a) of
Regulation D).

          5. Agreements. Merger Sub and, after the Closing Date, the Company and the
Guarantors, jointly and severally agree, in each case, with each Initial Purchaser as follows:

     (a) Within five Business Days following the Closing Date, the Company and each of the
Guarantors will use commercially reasonable efforts to enter into a Registration Rights
Agreement with the Initial Purchasers substantially in the form attached hereto as
Exhibit B (the “Registration Rights Agreement”).

     (b) Within five Business Days following the Closing Date (unless otherwise agreed to by
each of the Guarantors, the Company and the Initial Purchasers), the Company and each of the
Guarantors will use commercially reasonable efforts to deliver opinions and advice letters,
as the case may be, of (i) Ropes & Gray LLP, counsel for Merger Sub, the Company and those
Guarantors organized or incorporated in the state of Delaware, California and Massachusetts,
substantially in the form of Exhibit C hereto, (ii) Texas counsel to the Company and
Guarantors, substantially in the form of Exhibit D hereto, (iii) Colorado counsel to
the Guarantors, substantially in the form of Exhibit E hereto, (iv) Florida and New
Jersey counsel to the Guarantors, substantially in the form of Exhibit F hereto, (v)
Nevada counsel to the Guarantors, substantially in the form of Exhibit G hereto,
(vi) Colorado counsel to the Guarantors, substantially in the form of Exhibit H
hereto, (vii) Washington counsel to the Guarantors, substantially in the form of Exhibit
I hereto, and (viii) special regulatory counsel to the Company, substantially in the
form of Exhibit J hereto and, in each case, with appropriate modifications to
reflect the structure and terms of the Transactions; provided that it is understood
by the parties that the drafts are subject to change should the Company or Merger Sub elect
to engage local or FCC counsel which differ from those set forth on Exhibit D
through J.

     (c) Within five Business Days following the Closing Date (unless otherwise agreed to by
each of the Guarantors and the Initial Purchasers), each of the Guarantors shall have
entered into the Joinder Agreement, and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.

     (d) Within five Business Days following the Closing Date (unless otherwise agreed to by
each of the Guarantors and the Initial Purchasers), each of the Guarantors shall have
entered into a supplemental indenture to the Indenture, and the Initial Purchasers shall
have received counterparts, conformed as executed, thereof.

     (e) During the period from the Closing Date until two years after the Closing Date, the
Company will not, and will not permit any of its Affiliates to, resell any Securities that
have been acquired by any of them except for Securities resold in a transaction registered
under the Act.

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     (f) Merger Sub and any person acting on its behalf will not, and up to the Closing
Date, Merger Sub will use its commercially reasonable efforts to cause the Company and the
Guarantors not to, make offers or sales of any security (as defined in the Act), or solicit
offers to buy any security, under circumstances that could be integrated with the sale of
the Securities in a manner that would reasonably be expected to require the registration of
the Securities under the Act.

     (g) Except in connection with the Exchange Offer (as defined in the Registration Rights
Agreement) or the Shelf Registration Statement (as defined in the Registration Rights
Agreement), Merger Sub, the Company, the Guarantors and any person acting on their behalf
will not engage in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of the Securities in the
United States.

     (h) So long as any of the Securities are “restricted securities” within the meaning of
Rule 144(a)(3) under the Act, Merger Sub, the Company, the Guarantors and their respective
subsidiaries will, unless they become subject to and comply with Section 13 or 15(d) of the
Exchange Act or file the periodic reports contemplated by such provisions pursuant to the
terms of the Indenture, provide to each holder of such restricted securities and to each
prospective purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Act (it being acknowledged and agreed that, prior to the first
date on which information is required to be provided under the Indenture, the information of
the type and scope contained in the Draft Offering Memorandum (as defined in Section 15
hereof) is sufficient for this purpose). This covenant is intended to be for the benefit of
the holders, and the prospective purchasers designated by such holders, from time to time of
such restricted securities.

     (i) Merger Sub, the Company, the Guarantors and any person acting on their behalf will
not engage in any directed selling efforts with respect to the Securities, and each of them
will comply with the offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.

     (j) Merger Sub and the Company will cooperate with the Initial Purchasers and use their
commercially reasonable efforts to (i) permit the Senior Cash Pay Notes and the Senior
Toggle Notes to be designated PORTAL Market securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the PORTAL Market and (ii) permit the
Senior Cash Pay Notes and the Senior Toggle Notes to be eligible for clearance and
settlement through The Depository Trust Company.

     (k) The Company (which is permitted to consummate its pending tender offer), its
Affiliates (apart from Clear Media Limited, which is permitted to issue equity and debt
securities, including conversion and puts of such securities, Clear Channel Outdoor
Holdings, Inc. and its subsidiaries, which are permitted to issue up to $400 million
aggregate principal amount of public debt, and AMFM Operating Inc., which is

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permitted to consummate its pending tender offer, and the Sponsors and their Affiliates
(other than the Company and its subsidiaries)) and the Guarantors will not, for a period of
90 days following the Closing Date, without the prior written consent of DBSI, offer, sell
or contract to sell, pledge or otherwise dispose of (or enter into any transaction that is
designed to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or otherwise) by
the Company, any of the Guarantors or any of their respective Affiliates (other than the
Sponsors and their Affiliates (other than the Company and its subsidiaries)) or any person
in privity with the Company, any of the Guarantors or any of their respective Affiliates),
directly or indirectly, or announce the offering of, any capital markets debt securities
issued or guaranteed by the Company or any of the Guarantors (other than the Securities and
the Guarantees).

     (l) If the Closing Date occurs, Merger Sub, the Company and the Guarantors, jointly and
severally, agree to pay the costs and expenses relating to the following matters: (i) the
fees of the Trustee (and its counsel); (ii) the preparation, printing or reproduction of any
customary offering memorandum (including the Offering Memorandum referred to in Section 15
hereof) and any amendment or supplement thereto; (iii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and packaging) of
such copies of any offering memorandum, and all amendments or supplements thereto, as may be
reasonably requested for use in connection with the offering and sale of the Securities;
(iv) any stamp or transfer taxes in connection with the original issuance and sale of the
Securities; (v) the printing (or reproduction) and delivery of any blue sky memorandum to
investors in connection with the offering of the Securities; (vi) any registration or
qualification of the Securities for offer and sale under the securities or blue sky laws of
the several states and any other jurisdictions specified pursuant to Section 5(e) (including
filing fees and the reasonable fees and expenses of counsel for the Initial Purchasers
relating to such registration and qualification); (vii) admitting the Securities for trading
in the PORTAL Market and the approval of the Securities for book-entry transfer by The
Depository Trust Company; (viii) the transportation and other expenses incurred by or on
behalf of representatives of Merger Sub in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Company’s accountants and
the fees and expenses of counsel (including local and special counsel) to Merger Sub and the
Company; (x) the rating of the Securities by rating agencies; and (xi) all other costs and
expenses incident to the performance by Merger Sub and the Company of their obligations
hereunder; provided, however, that except as specifically provided in this
paragraph (h), the Initial Purchasers shall pay their own costs and expenses in connection
with presentations for prospective purchasers of the Securities.

     (m) Merger Sub, the Company and the Guarantors acknowledge and agree that the Initial
Purchasers are acting solely in the capacity of an arm’s length contractual counterparty to
Merger Sub, the Company and the Guarantors with respect to the offering of Securities
contemplated hereby (including in connection with determining the terms of the offering) and
not as a financial advisor or a fiduciary to, or an agent of, Merger Sub, the Company, any
of the Guarantors or any other person. Additionally, no Initial

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Purchaser is advising Merger Sub, the Company, any of the Guarantors or any other
person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. Merger Sub, the Company and the Guarantors shall consult with their own
advisors concerning such matters and shall be responsible for making their own independent
investigation and appraisal of the transactions contemplated hereby, and the Initial
Purchasers shall have no responsibility or liability to Merger Sub, the Company or any of
the Guarantors with respect thereto. Any review by the Initial Purchasers of Merger Sub,
the Company and the Guarantors, the transactions contemplated hereby or other matters
relating to such transactions will be performed solely for the benefit of the Initial
Purchasers and shall not be on behalf of Merger Sub, the Company or any of the Guarantors.

          6. Conditions to the Obligations of the Initial Purchasers. The obligations of the
Initial Purchasers to purchase the Securities shall be subject to the following conditions:

     (a) At the Closing Date, the Company, the Trustee and the Paying Agent shall have
entered into the Indenture and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.

     (b) At the Closing Date, the Company shall have entered into the Joinder Agreement, and
the Initial Purchasers shall have received counterparts, conformed as executed, thereof.

     (c) Prior to or substantially simultaneously with the issuance of the Securities on the
Closing Date, the Merger shall be consummated pursuant to the Merger Agreement;
provided that none of the following provisions of the Merger Agreement shall have
been amended or waived in any respect materially adverse to the Initial Purchasers without
the prior written consent of the Initial Purchasers, not to be unreasonably withheld:
Sections 2.01, 2.03, 3.01, 6.01(c) (but only to the extent such amendment or waiver would
have been required if the reference therein to $100 million were replaced with $200
million), 6.01(e), 6.01(f) (but only to the extent such amendment or waiver would have been
required if Clear Media Limited and its subsidiaries were excluded from such provision),
6.01(g), 6.01(n), 6.01(r), 6.01(t) (to the extent relating to any of the foregoing),
6.13(b), 7.01 or 7.02 (except to the extent any condition set forth therein is not satisfied
solely as a result of a breach of any of the foregoing provisions of Article VI of the
Merger Agreement).

     (d) Prior to or substantially simultaneously with the issuance of the Securities on the
Closing Date, the Equity Contribution (as defined in the Senior Secured Credit Agreements)
shall have been consummated.

          The documents required to be delivered by this Section 6 will be available for inspection at
the office of Ropes & Gray LLP, at 1211 Avenue of the Americas, New York, New York 10036, on the
Business Day prior to the Closing Date.

          7. Indemnification and Contribution.

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          (a) Merger Sub, the Company and the Guarantors jointly and severally agree to indemnify and
hold harmless each Initial Purchaser, the directors, officers and Affiliates of each Initial
Purchaser and each person who controls any Initial Purchaser within the meaning of either the Act
or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the Act, the Exchange Act or other U.S.
federal or state statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any Offering
Memorandum (as defined in Section 15 hereof), Recorded Road Show, Issuer Written Communication or
any other written information used by or on behalf of the Company in connection with the offer or
sale of the Securities, or in any amendment or supplement thereto or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, and agree (subject to the limitations set forth in the provisos to this
sentence) to reimburse each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Merger Sub, the Company and
the Guarantors will not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made in any Offering Memorandum, Recorded Road Show, Issuer Written
Communication or in any amendment thereof or supplement thereto, in reliance upon and in conformity
with written information furnished to Merger Sub, the Company or the Guarantors by any Initial
Purchaser specifically for inclusion therein. This indemnity agreement will be in addition to any
liability that Merger Sub, the Company and the Guarantors may otherwise have. Merger Sub, the
Company and the Guarantors shall not be liable under this Section 7 to any indemnified party
regarding any settlement or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent is
consented to by Merger Sub, the Company or such Guarantor, as applicable, which consent shall not
be unreasonably withheld.

          (b) Each Initial Purchaser severally, and not jointly, agrees to indemnify and hold harmless
(i) as of the date hereof, Merger Sub, the Company and the Guarantors, (ii) each person, if any,
who controls (within the meaning of either the Act or the Exchange Act) Merger Sub, the Company or
any of the Guarantors, and (iii) the directors, officers, members, managers and partners, as the
case may be, of Merger Sub, the Company and the Guarantors, to the same extent as the foregoing
indemnity from Merger Sub, the Company and the Guarantors to each Initial Purchaser, but only with
reference to written information relating to such Initial Purchaser furnished to Merger Sub by such
Initial Purchaser in writing specifically for inclusion in any Offering Memorandum (or in any
amendment or supplement thereto) (it being understood and agreed that the such information includes
the third sentence of the third paragraph, the third sentence of the seventh paragraph and the
eight paragraph under the heading “Private Placement” in the Draft Offering Memorandum). This
indemnity agreement will be in addition to any liability that any Initial Purchaser may otherwise
have.

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          (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 7, notify the indemnifying party in writing
of the commencement thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights or defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above, except as provided in paragraph (d) below. The indemnifying party
shall be entitled to appoint counsel (including local counsel) of the indemnifying party’s choice
at the indemnifying party’s expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel, other than local counsel if not appointed by the
indemnifying party, retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel (including
local counsel) to represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would present such counsel with
a conflict of interest (based on the advice of counsel to the indemnified person); (ii) such action
includes both the indemnified party and the indemnifying party and the indemnified party shall have
reasonably concluded (based on the advice of counsel to the indemnified person) that there may be
legal defenses available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party; (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It is understood and agreed that the indemnifying person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for
all indemnified persons. Any such separate firm for any Initial Purchaser, its Affiliates,
directors and officers and any control persons of such Initial Purchaser shall be designated in
writing by DBSI, and any such separate firm for Merger Sub, the Company or any of the Guarantors
and any control persons of Merger Sub, the Company or any of the Guarantors shall be designated in
writing by Merger Sub, the Company or such Guarantor, as the case may be. In the event that any
Initial Purchaser, its Affiliates, directors and officers or any control persons of such Initial
Purchaser are Indemnified Persons collectively entitled, in connection with a proceeding in a
single jurisdiction, to the payment of fees and expenses of a single separate firm under this
Section 7(c), and any such Initial Purchaser, its Affiliates, directors and officers or any control
persons of such Initial Purchaser cannot agree to a mutually acceptable separate firm to act as
counsel thereto, then such separate firm for all such Indemnified Persons shall be designated in
writing by DBSI. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be

-11-

 

sought hereunder (whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such claim, action, suit or
proceeding and does not include any statement as to, or any admission of, fault, culpability or
failure to act by or on behalf of any indemnified party.

          (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party for any reason (other than by
virtue of the failure of an indemnified party to notify the indemnifying party of its right to
indemnification pursuant to subsection (a) or (b) above, where such failure materially prejudices
the indemnifying party (through the forfeiture of substantial rights or defenses)), Merger Sub, the
Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
severally agree to contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or defending any loss,
claim, damage, liability or action) (collectively “Losses”) to which Merger Sub, the
Company or any Guarantor and one or more of the Initial Purchasers may be subject in such
proportion as is appropriate to reflect the relative benefits received by Merger Sub, the Company
and the Guarantors, on the one hand, and by the Initial Purchasers, on the other hand, from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser be responsible for any amount in excess of the purchase discount or commission applicable
to the Securities related to the Losses purchased by such Initial Purchaser hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any reason or not
permitted by applicable law, Merger Sub, the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, severally shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative fault of Merger Sub,
the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, in
connection with the statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by Merger Sub, the Company and the Guarantors
shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses)
received by them, and benefits received by the Initial Purchasers shall be deemed to be equal to
the total purchase discounts and commissions. Relative fault shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information provided by Merger
Sub, the Company or any Guarantor, on the one hand, or the Initial Purchasers, on the other hand,
the intent of the parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission and any other equitable considerations
appropriate in the circumstances. Merger Sub, the Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if the amount of such contribution were
determined by pro rata allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute pursuant to
this Section 7 are several in proportion to their respective purchase obligations hereunder and not
joint. For purposes of this Section 7, each person, if any, who controls an Initial Purchaser
within the meaning of either the Act or the Exchange Act and each director,

-12-

 

officer, employee, Affiliate and agent of an Initial Purchaser shall have the same rights to
contribution as such Initial Purchaser, and each person who controls Merger Sub, the Company or any
Guarantor within the meaning of either the Act or the Exchange Act and the respective officers,
directors, members, managers and partners of Merger Sub, the Company and the Guarantors shall have
the same rights to contribution as Merger Sub, the Company and the Guarantors, subject in each case
to the applicable terms and conditions of this paragraph (d).

          8. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of Merger Sub, the Company and the
Guarantors or, with respect to Sections 5(c), (d) and Section 15, their respective officers and of
the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of the Initial Purchasers or
Merger Sub, the Company and the Guarantors, or any of the indemnified persons referred to in
Section 7 hereof, and will survive delivery of and payment for the Securities. The provisions of
Section 7 hereof shall survive the termination or cancellation of this Agreement.

          9. Termination. This Agreement shall automatically terminate if the Closing Date
shall not have occurred at or prior to 11:59 p.m., New York City time, on the earliest of (w) the
20th Business Day following the receipt of the Requisite Shareholder Approval (as defined in the
Merger Agreement), (x) the 20th Business Day following the failure to obtain the Requisite
Shareholder Approval at a duly held Shareholders’ Meeting (as defined in the Merger Agreement)
after giving effect to all adjournments and postponements thereof, (y) five Business Days following
the termination of the Merger Agreement or (z) December 31, 2008 (the “Termination Date”);
provided, however, that if (A) the Requisite Shareholder Approval is obtained and
(B) any regulatory approval required in connection with the consummation of the Merger has not been
obtained (or has lapsed and not been renewed) or any waiting period under applicable antitrust laws
has not expired (or has restarted and such new period has not expired), then the Termination Date
shall automatically be extended until the 20th Business Day following receipt of all such approvals
(or renewals), but in no event later than March 31, 2009, provided further, that,
if as of the Termination Date there is a dispute among any of the parties to the Escrow Agreement
with respect to the disposition of any Escrow Funds (as defined in the Escrow Agreement) pursuant
to the Escrow Agreement, Merger Sub may, by written notice to the Initial Purchasers, extend the
Termination Date until the fifth Business Day after the final resolution of such dispute by a court
of competent jurisdiction or mutual resolution by the parties to such dispute; provided,
however, that the Termination Date with respect to any Initial Purchaser shall occur on the
date such Initial Purchaser withdraws its portion of the Escrow Funds pursuant to Section 5(f) of
the Escrow Agreement.

          10. Notices. All communications hereunder will be in writing and effective only on
receipt and, if sent to the Initial Purchasers, will be mailed, delivered or faxed to Deutsche Bank
Securities Inc. (fax no. (212) 797-4564 and confirmed to 60 Wall Street, New York, New York.
10005), Attention: Legal Department; or, if sent to Merger Sub, the Company or the Guarantors, will
be mailed, delivered or faxed c/o Clear Channel Communications, Inc. (fax no. (210) 832-3121),
Attention: General Counsel. Merger Sub, the Company and the Guarantors, shall be entitled to act
and rely upon any request, consent, notice or agreement given or made on behalf of the Initial
Purchasers by DBSI.

-13-

 

          11. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and at and after the Closing Date, after giving effect to the Joinder Agreement,
Merger Sub and the Company and their respective successors and the indemnified persons referred to
in Section 7 hereof and their respective successors, and, except as expressly set forth in Section
5(h) hereof, no other person will have any right or obligation hereunder. No purchaser of
Securities from any Initial Purchaser shall be deemed to be a successor merely by reason of such
purchase.

          12. Applicable Law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed within the
State of New York. The parties hereto each hereby waive any right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement.

          13. Counterparts. This Agreement may be signed in one or more counterparts (which may
be delivered in original form or facsimile or “pdf” file thereof), each of which when so executed
shall constitute an original and all of which together shall constitute one and the same agreement.

          14. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.

          15. Post-Closing Agreement to Cooperate; Ongoing Compliance of Finalized Offering
Memorandum; Securities Notices.

          (a) After the Closing Date, if requested by Initial Purchasers holding a majority in principal
amount of the Securities held by all Initial Purchasers then outstanding (the “Requisite
Initial Purchasers”) the Company will:

     (i) subject to section (c) below, use commercially reasonable efforts to, within twenty
(20) Business Days from the date of such request (the “Delivery Date”), update the
draft offering memorandum circulated to the Initial Purchasers on the date hereof (the
“Draft Offering Memorandum”) attached as Exhibit K hereto (as so finalized,
amended, supplemented or updated from time to time in accordance with the terms hereof and
of the Settlement Agreement, the “Offering Memorandum”) in a form customary for a
Rule 144A offering, for the time during the Company’s fiscal year during which such offering
is to be made;

     (ii) use commercially reasonable efforts to provide the Initial Purchasers on the
Delivery Date:

     (A) opinions and advice letters, as the case may be, consistent with those set
forth in Section 5(b) of this Agreement; and

     (B) a “comfort” letter dated as of the Delivery Date (or, in the event
professional standards preclude Ernst & Young LLP, from delivering a comfort letter,
an agreed upon procedures letter will be substituted therefor) with respect to the
Company and its subsidiaries and the Offering Memorandum from Ernst &

-14-

 

Young LLP, independent registered public accountants for the Company and
addressed to the Initial Purchasers, such letter or letters to be in the forms
previously negotiated with Ernst & Young LLP (as appropriately updated);

     (iii) use commercially reasonable efforts to assist the Initial Purchasers in their
marketing efforts for the resale of the Securities by, or by using commercially reasonable
efforts to cause it material subsidiaries to, to the extent not unreasonably interfering
with the (A) provide to the Initial Purchasers and their counsel all information reasonably
requested by the Initial Purchasers and their counsel to update due diligence to the
Delivery Date or such later dates as the Initial Purchasers shall reasonably request in
connection with an offer and resale of the Securities (a “Sale Date”) and (B)
participate in conference calls with prospective investors; provided that such
assistance does not unreasonably interfere with the ongoing operations of the Company and
its subsidiaries or otherwise impair, in any material respect, the ability of any officer or
executive of the Company or its subsidiaries to carry out their duties to the Company and
its subsidiaries;

     (iv) use commercially reasonable efforts to (A) register or qualify the Securities
under the state securities laws or blue sky laws of such U.S. jurisdictions as any Initial
Purchaser reasonably requests no later than the initial Sale Date, (B) take any and all
other actions as may be reasonably necessary to enable each Initial Purchaser to consummate
the disposition thereof in private transactions in such jurisdictions; provided,
however, that the Company shall not be required for any such purpose to (1) qualify
as a foreign corporation in any jurisdiction wherein it would not otherwise be required to
qualify but for the requirements of this Section 15, (2) consent to general service of
process in any such jurisdiction or (3) make any changes to its certificate of
incorporation, by-laws or other organizational document, or any agreement between it and any
of its equityholders, and (C) if not previously obtained, obtain (1) CUSIP numbers for the
Securities as necessary, (2) approval by the Nasdaq Stock Market for the Securities to be
designated as PORTAL-eligible securities (it being understood that the Initial Purchasers
shall assist the Company in obtaining such approval) and (3) eligibility for the Securities
to clear and settle through The Depository Trust Company;

     (v) use commercially reasonable efforts to furnish to each Initial Purchaser and to
counsel for the Initial Purchasers, without charge, as many copies of the Offering
Memorandum and any amendments and supplements thereto as they may reasonably request;
provided that the Initial Purchasers shall not be entitled to use such Offering
Memorandum delivered pursuant to this clause (v) at such time as (i) the financial
information contained therein no longer complies with the applicable requirements of
Regulation S-X or (ii) the Company has delivered a notice pursuant to section (c) below;

     (vi) not make any amendment or supplement to the Offering Memorandum or otherwise
distribute or refer to any written communications (as defined in Rule 405 of the Act) that
constitute an offer to sell or a solicitation of an offer to buy the Securities (any such
communication by Merger Sub, the Company or the Guarantors, an “Issuer Written
Communication”) that shall be reasonably disapproved by DBSI after reasonable notice
thereof; and

-15-

 

     (vii) if at any time any event occurs prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by Deutsche Bank Securities Inc.
(“DBSI”)) as a result of which the Offering Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the circumstances
under which they were made or the circumstances then prevailing, not misleading, or if it
should be necessary to amend or supplement the Offering Memorandum to comply with applicable
law in the opinion of counsel for the Initial Purchasers and counsel for the Company,
promptly (i) notify the Initial Purchasers upon actual knowledge of any such event; (ii)
subject to the provisions of this Section 15, use commercially reasonable efforts to prepare
an amendment or supplement that will correct such statement or omission or effect such
compliance; and (iii) use commercially reasonable efforts to supply any supplemented or
amended Offering Memorandum to the several Initial Purchasers and counsel for the Initial
Purchasers without charge in such quantities as they may reasonably request.

          (b) In addition to section (a) above, the Requisite Initial Purchasers may request in writing
that the Company cooperate in the resale of the Securities by performing the agreements set forth
in clauses (a)(i)-(vii) above on one (1) additional occasion (a “Securities Notice”) (it
being understood that the reference to a Sale Date, as applicable in section (a) above shall be
deemed to mean the 20th Business Day after the delivery of a Securities Notice). The Securities
Notice shall provide for a marketing period not to exceed five (5) consecutive Business Days (each
such period a “Marketing Period”) on no more than one occasion.

          (c) The Company may delay the Delivery Date or delay the initiation of the Securities Notice
by providing notice (each such notice, a “blackout notice”) to the Initial Purchasers and
may suspend use of the Offering Memorandum by the Initial Purchasers for a reasonable period of
time not to exceed 45 days in any three-month period and 90 days in any twelve-month period if (x)
such action is required by applicable law or (y) such action is taken by the Company in good faith
and for business reasons (not including avoidance of the Company’s obligations hereunder),
including material business developments or the acquisition or divestiture of assets or
interference with the ongoing operations. The Company shall promptly inform the Initial Purchaser
of the cessation of any “blackout notice.”

          (d) The provisions set forth in this Section 15 shall terminate on the earlier of (i) such
time as the Company and the Guarantors have fulfilled their obligations under the Registration
Rights Agreement to have a shelf registration statement declared effective by the Commission
registering the Securities held by the Initial Purchasers and (ii) one year from the date hereof.

          16. Definitions. The terms that follow, when used in this Agreement, shall have the
meanings indicated.

          “Affiliate” shall have the meaning specified in Rule 501(b) of Regulation D.

-16-

 

          “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday
or a day on which commercial banking institutions or trust companies are authorized or required by
law to close in New York City.

          “Code” shall mean the Internal Revenue Code of 1986, as amended.

          “Commission” shall mean the Securities and Exchange Commission.

          “Escrow Agreement” shall mean the Escrow Agreement, dated as of the date hereof, among
Merger Sub, the financial institutions and the other parties thereto.

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

          “Investment Company Act” shall mean the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission promulgated thereunder.

          “NASD” shall mean the National Association of Securities Dealers, Inc.

          “PORTAL” shall mean the Private Offerings, Resales and Trading through Automated
Linkages system of the NASD.

          “Regulation D” shall mean Regulation D under the Act.

          “Regulation S” shall mean Regulation S under the Act.

          “Senior Secured Credit Agreements” shall mean (i) the cash-flow based Credit
Agreement, dated as of the date hereof, among Merger Sub, as Parent Borrower, the Subsidiary
Co-Borrowers party thereto, the Foreign Subsidiary Revolving Borrowers party thereto, Clear Channel
Capital I, LLC (upon consummation of the Merger), as Holdings, Citibank, N.A., as Administrative
Agent, the other Lenders party thereto and the other agents named therein, and (ii) the
receivables-based Credit Agreement, dated as of the date hereof, among Merger Sub, as Parent
Borrower, the Subsidiary Borrowers party thereto, Clear Channel Capital I, LLC (upon consummation
of the Merger), as Holdings, Citibank, N.A., as Administrative Agent, the other Lenders party
thereto and the other agents named therein, each as may be amended, modified, or supplemented from
time to time.

          “Senior Secured Credit Facilities” shall mean those facilities contemplated in the
Senior Secured Credit Agreements.

          “Settlement Agreement” shall mean the settlement agreement dated the date hereof among
the Company, Merger Sub, the Initial Purchasers and the other parties thereto.

          “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission promulgated thereunder.

-17-

 

          If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement between Merger Sub and the several Initial Purchasers.

	 	 	 	 	 
	 	Very truly yours,

BT TRIPLE CROWN MERGER CO., INC.

 	 
	 	By:  	/s/ John Connaughton
 	 
	 	 	Name:  	John Connaughton 	 
	 	 	Title:  	 	 
	 

[Purchase Agreement]

 

 

	 	 	 	 	 	 	 
	The foregoing Agreement is hereby confirmed	 	 
	and accepted as of the date first above written.	 	 
	 
	 	 	 	 	 	 
	DEUTSCHE BANK SECURITIES INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David Flannery	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David Flannery	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Scott Sartorios	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Scott Sartorios	 	 
	 

	 	Title:
	 	Director	 	 

[Purchase Agreement]

 

 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

	 	 	 	 	 	 	 
	MORGAN STANLEY & CO. INCORPORATED	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Henry F. D’Alessandro	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Henry F. D’Alessandro	 	 
	 

	 	Title:
	 	Managing Director	 	 

[Purchase Agreement]

 

 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

	 	 	 	 	 	 	 
	CITIGROUP GLOBAL MARKETS INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Ross A. MacIntyre	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Ross A. MacIntyre	 	 
	 

	 	Title:
	 	Managing Director	 	 

[Purchase Agreement]

 

 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

	 	 	 	 	 	 	 
	CREDIT SUISSE SECURITIES (USA) LLC	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ SoVonna Day-Gions	 	 
	 	 	 	 	 
	 

	 	Name:
	 	SoVonna Day-Gions	 	 
	 

	 	Title:
	 	Managing Director	 	 

[Purchase Agreement]

 

 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

	 	 	 	 	 	 	 
	GREENWICH CAPITAL MARKETS, INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Michael F. Newcomb II	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Michael F. Newcomb II	 	 
	 

	 	Title:
	 	Managing Director	 	 

[Purchase Agreement]

 

 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

	 	 	 	 	 	 	 
	WACHOVIA CAPITAL MARKETS, LLC	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ James Jefferies	 	 
	 	 	 	 	 
	 

	 	Name:
	 	James Jefferies	 	 
	 

	 	Title:
	 	Managing Director	 	 

[Purchase Agreement]

 

 

SCHEDULE I

	 	 	 	 	 	 	 	 	 
	 	 	Principal Amount	 	 	 	 
	 	 	of Senior Cash	 	 	Principal Amount of	 
	 	 	Pay Notes To Be	 	 	Senior Toggle Notes	 
	Initial Purchasers	 	Purchased	 	 	To Be Purchased	 
	Deutsche Bank Securities Inc.
	 	 	183,750,000.00	 	 	 	249,375,000.00	 
	Morgan Stanley & Co. Incorporated
	 	 	183,751,000.00	 	 	 	249,375,000.00	 
	Citigroup Global Markets Inc.
	 	 	183,750,000.00	 	 	 	249,375,000.00	 
	Credit Suisse Securities (USA) LLC.
	 	 	142,913,000.00	 	 	 	193,954,000.00	 
	Greenwich Capital Markets, Inc.
	 	 	142,913,000.00	 	 	 	193,954,000.00	 
	Wachovia
Capital Markets, LLC.
	 	 	142,923,000.00	 	 	 	193,967,000.00	 
	 
	 	 	 	 	 	 
	Total
	 	$	980,000,000.00	 	 	$	1,330,000,000.00	 
	 
	 	 	 	 	 	 

[Purchase Agreement]

 

 

EXHIBIT A

DESCRIPTION OF THE NOTES

General

     Certain terms used in this description are defined under the subheading “Certain Definitions.”
In this description, (i) the term “Issuer” refers to BT Triple Crown Merger Co., Inc. (the “merger
sub”) and, following the merger (the “merger”) of the merger sub with and into Clear Channel
Communications, Inc. (“Clear Channel”), to only Clear Channel as the surviving corporation in the
merger and not to any of its Subsidiaries, and (ii) the terms “we,” “our” and “us” each refer to
the Issuer, its successors and their respective consolidated Subsidiaries, assuming completion of
the merger.

     The Issuer will issue $2,310,000,000 of notes, consisting of $980,000,000 aggregate principal
amount of 10.75% senior cash pay notes due 2016 (the “Senior Cash Pay Notes”) and $1,330,000,000
aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016 (together with any PIK
Notes (as defined under “Principal, Maturity and Interest”) issued in respect thereof, the “Senior
Toggle Notes” and, together with the Senior Cash Pay Notes, the “Notes”). The Issuer will issue the
Notes under an indenture to be dated as of the Issue Date (the “Indenture”) among the Issuer, Law
Debenture Trust Company of New York, as trustee (the “Trustee”), and Deutsche Bank Trust Company
Americas, as paying agent (the “Paying Agent”) and registrar. The Notes will be issued in private
transactions that are not subject to the registration requirements of the Securities Act. The terms
of the Indenture include those stated therein and will include those made part thereof by reference
to the Trust Indenture Act. The Senior Cash Pay Notes and the Senior Toggle Notes will each be
issued as a separate class, but, except as otherwise provided below, will be treated as a single
class for all purposes of the Indenture.

     The following description is only a summary of the material provisions of the Indenture and
does not purport to be complete and is qualified in its entirety by reference to the provisions of
that agreement, including the definitions therein of certain terms used below. We urge you to read
the Indenture because that agreement, not this description, defines your rights as Holders of the
Notes.

Brief Description of Notes

     The Notes:

	 	•	 	will be unsecured senior obligations of the Issuer;
	 
	 	•	 	will be pari passu in right of payment with all existing and future unsubordinated
Indebtedness (including the Senior Credit Facilities and the Existing Senior Notes);
	 
	 	•	 	will be effectively subordinated to all existing and future Secured Indebtedness of
the Issuer to the extent of the value of the assets securing such Indebtedness (including
the Senior Credit Facilities);
	 
	 	•	 	will be senior in right of payment to all Subordinated Indebtedness of the Issuer;
	 
	 	•	 	will be initially guaranteed by Holdings and each of the Issuer’s Restricted
Subsidiaries that guarantee the General Credit Facilities (i) on an unsecured senior
subordinated basis with respect to such Guarantor’s guarantee under Designated Senior
Indebtedness and (ii) on a senior unsecured basis with respect to all of the applicable
Guarantor’s existing and future unsecured senior debt other than such Guarantor’s
guarantee under Designated Senior Indebtedness; and
	 
	 	•	 	will be subject to registration with the SEC pursuant to the Registration Rights
Agreement.

Guarantees

     The Guarantors, as primary obligors and not merely as sureties, will initially jointly and
severally irrevocably and unconditionally guarantee, on an unsecured senior subordinated basis
solely with respect to any Designated Senior Indebtedness, and on an unsecured senior basis in all
other instances, the performance and full and punctual payment when due, whether at maturity, by
acceleration or otherwise, of all obligations of the Issuer under the Indenture and the Notes,
whether for payment of principal of or interest on the Notes, expenses, indemnification or
otherwise, on the terms set forth in the Indenture by executing the Indenture or a supplemental
indenture.

     Holdings and each Restricted Subsidiary that is a Domestic Subsidiary that guarantees the
General Credit Facilities will initially guarantee the Notes, subject to release as provided below
and in the ABL Facility. Each Guarantor’s Guarantees of the Notes will be a general unsecured
obligation of such Guarantor, will be subordinated to such

162

 

EXHIBIT A

Guarantor’s guarantee under any
Designated Senior Indebtedness, will be pari passu in right of payment with all other existing and
future unsubordinated Indebtedness of such Guarantor, and will be effectively subordinated to all
secured Indebtedness of each such entity to the extent of the value of the assets securing such
Indebtedness and will be senior in right of payment to all existing and future Subordinated
Indebtedness of such Guarantor. The Notes will be structurally subordinated to Indebtedness and
other liabilities of Subsidiaries of the Issuer that do not guarantee the Notes.

     Not all of the Issuer’s Subsidiaries will guarantee the Notes. In the event of a bankruptcy,
liquidation or reorganization of any of these non-guarantor Subsidiaries, the non-guarantor
Subsidiaries will pay the holders of their debt and their trade creditors before they will be able
to distribute or contribute, as the case may be, any of their assets to a Guarantor. None of the
Issuer’s Foreign Subsidiaries, non-Wholly-Owned Subsidiaries, special purpose Subsidiaries,
Securitization Subsidiaries, any Receivables Subsidiary or any other Subsidiary that does not
guarantee the General Credit Facilities will guarantee the Notes. On a pro forma basis after giving
effect to the Transactions, the non-guarantor Subsidiaries would have accounted for approximately
$3.4 billion, or 49%, of our total net revenue, approximately $1.1 billion, or 46%, of our EBITDA
(as such term is described and used in “Offering Memorandum Summary”) and approximately $983
million, or 43%, of our Adjusted EBITDA (as such term is described and used in “Offering Memorandum
Summary”), in each case, for the last twelve months ended March 31, 2008, and approximately $12.7
billion, or 44%, of our total assets as of March 31, 2008. On a historical basis without giving pro
forma effect to the Transactions, the non-guarantor Subsidiaries accounted for approximately 38% of
our total assets as of March 31, 2008. The difference between the historical percentage and the pro
forma percentage of total assets principally relates to the creation of significant goodwill and
intangibles in connection with the application of purchase accounting for the Transactions. On a
pro forma basis after giving effect to the Transactions, as of March 31, 2008, the non-guarantor
Subsidiaries would have had $5.3 billion of total balance sheet liabilities (including trade
payables) to which the Notes would have been structurally subordinated.

     The obligations of each Restricted Guarantor under its Guarantee will be limited as necessary
to prevent such Guarantee from constituting a fraudulent conveyance under applicable law.

     Any Guarantor that makes a payment under its Guarantee will be entitled upon payment in full
of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an
amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net
assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

     If a Guarantee was rendered voidable, it could be subordinated by a court to all other
indebtedness (including guarantees and other contingent liabilities) of the Guarantor, and,
depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be
reduced to zero.

     Each Guarantee by a Guarantor shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon:

     (1)(a) any sale, exchange or transfer (by merger or otherwise) of (i) the Capital Stock of
such Guarantor (including any sale, exchange or transfer), after which the applicable Guarantor
is no longer a Restricted Subsidiary or (ii) all or substantially all the assets of such
Guarantor which sale, exchange or transfer is made in a manner in compliance with the
applicable provisions of the Indenture;

     (b) the release or discharge of the guarantee by such Guarantor of the General Credit
Facilities or the guarantee which resulted in the creation of such Guarantee, except a
discharge or release by or as a result of payment under such guarantee;

     (c) the designation of any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary; or

     (d) the Issuer exercising its legal defeasance option or covenant defeasance option
as described under “Legal Defeasance and Covenant Defeasance” or the Issuer’s obligations
under the Indenture being discharged in a manner not in violation of the terms of the
Indenture; and

     (2) such Guarantor delivering to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for in the Indenture relating to
such transaction have been complied with.

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EXHIBIT A

Ranking

     The payment of the principal of, premium, if any, and interest on the Notes by the Issuer will
rank pari passu in right of payment to all unsubordinated Indebtedness of the Issuer, including the
obligations of the Issuer under the Senior Credit Facilities.

     The payment of any Guarantee of the Notes will be subordinated to obligations of such
Guarantor under its Designated Senior Indebtedness and will rank pari passu in right of payment to
all other unsubordinated indebtedness of the relevant Guarantor.

     Each Guarantor’s obligations under its Guarantees of the Notes are subordinated to the
obligations of that Guarantor under its Designated Senior Indebtedness. As such, the rights of
Holders to receive payment pursuant to such Guarantee will be subordinated in right of payment to
the rights of the holders of such Guarantor’s Designated Senior Indebtedness.

     Although the Indenture will contain limitations on the amount of additional Indebtedness that
the Guarantors may incur, under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Designated Senior Indebtedness. See “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock.”

     No Guarantor is permitted to make any payment or distribution of any kind or character with
respect to its Obligations under its Guarantee of the Notes if either of the following occurs (a
“Payment Default”):

     (1) any Obligation on any Designated Senior Indebtedness of such Guarantor is not paid in
full in cash when due; or

     (2) any other default on Designated Senior Indebtedness of such Guarantor occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms;

unless, in either case, the Payment Default has been cured or waived and any such acceleration has
been rescinded or such Designated Senior Indebtedness has been paid in full in cash. Regardless of
the foregoing, each Guarantor is permitted to make a payment or distribution under its Guarantee of
the Notes if the Issuer and the Trustee receive written notice approving such payment from the
Representatives of all Designated Senior Indebtedness with respect to which the Payment Default has
occurred and is continuing.

     During the continuance of any default (other than a Payment Default) (a “Non-Payment Default”)
with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, no Guarantor is permitted to make
any payment or distribution of any kind or character with respect to its Obligations under its
Guarantee of the Notes for a period (a “Payment Blockage Period”) commencing upon the receipt by
the Trustee (with a copy to the Issuer) of written notice (a “Blockage Notice”) of such Non-Payment
Default from the Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter. The Payment Blockage Period will
end earlier if such Payment Blockage Period is terminated:

     (1) by written notice to the Trustee and the Issuer from the Person or Persons who gave
such Blockage Notice;

     (2) because the default giving rise to such Blockage Notice is cured, waived or otherwise
no longer continuing; or

     (3) because such Designated Senior Indebtedness has been discharged or repaid in full in
cash.

     Notwithstanding the provisions described above (but subject to the subordination provisions of
the immediately succeeding paragraph), unless the holders of such Designated Senior Indebtedness or
the Representatives of such Designated Senior Indebtedness have accelerated the maturity of such
Designated Senior Indebtedness or a Payment Default has occurred and is continuing, each Guarantor
is permitted to make any payment or distribution of any kind or character with respect to its
Obligations under its Guarantee of the Notes after the end of such Payment Blockage Period. The
Guarantees shall not be subject to more than one Payment Blockage Period in any consecutive 360-day
period, irrespective of the number of Non-Payment Defaults with respect to Designated Senior
Indebtedness during such period. However, in no event may the total number of days during which any
Payment Blockage Period or Periods on the Guarantees are in effect exceed 179 days in the aggregate
during any consecutive 360-day period, and there must be at least 181 days during any consecutive
360-day period during which no Payment Blockage Period is in effect.

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EXHIBIT A

Notwithstanding the foregoing,
however, no Non-Payment Default that existed or was continuing on the date of the commencement of
any Payment Blockage Period with respect to any Designated Senior Indebtedness and that was the
basis for the initiation of such Payment Blockage Period will be, or be made, the basis for a
subsequent Payment Blockage Period unless such default has been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of
any financial covenants during the period after the date of delivery of such initial Payment
Blockage Period, that, in either case, would give rise to a Non-Payment Default pursuant to any
provisions under which a 

Non-Payment Default previously existed or was continuing shall constitute
a new Non-Payment Default for this purpose).

     In connection with the Guarantees, in the event of any payment or distribution of the assets
of a Guarantor upon a total or partial liquidation or dissolution or reorganization of or similar
proceeding relating to such Guarantor or its property:

     (1) the holders of Designated Senior Indebtedness of such Guarantor will be entitled to
receive payment in full in cash of such Designated Senior Indebtedness before the Holders of
the Notes are entitled to receive any payment or distribution of any kind or character with
respect to any Obligations on, or related to, such Guarantor’s Guarantee of the Notes; and

     (2) until the Designated Senior Indebtedness of such Guarantor is paid in full in cash,
any payment or distribution to which Holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of such Designated Senior
Indebtedness as their interests may appear.

     If a distribution is made to Holders of the Notes that, due to the subordination provisions,
should not have been made to them, such Holders of the Notes are required to hold it in trust for
the holders of Designated Senior Indebtedness of the applicable Guarantor and pay it over to them
as their interests may appear.

     The subordination and payment blockage provisions described above will not prevent a Default
from occurring under the Indenture upon the failure of the Issuer to pay cash interest or principal
(including any accretion) with respect to the Notes when due by their terms. If payment of the
Notes is accelerated because of an Event of Default, the Guarantors must promptly notify the
holders of Designated Senior Indebtedness or the Representative of such Designated Senior
Indebtedness of the acceleration, provided that any failure to give such notice shall have no
effect whatsoever on the subordination provisions described herein. If any Designated Senior
Indebtedness of a Guarantor is outstanding, such Guarantor may not make any payment or distribution
under its Guarantee of the Notes until five Business Days after the Representatives of all the
issuers of such Designated Senior Indebtedness receive notice of such acceleration and, thereafter,
may make any payment or distribution under its Guarantee of the Notes only if the Indenture
otherwise permits payment at that time.

     A Holder by its acceptance of Notes agrees to be bound by the provisions described in this
section and authorizes and expressly directs the Trustee, on its behalf, to take such action as may
be necessary or appropriate to effectuate the subordination provided for in the Indenture and
appoints the Trustee its attorney-in-fact for such purpose.

     By reason of the subordination provisions contained in the Indenture, in the event of a
liquidation or insolvency proceeding, creditors of the Guarantor who are holders of Designated
Senior Indebtedness of such Guarantor may recover more, ratably, than the Holders of the Notes, and
creditors who are not holders of Designated Senior Indebtedness may recover less, ratably, than
holders of Designated Senior Indebtedness and may recover more, ratably, than the Holders of the
Notes.

     The terms of the subordination provisions described above will not apply to payments from
money or the proceeds of government securities held in trust by the Trustee for the payment of
principal (including any accretion) of and interest on the Notes pursuant to the provisions
described under “Legal Defeasance and Covenant Defeasance” or “Satisfaction and Discharge,” if the
foregoing subordination provisions were not violated at the time the applicable amounts were
deposited in trust pursuant to such provisions and the respective deposit in the trust was
otherwise made in accordance with such provisions.

     The Notes will be effectively subordinated to all of the existing and future Secured
Indebtedness of the Issuer and each Guarantor to the extent of the value of the assets securing
such Indebtedness.

     Although the Indenture will contain limitations on the amount of additional Indebtedness that
the Issuer and the Guarantors may incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be unsubordinated
Indebtedness. See “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock.”

165

 

EXHIBIT A

Paying Agent and Registrar for the Notes

     The Issuer will maintain one or more Paying Agents for each series of Notes. The initial
Paying Agent for each series of Notes will be Deutsche Bank Trust Company Americas.

     The Issuer will also maintain a registrar in respect of each series of Notes, initially
Deutsche Bank Trust Company Americas. If the Issuer fails to appoint a registrar the Trustee will
act as such. The registrar for each series of Notes will maintain a register reflecting ownership
of that series of Notes outstanding from time to time and will make payments on and facilitate
transfer of those Notes on behalf of the Issuer.

     The Issuer may change the Paying Agents or the registrars without prior notice to the Holders.
The Issuer, any Restricted Subsidiary or any Subsidiaries of a Restricted Subsidiary may act as a
Paying Agent or registrar.

Transfer and Exchange

     A Holder may transfer or exchange Notes in accordance with the Indenture. Any registrar or the
Trustee may require a Holder to furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to pay all taxes due on transfer. The
Issuer is not required to transfer or exchange any Note selected for redemption. Also, the Issuer
is not required to transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.

Principal, Maturity and Interest

     The Issuer will issue $2,310,000,000 of Notes, consisting of $980,000,000 in aggregate
principal amount of Senior Cash Pay Notes and $1,330,000,000 in aggregate principal amount of
Senior Toggle Notes. The Notes will mature on      , 2016. Subject to compliance with the
covenant described below under the caption “Certain Covenants—Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” the Issuer may issue
additional Notes from time to time after this offering under the Indenture (“Additional Notes”). In
addition, in connection with the payment of PIK Interest or Partial PIK Interest in respect of the
Senior Toggle Notes, the Issuer is entitled to, without the consent of the Holders, increase the
outstanding principal amount of the Senior Toggle Notes or issue additional Senior Toggle Notes
(the “PIK Notes”) under the Indenture on the same terms and conditions as the Senior Toggle Notes
offered hereby (in each case, a “PIK Payment”). The Notes offered by the Issuer and any Additional
Notes and PIK Notes subsequently issued under the Indenture will be treated as a single class for
all purposes under the Indenture, including waivers, amendments, redemptions and offers to
purchase. Unless the context requires otherwise, references to “Notes” for all purposes of the
Indenture and this “Description of the Notes” include any Additional Notes and any PIK Notes that
are actually issued and references to “principal amount” of the Notes include any increase in the
principal amount of the outstanding Notes as a result of a PIK Payment.

     Interest will accrue on the Notes from the Issue Date, or from the most recent date to which
interest has been paid or provided for. Interest will be payable semiannually using a 360-day year
comprised of twelve 30-day months to Holders of record at the close of business on the
              or            immediately preceding the interest payment date,
on            and
                of each year, commencing      , 2008. If a payment date is not on a Business Day at the
place of payment, payment may be made at the place on the next succeeding Business Day and no
interest will accrue for the intervening period.

     For any interest payment period, the Issuer may, at its option, elect to pay interest on the
Senior Toggle Notes:

	 	•	 	entirely in cash (“Cash Interest”);
	 
	 	•	 	entirely by increasing the principal amount of the outstanding Senior Toggle Notes
or by issuing PIK Notes (“PIK Interest”); or
	 
	 	•	 	on 50% of the outstanding principal amount of the Senior Toggle Notes in cash and
on 50% of the principal amount by increasing the principal amount of the outstanding
Senior Toggle Notes or by issuing PIK Notes (“Partial PIK Interest”).

     The Issuer must elect the form of interest payment with respect to each interest period by
delivering a notice to the Trustee and the Paying Agent no later than 10 business days prior to the
beginning of such interest period. The Trustee or the Paying Agent shall promptly deliver a
corresponding notice to the Holders. In the absence of such an election for any interest period,
interest on the Senior Toggle Notes shall be payable according to the election for the previous
interest

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EXHIBIT A

period. Notwithstanding anything to the contrary, the payment of accrued interest in
connection with any redemption of Notes as described under “Optional Redemption” or “Repurchase at
the Option of Holders” shall be made solely in cash.

     Cash Interest on the Senior Toggle Notes will accrue at a rate of 11.00% per annum and be
payable in cash. PIK Interest on the Senior Toggle Notes will accrue at a rate of 11.75% per annum
and be payable (x) with respect to Senior Toggle Notes represented by one or more global notes
registered in the name of, or held by, The Depository Trust Company (“DTC”) or its nominee on the
relevant record date, by increasing the principal amount of any outstanding global Senior Toggle
Notes by an amount equal to the amount of PIK Interest or Partial PIK Interest, as applicable, for
the applicable interest period (rounded up to the nearest whole dollar) (or, if necessary, pursuant
to the requirements of the depositary or otherwise, to authenticate new global notes executed by
the Issuer with such increased principal amounts) and (y) with respect to Senior Toggle Notes
represented by certificated notes, by issuing PIK Notes in certificated form in an aggregate
principal amount equal to the amount of PIK Interest or Partial PIK Interest, as applicable, for
the applicable period (rounded up to the nearest whole dollar), and the Trustee will, at the
request of the Issuer, authenticate and deliver such PIK Notes in certificated form for original
issuance to the Holders on the relevant record date, as shown by the records of the registrar of
Holders. In the event that the Issuer elects to pay Partial PIK Interest for any interest period,
each Holder will be entitled to receive Cash Interest in respect of 50% of the principal amount of
the Senior Toggle Notes held by such Holder on the relevant record date and Partial PIK Interest in
respect of 50% of the principal amount of the Senior Toggle Notes held by such Holder on the
relevant record date. Following an increase in the principal amount of the outstanding global
Senior Toggle Notes as a result of a PIK Payment or Partial PIK Payment, the global Senior Toggle
Notes will bear interest on such increased principal amount from and after the date of such PIK
Payment or Partial PIK Payment. Any PIK Notes issued in certificated form will be dated as of the
applicable interest payment date and will bear interest from and after such date. All Senior Toggle
Notes issued pursuant to a PIK Payment will mature on      , 2016 and will be governed by,
and subject to the terms, provisions and conditions of, the Indenture and shall have the same
rights and benefits as the Senior Toggle Notes issued on the Issue Date. Any certificated PIK Notes
will be issued with the description PIK on the face of such PIK Note.

     Interest on the Senior Cash Pay Notes will accrue at a rate of 10.75% per annum and be payable
in cash.

     Special Interest may accrue on the Notes in certain circumstances pursuant to the Registration
Rights Agreement for the Notes. Any Special Interest on the Notes will be payable in the same form
elected by the Issuer for payment of interest for the applicable interest payment period. All
references to the Indenture, in any context, to any interest or other amount payable on or with
respect to the Notes shall be deemed to include any Special Interest pursuant to the Registration
Rights Agreement for the Notes.

     Principal of, premium, if any, and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose or, at the option of the Issuer, payment of Cash
Interest may be made by check mailed to the Holders of the Notes at their respective addresses set
forth in the register of Holders; provided that all payments of principal, premium, if any, and
Cash Interest with respect to the Notes represented by one or more global notes registered in the
name of or held by DTC or its nominee will be made by wire transfer of immediately available funds
to the accounts specified by the Holder or Holders thereof. Until otherwise designated by the
Issuer, the Issuer’s office or agency will be the office of the Paying Agent maintained for such
purpose.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

     On      , 2015 (the “Special Redemption Date”), the Issuer will be required to redeem
for cash a portion (the “Special Redemption Amount”) of Senior Toggle Notes equal to the product of
(x) $30.0 million and (y) the lesser of (i) one and (ii) a fraction the numerator of which is the
aggregate principal amount outstanding on the Special Redemption Date of the Senior Toggle Notes
for United States federal income tax purposes and the denominator of which is $1,330,000,000, as
determined by the Issuer in good faith and rounded to the nearest $2,000 (such redemption, the
“Special Redemption”). The redemption price for each portion of a Senior Toggle Note so
redeemed pursuant to the Special Redemption will equal 100% of the principal amount of such portion
plus any accrued and unpaid interest thereon to the Special Redemption Date.

     Except for the Special Redemption of any portion of the Senior Toggle Notes as described in
the immediately preceding paragraph, the Issuer is not required to make any sinking fund payments
with respect to the Notes. However, under certain circumstances, the Issuer may be required to
offer to purchase Notes as described under the caption “Repurchase at the Option of Holders.” We
may at any time and from time to time purchase Notes in the open market or otherwise.

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EXHIBIT A

Optional Redemption

Senior Cash Pay Notes

     At any time prior to      , 2012, the Senior Cash Pay Notes may be redeemed or
purchased (by the Issuer or any other Person), in whole or in part, upon notice as described under
“Selection and Notice,” at a redemption price equal to 100% of the principal amount of Senior Cash
Pay Notes redeemed plus the Applicable Premium as of the date of redemption (the “Redemption
Date”), and, without duplication, accrued and unpaid interest to the Redemption Date, subject to
the rights of Holders of Senior Cash Pay Notes on the relevant record date to receive interest due
on the relevant interest payment date. The Issuer may provide in such notice that payment of the
redemption price and performance of the Issuer’s obligations with respect to such redemption or
purchase may be performed by another Person.

     On and after      , 2012, the Senior Cash Pay Notes may be redeemed or purchased (by
the Issuer or any other Person), at the Issuer’s option, in whole or in part, upon notice as
described under “Selection and Notice,” at any time and from time to time at the redemption prices
set forth below. The Issuer may provide in such notice that the payment of the redemption price and
the performance of the Issuer’s obligations with respect to such redemption may be performed by
another Person. The Senior Cash Pay Notes will be redeemable at the redemption prices (expressed as
percentages of principal amount of the Senior Cash Pay Notes to be redeemed) set forth below plus
accrued and unpaid interest thereon to the applicable Redemption Date, subject to the right of
Holders of record of Senior Cash Pay Notes on the relevant record date to receive interest due on
the relevant interest payment date, if redeemed during the twelve-month period beginning on
                  of each of the years indicated below:

	 	 	 	 	 
	Year	 	 	Percentage
	 	 	 	 
	2012
	 	 	105.375%	
	2013
	 	 	102.688%	
	2014 and thereafter
	 	 	100.000%	

     In addition, until      , 2011, the Issuer may, at its option, on one or more
occasions, redeem up to 40% of the then outstanding aggregate principal amount of Senior Cash Pay
Notes at a redemption price equal to 110.750% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon to the applicable Redemption Date, subject to the right of
Holders of record on the relevant record date to receive interest due on the relevant interest
payment date, with the net cash proceeds of one or more Equity Offerings to the extent such net
cash proceeds are received by or contributed to the Issuer; provided that at least 50% of the sum
of the aggregate principal amount of Senior Cash Pay Notes originally issued under the Indenture
and any Additional Notes that are Senior Cash Pay Notes issued under the Indenture after the Issue
Date remains outstanding immediately after the occurrence of each such redemption; provided further
that each such redemption occurs within 180 days of the date of closing of each such Equity
Offering.

     The Issuer may provide in such notice that payment of the redemption price and performance of
the Issuer’s obligations with respect thereto may be performed by another Person. Notice of any
redemption upon any Equity Offering may be given prior to the completion of the related Equity
Offering, and any such redemption or notice may, at the Issuer’s discretion, be subject to one or
more conditions precedent, including, but not limited to, completion of the related Equity
Offering.

     The Trustee or the Paying Agent shall select the Notes to be purchased in the manner described
under “Selection and Notice.”

Senior Toggle Notes

     At any time prior to      , 2012, the Senior Toggle Notes may be redeemed or purchased
(by the Issuer or any other Person), in whole or in part, upon notice as described under “Selection
and Notice,” at a redemption price equal to 100% of the principal amount of Senior Toggle Notes
redeemed plus the Applicable Premium as of the date of redemption (the “Redemption Date”), and,
without duplication, accrued and unpaid interest to the Redemption Date, subject to the rights of
Holders of Senior Toggle Notes on the relevant record date to receive interest due on the relevant
interest payment date. The Issuer may provide in such notice that payment of the redemption price
and performance of the Issuer’s obligations with respect to such redemption or purchase may be
performed by another Person.

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EXHIBIT A

     On and after      , 2012, the Senior Toggle Notes may be redeemed or purchased (by the
Issuer or any other Person), at the Issuer’s option, in whole or in part, upon notice as described
under “Selection and Notice,” at any time and from time to time at the redemption prices set forth
below. The Issuer may provide in such notice that the payment of the redemption price and the
performance of the Issuer’s obligations with respect to such redemption may be performed by another
Person. The Senior Toggle Notes will be redeemable at the redemption prices (expressed as
percentages of principal amount of the Senior Toggle Notes to be redeemed) set forth below plus
accrued and unpaid interest thereon to the applicable Redemption Date, subject to the right of
Holders of record of Senior Toggle Notes on the relevant record date to receive interest due on the
relevant interest payment date, if redeemed during the twelve-month period beginning on
of each of the years indicated below:

	 	 	 	 	 
	Year	 	 	Percentage
	 	 	 	 
	2012
	 	 	105.500	%
	2013
	 	 	102.750	%
	2014 and thereafter
	 	 	100.000	%

     In addition, until      , 2011, the Issuer may, at its option, on one or more
occasions, redeem up to 40% of the then outstanding aggregate principal amount of Senior Toggle
Notes (and any PIK Notes issued in respect thereof) at a redemption price equal to 111.000% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon to the applicable
Redemption Date, subject to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date, with the net cash proceeds of one or more
Equity Offerings to the extent such net cash proceeds are received by or contributed to the Issuer;
provided that at least 50% of the sum of the aggregate principal amount of Senior Toggle Notes
originally issued under the Indenture and any Additional Notes that are Senior Toggle Notes issued
under the Indenture after the Issue Date (but excluding PIK Notes) remains outstanding immediately
after the occurrence of each such redemption; provided further that each such redemption occurs
within 180 days of the date of closing of each such Equity Offering.

     At the end of any “accrual period” (as defined in Section 1272(a)(5) of the Code) ending after
the fifth anniversary of the Issue Date (each, a “Mandatory Deferrable Interest Payment Date”), the
Issuer may make cash payments on the Senior Toggle Notes then outstanding in an aggregate amount of
up to the Mandatory Deferrable Interest Payment Amount (each such payment, a “Mandatory Deferrable
Interest Payment”). Any such payments will be made in proportion to the then outstanding principal
amounts of such Senior Toggle Notes. The “Mandatory Deferrable Interest Payment Amount” shall mean,
as of each Mandatory Deferrable Interest Payment Date, the excess, if any, of (i) the aggregate
amount of accrued and unpaid interest and all accrued but unpaid “original issue discount” (as
defined in Section 1273(a)(1) of the Code) with respect to the Senior Toggle Notes then
outstanding, over (ii) an amount equal to the product of (A) the aggregate “issue price” (as
defined in Sections 1273(b) and 1274(a) of the Code) of the Senior Toggle Notes then outstanding
multiplied by (B) the “yield to maturity” (as defined in the Treasury Regulation Section
1.1272-1(b)(1)(i)) of the Senior Toggle Notes.

     The Issuer may provide in such notice that payment of the redemption price and performance of
the Issuer’s obligations with respect thereto may be performed by another Person. Notice of any
redemption upon any Equity Offering may be given prior to the completion of the related Equity
Offering, and any such redemption or notice may, at the Issuer’s discretion, be subject to one or
more conditions precedent, including, but not limited to, completion of the related Equity
Offering.

     The Trustee or the Paying Agent shall select the Notes to be purchased in the manner described
under “Selection and Notice.”

Repurchase at the Option of Holders

Change of Control

     The Notes will provide that if a Change of Control occurs, unless the Issuer has previously or
concurrently mailed a redemption notice with respect to all the outstanding Notes as described
under “Optional Redemption,” the Issuer will make an offer to purchase all of the Notes pursuant to
the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of
Control Payment”) equal to 101.0% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase, subject to the right of Holders of the Notes of record
on the relevant record date to receive interest due on the relevant interest payment date. Within
30 days following any Change of Control, the Issuer will send notice of such Change of Control
Offer by first-class mail, with a copy to the Trustee, to each Holder of

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EXHIBIT A

Notes to the address of
such Holder appearing in the security register with a copy to the Trustee, or otherwise in
accordance with the procedures of DTC, with the following information:

     (1) that a Change of Control Offer is being made pursuant to the covenant entitled
“Repurchase at the Option of Holders—Change of Control,” and that all Notes properly tendered
pursuant to such Change of Control Offer will be accepted for payment by the Issuer;

     (2) the purchase price and the purchase date, which will be no earlier than 30 days
nor later than 60 days from the date such notice is mailed (the “Change of Control Payment
Date”);

     (3) that any Note not properly tendered will remain outstanding and continue to accrue
interest;

     (4) that unless the Issuer defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;

     (5) that Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender such Notes, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the
notice at the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;

     (6) that Holders will be entitled to withdraw their tendered Notes and their election to
require the Issuer to purchase such Notes, provided that the Paying Agent receives, not later
than the close of business on the fifth Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder
of the Notes, the principal amount of Notes tendered for purchase, and a statement that such
Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

     (7) that the Holders whose Notes are being repurchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to a minimum of $2,000 or an integral multiple
of $1,000 in principal amount; provided, however, that if PIK Notes are issued or PIK Interest
is paid, the principal amount of such unpurchased portion may equal a minimum of $1.00 or an
integral multiple of $1.00;

     (8) if such notice is mailed prior to the occurrence of a Change of Control, stating that
the Change of Control Offer is conditional on the occurrence of such Change of Control; and

     (9) the other instructions, as determined by the Issuer, consistent with the covenant
described hereunder, that a Holder must follow.

     The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of Notes by the Issuer pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations conflict with the
provisions of the Indenture, the Issuer will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described in the Indenture by
virtue thereof.

     On the Change of Control Payment Date, the Issuer will, to the extent permitted by law,

     (1) accept for payment all Notes or portions thereof properly tendered pursuant to the
Change of Control Offer,

     (2) deposit with the Paying Agent an amount equal to the aggregate Change of Control
Payment in respect of all Notes or portions thereof so tendered, and

     (3) deliver, or cause to be delivered, to the Trustee for cancellation (and delivery
to the Paying Agent) the Notes so accepted together with an Officer’s Certificate to the
Trustee stating that such Notes or portions thereof have been tendered to and purchased by the
Issuer.

     The Senior Credit Facilities will, and future credit agreements or other agreements to which
the Issuer becomes a party may, provide that certain change of control events with respect to the
Issuer would constitute a default thereunder (including a Change of Control under the Indenture).
If we experience a change of control that triggers a default under our Senior Credit Facilities, we
could seek a waiver of such default or seek to refinance our Senior Credit Facilities. In the event
we do not obtain such a waiver or refinance the Senior Credit Facilities, such default could result
in amounts

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outstanding under our Senior Credit Facilities being declared due and payable and cause
a Receivables Facility to be wound down.

     Our ability to pay cash to the Holders of Notes following the occurrence of a Change of
Control may be limited by our 

then-existing financial resources. Therefore, sufficient funds may
not be available when necessary to make any required repurchases.

     The Change of Control purchase feature of the Notes may in certain circumstances make more
difficult or discourage a sale or takeover of us and, thus, the removal of incumbent management.
The Change of Control purchase feature is a result of negotiations between the Initial Purchasers
and us. After the Issue Date, we have no present intention to engage in a transaction involving a
Change of Control, although it is possible that we could decide to do so in the future. Subject to
the limitations discussed below, we could, in the future, enter into certain transactions,
including acquisitions, dispositions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings.
Restrictions on our ability to incur additional Indebtedness are contained in the covenants
described under “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock” and “Certain Covenants—Liens.” Such restrictions in the
Indenture can be waived only with the consent of the Holders of a majority in principal amount of
the Notes then outstanding. Except for the limitations contained in such covenants, however, the
Indenture will not contain any covenants or provisions that may afford Holders of the Notes
protection in the event of a highly leveraged transaction.

     We will not be required to make a Change of Control Offer following a Change of Control if a
third party makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer
made by us and purchases all Notes validly tendered and not withdrawn under such Change of Control
Offer. Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement
is in place for the Change of Control at the time of making of the Change of Control Offer.

     The definition of “Change of Control” includes a disposition of all or substantially all of
the assets of the Issuer and its Restricted Subsidiaries to any Person. Although there is a limited
body of case law interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve a disposition of “all or
substantially all” of the assets of the Issuer and its Restricted Subsidiaries. As a result, it may
be unclear as to whether a Change of Control has occurred and whether a Holder of Notes may require
the Issuer to make an offer to repurchase the Notes as described above.

     Except as described in clause (11) of the second paragraph under “Amendment, Supplement and
Waiver,” the provisions in the Indenture relative to the Issuer’s obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or modified at any time with
the written consent of the Holders of a majority in principal amount of the then outstanding Notes
under the Indenture.

Asset Sales

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an
Asset Sale, unless:

     (1) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value (as determined in good
faith by the Issuer) of the assets sold or otherwise disposed of; and

     (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration
therefor received by the Issuer or such Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents; provided that the amount of:

     (a) any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most
recent balance sheet or in the footnotes thereto) of the Issuer or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the Notes or
that are owed to the Issuer or a Restricted Subsidiary, that are assumed by the transferee
of any such assets and for which the Issuer and all of its Restricted Subsidiaries have
been validly released by all creditors in writing,

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EXHIBIT A

     (b) any securities, notes or other obligations or assets received by the Issuer or
such Restricted Subsidiary from such transferee that are converted by the Issuer or such
Restricted Subsidiary into cash (to the extent of the cash received) within 180 days
following the closing of such Asset Sale, and

     (c) any Designated Non-cash Consideration received by the Issuer or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken together with
all other Designated Non-cash Consideration received pursuant to this clause (c) that is
at that time outstanding, not to exceed $300.0 million at the time of the receipt of such
Designated Non-cash Consideration, with the fair market value of each item of Designated
Non-cash Consideration being measured at the time received and without giving effect to
subsequent changes in value

     shall be deemed to be cash for purposes of this provision and for no other purpose.

     Within 18 months after the receipt of any Net Proceeds of any Asset Sale by the Issuer or any
Restricted Subsidiary, the Issuer or such Restricted Subsidiary, at its option, may apply the Net
Proceeds from such Asset Sale,

     (1) to permanently reduce:

     (a) Obligations under the Senior Credit Facilities and to correspondingly reduce
commitments with respect thereto;

     (b) Obligations under Pari Passu Indebtedness (as defined below) that is secured by a
Lien, which Lien is permitted by the Indenture, and to correspondingly reduce commitments
with respect thereto;

     (c) Obligations under (i) Notes (to the extent such purchases are at or above 100% of
the principal amount thereof) or (ii) any other Pari Passu Indebtedness of the Issuer or a
Restricted Guarantor (and to correspondingly reduce commitments with respect thereto);
provided that the Issuer shall equally and ratably reduce Obligations under the Notes as
provided under “Optional Redemption,” through open-market purchases (to the extent such
purchases are at or above 100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth below for an Asset Sale Offer) to all Holders of
Notes to purchase a pro rata amount of Notes at 100% of the principal amount thereof, plus
accrued but unpaid interest; or

     (d) Indebtedness of a Restricted Subsidiary that is not a Guarantor, other than
Indebtedness owed to the Issuer or another Restricted Subsidiary; or

     (2) to (a) make an Investment in any one or more businesses, provided that such Investment
in any business is in the form of the acquisition of Capital Stock and results in the Issuer or
Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary, (b) acquire properties, (c) make
capital expenditures or (d) acquire other assets that, in the case of each of clauses (a), (b),
(c) and (d) are either (x) used or useful in a Similar Business or (y) replace the businesses,
properties and/or assets that are the subject of such Asset Sale;

     provided that, in the case of clause (2) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such commitment so long as the Issuer or
such other Restricted Subsidiary enters into such commitment with the good faith expectation that
such Net Proceeds will be applied to satisfy such commitment within the later of 18 months after
receipt of such Net Proceeds and 180 days following such commitment; provided that if such
commitment is cancelled or terminated after the later of such 18 month or 180 day period for any
reason before such Net Proceeds are applied, then such Net Proceeds shall constitute Excess
Proceeds.

     Any Net Proceeds from any Asset Sale described in the preceding paragraph that are not
invested or applied as provided and within the time period set forth in the preceding paragraph
will be deemed to constitute “Excess Proceeds.”
When the aggregate amount of Excess Proceeds with respect to the Notes exceeds $100.0 million,
the Issuer shall make an offer to all Holders of the Notes and, if required by the terms of any
Indebtedness that is pari passu in right of payment with such Notes (“Pari Passu Indebtedness”), to
the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum
aggregate principal amount of such Notes and the maximum aggregate principal amount (or accreted
value, if less) of such Pari Passu Indebtedness that is a minimum of $2,000 or an integral multiple
of $1,000, or if PIK Notes are issued or PIK Interest is paid, a minimum of $1.00 and an integral
multiple of $1.00, (in each case in aggregate principal amount) that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount
thereof (or accreted value, if applicable) plus accrued and unpaid interest to the date fixed for
the closing of such offer, in accordance with the procedures set forth in the Indenture. The Issuer
will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after
the date that Excess

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EXHIBIT A

Proceeds exceed $100.0 million by mailing the notice required pursuant to the
terms of the Indenture, with a copy to the Trustee or otherwise in accordance with the procedures
of DTC. The Issuer, in its sole discretion, may satisfy the foregoing obligations with respect to
any Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds
prior to the expiration of the relevant 18 month period (or such longer period provided above) or
with respect to Excess Proceeds of $100.0 million or less.

     To the extent that the aggregate principal amount of Notes and such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds with respect to the
Notes, the Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to
the other covenants contained in the Indenture. If the aggregate principal amount of Notes and the
aggregate principal amount (or accreted value, if applicable) of the Pari Passu Indebtedness
surrendered in an Asset Sale Offer exceeds the amount of Excess Proceeds with respect to the Notes,
the Trustee or the Paying Agent shall select the Notes and the Issuer or the agent for such Pari
Passu Indebtedness will select such other Pari Passu Indebtedness to be purchased on a pro rata
basis based on the principal amount of the Notes and such Pari Passu Indebtedness tendered. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

     Pending the final application of any Net Proceeds pursuant to this covenant, the holder of
such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under
a revolving credit facility, including under any Senior Credit Facility, or otherwise invest such
Net Proceeds in any manner not prohibited by the Indenture.

     The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
the Indenture, the Issuer will comply with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations described in the Indenture by virtue thereof.

     Except as described in clause (11) of the second paragraph under “Amendment, Supplement and
Waiver,” the provisions under the Indenture relative to the Issuer’s obligation to make an offer to
repurchase the Notes as a result of an Asset Sale may be waived or modified with the written
consent of the Holders of a majority in principal amount of the then outstanding Notes.

Selection and Notice

     If the Issuer is redeeming less than all of a series of Notes at any time, the Trustee or the
Paying Agent will select the Notes of such series to be redeemed (a) if such Notes are listed on
any national securities exchange, in compliance with the requirements of the principal national
securities exchange on which such Notes are listed or (b) on a pro rata basis to the extent
practicable, or, if the pro rata basis is not practicable for any reason by lot or by such other
method as the Trustee or the Paying Agent shall deem appropriate.

     Notices of purchase or redemption shall be mailed by first-class mail, postage prepaid, at
least 30 but not more than 60 days before the purchase or redemption date to (x) each Holder of
Notes to be redeemed at such Holder’s registered address, (y) to the Trustee to forward to each
Holder of Notes to be redeemed at such Holder’s registered address, or (z) otherwise in accordance
with the procedures of DTC, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the Notes or a
satisfaction and discharge of the Indenture. If any Note is to be purchased or redeemed in part
only, any notice of purchase or redemption that relates to such Note shall state the portion of the
principal amount thereof that has been or is to be purchased or redeemed.

     The Issuer will issue a new Note in a principal amount equal to the unredeemed portion of the
original Note in the name of the Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on Notes or portions
of them called for redemption.

Certain Covenants

     Set forth below are summaries of certain covenants that will be contained in the Indenture.

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Limitation on Restricted Payments

     The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

     (1) declare or pay any dividend or make any distribution or any payment having the effect
thereof on account of the Issuer’s or any Restricted Subsidiary’s Equity Interests (in such
Person’s capacity as holder of such Equity Interests), including any dividend or distribution
payable in connection with any merger or consolidation other than:

     (a) dividends or distributions payable solely in Equity Interests (other than
Disqualified Stock) of the Issuer; or

     (b) dividends or distributions by a Restricted Subsidiary so long as, in the case of
any dividend or distribution payable on or in respect of any class or series of securities
issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary of the Issuer, the
Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its Equity Interests in such class or series of
securities;

     (2) purchase, redeem, defease or otherwise acquire or retire for value any Equity
Interests of the Issuer or any direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;

     (3) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or
retire for value in each case, prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness other than:

     (a) Indebtedness permitted under clause (8) of the covenant described under
“—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock”; or

     (b) the purchase, repurchase or other acquisition of Subordinated Indebtedness of the
Issuer or any Restricted Subsidiary purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one year of
the date of purchase, repurchase or acquisition; or

     (4) make any Restricted Investment

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EXHIBIT A

     (all such payments and other actions set forth in clauses (1) through (4) above being
collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

     (1) no Default shall have occurred and be continuing or would occur as a consequence
thereof;

     (2) immediately after giving effect to such transaction on a pro forma basis, the Issuer
could incur $1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio test
set forth in the first paragraph of the covenant described under “—Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; and

     (3) such Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Issuer and its Restricted Subsidiaries after the Issue Date (including
Restricted Payments permitted by clauses (1), (2) (with respect to the payment of dividends on
Refunding Capital Stock (as defined below) pursuant to clause (c) thereof only), (6)(c) and (8)
of the next succeeding paragraph, but excluding all other Restricted Payments permitted by the
next succeeding paragraph), is less than the sum of (without duplication):

     (a) 50% of the Consolidated Net Income of the Issuer for the period (taken as one
accounting period) beginning on the first day of the fiscal quarter commencing after the
Issue Date to the end of the Issuer’s most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted Payment, or, in
the case such Consolidated Net Income for such period is a deficit, minus 100% of such
deficit; plus

     (b) 100% of the aggregate net proceeds (including cash and the fair market value, as
determined in good faith by the Issuer, of marketable securities or other property)
received by the Issuer or a Restricted Subsidiary since immediately after the Issue Date
(other than net cash proceeds to the extent such net cash proceeds have been used to incur
Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of
the second paragraph of “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”) from the issue or sale of:

     (i)(A) Equity Interests of the Issuer, including Treasury Capital Stock (as
defined below), but excluding cash proceeds and the fair market value, as determined
in good faith by the Issuer, of marketable securities or other property received from
the sale of:

     (x) Equity Interests to members of management, directors or consultants of
the Issuer, its Restricted Subsidiaries and any direct or indirect parent
company of the Issuer, after the Issue Date to the extent such amounts have been
applied to Restricted Payments made in accordance with clause (4) of the next
succeeding paragraph; and

     (y) Designated Preferred Stock; and

     (B) to the extent such proceeds or other property are actually contributed to
the capital of the Issuer or any Restricted Subsidiary, Equity Interests of the
Issuer’s direct or indirect parent companies (excluding contributions of the proceeds
from the sale of Designated Preferred Stock of such companies or contributions to the
extent such amounts have been applied to Restricted Payments made in accordance with
clause (4) of the next succeeding paragraph); or

     (ii) debt of the Issuer or any Restricted Subsidiary that has been converted
into or exchanged for such Equity Interests of the Issuer or a direct or indirect
parent company of the Issuer;

provided, however, that this clause (b) shall not include the proceeds from (W) Refunding
Capital Stock (as defined below), (X) Equity Interests or convertible debt securities sold
to the Issuer or a Restricted Subsidiary, as the case may be, (Y) Disqualified Stock or
debt securities that have been converted into Disqualified Stock or (Z) Excluded
Contributions; plus

     (c) 100% of the aggregate amount of net proceeds (including cash and the fair market
value, as determined in good faith by the Issuer, of marketable securities or other
property) contributed to the capital of the Issuer following the Issue Date (other than
(i) net cash proceeds to the extent such net cash proceeds have been used to incur
Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of
the second paragraph of “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”, (ii) by a Restricted Subsidiary and (iii) from
any Excluded Contributions); plus

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EXHIBIT A

     (d) 100% of the aggregate amount of proceeds (including cash and the fair market
value, as determined in good faith by the Issuer, of marketable securities or other
property) received by the Issuer or a Restricted Subsidiary by means of:

     (i) the sale or other disposition (other than to the Issuer or a Restricted
Subsidiary) of Restricted Investments made by the Issuer or its Restricted
Subsidiaries and repurchases and redemptions of such Restricted Investments from the
Issuer or its Restricted Subsidiaries and repayments of loans or advances, and
releases of guarantees, which constitute Restricted Investments by the Issuer or its
Restricted Subsidiaries, in each case with respect to Restricted Investments made
after the Issue Date; or

     (ii) the sale or other disposition (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a dividend or distribution
from an Unrestricted Subsidiary after the Issue Date; plus

     (e) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary after the Issue Date, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Issuer in good faith or if such fair market
value may exceed $100.0 million, in writing by an Independent Financial Advisor, at the
time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary,
other than to the extent such Investment constituted a Permitted Investment.

     The foregoing provisions will not prohibit:

     (1) the payment of any dividend within 60 days after the date of declaration thereof, if
at the date of declaration such payment would have complied with the provisions of the
Indenture;

     (2)(a) the redemption, repurchase, retirement or other acquisition of any (i) Equity
Interests (“Treasury Capital Stock”) or Subordinated Indebtedness of the Issuer or any
Restricted Subsidiary or (ii) Equity Interests of any direct or indirect parent company of the
Issuer, in the case of each of clause (i) and (ii), in exchange for, or out of the proceeds of
the substantially concurrent sale or issuance (other than to the Issuer or a Restricted
Subsidiary) of, Equity Interests of the Issuer, or any direct or indirect parent company of the
Issuer to the extent contributed to the capital of the Issuer or any Restricted Subsidiary (in
each case, other than any Disqualified Stock) (“Refunding Capital Stock”), (b) the declaration
and payment of dividends on the Treasury Capital Stock out of the proceeds of the substantially
concurrent sale (other than to the Issuer or a Restricted Subsidiary) of the Refunding Capital
Stock, and (c) if immediately prior to the retirement of Treasury Capital Stock, the
declaration and payment of dividends thereon was permitted under clause (6)(a) or (b) of this
paragraph, the declaration and payment of dividends on the Refunding Capital Stock (other than
Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or
otherwise acquire any Equity Interests of any direct or indirect parent company of the Issuer)
in an aggregate amount per year no greater than the aggregate amount of dividends per annum
that were declarable and payable on such Treasury Capital Stock immediately prior to such
retirement;

     (3) the redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness of the Issuer or a Restricted Subsidiary made by exchange for, or out of the
proceeds of the substantially concurrent sale of, new Indebtedness of the Issuer or a
Restricted Subsidiary, as the case may be, which is incurred in compliance with “—Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” so long
as:

     (a) the principal amount (or accreted value, if applicable) of such new Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus any
accrued and unpaid interest on, the Subordinated Indebtedness being so redeemed,
repurchased, exchanged, acquired or retired for value, plus the amount of any premium
required to be paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, exchanged, acquired or retired and any fees
and expenses incurred in connection with such redemption, repurchase, exchange,
acquisition or retirement and the issuance of such new Indebtedness;

     (b) such new Indebtedness is subordinated to the Notes or the applicable Guarantee at
least to the same extent as such Subordinated Indebtedness so purchased, exchanged,
redeemed, repurchased, exchanged, acquired or retired for value;

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EXHIBIT A

     (c) such new Indebtedness has a final scheduled maturity date equal to or later than
the final scheduled maturity date of the Subordinated Indebtedness being so redeemed,
repurchased, exchanged, acquired or retired; and

     (d) such new Indebtedness has a Weighted Average Life to Maturity equal to or greater
than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired;

     (4) a Restricted Payment to pay for the repurchase, retirement or other acquisition for
value of Equity Interests (other than Disqualified Stock) of the Issuer or any of its direct or
indirect parent companies held by any future, present or former employee, director, officer or
consultant of the Issuer, any of its Subsidiaries or any of its direct or indirect parent
companies pursuant to any management equity plan or stock option plan or any other management
or employee benefit plan or agreement (including, for the avoidance of doubt, any principal and
interest payable on any notes issued by the Issuer or any direct or indirect parent company of
the Issuer in connection with any such repurchase, retirement or acquisition), or any stock
subscription or shareholder agreement, including any Equity Interest rolled over by management
of the Issuer or any direct or indirect parent company of the Issuer in connection with the
Transactions; provided, however, that the aggregate Restricted Payments made under this clause
(4) do not exceed in any calendar year $50.0 million with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum of $75.0 million in any
calendar year; provided further that such amount in any calendar year may be increased by an
amount not to exceed:

     (a) the cash proceeds from the sale of Equity Interests (other than Disqualified
Stock) of the Issuer and, to the extent contributed to the capital of the Issuer, Equity
Interests of any of the direct or indirect parent companies of the Issuer, in each case to
employees, directors, officers or consultants of the Issuer, any of its Subsidiaries or
any of its direct or indirect parent companies that occurs after the Issue Date (other
than Equity Interests the proceeds of which are used to fund the Transactions), to the
extent the cash proceeds from the sale of such Equity Interests have not otherwise been
applied to the payment of Restricted Payments by virtue of clause (3) of the preceding
paragraph; plus

     (b) the cash proceeds of key man life insurance policies received by the Issuer (or
by any direct or indirect parent company to the extent actually contributed in cash to the
Issuer) or any of its Restricted Subsidiaries after the Issue Date; less

     (c) the amount of any Restricted Payments previously made with the cash proceeds
described in clauses (a) and (b) of this clause (4);

and provided further that cancellation of Indebtedness owing to the Issuer or any
Restricted Subsidiary from employees, directors, officers or consultants of the Issuer,
any of its Subsidiaries or its direct or indirect parent companies in connection with a
repurchase of Equity Interests of the Issuer or any of the Issuer’s direct or indirect
parent companies will not be deemed to constitute a Restricted Payment for purposes of
this covenant or any other provision of the Indenture;

     (5) the declaration and payment of dividends to holders of any class or series of
Disqualified Stock of the Issuer or any of its Restricted Subsidiaries issued in accordance
with the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;

     (6)(a) the declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by the Issuer or any of its
Restricted Subsidiaries after the Issue Date, provided that the amount of dividends paid
pursuant to this clause (a) shall not exceed the aggregate amount of cash actually received by
the Issuer or a Restricted Subsidiary from the issuance of such Designated Preferred Stock;

     (b) a Restricted Payment to a direct or indirect parent company of the Issuer, the
proceeds of which will be used to fund the payment of dividends to holders of any class or
series of Designated Preferred Stock (other than Disqualified Stock) of such parent
corporation issued after the Issue Date, provided that the amount of Restricted Payments
paid pursuant to this clause (b) shall not exceed the aggregate amount of cash actually
contributed to the capital of the Issuer from the sale of such Designated Preferred Stock;
or

     (c) the declaration and payment of dividends on Refunding Capital Stock that is
Preferred Stock in excess of the dividends declarable and payable thereon pursuant to
clause (2) of this paragraph;

provided, however, that, in the case of each of (a), (b) and (c) of this clause (6), for
the most recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date of issuance of such Designated Preferred
Stock or the declaration of such dividends on Refunding Capital Stock

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that is Preferred Stock, after giving effect to such issuance or declaration on a pro
forma basis, the Issuer could incur $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test set forth in the covenant described under “—Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

     (7) repurchases of Equity Interests deemed to occur upon exercise of stock options or
warrants if such Equity Interests represent a portion of the exercise price of such options or
warrants;

     (8) the declaration and payment of dividends on the Issuer’s common stock (or a Restricted
Payment to any direct or indirect parent entity to fund a payment of dividends on such entity’s
common stock), following the first public Equity Offering of such common stock after the Issue
Date, of up to 6% per annum of the net cash proceeds received by (or, in the case of a
Restricted Payment to a direct or indirect parent entity, contributed to the capital of) the
Issuer in or from any such public Equity Offering;

     (9) Restricted Payments that are made with Excluded Contributions;

     (10) other Restricted Payments in an aggregate amount taken together with all other
Restricted Payments made pursuant to this clause (10) not to exceed $400.0 million;

     (11) distributions or payments of Receivables Fees and Securitization Fees;

     (12) any Restricted Payment used to fund or effect the Transactions and the fees and
expenses related thereto or owed to Affiliates, in each case to the extent permitted by the
covenant described under “—Transactions with Affiliates”, and any payments to holders of
Equity Interests of the Issuer (immediately prior to giving effect to the Transactions) in
connection with, or as a result of, their exercise of appraisal rights and the settlement of
any claims or actions (whether actual, contingent or potential) with respect thereto;

     (13) the repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to the provisions similar to those described under the
captions “Repurchase at the Option of Holders—Change of Control” and “Repurchase at the Option
of Holders—Asset Sales”; provided that all Notes tendered by Holders in connection with a
Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or
acquired for value;

     (14) the declaration and payment of dividends or the payment of other distributions by the
Issuer or a Restricted Subsidiary to, or the making of loans or advances to, any of the
Issuer’s direct or indirect parent companies in amounts required for any direct or indirect
parent companies to pay, in each case without duplication,

     (a) franchise taxes and other fees, taxes and expenses required to maintain their
legal existence;

     (b) federal, foreign, state and local income or franchise and similar taxes; provided
that, in each fiscal year, the amount of such payments shall not exceed the amount that
the Issuer and its Restricted Subsidiaries would be required to pay in respect of federal,
foreign, state and local income or franchise taxes if such entities were corporations
paying taxes separately from any parent entity at the highest combined applicable federal,
foreign, state, local or franchise tax rate for such fiscal year (and to the extent of any
amounts actually received in cash from its Unrestricted Subsidiaries, in amounts required
to pay such taxes to the extent attributable to the income of such Unrestricted
Subsidiaries);

     (c) customary salary, bonus and other benefits payable to directors, officers and
employees of any direct or indirect parent company of the Issuer to the extent such
salaries, bonuses and other benefits are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries;

     (d) general operating and overhead costs and expenses of any direct or indirect
parent company of the Issuer to the extent such costs and expenses are attributable to the
ownership or operation of the Issuer and its Restricted Subsidiaries;

     (e) amounts payable to the Investors pursuant to the Sponsor Management Agreement;

     (f) fees and expenses other than to Affiliates of the Issuer related to (i) any
equity or debt offering of such parent entity (whether or not successful) and (ii) any
Investment otherwise permitted under this covenant (whether or not successful);

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     (g) cash payments in lieu of issuing fractional shares in connection with the
exercise of warrants, options or other securities convertible into or exchangeable for
Equity Interests of the Issuer or any direct or indirect parent of the Issuer; and

     (h) to finance Investments otherwise permitted to be made pursuant to this covenant;
provided that (A) such Restricted Payment shall be made substantially concurrently with
the closing of such Investment; (B) such direct or indirect parent company shall,
immediately following the closing thereof, cause (1) all property acquired (whether assets
or Equity Interests) to be contributed to the capital of the Issuer or one of its
Restricted Subsidiaries or (2) the merger of the Person formed or acquired into the Issuer
or one of its Restricted Subsidiaries (to the extent not prohibited by the covenant
“—Merger, Consolidation or Sale of All or Substantially All Assets” below) in order to
consummate such Investment; (C) such direct or indirect parent company and its Affiliates
(other than the Issuer or a Restricted Subsidiary) receives no consideration or other
payment in connection with such transaction except to the extent the Issuer or a
Restricted Subsidiary could have given such consideration or made such payment in
compliance with the Indenture; (D) any property received by the Issuer shall not increase
amounts available for Restricted Payments pursuant to clause (3) of the preceding
paragraph; and (E) such Investment shall be deemed to be made by the Issuer or a
Restricted Subsidiary by another provision of this covenant (other than pursuant to clause
(10) hereof) or pursuant to the definition of “Permitted Investments” (other than clause
(9) thereof);

     (15) the distribution, by dividend or otherwise, of shares of Capital Stock of, or
Indebtedness owed to the Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries;

     (16) payments or distributions to dissenting stockholders pursuant to applicable law,
pursuant to or in connection with a consolidation, merger or transfer of all or substantially
all of the assets of the Issuer and its Restricted Subsidiaries, taken as a whole, that
complies with the covenant described under “—Merger, Consolidation or Sale of All or
Substantially All Assets”; provided that as a result of such consolidation, merger or transfer
of assets, the Issuer shall make a Change of Control Offer and that all Notes tendered by
Holders in connection with such Change of Control Offer have been repurchased, redeemed or
acquired for value;

     (17) any Restricted Payments relating to a Securitization Subsidiary that, in the good
faith determination of the Issuer, are necessary or advisable to effect any Qualified
Securitization Financing; and

     (18) purchase Equity Interests of CCO not owned by the Issuer or its Restricted
Subsidiaries (whether by tender offer, open market purchase, merger or otherwise);

     provided, however, that at the time of, and after giving effect to, any Restricted Payment
permitted under clauses (10), (15) and (17), no Default shall have occurred and be continuing or
would occur as a consequence thereof.

     As of the Issue Date, all of the Subsidiaries of the Issuer will be Restricted Subsidiaries.
The Issuer will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the second to last sentence of the definition of “Unrestricted Subsidiary.” For
purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding
Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the
Subsidiary so designated will be deemed to be Investments in an amount determined as set forth in
the last sentence of the definition of “Investment.” Such designation will be permitted only if a
Restricted Payment in such amount would be permitted at such time pursuant to this covenant or
pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of
the restrictive covenants set forth in the Indenture.

     Notwithstanding the foregoing provisions of this covenant, the Issuer will not, and will not
permit any of its Restricted Subsidiaries to, pay any cash dividend or make any cash distribution
on, or in respect of, the Issuer’s Capital Stock or purchase for cash or otherwise acquire for cash
any Capital Stock of the Issuer or any direct or indirect parent of the Issuer for the purpose of
paying any cash dividend or making any cash distribution to, or acquiring Capital Stock of any
direct or indirect parent of the Issuer for cash from, the Investors, or guarantee any Indebtedness
of any Affiliate of the Issuer for the purpose of paying such dividend, making such distribution or
so acquiring such Capital Stock to or from the Issuer, in each case by means of utilization of the
cumulative Restricted Payment credit provided by the first paragraph of this covenant, or the
exceptions provided by clauses (1) or (10) of the second paragraph of this covenant or clause (12)
of the definition of “Permitted Investments,” unless the most recent interest payment made by the
Issuer was a Cash Interest payment and the Issuer has not made a PIK Election with respect to the
next interest payment due and, in each case, such payment is otherwise in compliance with this
covenant.

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Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with
respect to any Indebtedness (including Acquired Indebtedness) and the Issuer and the Restricted
Guarantors will not issue any shares of Disqualified Stock and will not permit any Restricted
Subsidiary that is not a Guarantor to issue any shares of Disqualified Stock or Preferred Stock;
provided, however, that the Issuer and the Restricted Guarantors may incur Indebtedness (including
Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary that is
not a Guarantor may incur Indebtedness (including Acquired Indebtedness), issue shares of
Disqualified Stock and issue shares of Preferred Stock, if the Consolidated Leverage Ratio at the
time such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is
issued would have been no greater than 7.5 to 1.0 determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the
application of proceeds therefrom had occurred at the beginning of the most recently ended four
fiscal quarters for which internal financial statements are available; provided, however, that
Restricted Subsidiaries that are not Guarantors may not incur Indebtedness or issue Disqualified
Stock or Preferred Stock if, after giving pro forma effect to such incurrence or issuance
(including a pro forma application of the net proceeds therefrom), more than an aggregate of $750.0
million of Indebtedness or Disqualified Stock or Preferred Stock of Restricted Subsidiaries that
are not Guarantors is outstanding pursuant to this paragraph at such time.

     The foregoing limitations will not apply to:

     (1) the incurrence of Indebtedness under Credit Facilities by the Issuer or any of its
Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’
acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a
principal amount equal to the face amount thereof), up to an aggregate principal amount of
$16,770,638,000 outstanding at any one time, less the aggregate amount of proceeds received
from the sale of any Securitization Assets made since the Issue Date;

     (2) the incurrence by the Issuer and any Restricted Guarantor of Indebtedness represented
by the Notes (including any PIK Notes and any Guarantee, but excluding any Additional Notes);

     (3) the incurrence by the Issuer and any Restricted Guarantor of Indebtedness represented
by the Exchange Notes and related guarantees of the Exchange Notes to be issued in exchange for
the Notes (including any PIK Notes but excluding any Additional Notes) and Guarantees pursuant
to the Registration Rights Agreement;

     (4) Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Issue
Date (other than Indebtedness described in clauses (1) and (2));

     (5) Indebtedness (including Capitalized Lease Obligations) incurred or Disqualified Stock
and Preferred Stock issued by the Issuer or any of its Restricted Subsidiaries, to finance the
purchase, lease or improvement of property (real or personal) or equipment that is used or
useful in a Similar Business, whether through the direct purchase of assets or the Equity
Interests of any Person owning such assets in an aggregate principal amount, together with any
Refinancing Indebtedness in respect thereof and all other Indebtedness incurred and
Disqualified Stock and/or Preferred Stock issued and outstanding under this clause (5), not to
exceed $150.0 million at any time outstanding; so long as such Indebtedness exists at the date
of such purchase, lease or improvement, or is created within 270 days thereafter;

     (6) Indebtedness incurred by the Issuer or any Restricted Subsidiary constituting
reimbursement obligations with respect to bankers’ acceptances and letters of credit issued in
the ordinary course of business, including letters of credit in respect of workers’
compensation claims, or other Indebtedness with respect to reimbursement type obligations
regarding workers’ compensation claims; provided, however, that upon the drawing of such
bankers’ acceptances and letters of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such drawing or incurrence;

     (7) Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
provided, however, that such Indebtedness is not reflected on the balance sheet (other than by
application of FIN 45 or in respect of acquired contingencies and contingent consideration
recorded under FAS 141(R)) of the Issuer or

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any Restricted Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be deemed to be reflected
on such balance sheet for purposes of this clause (7));

     (8) Indebtedness of the Issuer to a Restricted Subsidiary or a Restricted Subsidiary to
the Issuer or another Restricted Subsidiary; provided that any such Indebtedness (other than
pursuant to the CCU Mirror Note) owing by the Issuer or a Guarantor to a Restricted Subsidiary
that is not a Guarantor is expressly subordinated in right of payment to the Notes or the
Guarantee of the Notes, as the case may be; provided further that any subsequent issuance or
transfer of any Capital Stock or any other event which results in any Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness
(except to the Issuer or another Restricted Subsidiary or any pledge of such Indebtedness
constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such
Indebtedness not permitted by this clause (8);

     (9) shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another
Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock
or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to
the Issuer or a Restricted Subsidiary or pursuant to any pledge of such Preferred Stock
constituting a Permitted Lien) shall be deemed in each case to be an issuance of such shares of
Preferred Stock not permitted by this clause (9);

     (10) Hedging Obligations (excluding Hedging Obligations entered into for speculative
purposes) for the purpose of limiting interest rate risk with respect to any Indebtedness
permitted to be incurred pursuant to this covenant, exchange rate risk or commodity pricing
risk;

     (11) obligations in respect of self-insurance, customs, stay, performance, bid, appeal and
surety bonds and completion guarantees and other obligations of a like nature provided by the
Issuer or any of its Restricted Subsidiaries in the ordinary course of business;

     (12) Indebtedness or Disqualified Stock of the Issuer or any Restricted Guarantor and
Indebtedness, Disqualified Stock or Preferred Stock of any Restricted Subsidiary that is not a
Guarantor in an aggregate principal amount or liquidation preference equal to 200.0% of the net
cash proceeds received by the Issuer and its Restricted Subsidiaries since immediately after
the Issue Date from the issue or sale of Equity Interests of the Issuer or cash contributed to
the capital of the Issuer (in each case, other than proceeds of Disqualified Stock or sales of
Equity Interests to, or contributions received from, the Issuer or any of its Subsidiaries) as
determined in accordance with clauses (3)(b) and (3)(c) of the first paragraph of the covenant
described under “—Limitation on Restricted Payments” to the extent such net cash proceeds or
cash have not been applied pursuant to such clauses to make Restricted Payments or to make
other Investments, payments or exchanges pursuant to the second paragraph of the covenant
described under”—Limitation on Restricted Payments” or to make Permitted Investments (other
than Permitted Investments specified in clauses (1), (2) and (3) of the definition thereof) ;
provided, however, that any amounts in excess of 100.0% shall be Subordinated Indebtedness of
the Issuer or any Restricted Subsidiary that has a Stated Maturity that is no earlier than 90
days after the Stated Maturity of the Notes or Disqualified Stock or Preferred Stock of any
Restricted Subsidiary that has a Stated Maturity that is no earlier than 90 days after the
Stated Maturity of the Notes, and (b) Indebtedness or Disqualified Stock of the Issuer or a
Restricted Guarantor not otherwise permitted hereunder, and Indebtedness, Disqualified Stock or
Preferred Stock of any Restricted Subsidiary that is not a Guarantor not otherwise permitted
hereunder in an aggregate principal amount or liquidation preference, which when aggregated
with the principal amount and liquidation preference of all other Indebtedness, Disqualified
Stock and Preferred Stock then outstanding and incurred pursuant to this clause (12)(b), does
not at any one time outstanding exceed $1,000.0 million (it being understood that any
Indebtedness incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause
(12)(b) shall cease to be deemed incurred or outstanding for purposes of this clause (12)(b)
but shall be deemed incurred for the purposes of the first paragraph of this covenant from and
after the first date on which the Issuer or such Restricted Subsidiary could have incurred such
Indebtedness or issued such Disqualified Stock or Preferred Stock under the first paragraph of
this covenant without reliance on this clause (12)(b));

     (13) the incurrence by the Issuer or any Restricted Subsidiary of Indebtedness or issuance
by the Issuer or any Restricted Subsidiary of Disqualified Stock or Preferred Stock which
serves to extend, replace, refund, refinance, renew or defease:

     (a) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued as
permitted under the first paragraph of this covenant and clauses (2), (3), (4), (5),
(12)(a) and (14) below, or

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     (b) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued to so
extend, replace, refund, refinance, renew or defease the Indebtedness, Disqualified Stock
or Preferred Stock described in clause (a) above,

including, in each case, additional Indebtedness, Disqualified Stock or Preferred Stock
incurred to pay premiums (including tender premiums), defeasance costs and fees and expenses in
connection therewith (collectively, the “Refinancing Indebtedness”) prior to its respective
maturity; provided, however, that such Refinancing Indebtedness:

     (A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness
is incurred which is not less than the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or Preferred Stock being extended, replaced, refunded,
refinanced, renewed or defeased (except by virtue of prepayment of such Indebtedness),

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     (B) to the extent such Refinancing Indebtedness extends, replaces, refunds,
refinances, renews or defeases (i) Indebtedness subordinated or pari passu to the Notes or
any Guarantee thereof, such Refinancing Indebtedness is subordinated or pari passu to the
Notes or the Guarantee at least to the same extent as the Indebtedness being extended,
replaced, refunded, refinanced, renewed or defeased or (ii) Disqualified Stock or
Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred
Stock, respectively, and

     (C) shall not include:

     (i) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted
Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock
or Preferred Stock Indebtedness, Disqualified Stock or Preferred Stock of the Issuer;

     (ii) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted
Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock
or Preferred Stock of the Issuer or a Restricted Guarantor; or

     (iii) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a
Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred
Stock of an Unrestricted Subsidiary;

and provided further that subclauses (A) and (B) of this clause (13) will not apply to any
extension, replacement, refunding, refinancing, renewal or defeasance of any Indebtedness
under a Credit Facility;

     (14) Indebtedness, Disqualified Stock or Preferred Stock of (x) the Issuer or a Restricted
Subsidiary incurred or issued to finance an acquisition or (y) Persons that are acquired by the
Issuer or any Restricted Subsidiary or merged into the Issuer or a Restricted Subsidiary in
accordance with the terms of the Indenture; provided that after giving effect to such
acquisition or merger, either:

     (i) the Issuer would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in the first
paragraph of this covenant, or

     (ii) the Consolidated Leverage Ratio is less than the Consolidated Leverage
Ratio immediately prior to such acquisition or merger;

     (15) Indebtedness arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within five Business Days of its
incurrence;

     (16) Indebtedness of the Issuer or any of its Restricted Subsidiaries supported by a
letter of credit issued pursuant to any Credit Facility, in a principal amount not in excess of
the stated amount of such letter of credit;

     (17)(a) any guarantee by the Issuer or a Restricted Subsidiary of Indebtedness or other
obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness
incurred by such Restricted Subsidiary is permitted under the terms of the Indenture, or

     (b) any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer; provided
that such Restricted Subsidiary shall comply with the covenant described below under
“Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”;

     (18) Indebtedness of Foreign Subsidiaries of the Issuer in an amount not to exceed at
any one time outstanding and together with any other Indebtedness incurred under this clause
(18) $250.0 million (it being understood that any Indebtedness incurred pursuant to this clause
(18) shall cease to be deemed incurred or outstanding for purposes of this clause (18) but
shall be deemed incurred for the purposes of the first paragraph of this covenant from and
after the first date on which such Foreign Subsidiary could have incurred such Indebtedness
under the first paragraph of this covenant without reliance on this clause (18));

     (19) Indebtedness consisting of Indebtedness issued by the Issuer or any of its Restricted
Subsidiaries to future, current or former officers, directors, employees and consultants
thereof or any direct or indirect parent thereof, their respective estates, heirs, family
members, spouses or former spouses, in each case to finance the purchase or redemption of
Equity Interests of the Issuer, a Restricted Subsidiary or any of their respective direct or

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indirect parent companies to the extent described in clause (4) of the second paragraph of the
covenant described under “—Limitation on Restricted Payments”;

     (20) cash management obligations and Indebtedness in respect of netting services, employee
credit card programs and similar arrangements in connection with cash management and deposit
accounts; and

     (21) customer deposits and advance payments received in the ordinary course of business
from customers for goods purchased in the ordinary course of business.

For purposes of determining compliance with this covenant:

     (1) in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or
any portion thereof) meets the criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through (21) above
or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer, in
its sole discretion, may classify or reclassify such item of Indebtedness, Disqualified Stock
or Preferred Stock (or any portion thereof) and will only be required to include the amount and
type of such Indebtedness, Disqualified Stock or Preferred Stock in one of the above clauses or
under the first paragraph of this covenant; provided that all Indebtedness outstanding under
the Credit Facilities on the Issue Date will be treated as incurred on the Issue Date under
clause (1) of the preceding paragraph; and

     (2) at the time of incurrence or any reclassification thereafter, the Issuer will be
entitled to divide and classify an item of Indebtedness in more than one of the types of
Indebtedness described in the first and second paragraphs above.

     Accrual of interest or dividends, the accretion of accreted value, the accretion or
amortization of original issue discount and the payment of interest or dividends in the form of
additional Indebtedness, Disqualified Stock or Preferred Stock, as applicable, will not be deemed
to be an incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for
purposes of this covenant.

     For purposes of determining compliance with any U.S. dollar-denominated restriction on the
incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated
in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on
the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case
of revolving credit debt; provided that if such Indebtedness is incurred to refinance other
Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable
U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange
rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness
does not (i) exceed the principal amount of such Indebtedness being refinanced plus (ii) the
aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing.

     The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred
in a different currency from the Indebtedness being refinanced, shall be calculated based on the
currency exchange rate applicable to the currencies in which such respective Indebtedness is
denominated that is in effect on the date of such refinancing. The principal amount of any
non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date
shall be the principal amount thereof that would be shown on a balance sheet of the Issuer dated
such date prepared in accordance with GAAP.

     The Issuer will not, and will not permit any Restricted Guarantor to, directly or indirectly,
incur any Indebtedness (including Acquired Indebtedness) that is contractually subordinated or
junior in right of payment to any Indebtedness of the Issuer or such Restricted Guarantor (other
than Indebtedness constituting Designated Senior Indebtedness), as the case may be, unless such
Indebtedness is expressly subordinated in right of payment to the Notes or such Restricted
Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is subordinated to
other Indebtedness of the Issuer or such Restricted Guarantor, as the case may be. The Indenture
will not treat (1) unsecured Indebtedness as subordinated or junior to Secured Indebtedness merely
because it is unsecured or (2) unsubordinated Indebtedness as subordinated or junior to any other
unsubordinated Indebtedness merely because it has a junior priority with respect to the same
collateral.

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EXHIBIT A

Limitation on Modification of Existing Senior Notes

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to, amend any of
the Existing Senior Notes or the Existing Senior Notes Indenture, or any supplemental indenture in
respect thereof, to create, incur or assume any Lien that secures any of the Existing Senior Notes
other than to the extent permitted by the Senior Credit Facilities as in effect on the Issue Date.

Limitation on Layering

     The Issuer will not permit any Restricted Guarantor to, directly or indirectly, incur any
Indebtedness that is subordinate in right of payment to any Designated Senior Indebtedness of such
Restricted Guarantor, as the case may be, unless such Indebtedness is either:

     (1) equal in right of payment with the such Restricted Guarantor’s Guarantee of the Notes;
or

     (2) expressly subordinated in right of payment to such Restricted Guarantor’s Guarantee of
the Notes.

     The Indenture will not treat (1) unsecured Indebtedness as subordinated or junior to Secured
Indebtedness merely because it is unsecured or (2) unsubordinated Indebtedness as subordinated or
junior to any other unsubordinated Indebtedness merely because it has a junior priority with
respect to the same collateral.

Liens

     The Issuer will not, and will not permit any Restricted Guarantor to, directly or indirectly,
create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures Obligations
under any Indebtedness or any related guarantee, on any asset or property of the Issuer or any
Restricted Guarantor, or any income or profits therefrom, or assign or convey any right to receive
income therefrom, unless:

     (1) in the case of Liens securing Subordinated Indebtedness, the Notes and related
Guarantees are secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens; or

     (2) in all other cases, the Notes or the Guarantees are equally and ratably secured.

     The foregoing shall not apply to (a) Liens securing the Notes (including PIK Notes) and the
related Guarantees or the Exchange Notes (including PIK Notes issued in respect thereof) and
related guarantees, (b) Liens securing Obligations under any Indebtedness and related guarantees
under Credit Facilities, including any letter of credit facility relating thereto, that was
permitted by the terms of the Indenture to be incurred pursuant to clause (1) of the second
paragraph under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock” and (c) Liens incurred to secure Obligations in respect of any Indebtedness
permitted to be incurred pursuant to the covenant described above under “—Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided that, with
respect to Liens securing Obligations permitted under this subclause (c), at the time of incurrence
and after giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be no greater
than 6.75 to 1.0.

     Any Lien created for the benefit of the Holders of the Notes pursuant to this covenant shall
be deemed automatically and unconditionally released and discharged upon the release and discharge
of the applicable Lien described in clauses (1) and (2) above.

Merger, Consolidation or Sale of All or Substantially All Assets

     The Issuer may not consolidate or merge with or into or wind up into (whether or not the
Issuer is the surviving corporation), and may not sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the properties or assets of the Issuer and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions, to any Person
unless:

     (1) the Issuer is the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Issuer) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made is organized
or existing under the laws of the United States, any state thereof, the District of Columbia,
or any territory thereof (the Issuer or such Person, as the case may be, being herein called the

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“Successor Company”); provided that in the case where the Successor Company is not a
corporation, a co-obligor of the Notes is a corporation;

     (2) the Successor Company, if other than the Issuer, expressly assumes all the obligations
of the Issuer under the Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;

     (3) immediately after such transaction, no Default exists;

     (4) immediately after giving pro forma effect to such transaction and any related
financing transactions, as if such transactions had occurred at the beginning of the applicable
four-quarter period, (a) the Successor Company would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in the first
paragraph of the covenant described under “—Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock,” or (b) the Consolidated Leverage Ratio for
the Successor Company and its Restricted Subsidiaries would be equal to or less than such
Consolidated Leverage Ratio immediately prior to such transaction;

     (5) each Restricted Guarantor, unless it is the other party to the transactions described
above, in which case clause (1)(b) of the second succeeding paragraph shall apply, shall have
by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations
under the Indenture and the Notes; and

     (6) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer and such supplemental
indentures, if any, comply with the Indenture.

     The Successor Company will succeed to, and be substituted for the Issuer under the Indenture
and the Notes, as applicable. Notwithstanding the foregoing, clauses (2), (3), (4), (5) and (6)
above shall not apply to the Transactions (including the merger). Notwithstanding the foregoing
clauses (3) and (4),

     (1) the Issuer or any Restricted Subsidiary may consolidate with or merge into or transfer
all or part of its properties and assets to the Issuer or a Restricted Guarantor; and

     (2) the Issuer may merge with an Affiliate of the Issuer solely for the purpose of
reorganizing the Issuer in the United States, any state thereof, the District of Columbia or
any territory thereof so long as the amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.

     Subject to certain limitations described in the Indenture governing release of a Guarantee
upon the sale, disposition or transfer of a guarantor, no Restricted Guarantor will, and the Issuer
will not permit any Restricted Guarantor to, consolidate or merge with or into or wind up into
(whether or not the Issuer or such Restricted Guarantor is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties
or assets, in one or more related transactions, to any Person unless:

     (1)(a) such Restricted Guarantor is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than such Restricted Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition will have been
made is organized or existing under the laws of the jurisdiction of organization of such
Restricted Guarantor, as the case may be, or the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof (such Restricted Guarantor or such Person,
as the case may be, being herein called the “Successor Person”);

     (b) the Successor Person, if other than such Restricted Guarantor, expressly assumes
all the obligations of such Restricted Guarantor under the Indenture and such Restricted
Guarantor’s related Guarantee pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;

     (c) immediately after such transaction, no Default exists; and

     (d) the Issuer shall have delivered to the Trustee an Officer’s Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture; or

     (2) the transaction complies with clauses (1) and (2) of the first paragraph of the
covenant described under “Repurchase at the Option of Holders—Asset Sales.”

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     In the case of clause (1) above, the Successor Person will succeed to, and be substituted
for, such Restricted Guarantor under the Indenture and such Restricted Guarantor’s Guarantee.
Notwithstanding the foregoing, any Restricted Guarantor may (1) merge or consolidate with or
into or wind up into or transfer all or part of its properties and assets to another Restricted
Guarantor or the Issuer, (2) merge with an Affiliate of the Issuer solely for the purpose of
reincorporating the Guarantor in the United States, any state thereof, the District of Columbia
or any territory thereof or (3) convert into (which may be effected by merger with a Restricted
Subsidiary that has substantially no assets and liabilities) a corporation, partnership,
limited partnership, limited liability corporation or trust organized or existing under the
laws of the jurisdiction of organization of such Restricted Guarantor (which may be effected by
merger so long as the survivor thereof is a Restricted Guarantor).

Transactions with Affiliates

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of their properties or assets to,
or purchase any property or assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate of the Issuer (each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or consideration in excess of $20.0 million, unless:

     (1) such Affiliate Transaction is on terms that are not materially less favorable to the
Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on
an arm’s-length basis; and

     (2) the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate payments or consideration in excess of
$40.0 million, a resolution adopted by the majority of the board of directors of the Issuer
approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that
such Affiliate Transaction complies with clause (1) above.

The foregoing provisions will not apply to the following:

     (1) transactions between or among the Issuer or any of its Restricted Subsidiaries;

     (2) Restricted Payments permitted by the provisions of the Indenture described above under
the covenant “—Limitation on Restricted Payments” and Investments constituting Permitted
Investments;

     (3) the payment of management, consulting, monitoring, transaction, advisory and
termination fees and related expenses and indemnities, directly or indirectly, to the
Investors, in each case pursuant to the Sponsor Management Agreement;

     (4) the payment of reasonable and customary fees and compensation consistent with
past practice or industry practices paid to, and indemnities provided on behalf of, employees,
officers, directors or consultants of the Issuer, any of its direct or indirect parent
companies or any of its Restricted Subsidiaries;

     (5) transactions in which the Issuer or any of its Restricted Subsidiaries, as the case
may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that
such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of
view or stating that the terms are not materially less favorable to the Issuer or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable transaction by
the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

     (6) any agreement as in effect as of the Issue Date (other than the Sponsor Management
Agreement), or any amendment thereto (so long as any such amendment is not disadvantageous in
any material respect in the good faith judgment of the board of directors of the Issuer to the
Holders when taken as a whole as compared to the applicable agreement as in effect on the Issue
Date);

     (7) the existence of, or the performance by the Issuer or any of its Restricted
Subsidiaries of its obligations under the terms of, any stockholders agreement, principal
investors agreement (including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Issue Date and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of obligations under any future amendment to any
such existing agreement or under any similar agreement entered into after the Issue Date shall
only be permitted by this clause (7) to the extent that the terms of any such amendment or new
agreement are not otherwise disadvantageous in any

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material respect in the good faith judgment
of the board of directors of the Issuer to the Holders when taken as a whole;

     (8) the Transactions and the payment of all fees and expenses related to the Transactions,
including Transaction Expenses;

     (9) transactions with customers, clients, suppliers, contractors, joint venture partners
or purchasers or sellers of goods or services, in each case in the ordinary course of business
and otherwise in compliance with the terms of the Indenture which are fair to the Issuer and
its Restricted Subsidiaries, in the reasonable determination of the board of directors of the
Issuer or the senior management thereof, or are on terms at least as favorable as would
reasonably have been obtained at such time from an unaffiliated party;

     (10) the issuance of Equity Interests (other than Disqualified Stock) by the Issuer or a
Restricted Subsidiary;

     (11) sales of accounts receivable, or participations therein, or Securitization Assets or
related assets in connection with any Receivables Facility or any Qualified Securitization
Financing;

     (12) payments by the Issuer or any of its Restricted Subsidiaries to any of the Investors
made for any financial advisory, financing, underwriting or placement services or in respect of
other investment banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the board of
directors of the Issuer in good faith or as otherwise permitted by the Indenture;

     (13) payments or loans (or cancellation of loans) to employees or consultants of the
Issuer, any of its direct or indirect parent companies or any of its Restricted Subsidiaries
and employment agreements, severance arrangements, stock option plans and other similar
arrangements with such employees or consultants which, in each case, are approved by a majority
of the board of directors of the Issuer in good faith; and

     (14) Investments by the Investors in debt securities of the Issuer or any of its
Restricted Subsidiaries so long as (i) the investment is being offered generally to other
investors on the same or more favorable terms and (ii) the investment constitutes less than
5.0% of the proposed or outstanding issue amount of such class of securities.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

     The Issuer will not, and will not permit any of its Restricted Subsidiaries that are not
Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to:

     (1)(a) pay dividends or make any other distributions to the Issuer or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or

     (b) pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

     (2) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

     (3) sell, lease or transfer any of its properties or assets to the Issuer or any of its
Restricted Subsidiaries,

except (in each case) for such encumbrances or restrictions existing under or by reason of:

     (a) contractual encumbrances or restrictions in effect on the Issue Date, including
without limitation, pursuant to the Existing Senior Notes;

     (b)(x) the Senior Credit Facilities and the related documentation, (y) the Indenture,
the Notes and the Guarantees and (z) the Exchange Notes and the related indenture and
guarantees;

     (c) purchase money obligations for property acquired in the ordinary course of
business and Capital Lease Obligations that impose restrictions of the nature discussed in
clause (3) above on the property so acquired;

     (d) applicable law or any applicable rule, regulation or order;

     (e) any agreement or other instrument of a Person acquired by or merged, consolidated
or amalgamated with or into the Issuer or any Restricted Subsidiary thereof in existence
at the time of such acquisition, merger,

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consolidation or amalgamation (but, in any such
case, not created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than the Person
so acquired and its Subsidiaries, or the property or assets of the Person so acquired and
its Subsidiaries or the property or assets so assumed;

     (f) contracts for the sale of assets, including customary restrictions with
respect to a Subsidiary of (i) the Issuer or (ii) a Restricted Subsidiary, pursuant to an
agreement that has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary that impose restrictions on the
assets to be sold;

     (g) Secured Indebtedness otherwise permitted to be incurred pursuant to the covenants
described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock and Preferred Stock” and “—Liens” that limit the right of the debtor to dispose of
the assets securing such Indebtedness;

     (h) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business;

     (i) other Indebtedness, Disqualified Stock or Preferred Stock of Foreign Subsidiaries
permitted to be incurred subsequent to the Issue Date pursuant to the provisions of the
covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;

     (j) customary provisions in any joint venture agreement or other similar agreement
relating solely to such joint venture;

     (k) customary provisions contained in any lease, sublease, license, sublicense or
similar agreement, including with respect to intellectual property, and other agreements,
in each case, entered into in the ordinary course of business;

     (l) any encumbrances or restrictions created in connection with any Receivables
Facility or Qualified Securitization Financing that, in the good faith determination of
the Issuer, are necessary or advisable to effect such Receivables Facility or Qualified
Securitization Financing; and

     (m) any encumbrances or restrictions of the type referred to in clauses (1), (2) and
(3) above imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (a) through (l) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Issuer, no more restrictive with
respect to such encumbrance and other restrictions taken as a whole than those prior to
such amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.

Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

     The Issuer will not permit any Restricted Subsidiary that is a Wholly-Owned Subsidiary of the
Issuer (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee other
capital markets debt
securities), other than a Guarantor, a Foreign Subsidiary or a Securitization Subsidiary, to
guarantee the payment of any Indebtedness of the Issuer or any Restricted Guarantor unless:

     (1) such Restricted Subsidiary within 30 days executes and delivers a supplemental
indenture to the Indenture providing for a Guarantee by such Restricted Subsidiary, except that
with respect to a guarantee of Indebtedness of the Issuer or any Restricted Guarantor, if such
Indebtedness is by its express terms subordinated in right of payment to the Notes or a related
Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness
shall be subordinated in right of payment to such Guarantee substantially to the same extent as
such Indebtedness is subordinated to the Notes or such Restricted Guarantor’s related
Guarantee; and

     (2) such Restricted Subsidiary shall within 30 days deliver to the Trustee an Opinion of
Counsel reasonably satisfactory to the Trustee;

provided, that this covenant shall not be applicable to (i) any guarantee of any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred
in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (ii)
guarantees of any Qualified Securitization Financing by any Restricted Subsidiary. The Issuer may
elect, in its sole discretion, to cause any Subsidiary that is not otherwise required to be a

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Restricted Guarantor to become a Restricted Guarantor, in which case such Subsidiary shall not be
required to comply with the 30 day periods described above.

Reports and Other Information

     Notwithstanding that the Issuer may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided
for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC,
the Indenture will require the Issuer to file with the SEC from and after the Issue Date no later
than 15 days after the periods set forth below,

     (1) within 90 days (or any other time period then in effect under the rules and
regulations of the Exchange Act with respect to the filing of a Form 10-K by a non-accelerated
filer) after the end of each fiscal year, annual reports on Form 10-K, or any successor or
comparable form, containing the information required to be contained therein, or required in
such successor or comparable form;

     (2) within 45 days after the end of each of the first three fiscal quarters of each fiscal
year, reports on Form 10-Q containing all quarterly information that would be required to be
contained in Form 10-Q, or any successor or comparable form;

     (3) promptly from time to time after the occurrence of an event required to be therein
reported, such other reports on 
Form 8-K, or any successor or comparable form; and

     (4) any other information, documents and other reports which the Issuer would be required
to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

in each case, in a manner that complies in all material respects with the requirements specified in
such form; provided that the Issuer shall not be so obligated to file such reports with the SEC if
the SEC does not permit such filing, in which event the Issuer will make available such information
to prospective purchasers of Notes, in addition to providing such information to the Trustee and
the Holders of the Notes, in each case within 5 days after the time the Issuer would have been
required to file such information with the SEC as required pursuant to the first sentence of this
paragraph. To the extent any such information is not furnished within the time periods specified
above and such information is subsequently furnished (including upon becoming publicly available,
by filing such information with the SEC), the Issuer will be deemed to have satisfied its
obligations with respect thereto at such time and any Default with respect thereto shall be deemed
to have been cured; provided, that such cure shall not otherwise affect the rights of the Holders
under “Events of Default and Remedies” if Holders of at least 25% in principal amount of the then
total outstanding Notes have declared the principal, premium, if any, interest and any other
monetary obligations
on all the then outstanding Notes to be due and payable immediately and such declaration shall not
have been rescinded or cancelled prior to such cure. In addition, to the extent not satisfied by
the foregoing, the Issuer will agree that, for so long as any Notes are outstanding, it will
furnish to Holders and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

     In the event that any direct or indirect parent company of the Issuer becomes a guarantor of
the Notes, the Indenture will permit the Issuer to satisfy its obligations in this covenant with
respect to financial information relating to the Issuer by furnishing financial information
relating to such parent; provided that the same is accompanied by consolidating information that
explains in reasonable detail the differences between the information relating to such parent, on
the one hand, and the information relating to the Issuer and its Restricted Subsidiaries on a
standalone basis, on the other hand.

     Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the
commencement of the exchange offer or the effectiveness of the shelf registration statement by the
filing with the SEC of the exchange offer registration statement or shelf registration statement in
accordance with the terms of the Registration Rights Agreement, and any amendments thereto, with
such financial information that satisfies Regulation S-X of the Securities Act.

Events of Default and Remedies

     The Indenture will provide that each of the following is an Event of Default:

     (1) default in payment when due and payable, upon redemption, acceleration or otherwise,
of principal of, or premium, if any, on the Notes;

     (2) default for 30 days or more in the payment when due of interest on or with respect to
the Notes;

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     (3) failure by the Issuer or any Guarantor for 60 days after receipt of written notice
given by the Trustee or the Holders of not less than 25% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements (other than a default referred to
in clauses (1) and (2) above) contained in the Indenture or the Notes;

     (4) default under any mortgage, indenture or instrument under which there is issued or by
which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of
its Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or any of its
Restricted Subsidiaries, other than Indebtedness owed to the Issuer or a Restricted Subsidiary,
whether such Indebtedness or guarantee now exists or is created after the issuance of the
Notes, if both:

     (a) such default either results from the failure to pay any principal of such
Indebtedness at its stated final maturity (after giving effect to any applicable grace
periods) or relates to an obligation other than the obligation to pay principal of any
such Indebtedness at its stated final maturity and results in the holder or holders of
such Indebtedness causing such Indebtedness to become due prior to its stated maturity;
and

     (b) the principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the maturity of which
has been so accelerated, aggregate $100.0 million or more at any one time outstanding;

     (5) failure by the Issuer or any Significant Party to pay final non-appealable judgments
aggregating in excess of $100.0 million, which final judgments remain unpaid, undischarged and
unstayed for a period of more than 90 days after such judgments become final, and in the event
such judgment is covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed;

     (6) certain events of bankruptcy or insolvency with respect to the Issuer or any
Significant Party;

     (7) failure of any Person required by the terms of the Indenture to be a Guarantor as of
the Issue Date to execute a supplemental indenture to the Indenture within five (5) Business
Days following the Issue Date; or

     (8) the Guarantee of any Significant Party shall for any reason cease to be in full force
and effect or be declared null and void or any responsible officer of any Guarantor that is a
Significant Party, as the case may be, denies in writing that it has any further liability
under its Guarantee or gives written notice to such effect, other than by reason of the
termination of the Indenture or the release of any such Guarantee in accordance with the
Indenture.

     If any Event of Default (other than of a type specified in clause (6) above) occurs with
respect to the Issuer and is continuing under the Indenture, the Trustee or the Holders of at least
25% in principal amount of the then total outstanding Notes may declare the principal, premium, if
any, interest and any other monetary obligations on all the then outstanding Notes to be due and
payable immediately.

     Upon the effectiveness of such declaration, such principal and interest will be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising
under clause (6) of the first paragraph of this section with respect to the Issuer, all outstanding
Notes will become due and payable without further action or notice. The Indenture will provide that
the Trustee may withhold from the Holders notice of any continuing Default, except a Default
relating to the payment of principal, premium, if any, or interest, if it determines that
withholding notice is in their interest. In addition, the Trustee shall have no obligation to
accelerate the Notes if in the best judgment of the Trustee acceleration is not in the best
interest of the Holders of the Notes.

     The Indenture will provide that the Holders of a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes
waive any existing Default and its consequences under the Indenture (except a continuing Default in
the payment of interest on, premium, if any, or the principal of any Note held by a non-consenting
Holder) and rescind any acceleration with respect to the Notes and its consequences (except if such
rescission would conflict with any judgment of a court of competent jurisdiction). In the event of
any Event of Default specified in clause (4) above, such Event of Default and all consequences
thereof (excluding any resulting payment default, other than as a result of acceleration of the
Notes) shall be annulled, waived and rescinded, automatically and without any action by the Trustee
or the Holders, if within 20 days after such Event of Default arose:

     (1) the Indebtedness or guarantee that is the basis for such Event of Default has been
discharged; or

     (2) holders thereof have rescinded or waived the acceleration, notice or action (as the
case may be) giving rise to such Event of Default; or

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     (3) the default that is the basis for such Event of Default has been cured.

     Subject to the provisions of the Indenture relating to the duties of the Trustee thereunder,
in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or direction of any of the
Holders of the Notes unless the Holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder of a Note may pursue any remedy with
respect to the Indenture or the Notes unless:

     (1) such Holder has previously given the Trustee notice that an Event of Default is
continuing;

     (2) Holders of at least 25% in principal amount of the total outstanding Notes have
requested the Trustee to pursue the remedy;

     (3) Holders of the Notes have offered the Trustee reasonable security or indemnity against
any loss, liability or expense;

     (4) the Trustee has not complied with such request within 60 days after the receipt
thereof and the offer of security or indemnity; and

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     (5) Holders of a majority in principal amount of the total outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day period.

     Subject to certain restrictions, under the Indenture the Holders of a majority in principal
amount of the then total outstanding Notes are given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that
conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder of a Note or that would involve the Trustee in personal liability.

     The Issuer is required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Issuer is required, within five Business Days after becoming aware of
any Default, to deliver to the Trustee a statement specifying such Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

     No past, present or future director, officer, employee, incorporator, member, partner or
stockholder of the Issuer or any Guarantor or any of their direct or indirect parent companies
shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the
Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder by accepting Notes waives and releases all such
liability. The waiver and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy.

Legal Defeasance and Covenant Defeasance

     The obligations of the Issuer and the Guarantors under the Indenture will terminate (other
than certain obligations) and will be released upon payment in full of all of the Notes. The Issuer
may, at its option and at any time, elect to have all of its obligations discharged with respect to
the Notes and have each Guarantor’s obligations discharged with respect to its Guarantee (“Legal
Defeasance”) and cure all then existing Events of Default except for:

     (1) the rights of Holders of Notes to receive payments in respect of the principal of,
premium, if any, and interest on the Notes when such payments are due solely out of the trust
created pursuant to the Indenture;

     (2) the Issuer’s obligations with respect to Notes concerning issuing temporary Notes,
registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of
an office or agency for payment and money for security payments held in trust;

     (3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s
obligations in connection therewith; and

     (4) the Legal Defeasance provisions of the Indenture.

     In addition, the Issuer may, at its option and at any time, elect to have its obligations and
those of each Guarantor released with respect to substantially all of the restrictive covenants in
the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations
shall not constitute a Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including bankruptcy, receivership, rehabilitation and insolvency events
pertaining to the Issuer) described under “Events of Default and Remedies” will no longer
constitute an Event of Default with respect to the Notes.

     In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:

     (1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal amount of, premium, if any, and interest
due on the Notes on the stated maturity date or on the redemption date, as the case may be, of
such principal amount, premium, if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a particular redemption date;

     (2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,

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     (a) the Issuer has received from, or there has been published by, the United
States Internal Revenue Service a ruling, or

     (b) since the issuance of the Notes, there has been a change in the applicable U.S.
federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm
that, subject to customary assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result
of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such Legal Defeasance had
not occurred;

     (3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be
subject to such tax on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;

     (4) no Default (other than that resulting from borrowing funds to be applied to make such
deposit and any similar and simultaneous deposit relating to such other Indebtedness, and in
each case, the granting of Liens in connection therewith) shall have occurred and be continuing
on the date of such deposit;

     (5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under any Senior Credit Facility or any other material agreement or
instrument governing Indebtedness (other than the Indenture) to which, the Issuer or any
Restricted Guarantor is a party or by which the Issuer or any Restricted Guarantor is bound
(other than that resulting from any borrowing of funds to be applied to make the deposit
required to effect such Legal Defeasance or Covenant Defeasance and any similar and
simultaneous deposit relating to other Indebtedness, and, in each case, the granting of Liens
in connection therewith);

     (6) the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that
the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or
defrauding any creditors of the Issuer or any Restricted Guarantor or others; and

     (7) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions)
each stating that all conditions precedent provided for or relating to the Legal Defeasance or
the Covenant Defeasance, as the case may be, have been complied with.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect as to all Notes, when
either:

     (1) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed
Notes which have been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for cancellation; or

     (2)(a) all Notes not theretofore delivered to the Trustee for cancellation have
become due and payable by reason of the making of a notice of redemption or otherwise, will
become due and payable within one year or are to be called for redemption and redeemed within
one year under arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Issuer, and the Issuer or any Guarantor
has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust
solely for the benefit of the Holders of the Notes cash in U.S. dollars, Government Securities,
or a combination thereof, in such amounts as will be sufficient without consideration of any
reinvestment of interest to pay and discharge the entire indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation for principal, premium, if any, and
accrued interest to the date of maturity or redemption thereof, as the case may be;

     (b) no Default (other than that resulting from borrowing funds to be applied to make
such deposit or any similar and simultaneous deposit relating to other Indebtedness and in
each case, the granting of Liens in connection therewith) with respect to the Indenture or
the Notes shall have occurred and be continuing on the date of such deposit or shall occur
as a result of such deposit and such deposit will not result in a breach or

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violation of, or constitute a default under any Senior Credit Facility or any other material agreement
or instrument governing Indebtedness (other than the Indenture) to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is bound (other than
resulting from any borrowing of funds to be applied to make such deposit and any similar
and simultaneous deposit relating to other Indebtedness and, in each case, the granting of
Liens in connection therewith);

     (c) the Issuer has paid or caused to be paid all sums payable by it under the
Indenture; and

     (d) the Issuer has delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at maturity or the redemption date, as the
case may be.

     In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Amendment, Supplement and Waiver

     Except as provided in the next two succeeding paragraphs, the Indenture, any Guarantee and the
Notes may be amended or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding, other than Notes beneficially owned by the Issuer
or its Affiliates, including consents obtained in connection with a purchase of, or tender offer or
exchange offer for Notes, and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes, other than Notes beneficially owned by the Issuer or its
Affiliates (including consents obtained in connection with a purchase of or tender offer or
exchange offer for the Notes); provided that if any amendment, waiver or other modification would
only affect the Senior Cash Pay Notes or the Senior Toggle Notes, only the consent of the holders
of at least a majority in principal amount of the then outstanding Senior Cash Pay Notes or Senior
Toggle Notes (and not the consent of at least a majority in principal amount of all of the then
outstanding Notes), as the case may be, shall be required.

     The Indenture will provide that, without the consent of each affected Holder of Notes, an
amendment or waiver may not, with respect to any Notes held by a non-consenting Holder:

     (1) reduce the principal amount of such Notes whose Holders must consent to an amendment,
supplement or waiver;

     (2) reduce the principal amount of or change the fixed final maturity of any such Note or
alter or waive the provisions with respect to the redemption of such Notes (other than
provisions relating to the covenants described above under “Repurchase at the Option of
Holders”);

     (3) reduce the rate of or change the time for payment of interest on any Note;

     (4) waive a Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration) or in respect of a covenant or provision contained in the Indenture or
any Guarantee which cannot be amended or modified without the consent of all affected Holders;

     (5) make any Note payable in money other than that stated therein;

     (6) make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders to receive payments of principal of or premium, if any, or
interest on the Notes;

     (7) make any change in these amendment and waiver provisions;

     (8) impair the right of any Holder to receive payment of principal of, or interest on such
Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such Holder’s Notes;

     (9) make any change to the ranking of the Notes that would adversely affect the Holders;
or

     (10) except as expressly permitted by the Indenture, modify the Guarantees of any
Significant Party in any manner adverse to the Holders of the Notes; or

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     (11) after the Issuer’s obligation to purchase Notes arises thereunder, amend, change or
modify in any respect materially adverse to the Holders of the Notes the obligations of the
Issuer to make and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate an Asset Sale Offer with respect to any Asset Sale that has been
consummated or, after such Change or Control has occurred or such Asset Sale has been
consummated, modify any of the provisions or definitions with respect thereto in a manner that
is materially adverse to the Holders of the Notes.

     Notwithstanding the foregoing, the Issuer and the Trustee may amend or supplement the
Indenture and the Notes and the Issuer, the Trustee and the Guarantors may amend or supplement any
Guarantee issued under the Indenture, in each case, without the consent of any Holder;

     (1) to cure any ambiguity, omission, mistake, defect or inconsistency;

     (2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

     (3) to comply with the covenant relating to mergers, consolidations and sales of
assets;

     (4) to provide for the assumption of the Issuer’s or any Guarantor’s obligations to the
Holders;

     (5) to make any change that would provide any additional rights or benefits to the Holders
or that does not adversely affect the legal rights under the Indenture of any such Holder;

     (6) to add covenants for the benefit of the Holders or to surrender any right or power
conferred upon the Issuer or any Guarantor;

     (7) to comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act;

     (8) to evidence and provide for the acceptance and appointment under the Indenture of a
successor Trustee thereunder pursuant to the requirements thereof;

     (9) to add a Guarantor under the Indenture;

     (10) to conform the text of the Indenture or the Guarantees or the Notes issued thereunder
to any provision of this “Description of the Notes” to the extent that such provision in this
“Description of the Notes” was intended to be a verbatim recitation of a provision of the
Indenture, Guarantee or Notes;

     (11) to provide for the issuance of Exchange Notes or private exchange notes, which are
identical to Exchange Notes except that they are not freely transferable; or

     (12) to make any amendment to the provisions of the Indenture relating to the transfer and
legending of Notes as permitted by the Indenture, including, without limitation to facilitate
the issuance and administration of the Notes; provided, however, that (i) compliance with the
Indenture as so amended would not result in Notes being transferred in violation of the
Securities Act or any applicable securities law and (ii) such amendment does not materially and
adversely affect the rights of Holders to transfer Notes.

     However, no amendment to, or waiver of, the subordination provisions of the Indenture with
respect to the Guarantees (or the component definitions used therein), if adverse to the interests
of the holders of the Designated Senior Indebtedness of the Guarantors, may be made without the
consent of the holders of a majority of such Designated Senior Indebtedness (or their
Representative).

     The consent of the Holders is not necessary under the Indenture to approve the particular form
of any proposed amendment. It is sufficient if such consent approves the substance of the proposed
amendment.

Notices

     Notices given by publication will be deemed given on the first date on which publication is
made and notices given by first-class mail, postage prepaid, will be deemed given five calendar
days after mailing.

Concerning the Trustee

     The Indenture will contain certain limitations on the rights of the Trustee thereunder, should
it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as security or otherwise. The Trustee will
be permitted to engage in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

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EXHIBIT A

     The Indenture will provide that the Holders of a majority in principal amount of the
outstanding Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The
Indenture will provide that in case an Event of Default shall occur (which shall not be cured), the
Trustee will be required, in the exercise of its power, to use the degree of care of a prudent
person in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder
shall have offered to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.

Governing Law

     The Indenture, the Notes and any Guarantee will be governed by and construed in accordance
with the laws of the State of New York.

Certain Definitions

     Set forth below are certain defined terms used in the Indenture. For purposes of the
Indenture, unless otherwise specifically indicated, the term “consolidated” with respect to any
Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such
consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate
of such Person.

     “ABL Facility” means the asset-based revolving Credit Facility provided under the Credit
Agreement to be entered into as of the Issue Date by and among the Issuer, the co-borrowers party
thereto, the guarantors party thereto, the lenders party thereto in their capacities as lenders
thereunder and Citibank, N.A., as Administrative Agent, including any notes, mortgages, guarantees,
collateral documents, instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, renewals, restatements, refundings or
refinancings thereof and any one or more indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that extend, replace, refund,
refinance, renew or defease any part of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or refinancing facility or indenture that
increases the amount that may be borrowed thereunder or alters the maturity of the loans thereunder
or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the
same or other agent, lender or group of lenders or investors.

     “Acquired Indebtedness” means, with respect to any specified Person,

     (1) Indebtedness of any other Person existing at the time such other Person is merged,
consolidated or amalgamated with or into or became a Restricted Subsidiary of such specified
Person, including Indebtedness incurred in connection with, or in contemplation of, such other
Person merging, consolidating or amalgamating with or into or becoming a Restricted Subsidiary
of such specified Person, and

     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.

     “Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of:

     (a) 1.0% of the principal amount of such Note on such Redemption Date; and

     (b) the excess, if any, of (i) the present value at such Redemption Date of (A) the
redemption price of such Note at           , 2012 (such redemption price being set forth
in the table appearing above under “Optional Redemption”), plus (B) all required remaining
interest payments (calculated based on the cash interest rate) due on such Note through           , 2012
(excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to the Treasury Rate as of
such Redemption Date plus 50 basis points; over (ii) the principal amount of such Note on
such Redemption Date.

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EXHIBIT A

     “Asset Sale” means:

     (1) the sale, conveyance, transfer or other disposition, whether in a single transaction
or a series of related transactions, of property or assets (including by way of a Sale and
Lease-Back Transaction) of the Issuer or any of its Restricted Subsidiaries (each referred to
in this definition as a “disposition”); or

     (2) the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a
single transaction or a series of related transactions;

in each case, other than:

     (a) any disposition of Cash Equivalents or Investment Grade Securities or obsolete or
worn out property or assets in the ordinary course of business or any disposition of
inventory or goods (or other assets) held for sale or no longer used in the ordinary
course of business;

     (b) the disposition of all or substantially all of the assets of the Issuer in a
manner permitted pursuant to the provisions described above under “Certain Covenants—
Merger, Consolidation or Sale of All or Substantially All Assets” or any disposition that
constitutes a Change of Control pursuant to the Indenture;

     (c) the making of any Restricted Payment that is permitted to be made, and is made,
under the covenant described above under “Certain Covenants—Limitation on Restricted
Payments” or the making of any Permitted Investment;

     (d) any disposition of property or assets or issuance or sale of Equity
Interests of any Restricted Subsidiary in any transaction or series of related
transactions with an aggregate fair market value of less than $50.0 million;

     (e) any disposition of property or assets or issuance of securities by a Restricted
Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another Restricted
Subsidiary;

     (f) to the extent allowable under Section 1031 of the Code, any exchange of like
property or assets (excluding any boot thereon) for use in a Similar Business;

     (g) the sale, lease, assignment, sub-lease, license or sub-license of any real or
personal property in the ordinary course of business;

     (h) any issuance or sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary;

     (i) foreclosures, condemnation, expropriation or any similar action with respect to
assets or the granting of Liens not prohibited by the Indenture;

     (j) sales of accounts receivable, or participations therein, or Securitization Assets
or related assets in connection with any Receivables Facility or any Qualified
Securitization Financing;

     (k) any financing transaction with respect to property built or acquired by the
Issuer or any Restricted Subsidiary after the Issue Date, including Sale and Lease-Back
Transactions and asset securitizations permitted by the Indenture;

     (l) sales of accounts receivable in connection with the collection or compromise
thereof;

     (m) the abandonment of intellectual property rights in the ordinary course of
business, which in the reasonable good faith determination of the Issuer are not material
to the conduct of the business of the Issuer and its Restricted Subsidiaries taken as a
whole;

     (n) voluntary terminations of Hedging Obligations;

     (o) the licensing or sub-licensing of intellectual property or other general
intangibles in the ordinary course of business, other than the licensing of intellectual
property on a long-term basis;

     (p) any surrender or waiver of contract rights or the settlement, release or
surrender of contract rights or other litigation claims in the ordinary course of
business;

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EXHIBIT A

     (q) the unwinding of any Hedging Obligations; and

     (r) the issuance of directors’ qualifying shares and shares issued to foreign
nationals as required by applicable law.

     “Business Day” means each day which is not a Legal Holiday.

     “Capital Stock” means:

     (1) in the case of a corporation, corporate stock or shares in the capital of such
corporation;

     (2) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital stock;

     (3) in the case of a partnership or limited liability company, partnership or membership
interests (whether general or limited); and

     (4) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing Person but
excluding from all of the foregoing any debt securities convertible into Capital Stock, whether
or not such debt securities include any right of participation with Capital Stock.

     “Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the
amount of the liability in respect of a capital lease that would at such time be required to be
capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto)
prepared in accordance with GAAP.

     “Capitalized Software Expenditures” shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted
Subsidiaries during such period in respect of purchased software or internally developed software
and software enhancements that, in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of such Person and its Restricted Subsidiaries.

     “Cash Equivalents” means:

     (1) United States dollars;

     (2)(a) Canadian dollars, pounds sterling, euro, or any national currency of any
participating member state of the EMU; or

     (b) in the case of the Issuer or a Restricted Subsidiary, such local currencies held by it
from time to time in the ordinary course of business;

     (3) securities issued or directly and fully and unconditionally guaranteed or insured by
the U.S. government or any agency or instrumentality thereof the securities of which are
unconditionally guaranteed as a full faith and credit obligation of such government with
maturities of 24 months or less from the date of acquisition;

     (4) certificates of deposit, time deposits and eurodollar time deposits with maturities of
one year or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any commercial bank having
capital and surplus of not less than $500.0 million in the case of U.S. banks and $100.0
million (or the U.S. dollar equivalent as of the date of determination) in the case of non-U.S.
banks;

     (5) repurchase obligations for underlying securities of the types described in
clauses (3) and (4) entered into with any financial institution meeting the qualifications
specified in clause (4) above;

     (6) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case
maturing within 24 months after the date of creation thereof;

     (7) marketable short-term money market and similar securities having a rating of at least
P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P
shall be rating such obligations, an equivalent rating from another Rating Agency) and in each
case maturing within 24 months after the date of creation thereof;

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EXHIBIT A

     (8) readily marketable direct obligations issued by any state, commonwealth or territory
of the United States or any political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from
the date of acquisition;

     (9) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from
S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of
acquisition;

     (10) Investments with average maturities of 12 months or less from the date of acquisition
in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the
equivalent thereof) or better by Moody’s; and

     (11) investment funds investing at least 95% of their assets in securities of the types
described in clauses (1) through (10) above.

     Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in
currencies other than those set forth in clauses (1) and (2) above, provided that such amounts are
converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any
event within ten Business Days following the receipt of such amounts.

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EXHIBIT A

     “Cash Interest” has the meaning set forth under “Principal, Maturity and Interest.”

     “CCO” means Clear Channel Outdoor Holdings, Inc., a Delaware corporation.

     “CCU Mirror Note” means the Revolving Promissory Note dated as of November 10, 2005 between
the Issuer, as maker, and CCO, as payee.

     “Change of Control” means the occurrence of any of the following after the Issue Date (and
excluding, for the avoidance of doubt, the Transactions):

     (1) the sale, lease or transfer, in one or a series of related transactions (other than by
merger, consolidation or amalgamation), of all or substantially all of the assets of the Issuer
and its Restricted Subsidiaries, taken as a whole, to any Person other than a Permitted Holder;
or

     (2) the Issuer becomes aware of (by way of a report or any other filing pursuant to
Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by
(A) any Person (other than any Permitted Holder) or (B) Persons (other than any Permitted
Holder) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act, or any successor provision), including any such group acting for the
purpose of acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination or purchase of
“beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of more than 50% of the total voting power of the Voting Stock of the
Issuer or any of its direct or indirect parent companies.

     “Code” means the Internal Revenue Code of 1986, as amended, or any successor thereto.

     “Consolidated Depreciation and Amortization Expense” means, with respect to any Person, for
any period, the total amount of depreciation and amortization expense, including the amortization
of deferred financing fees, debt issuance costs, commissions, fees and expenses and Capitalized
Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and
losses related to pensions and other post-employment benefits, of such Person and its Restricted
Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with
GAAP.

     “Consolidated Indebtedness” means, as of any date of determination, the sum, without
duplication, of (1) the total amount of Indebtedness of the Issuer and its Restricted Subsidiaries
set forth on the Issuer’s consolidated balance sheet (excluding any letters of credit except to the
extent of unreimbursed amounts drawn thereunder), plus (2) the greater of the aggregate liquidation
value and maximum fixed repurchase price without regard to any change of control or redemption
premiums of all Disqualified Stock of the Issuer and the Restricted Guarantors and all Preferred
Stock of its Restricted Subsidiaries that are not Guarantors, in each case, determined on a
consolidated basis in accordance with GAAP.

     “Consolidated Interest Expense” means, with respect to any Person for any period, without
duplication, the sum of:

     (1) consolidated interest expense of such Person and its Restricted Subsidiaries for such
period, to the extent such expense was deducted (and not added back) in computing Consolidated
Net Income (including (a) amortization of original issue discount resulting from the issuance
of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges
owed with respect to letters of credit or bankers acceptances, (c) non-cash interest expense
(but excluding any non-cash interest expense attributable to the movement in the mark to market
valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (d) the
interest component of Capitalized Lease Obligations, and (e) net payments, if any made (less
net payments, if any, received), pursuant to interest rate Hedging Obligations with respect to
Indebtedness, and excluding (t) any expense
resulting from the discounting of any Indebtedness in connection with the application of
recapitalization accounting or purchase accounting, as the case may be, in connection with the
Transactions or any acquisition, (u) penalties and interest relating to taxes, (v) any Special
Interest, any “special interest” with respect to other securities and any liquidated damages
for failure to timely comply with registration rights obligations, (w) amortization of deferred
financing fees, debt issuance costs, discounted liabilities, commissions, fees and expenses,
(x) any expensing of bridge, commitment and other financing fees, (y) commissions, discounts,
yield and other fees and charges (including any interest expense) related to any Receivables
Facility or Qualified Securitization Financing and (z) any accretion of accrued interest on
discounted liabilities); plus

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EXHIBIT A

     (2) consolidated capitalized interest of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued; less

     (3) interest income of such Person and its Restricted Subsidiaries for such period.

     For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by the Issuer to be the rate of interest implicit
in such Capitalized Lease Obligation in accordance with GAAP.

     “Consolidated Leverage Ratio” means, as of the date of determination, the ratio of (a) the
Consolidated Indebtedness of the Issuer and its Restricted Subsidiaries on such date, to (b) EBITDA
of the Issuer and its Restricted Subsidiaries for the most recently ended four fiscal quarters
ending immediately prior to such date for which internal financial statements are available.

     In the event that the Issuer or any Restricted Subsidiary (i) incurs, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes) or (ii) issues or
redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for
which the Consolidated Leverage Ratio is being calculated but prior to or simultaneously with the
event for which the calculation of the Consolidated Leverage Ratio is made (the “Consolidated
Leverage Ratio Calculation Date”), then the Consolidated Leverage Ratio shall be calculated giving
pro forma effect to such incurrence, redemption, retirement or extinguishment of Indebtedness, or
such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred
at the beginning of the applicable four-quarter period.

     For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Leverage Ratio Calculation Date, and other operational changes that the Issuer or any
of its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Leverage Ratio Calculation Date shall be calculated on a pro forma basis as set forth
below assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations,
consolidations, discontinued operations and other operational changes had occurred on the first day
of the four-quarter reference period. If since the beginning of such period any Person that
subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall have made any Investment,
acquisition, disposition, merger, amalgamation, consolidation, discontinued operation (other than
the Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date))
or operational change, in each case with respect to an operating unit of a business, that would
have required adjustment pursuant to this definition, then the Consolidated Leverage Ratio shall be
calculated giving pro forma effect thereto in the manner set forth below for such period as if such
Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational
change had occurred at the beginning of the applicable four-quarter period.

     For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the Transactions) and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Issuer (and may include, for the
avoidance of doubt, cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions) which is being
given pro forma effect that have been or are expected to be realized); provided, that actions to
realize such cost savings and operating expense reductions are taken within 12 months after the
date of such Investment, acquisition, amalgamation, merger or consolidation.

     For the purposes of this definition, any amount in a currency other than U.S. dollars will be
converted to U.S. dollars based on the average exchange rate for such currency for the most recent
twelve month period immediately prior to the date of determination determined in a manner
consistent with that used in calculating EBITDA for the applicable period.

     “Consolidated Net Income” means, with respect to any Person for any period, the aggregate
of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated
basis, and otherwise determined in accordance with GAAP; provided, however, that, without
duplication,

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EXHIBIT A

     (1) any net after-tax effect of extraordinary, non-recurring or unusual gains or
losses (less all fees and expenses related thereto) or expenses and Transaction Expenses
incurred within 180 days of the Issue Date shall be excluded,

     (2) the cumulative effect of a change in accounting principles during such period shall be
excluded,

     (3) any net after-tax effect of income (loss) from disposed or discontinued operations
(other than the Specified Assets (as defined in the Senior Credit Facilities as in effect on
the Issue Date) to the extent included in discontinued operations prior to consummation of the
disposition thereof) and any net after-tax gains or losses on disposal of disposed, abandoned
or discontinued operations shall be excluded,

     (4) any net after-tax effect of gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course of business, as
determined in good faith by the Issuer, shall be excluded,

     (5) the Net Income for such period of any Person that is not a Subsidiary, or is an
Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be
excluded; provided that Consolidated Net Income of such Person shall be increased by the amount
of dividends or distributions or other payments that are actually paid in cash (or to the
extent converted into cash) to such Person or a Subsidiary thereof that is the Issuer or a
Restricted Subsidiary in respect of such period,

     (6) solely for the purpose of determining the amount available for Restricted Payments
under clause (3)(a) of the first paragraph of “Certain Covenants—Limitation on Restricted
Payments,” the Net Income for such period of any Restricted Subsidiary (other than any
Guarantor) shall be excluded to the extent the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of its Net Income is not at the date of
determination permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally waived, provided that
Consolidated Net Income of the Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the extent converted into cash) to
the Issuer or a Restricted Subsidiary thereof in respect of such period, to the extent not
already included therein,

     (7) effects of purchase accounting adjustments (including the effects of such adjustments
pushed down to such Person and such Subsidiaries) in component amounts required or permitted by
GAAP, resulting from the application of purchase accounting in relation to the Transactions or
any consummated acquisition or the amortization or write-off of any amounts thereof, net of
taxes, shall be excluded,

     (8) any net after-tax effect of income (loss) from the early extinguishment or conversion
of (a) Indebtedness, (b) Hedging Obligations or (c) other derivative instruments shall be
excluded;

     (9) any impairment charge or asset write-off or write-down, including impairment charges
or asset write-offs or write-downs related to intangible assets, long-lived assets, investments
in debt and equity securities or as a result of a change in law or regulation, in each case,
pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be
excluded;

     (10) any non-cash compensation charge or expense, including any such charge or expense
arising from the grant of stock appreciation or similar rights, stock options, restricted stock
or other rights or equity incentive programs, and any cash charges associated with the
rollover, acceleration, or payout of Equity Interests by management of the Issuer or any of its
direct or indirect parent companies in connection with the Transactions, shall be excluded;

     (11) accruals and reserves that are established or adjusted within twelve months after the
Issue Date that are so required to be established as a result of the Transactions in accordance
with GAAP, or changes as a result of adoption or modification of accounting policies, shall be
excluded; and

     (12) to the extent covered by insurance and actually reimbursed, or, so long as the Issuer
has made a determination that there exists reasonable evidence that such amount will in fact be
reimbursed by the insurer and only to the extent that such amount is (a) not denied by the
applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the
date of such evidence with a deduction for any amount so added back to the extent not so
reimbursed within 365 days, expenses with respect to liability or casualty events or business
interruption shall be excluded.

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EXHIBIT A

Notwithstanding the foregoing, for the purpose of the covenant described under “Certain Covenants—Limitation on Restricted Payments” only (other than clause (3)(d) thereof), there shall be
excluded from Consolidated Net Income any income arising from any sale or other disposition of
Restricted Investments made by the Issuer and its Restricted Subsidiaries, any repurchases and
redemptions of Restricted Investments from the Issuer and its Restricted Subsidiaries, any
repayments of loans and advances which constitute Restricted Investments by the Issuer or any of
its Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such
amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause
(3)(d) thereof.

     “Consolidated Secured Debt Ratio” means, as of the date of determination, the ratio of
(a) the Consolidated Indebtedness of the Issuer and its Restricted Subsidiaries on such date that
is secured by Liens to (b) EBITDA of the Issuer and its Restricted Subsidiaries for the most
recently ended four fiscal quarters ending immediately prior to such date for which internal
financial statements are available.

     In the event that the Issuer or any Restricted Subsidiary (i) incurs, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes) or (ii) issues or
redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for
which the Consolidated Secured Debt Ratio is being calculated but prior to or simultaneously with
the event for which the calculation of the Consolidated Secured Debt Ratio is made (the
“Consolidated Secured Debt Ratio Calculation Date”), then the Consolidated Secured Debt Ratio shall
be calculated giving pro forma effect to such incurrence, redemption, retirement or extinguishment
of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the
same had occurred at the beginning of the applicable four-quarter period.

     For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Secured Debt Ratio Calculation Date, and other operational changes that the Issuer or
any of its Restricted Subsidiaries has determined to make and/or made during the four-quarter
reference period or subsequent to such reference period and on or prior to or simultaneously with
the Consolidated Secured Debt Ratio Calculation Date shall be calculated on a pro forma basis as
set forth below assuming that all such Investments, acquisitions, dispositions, mergers,
amalgamations, consolidations, discontinued operations and other operational changes had occurred
on the first day of the four-quarter reference period. If since the beginning of such period any
Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or
any of its Restricted Subsidiaries since the beginning of such period shall have made any
Investment, acquisition, disposition, merger, amalgamation, consolidation, discontinued operation
(other than the Specified Assets (as defined in the Senior Credit Facilities as in effect on the
Issue Date)) or operational change, in each case with respect to an operating unit of a business,
that would have required adjustment pursuant to this definition, then the Consolidated Secured Debt
Ratio shall be calculated giving pro forma effect thereto in the manner set forth below for such
period as if such Investment, acquisition, disposition, merger, consolidation, discontinued
operation or operational change had occurred at the beginning of the applicable four-quarter
period.

     For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the Transactions) and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Issuer (and may include, for the
avoidance of doubt, cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions) which is being
given pro forma effect that have been or are expected to be realized); provided, that actions to
realize such cost savings and operating expense reductions are taken within 12 months after the
date of such Investment, acquisition, amalgamation, merger or consolidation.

     “Contingent Obligations” means, with respect to any Person, any obligation of such Person
guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness
(“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly
or indirectly, including, without limitation, any obligation of such Person, whether or not
contingent,

     (1) to purchase any such primary obligation or any property constituting direct or
indirect security therefor,

     (2) to advance or supply funds

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EXHIBIT A

     (a) for the purchase or payment of any such primary obligation, or

     (b) to maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, or

     (3) to purchase property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.

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EXHIBIT A

     “Credit Facilities” means, with respect to the Issuer or any of its Restricted Subsidiaries,
one or more debt facilities, including the Senior Credit Facilities, or other financing
arrangements (including, without limitation, commercial paper facilities or indentures) providing
for revolving credit loans, term loans, letters of credit or other long-term indebtedness,
including any notes, mortgages, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments, supplements, modifications, extensions,
renewals, restatements or refundings thereof and any indentures or credit facilities or commercial
paper facilities that replace, refund or refinance any part of the loans, notes, other credit
facilities or commitments thereunder, including any such replacement, refunding or refinancing
facility or indenture that increases the amount permitted to be borrowed thereunder or alters the
maturity thereof (provided that such increase in borrowings is permitted under “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock”) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and
whether by the same or any other agent, lender or group of lenders.

     “Default” means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.

     “Designated Non-cash Consideration” means the fair market value of non-cash consideration
received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale that is so
designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting forth
the basis of such valuation, executed by the principal financial officer of the Issuer, less the
amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection
on such Designated Non-cash Consideration.

     “Designated Preferred Stock” means Preferred Stock of the Issuer, a Restricted Subsidiary or
any direct or indirect parent corporation of the Issuer (in each case other than Disqualified
Stock) that is issued for cash (other than to the Issuer or a Restricted Subsidiary or an employee
stock ownership plan or trust established by the Issuer or its Subsidiaries) and is so designated
as Designated Preferred Stock, pursuant to an Officer’s Certificate executed by the principal
financial officer of the Issuer, on the issuance date thereof, the cash proceeds of which are
excluded from the calculation set forth in clause (3) of the first paragraph of the “Certain
Covenants—Limitation on Restricted Payments” covenant.

     “Designated Senior Indebtedness” means:

     (1) all Indebtedness of any Guarantor under its guarantee of (i) the Senior Credit
Facilities permitted to be incurred pursuant to clause (1) of the second paragraph under
“Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock and Preferred Stock” plus (ii) the amount of Indebtedness permitted to be incurred
pursuant to clause (12)(b) of the second paragraph under “Certain Covenants—Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” plus (iii)
the amount of additional Indebtedness permitted to be incurred by such Guarantor under “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock” that is also permitted to be and is secured by a Lien pursuant to (A) the
Consolidated Secured Debt Ratio test set forth in clause (c) of the second paragraph under
“Certain Covenants—Liens” or (B) clause (20) of the definition of Permitted Liens (in each
case plus interest accruing on or after the filing of any petition in bankruptcy or similar
proceeding or for reorganization of the Guarantor (at the rate provided for in the
documentation with respect thereto, regardless of whether or not a claim for post-filing
interest is allowed in such proceedings)), and any and all other fees, expense reimbursement
obligations, indemnification amounts, penalties, and other amounts (whether existing on the
Issue Date or thereafter created or incurred) and all obligations of the Guarantor to reimburse
any bank or other Person in respect of amounts paid under letters of credit, acceptances or
other similar instruments;

     (2) all Hedging Obligations (and guarantees thereof) owing to a Lender (as defined in the
Senior Credit Facilities) or any Affiliate of such Lender (or any Person that was a Lender or
an Affiliate of such Lender at the time the applicable agreement giving rise to such Hedging
Obligation was entered into); and

     (3) all Obligations with respect to the items listed in the preceding clauses (1) and (2);
provided, however, that Designated Senior Indebtedness shall not include:

     (a) any obligation of such Person to the Issuer or any of its Subsidiaries;

     (b) any liability for federal, state, local or other taxes owed or owing by such
Person;

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EXHIBIT A

     (c) any accounts payable or other liability to trade creditors arising in the
ordinary course of business; provided that obligations incurred pursuant to the Credit
Facilities shall not be excluded pursuant to this clause (c);

     (d) any Indebtedness or other Obligation of such Person which is subordinate or
junior in any respect to any other Indebtedness or other Obligation of such Person; or

     (e) that portion of any Indebtedness which at the time of incurrence is incurred in
violation of the Indenture.

     “Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person
which, by its terms, or by the terms of any security into which it is convertible or for which it
is putable or exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable (other than solely as a result of a change of control or asset sale) pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other
than solely as a result of a change of control or asset sale), in whole or in part, in each case
prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes
are no longer outstanding; provided, however, that if such Capital Stock is issued to any plan for
the benefit of employees of the Issuer or its Subsidiaries or by any such plan to such employees,
such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be
repurchased in order to satisfy applicable statutory or regulatory obligations; provided further
that any Capital Stock held by any future, current or former employee, director, officer, manager
or consultant (or their respective Immediate Family Members), of the Issuer, any of its
Subsidiaries, any of its direct or indirect parent companies or any other entity in which the
Issuer or a Restricted Subsidiary has an Investment, in each case pursuant to any stock
subscription or shareholders’ agreement, management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any distributor equity plan or agreement shall
not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer
or its Subsidiaries.

     “Domestic Subsidiary” means any Subsidiary of the Issuer that is organized or existing under
the laws of the United States, any state thereof, the District of Columbia, or any territory
thereof.

     “EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such
Person and its Restricted Subsidiaries for such period

     (1) increased (without duplication) by:

     (a) provision for taxes based on income or profits or capital gains, including,
without limitation, federal, state, franchise and similar taxes, foreign withholding taxes
and foreign unreimbursed value added taxes of such Person and such Subsidiaries paid or
accrued during such period, including penalties and interest related to such taxes or
arising from any tax examinations, to the extent the same were deducted (and not added
back) in computing Consolidated Net Income; provided that the aggregate amount of
unreimbursed value added taxes to be added back for any four consecutive quarter period
shall not exceed $2.0 million; plus

     (b) Fixed Charges of such Person and such Subsidiaries for such period (including (x)
net losses on Hedging Obligations or other derivative instruments entered into for the
purpose of hedging interest rate risk, (y) fees payable in respect of letters of credit
and (z) costs of surety bonds in connection with financing activities, in each case, to
the extent included in Fixed Charges) to the extent the same was deducted (and not added
back) in calculating such Consolidated Net Income; plus

     (c) Consolidated Depreciation and Amortization Expense of such Person and such
Subsidiaries for such period to the extent the same were deducted (and not added back) in
computing Consolidated Net Income; plus

     (d) any fees, expenses or charges related to any Equity Offering, Investment,
acquisition, Asset Sale, disposition, recapitalization, the incurrence, repayment or
refinancing of Indebtedness permitted to be incurred by the Indenture (including any such
transaction consummated prior to the Issue Date and any such transaction undertaken but
not completed, and any charges or non-recurring merger costs incurred during such period
as a result of any such transaction, in each case whether or not successful (including,
for the avoidance of doubt, the effects of expensing all transaction related expenses in
accordance with FAS 141(R) and gains or losses associated with FIN 45)), or the offering,
amendment or modification of any debt instrument, including (i) the offering, any
amendment or other modification of the Notes, Exchange Notes or the Senior Credit
Facilities and any amendment or modification of the Existing Senior Notes and (ii)
commissions,

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EXHIBIT A

discounts, yield and other fees and charges (including any interest expense)
related to any Receivables Facility, and, in each case, deducted (and not added back) in
computing Consolidated Net Income; plus

     (e)(x) Transaction Expenses to the extent deducted (and not added back) in computing
Consolidated Net Income, (y) the amount of any severance, relocation costs, curtailments
or modifications to pension and post-retirement employee benefit plans and (z) any
restructuring charge or reserve deducted (and not added back) in such period in computing
Consolidated Net Income, including any restructuring costs incurred in connection with
acquisitions after the Issue Date, costs related to the closure and/or consolidation of
facilities, retention charges, systems establishment costs, conversion costs and excess
pension charges and consulting fees incurred in connection with any of the foregoing;
provided, that the aggregate amount added back pursuant to subclause (z) of this clause
(e) shall not exceed 10% of the LTM Cost Base in any four consecutive four quarter period;
plus

     (f) any other non-cash charges, including any (i) write-offs or write-downs, (ii)
equity-based awards compensation expense, (iii) losses on sales, disposals or abandonment
of, or any impairment charges or asset write-off related to, intangible assets, long-lived
assets and investments in debt and equity securities, (iv) all losses from investments
recorded using the equity method and (v) other non-cash charges, non-cash expenses or
non-cash losses reducing Consolidated Net Income for such period (provided that if any
such non-cash charges represent an accrual or reserve for potential cash items in any
future period, the cash payment in respect thereof in such future period shall be
subtracted from EBITDA in such future period to the extent paid, and excluding
amortization of a prepaid cash item that was paid in a prior period); plus

     (g) the amount of any minority interest expense consisting of Subsidiary income
attributable to minority equity interests of third parties in any non-Wholly-Owned
Subsidiary deducted (and not added back) in such period in calculating Consolidated Net
Income; plus

     (h) the amount of loss on sale of receivables and related assets to the Receivables
Subsidiary in connection with a Receivables Facility deducted (and not added back) in
computing Consolidated Net Income; plus

     (i) the amount of cost savings projected by the Issuer in good faith to be realized
as a result of specified actions taken during such period or expected to be taken
(calculated on a pro forma basis as though such cost savings had been realized on the
first day of such period), net of the amount of actual benefits realized during such
period from such actions, provided that (A) such amounts are reasonably identifiable and
factually supportable, (B) such actions are taken, committed to be taken or expected to be
taken within 18 months after the Issue Date, (C) no cost savings shall be added pursuant
to this clause (i) to the extent duplicative of any expenses or charges that are otherwise
added back in computing EBITDA with respect to such period and (D) the aggregate amount of
cost savings added pursuant to this clause (i) shall not exceed $100,000,000 for any
period consisting of four consecutive quarters; plus

     (j) to the extent no Default or Event of Default has occurred and is continuing, the
amount of management, monitoring, consulting, transaction and advisory fees and related
expenses paid in such period to the Investors to the extent otherwise permitted under
“Certain Covenants—Transactions with Affiliates” deducted (and not added back) in
computing Consolidated Net Income; plus

     (k) any costs or expense deducted (and not added back) in computing Consolidated Net
Income by such Person or any such Subsidiary pursuant to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement or any
stock subscription or shareholder agreement, to the extent that such cost or expenses are
funded with cash proceeds contributed to the capital of the Issuer or a Restricted
Guarantor or net cash proceeds of an issuance of Equity Interest of the Issuer or a
Restricted Guarantor (other than Disqualified Stock) solely to the extent that such net
cash proceeds are excluded from the calculation set forth in clause (3) of the first
paragraph under “Certain Covenants—Limitation on Restricted Payments”;

     (2) decreased by (without duplication) (a) any non-cash gains increasing Consolidated Net
Income of such Person and such Subsidiaries for such period, excluding any non-cash gains to
the extent they represent the reversal of an accrual or reserve for a potential cash item that
reduced EBITDA in any prior period and (b) the minority interest income consisting of
subsidiary losses attributable to minority equity interests of third parties in any non-Wholly
Owned Subsidiary to the extent such minority interest income is included in Consolidated Net
Income; and

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EXHIBIT A

     (3) increased or decreased by (without duplication):

     (a) any net gain or loss resulting in such period from Hedging Obligations and the
application of Statement of Financial Accounting Standards No. 133 and International
Accounting Standards No. 39 and their respective related pronouncements and
interpretations; plus or minus, as applicable,

     (b) any net gain or loss resulting in such period from currency translation gains or
losses related to currency remeasurements of indebtedness (including any net loss or gain
resulting from hedge agreements for currency exchange risk).

     “EMU” means economic and monetary union as contemplated in the Treaty on European Union.

     “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock, but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock.

     “Equity Offering” means any public or private sale of common stock or Preferred Stock of the
Issuer or of a direct or indirect parent of the Issuer (excluding Disqualified Stock), other than:

     (1) public offerings with respect to any such Person’s common stock registered on Form
S-8;

     (2) issuances to the Issuer or any Subsidiary of the Issuer; and

     (3) any such public or private sale that constitutes an Excluded Contribution.

     “euro” means the single currency of participating member states of the EMU.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     “Exchange Notes” means new notes of the Issuer issued in exchange for the Notes pursuant to,
or as contemplated by, the Registration Rights Agreement.

     “Excluded Contribution” means net cash proceeds, marketable securities or Qualified Proceeds
received by or contributed to the Issuer from,

     (1) contributions to its common equity capital, and

     (2) the sale (other than to a Subsidiary of the Issuer or to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement of the Issuer)
of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Issuer,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate on the date
such capital contributions are made or the date such Equity Interests are sold, as the case may be,
which are excluded from the calculation set forth in clauses (3)(b) and 3(c) of the first paragraph
under “Certain Covenants—Limitation on Restricted Payments.”

     “Existing Senior Notes” means the Issuer’s 4.625% Senior Notes Due 2008, 6.625% Senior Notes
Due 2008, 4.25% Senior Notes Due 2009, 4.5% Senior Notes Due 2010, 6.25% Senior Notes Due 2011,
4.4% Senior Notes Due 2011, 5.0% Senior Notes Due 2012, 5.75% Senior Notes Due 2013, 5.5% Senior
Notes Due 2014, 4.9% Senior Notes Due 2015, 5.5% Senior Notes Due 2016, 6.875% Senior Debentures
Due 2018 and 7.25% Debentures Due 2027.

     “Existing Senior Notes Indenture” means the Senior Indenture dated as of October 1, 1997
between the Issuer and The Bank of New York, as trustee, as the same may have been amended or
supplemented as of the Issue Date.

     “Fixed Charges” means, with respect to any Person for any period, the sum, without
duplication, of:

     (1) Consolidated Interest Expense of such Person and Restricted Subsidiaries for such
period; plus

     (2) all cash dividends or other distributions paid to any Person other than such Person or
any such Subsidiary (excluding items eliminated in consolidation) on any series of Preferred
Stock of the Issuer or a Restricted Subsidiary during such period; plus

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EXHIBIT A

     (3) all cash dividends or other distributions paid to any Person other than such Person or
any such Subsidiary (excluding items eliminated in consolidation) on any series of Disqualified
Stock of the Issuer or a Restricted Subsidiary during such period.

     “Foreign Subsidiary” means any Subsidiary that is not organized or existing under the laws of
the United States, any state thereof, the District of Columbia, or any territory thereof, and any
Restricted Subsidiary of such Foreign Subsidiary.

     “GAAP” means generally accepted accounting principles in the United States which are in effect
on the Issue Date.

     “General Credit Facilities” means the term and revolving credit facilities under the
Credit Agreement to be entered into as of the Issue Date by and among the Issuer, the subsidiary
guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and
Citibank, N.A., as Administrative Agent, including any notes, mortgages, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof
and any one or more indentures or credit facilities or commercial paper facilities with banks or
other institutional lenders or investors that extend, replace, refund, refinance, renew or defease
any part of the loans, notes, other credit facilities or commitments thereunder, including any such
replacement, refunding or refinancing facility or indenture that increases the amount that may be
borrowed thereunder or alters the maturity of the loans thereunder or adds Restricted Subsidiaries
as additional borrowers or guarantors thereunder and whether by the same or other agent, lender or
group of lenders or investors.

     “Government Securities” means securities that are:

     (1) direct obligations of the United States of America for the timely payment of which its
full faith and credit is pledged; or

     (2) obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America,

which, in either case, are not callable or redeemable at the option of the issuers thereof, and
shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the Government
Securities or the specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.

     “guarantee” means a guarantee (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or indirect, in any manner (including
letters of credit and reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.

     “Guarantee” means the guarantee by any Guarantor of the Issuer’s Obligations under the
Indenture and the Notes.

     “Guaranteed Leverage Ratio” means, as of the date of determination, the ratio of (a)
Designated Senior Indebtedness of the Guarantors, to (b) EBITDA of the Issuer and its Restricted
Subsidiaries for the most recently ended four fiscal quarters ending immediately prior to such date
for which internal financial statements are available.

     In the event that any Guarantor (i) incurs, redeems, retires or extinguishes any Indebtedness
(other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary
course of business for working capital purposes) or (ii) issues or redeems Disqualified Stock or
Preferred Stock subsequent to the commencement of the period for which the Guaranteed Leverage
Ratio is being calculated but prior to or simultaneously with the event for which the calculation
of the Guaranteed Leverage Ratio is made (the “Guaranteed Leverage Ratio Calculation Date“), then
the Guaranteed Leverage Ratio shall be calculated giving pro forma effect to such incurrence,
redemption, retirement or extinguishment of Indebtedness, or such issuance or redemption of
Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the
applicable four-quarter period.

     For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Guaranteed

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EXHIBIT A

Leverage Ratio Calculation Date, and other operational changes that the Issuer or any of
its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Guaranteed Leverage Ratio Calculation Date shall be calculated on a pro forma basis as set forth
below assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations,
consolidations, discontinued operations and other operational changes had occurred on the first day
of the four-quarter reference period. If since the beginning of such period any Person that
subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall have made any Investment,
acquisition, disposition, merger, amalgamation, consolidation, discontinued operation (other than
the Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date))
or operational change, in each case with respect to an operating unit of a business, that would
have required adjustment pursuant to this definition, then the Guaranteed Leverage Ratio shall be
calculated giving pro forma effect thereto in the manner set forth below for such period as if such
Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational
change had occurred at the beginning of the applicable four-quarter period.

     For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the Transactions) and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Issuer (and may include, for the
avoidance of doubt, cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions) which is being
given pro forma effect that have been or are expected to be realized; provided, that actions to
realize such cost savings and operating expense reductions are taken within 12 months after the
date of such Investment, acquisition, amalgamation, merger or consolidation).

     “Guarantor” means, each Person that Guarantees the Notes in accordance with the terms of the
Indenture.

     “Hedging Obligations” means, with respect to any Person, the obligations of such Person under
any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement,
commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing for the transfer or mitigation of
interest rate or currency risks either generally or under specific contingencies.

     “Holder” means the Person in whose name a Note is registered on the registrar’s books.

     “Holdings” means Clear Channel Capital I, LLC.

     “Immediate Family Member” means with respect to any individual, such individual’s child,
stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former
spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and
daughter-in-law (including adoptive relationships) and any trust, partnership or other bona fide
estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any
private foundation or fund that is controlled by any of the foregoing individuals or any
donor-advised fund of which any such individual is the donor.

     “Indebtedness” means, with respect to any Person, without duplication:

     (1) any indebtedness (including principal and premium) of such Person, whether or not
contingent:

     (a) in respect of borrowed money;

     (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit
or bankers’ acceptances (or, without duplication, reimbursement agreements in respect
thereof);

     (c) representing the balance deferred and unpaid of the purchase price of any
property (including Capitalized Lease Obligations), except (i) any such balance that
constitutes an obligation in respect of a commercial letter of credit, a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary course of
business, (ii) liabilities accrued in the ordinary course of business and (iii) any
earn-out obligations until such obligation becomes a liability on the balance sheet of
such Person in accordance with GAAP; or

     (d) representing any Hedging Obligations;

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EXHIBIT A

if and to the extent that any of the foregoing Indebtedness (other than letters of credit
(other than commercial letters of credit) and Hedging Obligations) would appear as a
liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared
in accordance with GAAP;

     (2) to the extent not otherwise included, any obligation by such Person to be liable for,
or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in
clause (1) of a third Person (whether or not such items would appear upon the balance sheet of
such obligor or guarantor), other than by endorsement of negotiable instruments for collection
in the ordinary course of business; and

     (3) to the extent not otherwise included, the obligations of the type referred to in
clause (1) of a third Person secured by a Lien on any asset owned by such first Person, whether
or not such Indebtedness is assumed by such first Person;

provided, however, that notwithstanding the foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course of business and (b) obligations under or
in respect of Receivables Facilities or any Qualified Securitization Financing.

     “Independent Financial Advisor” means an accounting, appraisal, investment banking firm or
consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in
the good faith judgment of the Issuer, qualified to perform the task for which it has been engaged.

     “Initial Purchasers” means Deutsche Bank Securities Inc., Morgan Stanley & Co.
Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich Capital
Markets, Inc. and Wachovia Capital Markets, LLC.

     “Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

     “Investment Grade Securities” means:

     (1) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than Cash Equivalents);

     (2) debt securities or debt instruments with an Investment Grade Rating, but excluding any
debt securities or instruments constituting loans or advances among the Issuer and the
Subsidiaries of the Issuer;

     (3) investments in any fund that invests exclusively in investments of the type described
in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending investment
or distribution; and

     (4) corresponding instruments in countries other than the United States customarily
utilized for high quality investments.

     “Investments” means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees), advances or capital
contributions (excluding accounts receivable, trade credit, advances to customers and commission,
travel and similar advances to directors, officers, employees and consultants, in each case made in
the ordinary course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any other Person and investments that
are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person
in the same manner as the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property. For purposes of the definition of
“Unrestricted Subsidiary” and the covenant described under “Certain Covenants—Limitation on
Restricted Payments”:

     (1) “Investments” shall include the portion (proportionate to the Issuer’s direct or
indirect equity interest in such Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Issuer or applicable Restricted Subsidiary shall be deemed to continue to have
a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

     (a) the Issuer’s direct or indirect “Investment” in such Subsidiary at the time of
such redesignation; less

     (b) the portion (proportionate to the Issuer’s direct or indirect equity interest in
such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time
of such redesignation; and

     (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined in good faith by
the Issuer.

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EXHIBIT A

     “Investors” means Thomas H. Lee Partners L.P. and Bain Capital LLC, each of their respective
Affiliates and any investment funds advised or managed by any of the foregoing, but not including,
however, any portfolio companies of any of the foregoing.

     “Issue Date” means the date that the Transactions are consummated.

     “Issuer” has the meaning set forth in the first paragraph under “General.”

     “Legal Holiday” means a Saturday, a Sunday or a day on which commercial banking institutions
are not required to be open in the State of New York.

     “Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge,
hypothecation, charge, security interest, preference, priority or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in the nature thereof,
any option or other agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.

     “LTM Cost Base” means, for any consecutive four quarter period, the sum of (a) direct
operating expenses, (b) selling, general and administrative expenses and (c) corporate expenses, in
each case excluding depreciation and amortization, of the Issuer and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency
business.

     “Net Income” means, with respect to any Person, the net income (loss) of such Person and its
Subsidiaries that are Restricted Subsidiaries, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends.

     “Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its
Restricted Subsidiaries in respect of any Asset Sale, including any cash received upon the sale or
other disposition of any Designated Non-cash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale and the sale or disposition of such Designated
Non-cash
Consideration, including legal, accounting and investment banking fees, payments made in order to
obtain a necessary consent or required by applicable law, and brokerage and sales commissions, any
relocation expenses incurred as a result thereof, other fees and expenses, including title and
recordation expenses, taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of principal, premium, if any, and interest on unsubordinated Indebtedness
required (other than required by clause (1) of the second paragraph of “Repurchase at the Option of

Holders—Asset Sales”) to be paid as a result of such transaction and any deduction of
appropriate amounts to be provided by the Issuer or any of its Restricted Subsidiaries as a reserve
in accordance with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Issuer or any of its Restricted Subsidiaries after such sale or
other disposition thereof, including pension and other
post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification obligations associated
with such transaction, and in the case of any Asset Sale by a Restricted Subsidiary that is not a
Wholly-Owned Subsidiary, a portion of the aggregate cash proceeds equal to the portion of the
outstanding Equity Interests of such non-Wholly-Owned Subsidiary owned by Persons other than the
Issuer and any other Restricted Subsidiary (to the extent such proceeds are committed to be
distributed to such Persons).

     “Obligations” means any principal (including any accretion), interest (including any interest
accruing on or subsequent to the filing of a petition in bankruptcy, reorganization or similar
proceeding at the rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable state, federal or foreign law), premium, penalties,
fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters
of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of
such principal (including any accretion), interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities, payable under the documentation governing any
Indebtedness.

     “Officer” means the Chairman of the Board, the Chief Executive Officer, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary
of the Issuer.

     “Officer’s Certificate” means a certificate signed on behalf of the Issuer by an Officer of
the Issuer, who must be the principal executive officer, the principal financial officer, the
treasurer or the principal accounting officer of the Issuer, that meets the requirements set forth
in the Indenture.

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EXHIBIT A

     “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable
to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee.

     “Partial PIK Interest” has the meaning set forth under “Principal, Maturity and Interest.”

     “Permitted Asset Swap” means the substantially concurrent purchase and sale or exchange of
Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents
between the Issuer or any of its Restricted Subsidiaries and another Person.

     “Permitted Holder” means any of the Investors and members of management of the Issuer (or its
direct parent or CC Media Holdings, Inc.) who are holders of Equity Interests of the Issuer (or any
of its direct or indirect parent companies) on the Issue Date and any group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any
of the foregoing are members; provided that (x) in the case of such group and without giving effect
to the existence of such group or any other group, such Investors and members of management,
collectively, have beneficial ownership of more than 50% of the total voting power of the Voting
Stock of the Issuer or any of its direct or indirect parent companies and (y) for purposes of this
definition, the amount of Equity Interests held by members of management who qualify as “Permitted
Holders” shall never exceed the amount of Equity Interests held by such members of management on
the Issue Date. Any person or group whose acquisition of beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act, or any successor provision) constitutes a Change of Control
in respect of which a Change of Control Offer is made in accordance with the requirements of the
covenant described under “Repurchase at the Option of Holders—Change of Control” (or would
result in a Change of Control Offer in the absence of the waiver of such requirement by Holders in
accordance with the covenant described under “Repurchase at the Option of Holders—Change of
Control”) will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

     “Permitted Investments” means:

     (1) any Investment in the Issuer or any of its Restricted Subsidiaries;

     (2) any Investment in cash and Cash Equivalents or Investment Grade Securities;

     (3) any Investment by the Issuer or any of its Restricted Subsidiaries in a Person that is
engaged in a Similar Business if as a result of such Investment:

     (a) such Person becomes a Restricted Subsidiary; or

     (b) such Person, in one transaction or a series of related transactions, is
amalgamated, merged or consolidated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary,

and, in each case, any Investment held by such Person; provided that such Investment was not
acquired by such Person in contemplation of such acquisition, merger, consolidation or
transfer;

     (4) any Investment in securities or other assets not constituting Cash Equivalents or
Investment Grade Securities and received in connection with an Asset Sale made pursuant to the
first paragraph “Repurchase at the Option of Holders—Asset Sales” or any other disposition
of assets not constituting an Asset Sale;

     (5) any Investment existing on the Issue Date or made pursuant to a binding commitment in
effect on the Issue Date or an Investment consisting of any extension, modification or renewal
of any such Investment or binding commitment existing on the Issue Date; provided that the
amount of any such Investment may be increased (x) as required by the terms of such Investment
or binding commitment as in existence on the Issue Date (including as a result of the accrual
or accretion of interest or original issue discount or the issuance of pay-in-kind securities)
or (y) as otherwise permitted under the Indenture;

     (6) any Investment acquired by the Issuer or any of its Restricted Subsidiaries:

     (a) in exchange for any other Investment, accounts receivable or notes receivable
held by the Issuer or any such Restricted Subsidiary in connection with or as a result of
a bankruptcy workout, reorganization or recapitalization of the issuer of such other
Investment, accounts receivable or notes receivable; or

     (b) as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect to any
secured Investment in default;

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EXHIBIT A

     (7) Hedging Obligations permitted under clause (10) of the covenant described in “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock”;

     (8) any Investment the payment for which consists of Equity Interests (exclusive of
Disqualified Stock) of the Issuer or any of its direct or indirect parent companies; provided,
however, that such Equity Interests will not increase the amount available for Restricted
Payments under clause (3) of the first paragraph under the covenant described under “Certain
Covenants—Limitation on Restricted Payments”;

     (9) Indebtedness (including any guarantee thereof) permitted under the covenant described
in “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock and Preferred Stock”;

     (10) any transaction to the extent it constitutes an Investment that is permitted and made
in accordance with the provisions of the second paragraph of the covenant described under
“Certain Covenants—Transactions with Affiliates” (except transactions described in clauses
(2), (5) and (9) of such paragraph);

     (11) any Investment consisting of a purchase or other acquisition of inventory, supplies,
material or equipment;

     (12) additional Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (12) that are at that time outstanding (without
giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash or marketable securities), not to exceed the greater of $600.0 million
and 2.00% of Total Assets (with the fair market value of each Investment being measured at the
time made and without giving effect to subsequent changes in value);

     (13) Investments relating to a Receivables Subsidiary that, in the good faith
determination of the Issuer, are necessary or advisable to effect any Receivables Facility;

     (14) advances to, or guarantees of Indebtedness of, employees, directors, officers and
consultants not in excess of $20.0 million outstanding at any one time, in the aggregate;

     (15) loans and advances to officers, directors and employees consistent with industry
practice or past practice, as well as for moving expenses and other similar expenses incurred
in the ordinary course of business or consistent with past practice or to fund such Person’s
purchase of Equity Interests of the Issuer or any direct or indirect parent company thereof;

     (16) Investments in the ordinary course of business consisting of endorsements for
collection or deposit;

     (17) Investments by the Issuer or any of its Restricted Subsidiaries in any other Person
pursuant to a “local marketing agreement” or similar arrangement relating to a station owned or
licensed by such Person;

     (18) any performance guarantee and Contingent Obligations in the ordinary course of
business and the creation of liens on the assets of the Issuer or any Restricted Subsidiary in
compliance with the covenant described under “Certain Covenants—Liens”;

     (19) any purchase or repurchase of the Notes; and

     (20) any Investment in a Similar Business having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (20) that are at that
time outstanding, not to exceed $200.0 million (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent changes in value).

     “Permitted Liens” means, with respect to any Person:

     (1) pledges, deposits or security by such Person under workmen’s compensation laws,
unemployment insurance, employers’ health tax and other social security laws or similar
legislation (including in respect of deductibles, self insured retention amounts and premiums
and adjustments thereto) or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or deposits of cash or U.S.
government bonds to secure surety or appeal bonds to which such Person is a party, or deposits
as security for contested taxes or import duties or for the payment of rent, in each case
incurred in the ordinary course of business;

     (2) Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s, repairmen’s
and mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days
or being contested in good faith by appropriate actions or other Liens arising out of judgments
or awards against such Person with respect to which

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EXHIBIT A

such Person shall then be proceeding with
an appeal or other proceedings for review if adequate reserves with respect thereto are
maintained on the books of such Person in accordance with GAAP;

     (3) Liens for taxes, assessments or other governmental charges not yet overdue for a
period of more than 30 days or subject to penalties for nonpayment or which are being contested
in good faith by appropriate actions diligently pursued, if adequate reserves with respect
thereto are maintained on the books of such Person in accordance with GAAP, or for property
taxes on property that the Issuer or any Subsidiary thereof has determined to abandon if the
sole recourse for such tax, assessment, charge, levy or claim is to such property;

     (4) Liens in favor of issuers of performance, surety, bid, indemnity, warranty, release,
appeal or similar bonds or with respect to other regulatory requirements or letters of credit
or bankers’ acceptances issued, and completion guarantees provided for, in each case, issued
pursuant to the request of and for the account of such Person in the ordinary course of its
business or consistent with past practice prior to the Issue Date;

     (5) minor survey exceptions, minor encumbrances, ground leases, easements or reservations
of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines,
drains, telegraph and telephone and cable television lines, gas and oil pipelines and other
similar purposes, or zoning, building codes or other restrictions (including minor defects and
irregularities in title and similar encumbrances) as to the use of real properties or Liens
incidental to the conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness and which do not in the aggregate
materially impair their use in the operation of the business of such Person;

     (6) Liens securing obligations under Indebtedness permitted to be incurred pursuant to
clause (5), (12)(b) or (18) of the second paragraph of the covenant described under “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock”; provided that Liens securing obligations under Indebtedness permitted to be
incurred pursuant to clause (18) extend only to the assets or Equity Interests of Foreign
Subsidiaries;

     (7) Liens existing on the Issue Date;

     (8) Liens existing on property or shares of stock or other assets of a Person at the time
such Person becomes a Subsidiary; provided, however, that such Liens are not created or
incurred in connection with, or in contemplation of, such other Person becoming such a
Subsidiary; provided, further, however, that such Liens may not extend to any other property or
other assets owned by the Issuer or any of its Restricted Subsidiaries;

     (9) Liens existing on property or other assets at the time the Issuer or a Restricted
Subsidiary acquired the property or such other assets, including any acquisition by means of an
amalgamation, merger or consolidation with or into the Issuer or any of its Restricted
Subsidiaries; provided, however, that such Liens are not created or incurred in connection
with, or in contemplation of, such acquisition, amalgamation, merger or consolidation; provided
further that the Liens may not extend to any other property owned by the Issuer or any of its
Restricted Subsidiaries;

     (10) Liens securing obligations under Indebtedness or other obligations of the Issuer or a
Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary permitted to be
incurred in accordance with the covenant described under “Certain Covenants—Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

     (11) Liens securing Hedging Obligations permitted to be incurred under the Indenture;

     (12) Liens on specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances or letters of credit
issued or created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

     (13) leases, subleases, licenses or sublicenses granted to others in the ordinary course
of business which do not materially interfere with the ordinary conduct of the business of the
Issuer or any of its Restricted Subsidiaries and do not secure any Indebtedness;

     (14) Liens arising from Uniform Commercial Code (or equivalent statutes) financing
statement filings regarding operating leases, consignments or accounts entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of business;

     (15) Liens in favor of the Issuer or any Guarantor;

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EXHIBIT A

     (16) Liens on equipment of the Issuer or any of its Restricted Subsidiaries granted in the
ordinary course of business;

     (17) Liens on (x) accounts receivable and related assets incurred in connection with a
Receivables Facility, and (y) any Securitization Assets and related assets incurred in
connection with a Qualified Securitization Financing;

     (18) Liens to secure any refinancing, refunding, extension, renewal or replacement (or
successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7),
(8), and (9); provided that (a) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property), and (b) the
obligations under Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (i) the outstanding principal amount or, if greater, committed amount
of the Indebtedness described under clauses (6), (7), (8), and (9) at the time the original
Lien became a Permitted Lien under the Indenture, and (ii) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing, refunding, extension, renewal or
replacement;

     (19) deposits made or other security provided in the ordinary course of business to secure
liability to insurance carriers;

     (20) other Liens securing Indebtedness or other obligations which do not exceed $50.0
million in the aggregate at any one time outstanding

     (21) Liens securing judgments for the payment of money not constituting an Event of
Default under clause (5) under “Events of Default and Remedies” so long as such Liens are
adequately bonded and any appropriate legal proceedings that may have been duly initiated for
the review of such judgment have not been finally terminated or the period within which such
proceedings may be initiated has not expired;

     (22) Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods in the ordinary
course of business;

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EXHIBIT A

     (23) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial
Code on items in the course of collection, (ii) attaching to commodity trading accounts or
other commodity brokerage accounts incurred in the ordinary course of business, and (iii) in
favor of banking institutions arising as a matter of law encumbering deposits (including the
right of 

set-off) and which are within the general parameters customary in the banking
industry;

     (24) Liens deemed to exist in connection with Investments in repurchase agreements
permitted under the Indenture; provided that such Liens do not extend to any assets other than
those that are the subject of such repurchase agreement;

     (25) Liens encumbering reasonable customary initial deposits and margin deposits and
similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in
the ordinary course of business and not for speculative purposes;

     (26) Liens that are contractual rights of set-off (i) relating to the establishment of
depository relations with banks not given in connection with the issuance of Indebtedness, (ii)
relating to pooled deposit or sweep accounts of the Issuer or any of its Restricted
Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business of the Issuer and its Restricted Subsidiaries or (iii) relating to
purchase orders and other agreements entered into with customers of the Issuer or any of its
Restricted Subsidiaries in the ordinary course of business;

     (27) Liens securing the Existing Senior Notes to the extent permitted by the Senior Credit
Facilities as in effect on the Issue Date;

     (28) Liens securing obligations owed by the Issuer or any Restricted Subsidiary to
any lender under any Senior Credit Facility or any Affiliate of such a lender in respect of any
overdraft and related liabilities arising from treasury, depository and cash management
services or any automated clearing house transfers of funds;

     (29) the rights reserved or vested in any Person by the terms of any lease, license,
franchise, grant or permit held by the Issuer or any Restricted Subsidiary thereof or by a
statutory provision, to terminate any such lease, license, franchise, grant or permit, or to
require annual or periodic payments as a condition to the continuance thereof;

     (30) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale or purchase of goods entered into by the Issuer or any Restricted
Subsidiary in the ordinary course of business;

     (31) Liens solely on any cash earnest money deposits made by the Issuer or any of its
Restricted Subsidiaries in connection with any letter of intent or purchase agreement
permitted; and

     (32) security given to a public utility or any municipality or governmental authority when
required by such utility or authority in connection with the operations of that Person in the
ordinary course of business.

     For purposes of this definition, the term “Indebtedness” shall be deemed to include interest
on and the costs in respect of such Indebtedness.

     “Person” means any individual, corporation, limited liability company, partnership, joint
venture, association, joint stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.

     “Preferred Stock” means any Equity Interest with preferential rights of payment of dividends
or upon liquidation, dissolution, or winding up.

     “Qualified Proceeds” means assets that are used or useful in, or Capital Stock of any Person
engaged in, a Similar Business; provided that the fair market value of any such assets or Capital
Stock shall be determined by the Issuer in good faith.

     “Qualified Securitization Financing” means any transaction or series of transactions that may
be entered into by Holdings, the Issuer or any of its Restricted Subsidiaries pursuant to which
such Person may sell, convey or otherwise transfer to (A) one or more Securitization Subsidiaries
or (B) any other Person (in the case of a transfer by a Securitization Subsidiary), or may grant a
security interest in, any Securitization Assets of CCO or any of its Subsidiaries (other than any

218

 

EXHIBIT A

assets that have been transferred or contributed to CCO or its Subsidiaries by the Issuer or any
other Restricted Subsidiary of the Issuer) that are customarily granted in connection with asset
securitization transactions similar to the Qualified Securitization Financing entered into of a
Securitization Subsidiary that meets the following conditions: (a) the board of directors of the
Issuer shall have determined in good faith that such Qualified Securitization Financing (including
the terms, covenants, termination events and other provisions) is in the aggregate economically
fair and reasonable to the Issuer and the Securitization Subsidiary, (b) all sales, transfers
and/or contributions of Securitization Assets and related assets to the Securitization Subsidiary
are made at fair market value, (c) the financing terms, covenants, termination events and other
provisions thereof, including any Standard Securitization Undertakings, shall be market terms (as
determined in good faith by the Issuer), (d) after giving pro forma effect to such Qualified
Securitization Financing, (x) the Consolidated Leverage Ratio of the Issuer would be (A) less than
8.0 to 1.0 and (B) lower than the Consolidated Leverage Ratio of the Issuer immediately prior to
giving pro forma effect to such Qualified Securitization Financing and (y) the Guaranteed Leverage
Ratio of the Issuer would be (A) less than 6.5 to 1.0 and (B) lower than the Guaranteed Leverage
Ratio of the Issuer immediately prior to giving pro forma effect to such Qualified Securitization
Financing, (e) the proceeds from such sale will be used by the Issuer to permanently reduce
Obligations under the Senior Credit Facilities and to correspondingly reduce commitments with
respect thereto and (f) the Issuer shall have received an Officer’s Certificate of the Issuer
certifying that all of the requirements of clauses (a) through (e) have been satisfied.

     “Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating
on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as
the case may be, selected by the Issuer which shall be substituted for Moody’s or S&P or both, as
the case may be.

     “Receivables Facility” means any of one or more receivables financing facilities as amended,
supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations
of which are non-recourse (except for customary representations, warranties, covenants and
indemnities made in connection with such facilities) to the Issuer or any of its Restricted
Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries sells their accounts receivable to either (a) a Person that is not a
Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its accounts receivable to
a Person that is not a Restricted Subsidiary.

     “Receivables Fees” means distributions or payments made directly or by means of discounts with
respect to any accounts receivable or participation interest therein issued or sold in connection
with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any
Receivables Facility.

     “Receivables Subsidiary” means any Subsidiary formed for the purpose of, and that solely
engages only in one or more Receivables Facilities and other activities reasonably related thereto.

     “Registration Rights Agreement” means the Registration Rights Agreement with respect to the
Notes, dated the Issue Date, among the Issuer, the Guarantors and the Initial Purchasers and any
similar registration rights agreements with respect to any Additional Notes.

     “Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in
a Similar Business, provided that any assets received by the Issuer or a Restricted Subsidiary in
exchange for assets transferred by the Issuer or a Restricted Subsidiary shall not be deemed to be
Related Business Assets if they consist of securities of a Person, unless upon receipt of the
securities of such Person, such Person would become a Restricted Subsidiary.

     “Representative” means any trustee, agent or representative (if any) for an issue of
Designated Senior Indebtedness of a Guarantor.

     “Restricted Guarantor” means a Guarantor that is a Restricted Subsidiary.

     “Restricted Investment” means an Investment other than a Permitted Investment.

     “Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of the Issuer
(including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided, however,
that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary,
such Subsidiary shall be included in the definition of “Restricted Subsidiary.”

     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any
successor to its rating agency business.

219

 

EXHIBIT A

     “Sale and Lease-Back Transaction” means any arrangement providing for the leasing by the
Issuer or any of its Restricted Subsidiaries of any real or tangible personal property, which
property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.

     “SEC ” means the U.S. Securities and Exchange Commission.

     “Secured Indebtedness” means any Indebtedness of the Issuer or any of its Restricted
Subsidiaries secured by a Lien.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the SEC promulgated thereunder.

     “Securitization Assets” means any properties, assets and revenue streams associated with the
Americas Outdoor Advertising segment of the Issuer and its Subsidiaries, and any other assets
related thereto, subject to a Qualified Securitization Financing and the proceeds thereof.

     “Securitization Fees” means distributions or payments made directly or by means of discounts
with respect to any participation interest issued or sold in connection with, and other fees paid
to a Person that is not a Securitization Subsidiary in connection with, any Qualified
Securitization Financing.

     “Securitization Subsidiary” means a Restricted Subsidiary or direct Wholly-Owned Subsidiary of
Holdings (other than the Issuer) to which the Issuer or any of its Restricted Subsidiaries sells,
conveys or otherwise transfers Securitization Assets and related assets that engages in no
activities other than in connection with the ownership and financing of Securitization Assets, all
proceeds thereof and all rights (contingent and other), collateral and other assets relating
thereto, and any business or activities incidental or related to such business, and which is
designated by the board of directors of the Issuer or such other Person as provided below as a
Securitization Subsidiary and (a) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (i) is guaranteed by Holdings, the Issuer or any other
Subsidiary of Holdings, other than another Securitization Subsidiary (excluding guarantees of
obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings), (ii) is recourse to or obligates Holdings, the Issuer or any other
Subsidiary of the Issuer,
other than another Securitization Subsidiary, in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of Holdings, the Issuer or any
other Subsidiary of the Issuer, other than another Securitization Subsidiary, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings, (b) with which none of Holdings, the Issuer or any other Subsidiary of
the Issuer, other than another Securitization Subsidiary, has any material contract, agreement,
arrangement or understanding other than on terms which the Issuer reasonably believes to be no less
favorable to Holdings, the Issuer or such Subsidiary than those that might be obtained at the time
from Persons that are not Affiliates of the Issuer and (c) to which none of Holdings, the Issuer or
any other Subsidiary of the Issuer, other than another Securitization Subsidiary, has any
obligation to maintain or preserve such entity’s financial condition or cause such entity to
achieve certain levels of operating results.

     “Senior Credit Facilities” means (i) any ABL Facility and (ii) the General Credit
Facilities.

     “Significant Party” means any Guarantor or Restricted Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the
Securities Act, as such regulation is in effect on the Issue Date.

     “Similar Business” means any business conducted or proposed to be conducted by the Issuer and
its Subsidiaries on the Issue Date or any business that is similar, reasonably related, incidental
or ancillary thereto.

     “Special Interest” means all additional interest then owing pursuant to the Registration
Rights Agreement.

     “Sponsor Management Agreement” means the management agreement between certain management
companies associated with the Investors and the Issuer and/or any direct or indirect parent
company, in substantially the form delivered to the Initial Purchasers prior to the Issue Date and
as amended, supplemented, amended and restated, replaced or otherwise modified from time to time;
provided, however, that the terms of any such amendment, supplement, amendment and restatement or
replacement agreement are not, taken as a whole, less favorable to the holders of the Notes in any
material respect than the original agreement in effect on the Issue Date.

     “Standard Securitization Undertakings” means representations, warranties, covenants and
indemnities entered into by Holdings (or any direct or indirect parent company of Holdings) or any
of its Subsidiaries that the Issuer has determined in good faith to be customary in a
securitization financing.

220

 

EXHIBIT A

     “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which the payment of interest or principal was scheduled to be
paid in the original documentation governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

221

 

EXHIBIT A

     “Subordinated Indebtedness” means:

     (1) any Indebtedness of the Issuer which is by its terms subordinated in right of payment
to the Notes; and

     (2) any Indebtedness of any Guarantor which is by its terms subordinated in right of
payment to the Guarantee of such entity of the Notes.

     “Subsidiary” means, with respect to any Person, a corporation, partnership, joint venture,
limited liability company or other business entity (excluding, for the avoidance of doubt,
charitable foundations) of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body (other than securities
or interests having such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.

     “Total Assets” means total assets of the Issuer and its Restricted Subsidiaries on a
consolidated basis prepared in accordance with GAAP, shown on the most recent balance sheet of the
Issuer and its Restricted Subsidiaries as may be expressly stated.

     “Transaction Expenses” means any fees or expenses incurred or paid by the Issuer or any
of its Subsidiaries in connection with the Transactions.

     “Transactions” means the “Transactions” as defined in the Senior Credit Facilities as in
effect on the Issue Date.

     “Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption
Date of United States Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available
at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to      , 2012; provided, however, that if the period from
the Redemption Date to      , 2012 is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant maturity of one year will
be used.

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§
77aaa-77bbbb).

     “Unrestricted Subsidiary” means:

     (1) any Subsidiary of the Issuer which at the time of determination is an Unrestricted
Subsidiary (as designated by the Issuer, as provided below); and

     (2) any Subsidiary of an Unrestricted Subsidiary.

     The Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or
holds any Lien on, any property of, the Issuer or any Restricted Subsidiary of the Issuer (other
than solely any Unrestricted Subsidiary of the Subsidiary to be so designated); provided that

     (1) any Unrestricted Subsidiary must be an entity of which the Equity Interests entitled
to cast at least a majority of the votes that may be cast by all Equity Interests having
ordinary voting power for the election of directors or Persons performing a similar function
are owned, directly or indirectly, by the Issuer;

     (2) such designation complies with the covenants described under “Certain Covenants—Limitation on Restricted Payments”; and

     (3) each of:

     (a) the Subsidiary to be so designated; and

     (b) its Subsidiaries

     has not at the time of designation, and does not thereafter, incur any Indebtedness
pursuant to which the lender has recourse to any of the assets of the Issuer or any Restricted
Subsidiary.

222

 

EXHIBIT A

     The Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that, immediately after giving effect to such designation, no Default shall have occurred and be
continuing and either:

     (1) the Issuer could incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test described in the first paragraph under “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock”; or

     (2) the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries would
be equal to or less than such ratio immediately prior to such designation, in each case on a
pro forma basis taking into account such designation.

     Any such designation by the Issuer shall be notified by the Issuer to the Trustee by promptly
filing with the Trustee a copy of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an Officer’s Certificate certifying that
such designation complied with the foregoing provisions.

     “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at
the time entitled to vote in the election of the board of directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified
Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:

     (1) the sum of the products of the number of years from the date of determination to the
date of each successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the
amount of such payment; by

     (2) the sum of all such payments.

     “Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the
outstanding Equity Interests of which (other than directors’ qualifying shares and shares issued to
foreign nationals as required under applicable law) shall at the time be owned by such Person or by
one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned
Subsidiaries of such Person.

223

 

EXHIBIT B

CLEAR CHANNEL COMMUNICATIONS, INC.

REGISTRATION RIGHTS AGREEMENT

$980,000,000 Senior Cash Pay Notes due 2016

$1,330,000,000 Senior Toggle Notes due 2016

[                         ], 2008

DEUTSCHE BANK SECURITIES INC.

MORGAN STANLEY & CO. INCORPORATED

CITIGROUP GLOBAL MARKETS INC.

CREDIT SUISSE SECURITIES (USA) LLC

GREENWICH CAPITAL MARKETS, INC.

WACHOVIA CAPITAL MARKETS, LLC

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, New York 10005

Ladies and Gentlemen:

          BT Triple Crown Merger Co., Inc., a Delaware corporation (“Merger Sub”) proposes to
sell to certain purchasers (the “Initial Purchasers”), for whom you (the
“Representatives”) are acting as representatives, their 10.75% Senior Cash Pay Notes due
2016 in the principal amount of $980,000,000 (the “Senior Cash Pay Notes”) and their
11.00%/11.75% Senior Toggle Notes due 2016 in the principal amount of $1,330,000,000 (the
“Senior Toggle Notes” and together with the Senior Cash Pay Notes, the “Senior
Notes”), upon the terms set forth in the Purchase Agreement among Merger Sub and the
Representatives dated May 13, 2008 (the “Purchase Agreement”) relating to the initial
placement of the Senior Notes and related guarantees (as described below) (the “Initial
Placement”). The Senior Notes will be issued by Clear Channel Communications, Inc., a Texas
corporation (the “Company”), pursuant to an indenture, to be dated on or about [          
     ], 2008 (the “Indenture”), among the Company, Law Debenture Trust Company of New York, as
trustee (the “Trustee”), and Deutsche Bank Trust Company Americas, as paying agent and
registrar (the “Paying Agent”), or such other Trustee and/or Paying Agent as may be
selected by the Company, as supplemented by the supplemental indenture executed by the Guarantors
(as defined below). To induce the Initial Purchasers to enter into the Purchase Agreement and to
satisfy a condition to your obligations thereunder, the Issuers (as defined below) agree with you
for your benefit and the benefit of the holders from time to time of the Securities (as defined
below) (including the Initial Purchasers) (each a “Holder” and, collectively, the
“Holders”), as follows:

          The Senior Notes will be unconditionally guaranteed by the guarantors listed in Annex
A hereto (the “Guarantors” and, together with Merger Sub and the Company, the
“Issuers”) on an unsecured basis and will be subordinated only to the Guarantors’
guarantees of the

 

 

Senior Secured Credit Facilities (as defined in the Purchase Agreement) and as further
described in the Offering Memorandum (as defined below). The Senior Cash Pay Notes,
together with the related guarantees (the “Senior Cash Pay Guarantees”), to be resold by
the Initial Purchasers to certain purchasers, are referred to herein as the “Senior Cash Pay
Securities.” The Senior Toggle Notes, together with the related guarantees (the
“Senior Toggle Guarantees”), to be resold by the Initial Purchasers to certain purchasers,
are referred to herein as the “Senior Toggle Securities” and, together with the Senior Cash
Pay Securities, the “Securities.”

          1. Definitions. Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:

          “Affiliate” shall have the meaning specified in Rule 405 under the Act and the terms
“controlling” and “controlled” shall have meanings correlative thereto.

          “Agreement” shall mean this Registration Rights Agreement.

          “broker-dealer” shall mean any broker or dealer registered as such under the Exchange
Act.

          “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday
or a day on which banking institutions or trust companies are authorized or obligated by law to
close in New York City.

          “Class” shall mean all Senior Cash Pay Securities and New Securities issued in
exchange for Senior Cash Pay Securities or all Senior Toggle Securities and New Securities issued
in exchange for Senior Toggle Securities, as appropriate.

          “Closing Date” shall mean the date of the first issuance of the Securities (determined
without regard to any reopening of the Indenture that may occur).

          “Commission” shall mean the Securities and Exchange Commission.

          “Company” shall have the meaning set forth in the preamble hereto.

          “Conduct Rules” shall mean the Conduct Rules and the By-Laws of the Financial Industry
Regulatory Authority.

          “Effective Time” shall mean in the case of (i) an Exchange Registration, the time and
date as of which the Commission declares the Exchange Registration Statement effective or as of
which the Exchange Registration Statement otherwise becomes effective pursuant to the Securities
Act and (ii) a Shelf Registration, the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes
effective pursuant to the Securities Act.

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

-2-

 

          “Exchange Offer Registration Period” shall mean the 180-day period following the
consummation of a Registered Exchange Offer, exclusive of any period during which any stop order
shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement
relating to such Registered Exchange Offer.

          “Exchange Offer Registration Statement” shall mean a registration statement of the
Issuers on an appropriate form under the Act with respect to a Registered Exchange Offer, all
amendments and supplements to such registration statement, including post-effective amendments
thereto, in each case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

          “Exchanging Dealer” shall mean any Holder (which may include any Initial Purchaser)
that is a broker-dealer and elects to exchange for New Securities any Securities that it acquired
for its own account as a result of market-making activities or other trading activities (but not
directly from any Issuer or any Affiliate of any Issuer) for New Securities.

          “Freely Tradable” means, with respect to a Security, a Security that at any time of
determination (i) may be sold to the public in accordance with Rule 144 under the Securities Act
(“Rule 144”) by a person that is not an “affiliate” (as defined in Rule 144) of the Issuers
where no conditions of Rule 144 are then applicable (other than the holding period requirement in
paragraph (d) of Rule 144, so long as such holding period requirement is satisfied at such time of
determination) and (ii) does not bear any restrictive legends relating to the Securities Act.

          “Guarantees” shall have the meaning set forth in the preamble hereto.

          “Guarantors” shall have the meaning set forth in the preamble hereto.

          “Holder” shall have the meaning set forth in the preamble hereto.

          “Indenture” shall have the meaning set forth in the preamble hereto.

          “Initial Placement” shall have the meaning set forth in the preamble hereto.

          “Initial Purchasers” shall have the meaning set forth in the preamble hereto.

          “Issuers” shall have the meaning set forth in the preamble hereto.

          “Losses” shall have the meaning set forth in Section 6(d) hereof.

          “Majority Holders” shall mean, with respect to any Class on any date, Holders of a
majority of the aggregate principal amount of such Class of Securities registered under a
Registration Statement.

          “Managing Underwriters” shall mean the investment banker or investment bankers and
manager or managers that administer an underwritten offering, if any, under a Registration
Statement.

-3-

 

          “New Securities” shall mean debt securities of the Company and guarantees by the
Guarantors, in each case identical in all material respects to the Senior Cash Pay Securities or
the Senior Toggle Securities, as applicable (except that the transfer restrictions shall be
modified or eliminated, as appropriate), to be issued under the Indenture in connection with sales
or exchanges effected pursuant to this Agreement.

          “Offering Memorandum” shall mean the offering memorandum required to be delivered
pursuant to the Purchase Agreement, relating to the offer and sale of the Senior Notes and related
guarantees, including any and all exhibits thereto and any information incorporated by reference
therein as of such date.

          “Prospectus” shall mean the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon Rule 430A under
the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities covered by such Registration
Statement, and all amendments and supplements thereto, including any and all exhibits thereto and
any information incorporated by reference therein.

          “Purchase Agreement” shall have the meaning set forth in the preamble hereto.

          “Registered Exchange Offer” shall mean the proposed offer of the Issuers to issue and
deliver to the Holders of either Class of Securities that are not prohibited by any law or policy
of the Commission from participating in such offer, in exchange for such Securities, a like
aggregate principal amount of New Securities of such Class.

          “Registrable Securities” shall mean the Securities; provided that, with respect to
either Class of Securities, the Securities of such Class shall cease to be Registrable Securities
on the earliest to occur of (i) the date on which a Registration Statement with respect to such
Securities has become effective under the Securities Act and such Securities have been exchanged or
disposed of pursuant to such Registration Statement, (ii) the date on which such Securities cease
to be outstanding or (iii) the date on which such Securities are Freely Tradable.

          “Registration Default” shall have the meaning set forth in Section 8 hereof.

          “Registration Statement” shall mean any Exchange Offer Registration Statement or Shelf
Registration Statement that covers either Class of Securities or New Securities, as applicable,
pursuant to the provisions of this Agreement, any amendments and supplements to such registration
statement, including post-effective amendments (in each case including the Prospectus contained
therein), all exhibits thereto and all material incorporated by reference therein.

          “Securities” shall have the meaning set forth in the preamble hereto.

          “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

          “Senior Cash Pay Notes” shall have the meaning set forth in the preamble hereto.

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          “Senior Cash Pay Securities” shall have the meaning set forth in the preamble hereto.

          “Senior Notes” shall have the meaning set forth in the preamble hereto.

          “Senior Secured Credit Facilities” shall have the meaning set forth in the preamble
hereto.

          “Senior Toggle Notes” shall have the meaning set forth in the preamble hereto.

          “Senior Toggle Securities” shall have the meaning set forth in the preamble hereto.

          “Shelf Registration” shall mean a registration effected pursuant to Section 3 hereof.

          “Shelf Registration Period” has the meaning set forth in Section 3(b)(ii) hereof.

          “Shelf Registration Statement” shall mean a “shelf” registration statement of the
Company pursuant to the provisions of Section 3 hereof which covers some or all of either Class of
the Securities or New Securities, as applicable, on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the Commission, amendments and
supplements to such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all material incorporated by
reference therein.

          “Trustee” shall have the meaning set forth in the preamble hereto.

          “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission promulgated thereunder.

          “Underwriter” shall mean any underwriter of Securities in connection with an offering
thereof under a Shelf Registration Statement.

          2. Registered Exchange Offer.

          (a) The Issuers shall use their commercially reasonable efforts to prepare and file with the
Commission the Exchange Offer Registration Statements with respect to each Registered Exchange
Offer. The Issuers shall use their commercially reasonable efforts to cause the Exchange Offer
Registration Statements to become effective under the Securities Act within 300 days of the Closing
Date.

          (b) Upon the effectiveness of the applicable Exchange Offer Registration Statement, the
Issuers shall promptly commence the Registered Exchange Offer, with respect to the Class of
Securities registered pursuant to such Exchange Offer Registration Statement, it being the
objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities
of such Class for New Securities of that Class (assuming that such Holder is not an Affiliate of
any Issuer, acquires the New Securities in the ordinary course of such Holder’s

-5-

 

business, has no arrangements with any person to participate in the distribution of the New
Securities and is not prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such New Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material restrictions under the
securities laws of a substantial proportion of the several states of the United States.

          (c) In connection with a Registered Exchange Offer of a Class of Securities, the Issuers
shall:

     (i) mail to each Holder of such Class a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;

     (ii) keep the Registered Exchange Offer open for not less than 20 Business Days
after the date notice thereof is mailed to such Holders (or, in each case, longer if
required by applicable law);

     (iii) use their commercially reasonable efforts to keep the Exchange Offer
Registration Statement continuously effective under the Securities Act, supplemented
and amended as required, under the Securities Act to ensure that it is available for
sales of New Securities of such Class by Exchanging Dealers during the applicable
Exchange Offer Registration Period;

     (iv) utilize the services of a depositary for the Registered Exchange Offer
with an address in the Borough of Manhattan in New York City, which may be the
Trustee or an Affiliate of the Trustee;

     (v) permit such Holders to withdraw tendered Securities of such Class at any
time prior to the close of business, New York time, on the last Business Day on
which the Registered Exchange Offer is open;

     (vi) prior to effectiveness of the related Exchange Offer Registration
Statement, provide a supplemental letter to the Commission (A) stating that the
Issuers are conducting such Registered Exchange Offer in reliance on the position of
the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13,
1988), and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B)
including a representation that the Issuers have not entered into any arrangement or
understanding with any person to distribute the New Securities to be received in
such Registered Exchange Offer and that, to the best of Issuers’ information and
belief, each Holder participating in such Registered Exchange Offer is acquiring the
New Securities in the ordinary course of business and has no arrangement or
understanding with any person to participate in the distribution of the New
Securities; and

     (vii) comply in all material respects with all applicable laws.

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          (d) As soon as practicable after the close of a Registered Exchange Offer of a Class of
Securities, the Issuers shall:

     (i) accept for exchange all Securities of such Class tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;

     (ii) deliver to the Trustee for cancellation in accordance with Section 4(s)
all Securities so accepted for exchange; and

     (iii) cause the Trustee promptly to authenticate and deliver to each Holder of
Securities a principal amount of New Securities of such Class equal to the principal
amount of the Securities of such Class of such Holder so accepted for exchange.

          (e) Each Holder hereby acknowledges and agrees that any broker-dealer and any such Holder
using a Registered Exchange Offer to participate in a distribution of New Securities (x) could not
under Commission policy as in effect on the date of this Agreement rely on the position of the
Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan
Stanley and Co., Inc. (pub. avail. June 5, 1991), as interpreted in the Commission’s letter to
Shearman & Sterling dated July 2, 1993 and similar no-action letters; and (y) must comply with the
registration and prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction, which must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or 508, as applicable, of
Regulation S-K under the Securities Act if the resales are of New Securities obtained by such
Holder in exchange for Securities acquired by such Holder directly from the Issuers or their
Affiliates. Accordingly, each Holder participating in a Registered Exchange Offer shall be
required to represent to the Issuers that, at the time of the consummation of such Registered
Exchange Offer:

     (i) any New Securities to be received by such Holder will be acquired in the
ordinary course of business;

     (ii) such Holder will have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of the
applicable Securities or the applicable New Securities;

     (iii) such Holder is not an Affiliate of any of the Issuers;

     (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does
not intend to engage in, the distribution of the applicable New Securities; and

     (v) if such Holder is a broker-dealer that will receive New Securities for its
own account in exchange for any Securities that were acquired as a result of
market-making or other trading activities, that it will deliver a prospectus in
connection with any resale of such New Securities.

-7-

 

          (f) If any Initial Purchaser determines that it is not eligible to participate in a Registered
Exchange Offer with respect to the exchange of Securities of either Class constituting any portion
of an unsold allotment, at the request of such Initial Purchaser, the Issuers shall issue and
deliver to such Initial Purchaser or the person purchasing New Securities of such Class registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such
Initial Purchaser, in exchange for such Securities, a like principal amount of New Securities. The
Issuers shall use their commercially reasonable efforts to cause the CUSIP Service Bureau to issue
the same CUSIP number for such New Securities as for New Securities of such Class issued pursuant
to a Registered Exchange Offer.

          (g) Interest on each New Security issued pursuant to a Registered Exchange Offer will accrue
(i) from the later of (A) the last interest payment date on which interest was paid on the
Securities surrendered in exchange therefor and (B) if the Securities are surrendered for exchange
on a date in a period that includes the record date for an interest payment date to occur on or
after the date of such exchange and as to which interest will be paid, the date of such interest
payment date, or (ii) if no interest has been paid on the Securities, from the Closing Date.

          (h) The obligations of the Issuers under a Registered Exchange Offer shall be subject to the
conditions that (i) such Registered Exchange Offer does not violate applicable law or any
applicable interpretation of the staff of the Commission; (ii) no action or proceeding shall have
been instituted in any court or by any governmental agency which might materially impair the
ability of the Issuers to proceed with such Registered Exchange Offer, and no material adverse
development shall have occurred in any existing action or proceeding with respect to the Issuers
and (iii) all governmental approvals required for the consummation of such Registered Exchange
Offer by the Issuers shall have been obtained. Notwithstanding anything to the contrary set forth
above in this Section 2, the requirements to commence and complete a Registered Exchange Offer
shall terminate at such time as all of the Securities are Freely Tradable.

          3. Shelf Registration.

          (a) If an Exchange Offer Registration Statement with respect to either Class of Securities is
required to be filed and declared effective pursuant to Section 2(a) above, and (i) due to any
change in law or currently prevailing interpretations thereof by the Commission’s staff, the
Issuers determine upon advice of their outside counsel that they are not permitted to effect a
Registered Exchange Offer with respect to such Class of Securities as contemplated by Section 2
hereof; (ii) for any other reason a Registered Exchange Offer with respect to such Class of
Securities is not consummated within 300 days of the date hereof; (iii) any Initial Purchaser so
requests with respect to Securities of either Class that are not eligible to be exchanged for New
Securities of such Class in the applicable Registered Exchange Offer and that are held by it
following consummation of such Registered Exchange Offer; or (iv) in the case of any Initial
Purchaser that participates in a Registered Exchange Offer or acquires New Securities pursuant to
Section 2(f) hereof, which Initial Purchaser does not receive Freely Tradable New Securities in
exchange for Securities constituting any portion of an unsold allotment (it being understood that
(x) the requirement that an Initial Purchaser must deliver a Prospectus containing the information
required by Item 507 or 508 of Regulation S-K under the Securities Act in connection with sales of
New Securities acquired in exchange for such Securities shall result in such

-8-

 

New Securities being
not Freely Tradable; and (y) the requirement that an Exchanging Dealer must deliver a Prospectus in
connection with sales of New Securities acquired in a Registered Exchange Offer in exchange for
Securities acquired as a result of market-making activities or other trading activities shall not
result in such New Securities being not Freely Tradable), the Issuers shall effect a Shelf Registration Statement with respect to such Class in accordance
with subsection (b) below.

          (b) If a Shelf Registration Statement with respect to any Class of Securities is required to
be filed and declared effective pursuant to this Section 3, (i) the Issuers shall as promptly as
practicable (but in no event more than 45 days after so required or requested pursuant to this
Section 3), file with the Commission and shall use their commercially reasonable efforts to cause
to be declared effective under the Securities Act within 300 days after so required or requested, a
Shelf Registration Statement relating to the offer and sale of the applicable Class of Securities
or the New Securities, as applicable (which may be an “automatic shelf registration statement” as
defined in Rule 405 of the Securities Act (an “Automatic Shelf Registration Statement”),
if the filing satisfies all relevant requirements for qualification as an Automatic Shelf
Registration Statement), by the Holders thereof from time to time in accordance with the methods of
distribution elected by such Holders and set forth in such Shelf Registration Statement;
provided, however, that no Holder (other than an Initial Purchaser) shall be
entitled to have the Securities or New Securities, as applicable, held by it covered by such Shelf
Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of
this Agreement applicable to such Holder; and provided, further, that with respect
to New Securities received by an Initial Purchaser in exchange for Securities constituting any
portion of an unsold allotment, the Issuers may, if permitted by current interpretations by the
Commission’s staff, file a post-effective amendment to the applicable Exchange Offer Registration
Statement containing the information required by Item 507 or 508 of Regulation S-K, as applicable,
in satisfaction of its obligations under this subsection with respect thereto, and any such
Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed
by the provisions herein applicable to, a Shelf Registration Statement.

          (c) Subject to Section 4(k), the Issuers shall use their commercially reasonable efforts to
keep such Shelf Registration Statement continuously effective, supplemented and amended as required
by the Securities Act, until the earliest of (A) the first anniversary of the Closing Date; (B) the
date upon which all the Securities or New Securities, as applicable, covered by such Shelf
Registration Statement have been sold pursuant to such Shelf Registration Statement; or (C) the
date upon which all the Securities or New Securities, as applicable, of such Class, covered by such
Shelf Registration Statement become Freely Tradable (the “Shelf Registration Period”). The
Issuers shall be deemed not to have used their commercially reasonable efforts to keep a Shelf
Registration Statement effective during the applicable Shelf Registration Period if they
voluntarily take any action that would result in Holders of Securities or New Securities, as
applicable, covered thereby not being able to offer and sell such Securities or New Securities, as
applicable, at any time during the Shelf Registration Period, unless such action is (x) required by
applicable law or otherwise undertaken by the Issuers in good faith and for valid business reasons
(not including avoidance of the Issuers’ obligations hereunder), including the acquisition or
divestiture of assets or a financing, and (y) permitted pursuant to Section 4(k)(ii) hereof.
Notwithstanding anything to the contrary set forth in this Section 3, the requirements to

-9-

 

file a
Shelf Registration Statement providing for the sale of all Registrable Securities of a particular
Class and to have such Shelf Registration Statement become effective and remain effective shall
terminate at such time as all of the Securities of such Class are Freely Tradable.

          (d) The Issuers shall cause each Shelf Registration Statement and the related Prospectus and
any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement
or such amendment or supplement, (A) to comply in all material respects with the applicable
requirements of the Securities Act; and (B) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein (in the case of the Prospectus, in the light of the circumstances under which
they were made) not misleading.

          4. Additional Registration Procedures. In connection with any Shelf Registration
Statement with respect to any Class of Securities and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.

          (a) The Issuers shall:

     (i) furnish, in each case if requested in writing, to each of the
Representatives, in the case of an Exchange Offer Registration Statement, and to
counsel for the Holders of Registrable Securities of the applicable Class in the
case of a Shelf Registration Statement, not less than five Business Days prior to
the filing thereof with the Commission, a copy of any Exchange Offer Registration
Statement, as applicable, and any Shelf Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus included therein
and shall use their commercially reasonable efforts to reflect in each such
document, when so filed with the Commission, such comments as the Representatives
reasonably propose;

     (ii) include the information set forth in Annex B hereto on the facing
page of the Exchange Offer Registration Statement, in Annex C hereto in the
forepart of the Exchange Offer Registration Statement in a section setting forth
details of the Registered Exchange Offer, in Annex D hereto in the
underwriting or plan of distribution section of the Prospectus contained in the
Exchange Offer Registration Statement, and in Annex E hereto in the letter
of transmittal delivered pursuant to the Registered Exchange Offer;

     (iii) if requested by an Initial Purchaser, include the information required by
Item 507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the
Exchange Offer Registration Statement; and

     (iv) in the case of a Shelf Registration Statement, include the names of the
Holders that propose to sell Securities pursuant to the Shelf Registration Statement
as selling security holders.

          (b) The Issuers shall ensure that:

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     (i) any Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any amendment or supplement thereto complies in all
material respects with the Securities Act; and

     (ii) any Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, it being understood that, with respect to the information
about Holders in any Shelf Registration Statement, the Issuers will be relying
solely on responses provided by Holders to a notice and questionnaire.

          (c) The Issuers shall advise the Representatives and, to the extent the Issuers have been
provided in writing a telephone or facsimile number and address for notices, the Holders of
Securities of the applicable Class covered by any Shelf Registration Statement and any Exchanging
Dealer of the applicable Class under any Exchange Offer Registration Statement, and, if requested
by any Representative or any such Holder or Exchanging Dealer, shall confirm such advice in writing
(which notice pursuant to clauses (ii) through (v) hereof shall be accompanied by an instruction to
suspend the use of the Prospectus until the Issuers shall have remedied the basis for such
suspension):

     (i) when a Registration Statement and any amendment thereto has been filed with
the Commission and when the Registration Statement or any post-effective amendment
thereto has become effective;

     (ii) of any request by the Commission for any amendment or supplement to the
Registration Statement or the Prospectus or for additional information;

     (iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening of any
proceeding for that purpose;

     (iv) of the receipt by the Issuers of any notification with respect to the
suspension of the qualification of the securities included therein for sale in any
jurisdiction or the institution or threatening of any proceeding for such purpose;
and

     (v) unless notice has been provided pursuant to Section 4(k)(ii), of the
happening of any event that requires any change in the Registration Statement or the
Prospectus so that, as of such date, such Registration Statement and Prospectus (A)
do not contain any untrue statement of a material fact and (B) do not omit to state
a material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading.

          (d) The Issuers shall use their commercially reasonable efforts to obtain as soon as possible
the withdrawal of any order suspending the effectiveness of any Registration Statement or the
qualification of the securities therein for sale in any jurisdiction.

-11-

 

          (e) The Issuers shall furnish, upon written request, to each Holder of Securities covered by
any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto
(including exhibits incorporated by reference therein).

          (f) The Issuers shall, during the Shelf Registration Period, deliver to each Holder of
Securities covered by any such Shelf Registration Statement, without charge, as many copies of the
Prospectus (including the preliminary Prospectus) included in such Shelf Registration Statement and
any amendment or supplement thereto as such Holder may reasonably request. The Issuers consent to
the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of
Securities in connection with the offering and sale of the Securities covered by the Prospectus, or
any amendment or supplement thereto, included in such Shelf Registration Statement.

          (g) The Issuers shall furnish to each Exchanging Dealer which so requests, without charge, at
least one copy of the applicable Exchange Offer Registration Statement and any post-effective
amendment thereto, including all material incorporated by reference therein, and, if the Exchanging
Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference
therein).

          (h) The Issuers shall promptly deliver to each Initial Purchaser, each Exchanging Dealer and
each other person required to deliver a Prospectus during the applicable Exchange Offer
Registration Period, without charge, as many copies of the Prospectus included in the applicable
Exchange Offer Registration Statement and any amendment or supplement thereto as any such person
may reasonably request. The Issuers consent to the use of such Prospectus or any amendment or
supplement thereto by any Initial Purchaser, any Exchanging Dealer and any such other person that
may be required to deliver a Prospectus following the applicable Registered Exchange Offer in
connection with the offering and sale of the New Securities of the Class covered by the Prospectus,
or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

          (i) Prior to any such Registered Exchange Offer or any other offering of Securities pursuant
to any Registration Statement, the Issuers shall arrange, if necessary, for the qualification of
the Securities or the New Securities for sale under the laws of such jurisdictions as any Holder
shall reasonably request and shall maintain such qualification in effect so long as required;
provided that no Issuer will be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would subject it to
general service of process in any such jurisdiction or to taxation in any such jurisdiction where
it is not then so subject.

          (j) The Issuers shall cooperate with the Holders of Securities of the applicable Class to
facilitate the timely preparation and delivery of certificates representing New Securities or
Securities to be issued or sold pursuant to any Registration Statement free of any restrictive
legends and in such denominations and registered in such names as Holders may request.

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          (k) (i) Subject to clause (ii) below, upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Issuers shall promptly (or within the time period
provided for by clause (ii) hereof, if applicable) prepare a post-effective amendment to the
applicable Registration Statement or an amendment or supplement to the related Prospectus or
file any other required document so that, as thereafter delivered to the Initial Purchasers of
the Securities included therein, the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading.
In such circumstances, the period of effectiveness of any Exchange Offer Registration Statement
provided for in Section 2 shall be extended by the number of days from and including the date of
the giving of a notice of suspension pursuant to Section 4(c) to and including the date when the
Initial Purchasers, the Holders of the Securities and any known Exchanging Dealer shall have
received such amended or supplemented Prospectus pursuant to this Section.

               (ii) Upon the occurrence or existence of any pending corporate development or any other
material event that, in the reasonable judgment of the Issuers, makes it appropriate to suspend the
availability of a Shelf Registration Statement and the related Prospectus, the Issuers shall give
notice (without notice of the nature or details of such events) to the Holders of the Registrable
Securities or New Securities, as applicable, of the Class covered by such Shelf Registration
Statement that the availability of the Shelf Registration is suspended and, upon actual receipt of
any such notice, each Holder agrees not to sell any Registrable Securities or New Securities, as
applicable, pursuant to the Shelf Registration until such Holder’s receipt of copies of the
supplemented or amended Prospectus provided for in clause (i) hereof, or until it is advised in
writing by the Issuers that the Prospectus may be used, and has received copies of any additional
or supplemental filings that are incorporated or deemed incorporated by reference in such
Prospectus. The period during which the availability of the Shelf Registration and any Prospectus
is suspended shall not exceed 45 days in any three-month period or 90 days in any twelve-month
period.

          (l) Not later than the effective date of any Registration Statement, the Issuers shall provide
a CUSIP number for the Securities or the New Securities, as the case may be, registered under such
Registration Statement and provide, as may be necessary, the Trustee with printed certificates for
such Securities or New Securities, as applicable, in a form eligible for deposit with The
Depository Trust Company.

          (m) The Issuers shall comply with all applicable rules and regulations of the Commission and
shall make generally available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder as soon as practicable
after the effective date of the applicable Registration Statement and in any event no later than 45
days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning
with the first month of the Issuers’ first fiscal quarter commencing after the effective date of
the applicable Registration Statement.

          (n) The Issuers shall cause the Indenture to be qualified under the Trust Indenture Act in a
timely manner.

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          (o) The Issuers may require each Holder of Securities to be sold pursuant to any Shelf
Registration Statement to furnish to the Issuers such information regarding the Holder and the
distribution of such Securities as the Issuers may from time to time reasonably require for
inclusion in such Registration Statement. The Issuers may exclude from such Shelf Registration Statement the Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.

          (p) In the case of any Shelf Registration Statement, the Issuers shall enter into customary
agreements (including, if requested, an underwriting agreement in customary form) and take all
other appropriate actions in order to expedite or facilitate the registration or the disposition of
the Securities, and in connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification provisions and procedures no less favorable than those set
forth in Section 6 hereof (or such other provisions and procedures acceptable to the Majority
Holders of such Class being registered and the Managing Underwriters, if any, with respect to all
parties to be indemnified pursuant to Section 6).

          (q) In the case of any Shelf Registration Statement, the Issuers shall:

     (i) make reasonably available for inspection by a representative of the Holders
of Securities of such Class to be registered thereunder (an “Inspector”),
any underwriter participating in any disposition pursuant to such Registration
Statement, one firm of accountants designated by the Majority Holders of Securities
of such Class to be registered thereunder and one attorney and one firm of
accountants designated by such underwriter or underwriters, at reasonable times and
in a reasonable manner, all relevant financial and other records and pertinent
corporate documents of the Issuers and their subsidiaries;

     (ii) cause each Issuers’ officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Inspector or
any such underwriter, attorney or accountant in connection with any such
Registration Statement as is customary for similar due diligence examinations;
provided, however, that any information that is designated in
writing by the Issuers, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by such Inspector, underwriter or
underwriters or any such attorney or accountant, unless such disclosure is made in
connection with a court proceeding or required by law, or such information becomes
available to the public generally or through a third party without an accompanying
obligation of confidentiality;

     (iii) make such representations and warranties to the Holders of Securities
registered thereunder and the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in primary underwritten offerings
and covering matters including, but not limited to, those set forth in the Purchase
Agreement;

     (iv) obtain opinions of counsel to the Issuers and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably

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satisfactory
to the Managing Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;

     (v) obtain “comfort” letters and updates thereof from the independent certified
public accountants of the Issuers (and, if necessary, any other independent
certified public accountants of any subsidiary of the Issuers or of any business
acquired by the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in “comfort”
letters in connection with primary underwritten offerings; and

     (vi) deliver such documents and certificates as may be reasonably requested by
the Majority Holders of the Class registered or the Managing Underwriters, if any,
including those to evidence compliance with Section 4(k) and with any customary
conditions contained in the underwriting agreement or other agreement entered into
by the Issuers.

The actions set forth in clauses (iii), (iv), (v) and (vi) of this paragraph (q) shall be performed
at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto;
and (B) each closing under any underwriting or similar agreement as and to the extent required
thereunder.

          (r) In the case of any Exchange Offer Registration Statement, the Issuers shall, if requested
by an Initial Purchaser, or by a broker-dealer that holds Securities of the applicable Class that
were acquired as a result of market-making or other trading activities:

     (i) make reasonably available for inspection by the requesting party, one
attorney and one firm of accountants designated by the requesting party, at
reasonable times and in a reasonable manner, all relevant financial and other
records, pertinent corporate documents and properties of the Issuers and their
subsidiaries;

     (ii) cause each Issuers’ officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the requesting
party or any such attorney or accountant in connection with any such Registration
Statement as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the Issuers,
in good faith, as confidential at the time of delivery of such information shall be
kept confidential by such Initial Purchaser or any such attorney or accountant,
unless such disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality;

-15-

 

     (iii) make such representations and warranties to the requesting party, in
form, substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings and covering matters including, but not limited to,
those set forth in the Purchase Agreement;

     (iv) obtain opinions of counsel to the Issuers and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably satisfactory
to the requesting party and its counsel), addressed to the requesting party,
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by the
requesting party or its counsel;

     (v) obtain “comfort” letters and updates thereof from the independent certified
public accountants of the Issuers (and, if necessary, any other independent
certified public accountants of any subsidiary of the Issuers or of any business
acquired by the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to the
requesting party, in customary form and covering matters of the type customarily
covered in “comfort” letters in connection with primary underwritten offerings, or
if requested by the requesting party or its counsel in lieu of a “comfort” letter,
an agreed-upon procedures letter under Statement on Auditing Standards No. 35,
covering matters requested by the requesting party or its counsel; and

     (vi) deliver such documents and certificates as may be reasonably requested by
the requesting party or its counsel, including those to evidence compliance with
Section 4(k) and with conditions customarily contained in underwriting agreements.

The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this Section shall be
performed at the close of the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.

          (s) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities of
the Class being registered by Holders to the Issuers (or to such other person as directed by the
Issuers) in exchange for the New Securities of such Class, the Issuers shall mark, or caused to be
marked, on the Securities so exchanged that such Securities are being cancelled in exchange for the
New Securities. In no event shall the Securities be marked as paid or otherwise satisfied.

          (t) The Issuers shall use their commercially reasonable efforts if the Securities of the Class
being registered have been rated prior to the initial sale of such Securities, to confirm such
ratings will apply to the Securities or the New Securities, as the case may be, covered by a
Registration Statement.

          (u) In the event that any broker-dealer shall underwrite any Securities or participate as a
member of an underwriting syndicate or selling group or “assist in the distribution” (within the
meaning of the Conduct Rules) thereof, whether as a Holder of such Securities or as

-16-

 

an underwriter,
a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Issuers
shall assist such broker-dealer in complying with the Conduct Rules.

          (v) The Issuers shall use their commercially reasonable efforts to take all other steps
necessary to effect the registration of either Class of Securities or New Securities, as the case
may be, covered by a Registration Statement.

          5. Registration Expenses. The Issuers shall bear all expenses incurred in connection
with the performance of their obligations under Sections 2, 3 and 4 hereof and, in the event of any
Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements
of one firm or counsel (which shall initially be Cahill Gordon & Reindel llp, but which
may be another nationally recognized law firm experienced in securities matters designated by the
Majority Holders of the Class being registered) to act as counsel for the Holders in connection
therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the
Initial Purchasers for the reasonable fees and disbursements of such counsel acting in connection
therewith. Notwithstanding the foregoing, the Holders shall pay all agency fees and commissions
and underwriting discounts and commissions and the fees and disbursements of any counsel or other
advisors or experts retained by such Holders (severally or jointly), other than the one counsel
specifically referred to above.

          6. Indemnification and Contribution.

          (a) The Issuers agree, jointly and severally, to indemnify and hold harmless each Holder of
Securities or New Securities, as the case may be, covered by any Registration Statement, each
Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h)
hereof, each Exchanging Dealer, the directors, officers, employees, Affiliates and agents of each
such Holder, Initial Purchaser or Exchanging Dealer and each person who controls any such Holder,
Initial Purchaser or Exchanging Dealer within the meaning of either the Securities Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus,
or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of any preliminary Prospectus or the Prospectus, in the
light of the circumstances under which they were made) not misleading, and agrees to reimburse each
such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that no Issuer will be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Issuers by or on behalf of any Initial
Purchaser or any Holder specifically for inclusion therein. This indemnity agreement shall be in
addition to any liability that the Issuers may otherwise have.

-17-

 

          Each Issuer also jointly and severally agrees to indemnify as provided in this Section 6(a) or
contribute as provided in Section 6(d) hereof to Losses of each underwriter, if any, of Securities
or New Securities, as the case may be, registered under a Shelf Registration Statement,
their directors, officers, employees, Affiliates or agents and each person who controls such
underwriter on substantially the same basis as that of the indemnification of the Initial
Purchasers and the selling Holders provided in this Section 6(a) and shall, if requested by any
Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(p)
hereof.

          (b) Each Holder of Securities covered by a Registration Statement (including each Initial
Purchaser that is a Holder, in such capacity) severally and not jointly agrees to indemnify and
hold harmless the Issuers, each of their respective directors, each of their respective officers
who signs such Registration Statement and each person who controls the Issuers within the meaning
of either the Securities Act or the Exchange Act, to the same extent as the foregoing indemnity
from the Issuers to each such Holder, but only with reference to written information relating to
such Holder furnished to the Issuers by or on behalf of such Holder specifically for inclusion in
the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition
to any liability that any such Holder may otherwise have.

          (c) Promptly after receipt by an indemnified party under this Section 6 or notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section, notify the indemnifying party in writing of
the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve
it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise
learn of such action and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent
the indemnified party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses of any separate
counsel, other than local counsel if not appointed by the indemnifying party, retained by the
indemnified party or parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel (including local counsel) to represent the
indemnified party in an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of interest; (ii) the
actual or potential defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party; (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of such action; or (iv)
the indemnifying party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the prior written
consent of the

-18-

 

indemnified parties (such consent not be to unreasonably withheld or delayed),
settle or compromise or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or potential parties to
such claim or
action) unless such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim, action, suit or proceeding.

          (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section is
unavailable to or insufficient to hold harmless an indemnified party for any reason, then each
applicable indemnifying party shall have a joint and several obligation to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending any loss, claim, liability, damage or
action) (collectively “Losses”) to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by such indemnifying party,
on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in no
case shall any Initial Purchaser be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a New Security,
applicable to the Security that was exchangeable into such New Security, nor shall any underwriter
be responsible for any amount in excess of the underwriting discount or commission applicable to
the securities purchased by such underwriter under the Registration Statement which resulted in
such Losses. If the allocation provided by the immediately preceding sentence is unavailable for
any reason, the indemnifying party and the indemnified party shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection
with the statements or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Issuer shall be deemed to be equal to the total
net proceeds from the Initial Placement (before deducting expenses) as set forth in the Offering
Memorandum. Benefits received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions as set forth on the cover page of the Offering Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value of receiving
Securities or New Securities, as applicable, registered under the Securities Act. Benefits
received by any underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus-forming a part of the Registration
Statement which resulted in such Losses. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information provided by the indemnifying
party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties
and their relative knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were treated as one entity
for such purpose) or any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person who controls a Holder within

-19-

 

the
meaning of either the Securities Act or the Exchange Act and each director, officer, employee and
agent of such Holder shall have the same rights to contribution as such Holder, and each person who
controls any Issuer within the meaning of either the Securities Act or the Exchange Act, each
officer, director, employee and agent of Issuers who shall have signed the Registration Statement and each director of the Issuers shall have the same rights to
contribution as the Issuers, subject in each case to the applicable terms and conditions of this
paragraph (d).

          (e) The provisions of this Section will remain in full force and effect, regardless of any
investigation made by or on behalf of any Holder or the Issuers or any of the indemnified persons
referred to in this Section 6, and will survive the sale by a Holder of securities covered by a
Registration Statement.

          7. Underwritten Registrations.

          (a) If any of the Securities or New Securities, as the case may be, covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall
be selected by the Majority Holders of the Class being sold.

          (b) No person may participate in any underwritten offering pursuant to any Shelf Registration
Statement, unless such person (i) agrees to sell such person’s Securities or New Securities, as the
case may be, of the Class being sold on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such arrangements; and (ii)
completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such underwriting arrangements.

          8. Registration Defaults. The Issuers agree to pay, jointly and severally, as
liquidated damages, additional interest on the Senior Cash Pay Notes and/or the Senior Toggle
Notes, as applicable (“Additional Interest”) if:

     (a) on or prior to the 300th day after the Closing Date, the Issuers have not, if
required by Section 2, exchanged New Securities of the applicable Class for all Securities
of such Class tendered in accordance with the terms of a Registered Exchange Offer;

     (b) on or prior to the 300th day after the Closing Date, a Shelf Registration
Statement, relating to the applicable Class, if required by Section 3, has not been declared
effective, if applicable; or

     (c) any Registration Statement required by this Agreement has been declared effective
but ceases to be effective at any time at which it is required to be effective under this
Agreement

(each such event referred to in clauses (a) through (c) a “Registration Default”), then,
except during any suspension of the availability of the Shelf Registration and any related
Prospectus pursuant to Section 4(k)(ii), Additional Interest will accrue on the principal amount of
the applicable Class of Securities (in addition to the stated interest on the applicable set of
Securities) at a rate of 0.25 percent per annum
(which rate will be increased by an additional 0.25
percent per annum

-20-

 

for each subsequent 90-day period during which such Additional Interest continues
to accrue; provided that the rate at which such Additional Interest accrues may in no event
exceed 0.50 percent per annum) commencing on (x) the 301st day after the date of this Agreement, in
the cases of subsections (a) and (b) above, or (y) the day on which such Shelf Registration
Statement ceases to be effective, in the case of subsection (c) above; provided,
however, that upon the exchange of New Securities for all Securities tendered (in the case of subsection (a) above), or upon
the effectiveness of a Shelf Registration Statement (in the case of subsection (b) above) or upon
the effectiveness of the Registration Statement which had ceased to remain effective (in the case
of subsection (c) above), Additional Interest on such Securities as a result of such subsection
shall cease to accrue.

          9. No Inconsistent Agreements. Each Issuer has not entered into, and agrees not to
enter into, any agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or that otherwise conflicts with the provisions hereof.

          10. Amendments and Waivers. The provisions of this Agreement may not be amended,
qualified, modified or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Issuers have obtained the written consent of the Holders of a
majority of the Registerable Securities outstanding; provided that, with respect to any
matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the
Issuers shall obtain the written consent of each such Initial Purchaser against which such
amendment, qualification, supplement, waiver or consent is to be effective; provided,
further, that no amendment, qualification, supplement, waiver or consent with respect to
Section 8 hereof shall be effective as against any Holder of Registered Securities unless consented
to in writing by such Holder; and provided, further, that the provisions of this
Section 10 may not be amended, qualified, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the Issuers have obtained the
written consent of the Initial Purchasers and each Holder. Notwithstanding the foregoing (except
the foregoing provisos), a waiver or consent to departure from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders whose Securities or New Securities,
as the case may be, are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders may be given by the Majority Holders of the
applicable Class registered under such Registration Statement, determined on the basis of
Securities or New Securities, as the case may be, being sold rather than registered under such
Registration Statement.

          11. Notices. All notices, requests and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air
courier guaranteeing overnight delivery:

     (a) if to a Holder, at the most current address given by such Holder to the Issuers in
accordance with the provisions of this Section 11, which address initially is, with respect
to each Holder, the address of such Holder maintained by the Trustee under the Indenture;

     (b) if to the Representatives, initially at the address or addresses set forth in the
Purchase Agreement; and

-21-

 

     (c) if to the Issuers, initially at its address set forth in the Purchase
Agreement.

          All such notices and communications shall be deemed to have been duly given when received.

          The Initial Purchasers or the Issuers by notice to the other parties may designate additional
or different addresses for subsequent notices or communications.

          12. Successors. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their respective successors and assigns, including, without the need for an express
assignment or any consent by the Issuers thereto, subsequent Holders of Securities and the New
Securities, and the indemnified persons referred to in Section 6 hereof. The Issuers hereby agree
to extend the benefits of this Agreement to any Holder of Securities and the New Securities, and
any such Holder may specifically enforce the provisions of this Agreement as if an original party
hereto.

          13. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.

          14. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.

          15. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed in the
State of New York. The parties hereto each hereby waive, to the fullest extent permitted by
applicable law, any right to trial by jury in any action, proceeding or counterclaim arising out of
or relating to this Agreement.

          16. Severability. In the event that any one of more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.

          17. Securities Held by the Issuers, etc. Whenever the consent or approval of Holders
of a specified percentage of principal amount of either Class of Securities or New Securities, as
applicable, is required hereunder, such Securities or New Securities, as applicable, held by the
Issuers or their Affiliates (other than subsequent Holders of either Class of Securities or New
Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their
holdings of such Securities or New Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.

-22-

 

          If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement between the Issuers and the several Initial Purchasers.

	 	 	 	 	 
	 	

Very truly yours,

CLEAR CHANNEL COMMUNICATIONS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[GUARANTORS]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-23-

 

The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

	 	 	 	 	 
	

DEUTSCHE BANK SECURITIES INC.

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	 	 
	By:  	
 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	MORGAN STANLEY SENIOR FUNDING INC.

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	 	 
	By:  	
 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	CITIGROUP GLOBAL MARKETS INC.

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	CREDIT SUISSE SECURITIES (USA) LLC

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

-24-

 

	 	 	 	 	 
	GREENWICH CAPITAL MARKETS, INC.

 	 	
	By:  	 	 	
	 	Name:  	 	 	
	 	Title:  	 	 	
	 	
	WACHOVIA CAPITAL MARKETS, LLC

 	 	
	By:  	 	 	
	 	Name:  	 	 	
	 	Title:  	 	 	

-25-

 

	 	 	 	 	 

ANNEX A

Guarantors

 

 

 

 

 

 

 

 

 

 

A-1

 

ANNEX B

          Each broker-dealer that receives new securities for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new
securities. The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the
meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of new securities received in
exchange for securities where such securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The issuers have agreed that, starting on
the expiration date of the exchange offer and ending on the close of business 180 days after the
expiration of the exchange offer, they will make this prospectus available to any broker-dealer for
use in connection with any such resale. See “Plan of Distribution.”

B-1

 

ANNEX C

          Each broker-dealer that receives new securities for its own account in exchange for
securities, where such securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such new securities. See “Plan of Distribution.”

C-1

 

ANNEX D

PLAN OF DISTRIBUTION

          Each broker-dealer that receives new securities for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new
securities. This prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of new securities received in exchange for securities
where such securities were acquired as a result of market-making activities or other trading
activities. The issuers have agreed that, starting on the expiration date of the Exchange Offer
and ending on the close of business 180 days after the expiration date of the Exchange Offer, they
will make this prospectus, as amended or supplemented, available to any broker-dealer for use in
connection with any such resale. In addition, until _________, ______, all dealers effecting
transactions in the new securities may be required to deliver a prospectus.

          The issuers will not receive any proceeds from any sale of new securities by broker-dealers.
New securities received by broker-dealers for their own account pursuant to the Exchange Offer may
be sold from time to time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the new securities or a combination of such methods
of resale, at market prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such new securities. Any broker-dealer
that resells new securities that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such new securities may be
deemed to be an “underwriter” within the meaning of the Securities Act and any profit of any such
resale of new securities and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states
that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

          For a period of 180 days after the expiration of the Exchange Offer, the issuers will promptly
send additional copies of this prospectus and any amendment or supplement to this prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The issuers have agreed
to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the
holder of the securities) other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.

          [If applicable, add information required by Regulation S-K Items 507 and/or 508.]

D-1

 

ANNEX E

Rider A

PLEASE FILL IN YOUR NAME AND ADDRESS BELOW IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

	 	 	 	 	 
	Name:
	 	 	 	 
	Address:

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 

Rider B

If the undersigned is not a broker-dealer, the undersigned represents that it acquired the New
Securities in the ordinary course of its business, it is not engaged in, and does not intend to
engage in, a distribution of New Securities and it has no arrangements or understandings with any
person to participate in a distribution of the New Securities. If the undersigned is a
broker-dealer that will receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchanged for New Securities were acquired by it as a result
of [market-making activities] or other trading activities and acknowledges that it will deliver a
prospectus in connection with any resale of such New Securities; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter”
within the meaning of the Securities Act.

E-1

 

EXHIBIT
C

FORM OF LEGAL OPINION OF ROPES & GRAY LLP

     Each of the Company and each Covered Guarantor listed on Schedule I hereto under the heading
“Delaware Corporate Subsidiaries” (a) is a corporation validly existing and in good standing under
the laws of the State of Delaware and (b) has the corporate power and authority under its
certificate of incorporation, its bylaws and the General Corporation Law of the State of Delaware
to execute and deliver each of the Note Documents to which it is a party and to perform its
obligations thereunder.

     Each of the Covered Guarantors listed on Schedule I hereto under the heading “Delaware Limited
Liability Companies” (a) is a limited liability company validly existing and in good standing under
the laws of the State of Delaware and (b) has the limited liability company power and authority
under its certificate of formation, its limited liability company
agreement and the Delaware Limited Liability Company Act to execute and deliver each of the
Note Documents to which it is a party and to perform its obligations thereunder.

     Each of the Covered Guarantors listed on Schedule I hereto under the heading “Delaware LP
Subsidiaries” (a) is a limited partnership validly existing and in good standing under the laws of
the State of Delaware and (b) has the limited partnership power and authority under its certificate
of limited partnership, its limited partnership agreement and the Delaware Revised Uniform Limited
Partnership Act to execute and deliver each of the Note Documents to which it is a party and to
perform its obligations thereunder.

     Each of the Covered Guarantors listed on Schedule I hereto under the heading “California
Corporate Subsidiaries” (a) is a corporation validly existing and in good standing under the laws
of the State of California and (b) has the corporate power and authority under its articles of
incorporation, its bylaws and the General Corporation Law of the State of California to execute and
deliver each of the Note Documents to which it is a party and to perform its obligations
thereunder.

     The Covered Guarantor listed on Schedule I hereto under the heading “Massachusetts Corporate
Subsidiary” (a) is a corporation validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and (b) has the corporate power and authority under its articles of
organization, its bylaws and the Massachusetts Business Corporation Act to execute and deliver each
of the Note Documents to which it is a party and to perform its obligations thereunder.

     The Purchase Agreement has been duly ratified, executed and delivered by the Company. The
Joinder Agreement has been duly authorized, executed and delivered by each of the Covered
Guarantors.

 

 

     The Registration Rights Agreement has been duly authorized, executed and delivered by each of
the Covered Guarantors and constitutes the valid and binding obligation of Clear Channel and each
of the Guarantors, enforceable against Clear Channel and each of the Guarantors in accordance with
its terms.

     Assuming due execution and authentication by the Trustee in the manner provided for in the
Indenture, the Notes, upon the issuance and delivery against payment of the consideration therefor
in accordance with the terms of the Settlement Agreement, the Escrow Agreement, the Purchase
Agreement, as supplemented by the Joinder Agreement, and the Indenture, and assuming the Merger has
occurred, constitute the valid and binding obligations of Clear Channel, enforceable against Clear
Channel in accordance with their terms.

     The Guarantees have been duly authorized by each of the Covered Guarantors, and assuming that
the Notes have been issued, authenticated and delivered against payment of the consideration
therefor in accordance with the terms of the Settlement Agreement, the Escrow Agreement, the
Purchase Agreement, as supplemented by the Joinder Agreement, and the Indenture, and assuming the
Merger has occurred, the Guarantees constitute valid and binding
obligations of each of the Guarantors, enforceable against each of the Guarantors in
accordance with their terms.

     The Guarantees of the Exchange Notes (defined herein) by each of the Covered Guarantors have
been duly authorized by each of the Covered Guarantors.

     Upon the Merger, the Indenture constitutes a valid and binding obligation of Clear Channel,
enforceable against Clear Channel in accordance with its terms.

     The Indenture Documents have been duly authorized by each of the Covered Guarantors, and the
Supplemental Indenture has been executed and delivered by each of the Covered Guarantors. Upon the
Merger, the Indenture Documents constitute valid and binding obligations of each of the Guarantors,
enforceable against each of the Guarantors in accordance with their terms.

     Prior to the Merger, the Company was not an “investment company,” as such term is defined in
the Investment Company Act. Upon the consummation of the Transactions, neither Clear Channel nor
any Guarantor is an “investment company,” as such term is defined in the Investment Company Act.

     The execution and delivery by the Company, Clear Channel and each Guarantor of the Note
Documents to which it is a party, and the issuance and sale of the Notes by the Company and of the
Guarantees by the Guarantors, will not violate, conflict with, or constitute a breach of any of the
terms or provisions of, or a default under (or an event that with notice or the lapse of time, or
both, would constitute a default), or require consent under, or result in the creation or
imposition of a lien, charge or encumbrance on any property or assets of the Company, Clear Channel
or the Guarantors or the acceleration of any indebtedness of the Company, Clear Channel or the
Guarantors pursuant to (i) the certificate of incorporation or bylaws of the Company or (a) the
certificate of incorporation, articles of incorporation or articles of organization, as applicable,
or bylaws, (b) the certificate of formation or limited liability

 

 

company agreement, as applicable,
or (c) the certificate of limited partnership or limited partnership agreement of each Covered
Guarantor, as applicable, (ii) any agreement set forth on Schedule III hereto, or (iii) any Covered
Laws applicable to the Company, Clear Channel or the Guarantors or their respective assets or
properties. With regard to clause (iii) above, we do not express any opinion as to compliance with
state securities or “Blue Sky” laws or as to compliance with the antifraud provisions of federal or
state securities laws.

     No consent, approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency is required under the Covered Laws
for the Company’s, Clear Channel’s, or any of the Guarantor’s execution and delivery of the Note
Documents to which it is a party, or the issuance and delivery of the Notes or the Guarantees,
except (i) such as may have been obtained or made or as may be required under state securities or
“Blue Sky” laws, (ii) as may be required under federal or state securities or “Blue Sky” laws in
connection with the registration statement to be filed to exchange any and all of each series of
Notes for a like aggregate principal amount of new notes (the “Exchange
Notes”) or any registration statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Notes and declared effective under the Act, as
contemplated by the Registration Rights Agreement and (iii) as may be required under or pursuant to
the Communications Act of 1934, as amended, and the published rules and regulations of the Federal
Communications Commission promulgated thereunder.

     Assuming the accuracy of the representations and warranties of the Company, Clear Channel, the
Guarantors and the Initial Purchasers set forth in the Purchase Agreement, as supplemented by the
Joinder Agreement, it is not necessary in connection with the offer, sale and delivery of the Notes
or in connection with any initial resale of the Notes by the Initial Purchasers in the manner
contemplated by the Purchase Agreement to register the offer or sale of the Notes or the Guarantees
under the Act or to qualify the Indenture under the Trust Indenture Act, it being understood that
we express no opinion as to any resale of Notes subsequent to any initial resale thereof by the
Initial Purchasers.

     To our knowledge, except as disclosed in the Final Memorandum, none of the Company, Clear
Channel and the Guarantors is a party to any action, suit or proceeding which places in question
the validity or enforceability of, or seeks to enjoin the performance of, the Note Documents.

 

 

EXHIBIT
D

FORM OF LEGAL OPINION OF FLORIDA COUNSEL

     Each Guarantor is a corporation validly existing and in good standing under the laws of the
State of Florida. Each Guarantor has all requisite company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.

     Each Guarantor has all requisite corporate power and authority to execute and deliver each of
the Guarantor Documents to which it is a party and to perform its obligations thereunder. The
execution, delivery and performance of the Guarantor Documents to which each Guarantor is a party
by such Guarantor has been duly authorized by all necessary company action on the part of such
Guarantor. The Guarantor Documents to which each Guarantor is a party have been duly and validly
executed and delivered by such Guarantor.

     The Guarantees of notes to be issued by the Company, having substantially identical terms in
all material respects as the Notes, except that such notes will not contain terms with respect to
transfer restrictions, by each Guarantor have been duly authorized by each such Guarantor.

     The execution and delivery by each Guarantor of the Guarantor Documents to which each
Guarantor is a party and the performance by the Guarantors of their obligations thereunder will not conflict with, constitute a default under or violate (i) any of the terms,
conditions or provisions of the Articles of Incorporation or By-Laws of the Guarantors, or (ii) any
law or regulation of the State of Florida applicable to corporations generally (“Florida
Law”).

     No consent, approval, waiver, license or authorization or other action by or filing with any
Florida governmental authority is required under Florida Law in connection with the execution and
delivery by the Guarantors of the Guarantor Documents to which they are a party or consummation by
the Guarantors of the transactions contemplated thereby or the performance by the Guarantors of
their obligations thereunder.

 

 

EXHIBIT
E

FORM OF LEGAL OPINION OF COLORADO COUNSEL

     Organization. Guarantor is a corporation duly organized and existing under the laws of
the State.

     Good Standing. Based solely upon the Good Standing Certificate of Guarantor attached
hereto as Exhibit 4.2, Guarantor is in good standing under the laws of the State.

     Power and Authority. Guarantor has (a) power and authority to execute, deliver and
perform its obligations set forth in each of the Guaranty Documents to which it is a party and
(b) all requisite corporate power and authority to own, lease and/or operate its properties and to
carry on its business as presently being conducted in the State.

     Execution and Delivery. Each of the Guaranty Documents has been duly executed and
delivered by Guarantor.

     Authorization. The execution and delivery of each of the Guaranty Documents to which
Guarantor is a party and the performance by Guarantor of its obligations thereunder have been duly
authorized by all necessary corporate action on behalf of Guarantor.

     Exchange Notes Guaranty. The execution and delivery by Guarantor of a form of Guaranty
of Exchange Notes (as defined in the Registration Rights Agreement) to be issued by the Company has
been duly authorized by all necessary corporate action on behalf of Guarantor.

     No Violation. The execution and delivery by Guarantor of the Guaranty Documents and
the performance by Guarantor of its obligations thereunder does not violate (a) any of the
Constituent Documents, (b) the applicable provisions of statutory law or regulation of this State
applicable to transactions such as the Transaction or (c) to our knowledge, result in a
violation of any of the proceedings described in Section V below and of which we have
knowledge as a result of the searches described in such Section V.

     No Consent. No consent, approval, waiver, license or authorization or other action by
or filing with any State governmental authority is required in connection with the execution and
delivery by Guarantor of the Guaranty Documents, the consummation of the Transaction or the
performance by Guarantor of its obligations under such Guaranty Documents.

 

 

EXHIBIT
F

FORM OF LEGAL OPINION OF NEVADA COUNSEL

     Each Guarantor (other than Citicasters Licenses, L.P.) is a corporation validly existing and
in good standing under the laws of the State of Nevada. Citicasters Licenses, L.P. is a limited
partnership validly existing and in good standing under the laws of the State of Nevada. Each
Guarantor has all requisite corporate or limited partnership, as applicable, power and authority to
own, lease and operate its properties and to carry on its business as now being conducted.

     Each Guarantor has all requisite corporate or limited partnership, as applicable, power and
authority to execute and deliver each of the Guarantor Documents to which it is a party and to
perform its obligations thereunder. The execution, delivery and performance of the Guarantor
Documents to which each Guarantor is a party by such Guarantor has been duly authorized by all
necessary corporate or limited partnership, as applicable, action on the part of such Guarantor.
The Guarantor Documents to which each Guarantor is a party have been duly and validly executed and
delivered by such Guarantor.

     The Guarantees of notes to be issued by the Company, having substantially identical terms in
all material respects as the Notes, except that such notes will not contain terms with respect to
transfer restrictions, by each Guarantor have been duly authorized by each such Guarantor.

     The execution and delivery by each Guarantor of the Guarantor Documents to which each
Guarantor is a party and the performance by the Guarantors of their obligations thereunder will not
conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions
of the articles of incorporation, bylaws, certificate of limited partnership and limited
partnership agreement, as applicable, of the Guarantors, (ii) any Nevada law or regulation or
(iii) to the best of our knowledge, any judgment, writ, injunction, decree, order or ruling of any
court or governmental authority binding on the Guarantors.

     No consent, approval, waiver, license or authorization or other action by or filing with any
Nevada governmental authority is required in connection with the execution and delivery
by the Guarantors of the Guarantor Documents to which they are a party, the consummation by
the Guarantors of the transactions contemplated thereby or the performance by the Guarantors of
their obligations thereunder.

 

 

EXHIBIT
G

FORM
OF LEGAL OPINION OF WASHINGTON COUNSEL

     Each Guarantor is a corporation duly incorporated and validly existing under the laws of the
state of Washington. Each Guarantor has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.

     Each Guarantor has all requisite corporate power and authority to execute and deliver each of
the Guarantor Documents to which it is a party and to perform its obligations thereunder. The
execution, delivery and performance of the Guarantor Documents to which each Guarantor is a party
by such Guarantor has been duly authorized by all necessary corporate action on the part of such
Guarantor. The Guarantor Documents to which each Guarantor is a party have been duly and validly
executed and delivered by such Guarantor.

     The Guarantees by each Guarantor of notes to be issued by the Company, having substantially
identical terms in all material respects as the Notes, except that such notes will not contain
terms with respect to transfer restrictions, have been duly authorized by each such Guarantor.

     The execution and delivery by each Guarantor of the Guarantor Documents to which each
Guarantor is a party and the performance by the Guarantors of their obligations thereunder will not
conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions
of the articles of incorporation and bylaws of any of the Guarantors, (ii) any Washington law or
regulation or (iii) to our knowledge, any judgment, order or decree of any Washington state court
binding on any Guarantor. For purposes of expressing the opinion in clause (iii) of this Paragraph
4, we have with your express consent relied solely upon our review of searches of court records in
the state of Washington attached hereto as Exhibit A.

     No approval, authorization or other action by, or filing with, any Washington governmental
authority is required in connection with the execution and delivery by each Guarantor of the
Guarantor Documents to which it is a party and the performance by of its agreements in such
Guarantor Documents.

     There are no stamp taxes, recording taxes, transfer fees or similar charges payable under
Washington law on account of the execution and deli very of the Guarantor Documents or the creation
of the indebtedness evidenced by any of the Guarantor Documents. We express no opinion, however,
with respect to any income, franchise, sales, withholding, real or personal property, business license, business and occupation tax or other tax that may result
from the transactions contemplated by the Guarantor Documents or the performance of the obligations
described therein, including the payment of the indebtedness evidenced by any of the Guarantor
Documents.

 

 

EXHIBIT
H

FORM OF LEGAL OPINION OF TEXAS COUNSEL

     The Company and each Guarantor that is a corporation is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Texas. Each Guarantor that is
a limited partnership is a limited partnership duly formed, validly existing and in good standing
under the laws of the State of Texas. The Company and each Guarantor have all requisite corporate
or limited partnership power and authority to own, lease and operate their properties and to
carryon their business as now being conducted.

     The Company has all requisite corporate power and authority to execute and deliver each of the
Note Documents to which it is a party and to perform its obligations thereunder. The execution,
delivery and performance of the Note Documents to which the Company is a party by the Company have
been duly authorized by all necessary corporate action on the part of the Company.

     Each Guarantor has all requisite corporate or limited partnership power and authority to
execute and deliver each of the Guarantor Documents to which it is a party and to perform its
obligations thereunder. The execution, delivery and performance of the Guarantor Documents to which
each Guarantor is a party by such Guarantor have been duly authorized by all necessary corporate or
limited partnership action on the part of such Guarantor.

     The Company has duly authorized for issuance the Exchange Notes (as defined in the Indenture).
The Guarantees of the Exchange Notes by each Guarantor have been duly authorized by each such
Guarantor.

     The execution and delivery by the Company and each Guarantor of the Note Documents or
Guarantor Documents to which they are a party and the performance by the Company or the Guarantors
of their obligations thereunder will not conflict with, constitute a default under or violate (i)
any of the terms, conditions or provisions of the articles of incorporation, bylaws, certificate of
limited partnership, or partnership agreement of the Company or the Guarantors, as applicable, (ii)
any Texas statutory law or regulation or (iii) to our knowledge, any judgment, writ, injunction,
decree, order or ruling of any court or governmental authority binding on the Company or the
Guarantors.

     No consent, approval, waiver, license or authorization or other action by or filing with any
Texas governmental authority is required on the part of the Company or the Guarantors in connection
with the execution and delivery by the Company or the Guarantors of the Note Documents or Guarantor
Documents to which they are a party, the consummation by the Company and the Guarantors of the
transactions contemplated to be performed pursuant thereto or the performance by the Company or the
Guarantors of their obligations thereunder, except those which have previously been obtained or
made.

 

 

EXHIBIT
I

FORM OF LEGAL OPINION OF OHIO COUNSEL

     Each Guarantor which is a corporation is a corporation validly existing and in good standing
under the laws of the State of Ohio. M Street L.L.C. is a limited liability company validly
existing and in full force and effect under the laws of the State of Ohio. Each Guarantor has all
requisite corporate or limited liability company power and authority, as applicable, to own, lease
and operate its properties and to carry on its business as now being conducted.

     Each Guarantor has all requisite corporate or limited liability company power and authority,
as applicable, to execute and deliver each of the Guarantor Documents to which it is a party and to
perform its obligations thereunder. The execution, delivery and performance of the Guarantor
Documents to which each Guarantor is a party by such Guarantor has been duly authorized by all
necessary corporate or limited liability company action, as applicable, on the part of such
Guarantor. The Guarantor Documents to which each Guarantor is a party have been duly and validly
executed and delivered by such Guarantor.

     The Guarantees of notes to be issued by the Company, as the successor in interest to Merger
Sub as set forth in the Registration Rights Agreement in exchange for the Notes, have been duly
authorized by each such Guarantor.

     The execution and delivery by each Guarantor of the Guarantor Documents to which each
Guarantor is a party and the performance by the Guarantors of their obligations thereunder will not
conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions
of the articles of incorporation and code of regulations of each Guarantor which is a corporation
and the articles of organization and operating agreement of M Street L.L.C., (ii) any Ohio law or
regulation or (iii) to the best of our knowledge, any judgment, writ, injunction, decree, order or
ruling of any court or governmental authority binding on the Guarantors.

     No consent, approval, waiver, license or authorization or other action by or filing with any
Ohio governmental authority is required in connection with the execution and delivery by
the Guarantors of the Guarantor Documents to which they are a party, the consummation by the
Guarantors of the transactions contemplated thereby or the performance by the Guarantors of their
obligations thereunder.

 

 

EXHIBIT
J

FORM OF LEGAL OPINION OF SPECIAL FCC COUNSEL

     The FCC records reviewed by us reflect that (a) the FCC-authorized licensee or permittee for
each of the Station Licenses listed in Schedule III is the entity identified in Schedule III as the
licensee or permittee thereof; (b) each of the Station Licenses has the expiration date set forth
on Schedule III hereof; and (c) except as may be set forth on Schedule III, each of the Station
Licenses is currently in effect

     Except for those Station Licenses identified on Schedule III as construction permits, each
Station License authorizes the licensee thereof identified in Schedule III to operate a fun service
radio broadcast station to serve the community of license identified in Schedule III for each such
Station License, subject to compliance with the terms of such Station License and the
Communications Laws.

     The FCC has issued the Merger Consent, and the Merger Consent has become effective pursuant to
Section l 03 of the FCC’s rules, 47 C.F.R. § l 03. To our knowledge, (i) no stay of the
effectiveness of the Merger Consent has been issued by the FCC, and (ii) the Merger Consent has not
been invalidated by any subsequently published FCC action. With regard to the three enumerated
conditions in paragraph 40 of the Merger Consent, (a) the FCC has granted all necessary authority
for consummation of the assignment to the Aloha Station Trust, LLC of those radio broadcast
stations required to be assigned to it under the first enumerated condition; (b) the FCC, by
Memorandum Opinion and Order: Shareholders of Univision Communications, Inc., FCC 08-48, released
February 12,2008, modified the condition (the “Univision Order Condition”) imposed by its
Memorandum Opinion and Order: Shareholders of Univision Communications, Inc., 22 FCC Red. 5842
(2007), to provide that the restructuring of the interests of Thomas H. Lee Partners, L.P.
(‘THLP”) in Broadcast Media Partners, Inc. (“BMPI”) to become non-attributable has
brought THLP and BMPI into compliance with the Univision Order Condition, as required by the second
enumerated condition; and (c) the FCC has granted all necessary authority for the transfer of
control of the radio broadcast stations held by Cumulus Media Partners, LLC (“CMP”) that
would result from the actions required to render the interests of Bain Capital, LLC and THLP in CMP
non-attributable, as required by the third enumerated condition. We advise you that, to our
knowledge, (x) no petition for reconsideration or review of the Merger Consent has been filed with
the FCC, and (y) no action has been taken by the FCC to reverse or set aside the Merger
Consent. We further advise you that written notification to the FCC is required upon
consummation of the transactions authorized by the Merger Consent

     The execution, delivery, and performance on the date hereby Merger Sub, the Company and the
Guarantors of the Note Documents to which each is a party do not require any registration with the
FCC, any authorization, consent or approval by the FCC except for those that have been obtained, or
any notice to or filing with the FCC, and do not violate the

 

 

Communications Laws, except that: (a)
the exercise of rights and remedies that constitute the assignment of any license, permit or other
authorization issued by the FCC (“FCC Authorization”), or transfer of control thereof,
including an assignment or transfer of any FCC Authorization upon such exercise, may require the
prior consent of the FCC (and we express no opinion as to the likelihood of obtaining any such FCC
consent), (b) if any FCC Authorization is assigned or control thereof transferred, FCC policy may
require that control of the assets used in the operation of the facilities authorized by such FCC
Authorization be transferred or assigned along with such FCC Authorization, (c) written
notification to the FCC is required upon consummation of any assignment of an FCC Authorization or
transfer of control thereof previously approved by the FCC, and (d) Section 73.3613 of the FCC’s
rules, 41 C.P.R. § 73.3613, may require that copies of certain of the Note Documents be filed with
the FCC for informational purposes within thirty (30) days after their execution, and any documents
required to be so filed may also be required to be listed and described in ownership reports filed
with the FCC.

 

 

Exhibit K

			
	 	 	 
	OFFERING MEMORANDUM
	 	CONFIDENTIAL

ClearChannel

BT Triple Crown Merger Co., Inc.

to be merged with and into

Clear Channel Communications, Inc.

$980,000,000 10.75% Senior Cash Pay Notes due 2016

$1,330,000,000 11.00%/11.75% Senior Toggle Notes due 2016

 

     We are offering $980,000,000 aggregate principal amount of 10.75% senior cash pay notes due
2016 (the “senior cash pay notes”) and $1,330,000,000 aggregate principal amount of 11.00%/11.75%
senior toggle notes due 2016 (the “senior toggle notes” and, together with the senior cash pay
notes, the “notes”). The notes will be issued in connection with the acquisition of Clear Channel
Communications, Inc. (the “Company”). At the time of the acquisition, BT Triple Crown Merger Co.,
Inc., the issuer of the notes offered hereby, will merge with and into the Company, with the
Company continuing as the surviving corporation. At the time of the merger, the Company will assume
the obligations of BT Triple Crown Merger Co., Inc. and the notes and related indenture by
operation of law.

     The senior cash pay notes will mature on August 1, 2016. We will pay interest on the senior
cash pay notes in cash on February 1 and August 1 of each year, commencing on February 1, 2009.
Interest on the senior cash pay notes will accrue at a rate of 10.75% per annum. The senior toggle
notes will mature on August 1, 2016 and will require a special redemption on August 1, 2015. We
will pay interest on the senior toggle notes on February 1 and August 1 of each year, commencing on
February 1, 2009. Interest on the senior toggle notes will be paid in cash on the first interest
payment date. Following the first interest payment date, we may elect to pay all or 50% of such
interest on the senior toggle notes in cash or by increasing the principal amount of the senior
toggle notes or by issuing new senior toggle notes (such increase or issuance, “PIK Interest”).
Interest on the senior toggle notes payable in cash will accrue at a rate of 11.00% per annum and
PIK Interest will accrue at a rate of 11.75% per annum. We will prepay portions of the principal of
the notes on the first interest payment date following the fifth anniversary of the issue date and
on each interest payment date thereafter. The notes will be treated as having been issued with
original issue discount for United States federal income tax purposes.

     We may redeem some or all of the notes at any time prior to August 1, 2012 at a price equal to
100% of the principal amount of such notes plus accrued and unpaid interest thereon to the
redemption date and a “make-whole premium,” as described in this offering memorandum. We may redeem
some or all of the notes at any time on or after August 1, 2012 at the redemption prices set forth
in this offering memorandum. In addition, we may redeem up to 40% of any series of the outstanding
notes at any time on or prior to August 1, 2011 with the net cash proceeds we raise in one or more
equity offerings. If we undergo a change of control, sell certain of our assets, or issue certain
debt offerings, we may be required to offer to purchase notes from holders.

     The notes will be our senior unsecured debt and will rank equal in right of payment with all
of our existing and future senior debt. Our direct parent and our wholly-owned domestic restricted
subsidiaries on the issue date that are guarantors of our obligations under our senior secured
credit facilities and our receivables based credit facility will guarantee the notes with
unconditional guarantees that will be unsecured and will be equal in right of payment to all
existing and future senior debt of such guarantors, except that the guarantees will be subordinated
in right of payment only to the guarantees of obligations under our senior secured credit
facilities and our receivables based credit facility. In addition, the notes and the guarantees
will be structurally senior to our existing and future debt to the extent that such debt is not
guaranteed by the guarantors of the notes. The notes and the guarantees will be effectively
subordinated to our existing and future secured debt and that of the guarantors to the extent of
the value of the assets securing such indebtedness and will be structurally subordinated to all
obligations of our subsidiaries that do not guarantee the notes.

     We have agreed to use commercially reasonable efforts to make an offer to exchange the notes
for registered, publicly tradable notes that have substantially identical terms as the notes. This
offering memorandum includes additional information on the terms of the notes, including redemption
and repurchase prices, covenants and transfer restrictions.

     We expect the notes to be eligible for trading in The PORTALSM Market, a subsidiary
of The Nasdaq Stock Market, Inc.

     Investing in the notes involves a high degree of risk. See “Risk Factors,” beginning on page
32.

 

     We have not registered the notes under the federal securities laws or the securities laws of
any state. The initial purchasers named below are offering the notes only to qualified
institutional buyers under Rule 144A and to persons outside the United States under Regulation S.
See “Notice to Investors” for additional information about eligible offerees and transfer
restrictions.

 

          We
expect that delivery of the notes will be made in New York, New York
on or about           , 2008.

Joint Book-Running Managers

					
	Deutsche Bank Securities
	 	Morgan Stanley
	 	Citi    
	Credit Suisse
	 	RBS Greenwich Capital
	 	Wachovia Securities

The date
of this offering memorandum is          , 2008.

 

 

     This offering memorandum has been prepared by us based on information we have obtained from
sources we believe to be reliable. Summaries of documents contained in this offering memorandum may
not be complete; we will make copies of actual documents available to you upon request. Neither we
nor the initial purchasers represent that the information herein is complete. The information in
this offering memorandum is current only as of the date on the cover, and the business or financial
condition of the Company and other information in this offering memorandum may change after that
date. You should consult your own legal, tax and business advisors regarding an investment in the
notes. Information in this offering memorandum is not legal, tax, or business advice.

     You should base your decision to invest in the notes solely on information contained in this
offering memorandum. Neither we nor the initial purchasers have authorized anyone to provide you
with any different information.

     Contact the initial purchasers with any questions concerning this offering or to obtain
documents or additional information to verify the information in this offering memorandum.

     We are offering the notes in reliance on an exemption from registration under the Securities
Act of 1933, as amended (the “Securities Act”), for an offer and sale of securities that does not
involve a public offering. If you purchase the notes, you will be deemed to have made certain
acknowledgments, representations and warranties as detailed under “Notice to Investors.” You may be
required to bear the financial risk of an investment in the notes for an indefinite period. Neither
we nor the initial purchasers are making an offer to sell the notes in any jurisdiction where the
offer and sale of the notes is prohibited. We do not make any representation to you that the notes
are a legal investment for you.

     Each prospective purchaser of the notes must comply with all applicable laws and regulations
in force in any jurisdiction in which it purchases, offers, or sells the notes and must obtain any
consent, approval, or permission required by it for the purchase, offer, or sale by it of the notes
under the laws and regulations in force in any jurisdiction to which it is subject or in which it
makes such purchases, offers, or sales, and neither we nor the initial purchasers shall have any
responsibility therefor.

     Neither the Securities and Exchange Commission (the “SEC”) nor any State Securities Commission
has approved or disapproved of the notes or determined if this offering memorandum is truthful or
complete. Any representation to the contrary is a criminal offense.

     We have prepared this offering memorandum solely for use in connection with the offer of the
notes to qualified institutional buyers under Rule 144A and to persons outside the United States
under Regulation S. You agree that you will hold the information contained in this offering
memorandum and the transactions contemplated hereby in confidence. You may not distribute this
offering memorandum to any person, other than a person retained to advise you in connection with
the purchase of the notes. We and the initial purchasers may reject any offer to purchase the notes
in whole or in part, sell less than the entire principal amount of the notes offered hereby, or
allocate to any purchaser less than all of the notes for which it has subscribed.

     THE NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PROSPECTIVE PURCHASERS SHOULD BE AWARE THAT THEY
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

i

 

IRS CIRCULAR 230 NOTICE

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NOTICE TO NEW HAMPSHIRE RESIDENTS

     NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED
UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED, 1955, AS AMENDED, WITH THE
STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS
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SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR
GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.

SEC REVIEW

     The information in this offering memorandum relates to an offering that is exempt from
registration under the Securities Act. We have agreed to use commercially reasonable efforts to
file a registration statement with the SEC relating to an exchange offer for the notes. The
registration statement may differ in important ways from this offering memorandum in order to
comply with SEC rules and comments, particularly due to rules governing the presentation of
financial measures that are not prepared in accordance with United States generally accepted
accounting principles (“GAAP”). The SEC may take the view that the non-GAAP financial measures
included in this offering memorandum, including, for example, income (loss) from continuing
operations before interest expense, income tax (benefit) expense, depreciation and amortization,
gain (loss) on marketable securities and minority interest expense, net of tax (“EBITDA”), OIBDAN
(defined herein) and Adjusted EBITDA (defined herein), do not comply with these guidelines and may
require us to remove them from, or to change the way we report (or reconcile to GAAP measures) our
non-GAAP financial measures in the exchange offer registration statement or shelf registration
statement. Any such change would result in differences between the non-GAAP financial measures
included in this offering memorandum and those included in any such registration statement, and any
such change or any other change contained in any such registration statement could be material.
Also, some adjustments to EBITDA may not be in accordance with current SEC practice or with
regulations adopted by the SEC that apply to registration statements filed under the Securities Act
and periodic reports

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presented under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
Accordingly, Adjusted EBITDA may be presented differently in filings made with the SEC than as
presented in this offering memorandum. See “Offering Memorandum Summary—Summary Historical and
Unaudited Pro Forma Consolidated Financial and Other Data” for a description of the calculation of
EBITDA, OIBDAN and Adjusted EBITDA.

FORWARD-LOOKING STATEMENTS

     This offering memorandum includes “forward-looking statements.” Forward-looking statements
include statements concerning our plans, objectives, goals, strategies, future events, future sales
or performance, capital expenditures, financing needs, plans, intentions or expected cost savings
relating to acquisitions, business trends and other information that is not historical information
and, in particular, appear under the headings “Offering Memorandum Summary,” “Unaudited Pro Forma
Condensed Consolidated Financial Statements,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Business.” Words such as “estimates,” “expects,”
“anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words
or similar expressions that predict or indicate future events or trends, or that do not relate to
historical matters, identify forward-looking statements. Our expectations, beliefs and projections
are expressed in good faith, and we believe there is a reasonable basis for them. However, there
can be no assurance that management’s expectations, beliefs and projections will result or be
achieved. Investors should not rely on forward-looking statements because they are subject to a
variety of risks, uncertainties and other factors that could cause actual results to differ
materially from our expectations. These factors include, but are not limited to:

	 	•	 	our financial performance through the date of the completion of the Transactions (as
defined in this offering memorandum);
	 
	 	•	 	the possibility that the Transactions may involve unexpected costs;
	 
	 	•	 	the impact of the substantial indebtedness incurred to finance the consummation of
the Transactions;
	 
	 	•	 	the outcome of any legal proceedings instituted against us or others in connection
with the proposed Transactions;
	 
	 	•	 	the effect of the announcement of the Transactions on our customer relationships,
operating results and business generally;
	 
	 	•	 	business uncertainty and contractual restrictions that may exist during the pendency
of the Transactions;
	 
	 	•	 	changes in interest rates;
	 
	 	•	 	the amount of the costs, fees, expenses and charges related to the Transactions;
	 
	 	•	 	diversion of management’s attention from ongoing business concerns;
	 
	 	•	 	the need to allocate significant amounts of cash flow to make payments on our
indebtedness, which in turn could reduce our financial flexibility and ability to fund
other activities; and

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	 	•	 	the other factors described in this offering memorandum under the heading “Risk Factors.”

     The foregoing factors are not exhaustive and new factors may emerge or changes to the
foregoing factors may occur that could impact our business. Except to the extent required by law,
we undertake no obligation to publicly update or revise any forward-looking statements whether as a
result of new information, future events, or otherwise. You should review carefully the section
captioned “Risk Factors” in this offering memorandum for a more complete discussion of the risks of
an investment in the notes.

     All forward-looking statements attributable to us or persons acting on our behalf apply only
as of the date of this offering memorandum and are expressly qualified in their entirety by the
cautionary statements included in this offering memorandum. Our actual results may differ
materially from results anticipated in our forward-looking statements.

MARKET DATA

     Market and industry data throughout this offering memorandum was obtained from a combination
of our own internal company surveys, the good faith estimates of management, various trade
associations and publications, the Arbitron Inc. (“Arbitron”) and Nielsen Media Research, Inc.
rankings, the Veronis Suhler Stevenson Industry Forecast, the Radio Advertising Bureau, BIA
Financial Network Inc., eMarketer, the Outdoor Advertising Association of America and Universal
McCann. While we believe our internal surveys, third-party information, estimates of management and
data from trade associations are reliable, neither we nor the initial purchasers have verified this
data with any independent sources. Accordingly, neither we nor the initial purchasers make any
representations as to the accuracy or completeness of that data.

     Entities affiliated with Thomas H. Lee Partners, L.P. beneficially own approximately 20.7% of
the outstanding shares of capital stock of The Nielsen Company B.V., an affiliate of Nielsen Media
Research, Inc. Additionally, officers of Thomas H. Lee Partners, L.P. are members of the governing
bodies of Nielsen Finance LLC, The Nielsen Company B.V. and Nielsen Finance Co., each of which are
affiliates of Nielsen Media Research, Inc. Information provided by Nielsen Media Research, Inc. is
contained in reports that are available to all of the clients of Nielsen Media Research, Inc. and
were not commissioned by or prepared for Thomas H. Lee Partners, L.P. or Bain Capital Partners,
LLC.

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OFFERING MEMORANDUM SUMMARY

     Unless otherwise stated or the context otherwise requires, all references in this offering
memorandum to “Clear Channel,” “we,” “our,” “us” and “Company” refer to Clear Channel
Communications, Inc. and its consolidated subsidiaries after giving effect to the Transactions
described in this offering memorandum, references to “CCM Parent” refer to CC Media Holdings, Inc.,
references to “Merger Sub” refer to BT Triple Crown Merger Co., Inc. and references to the “Fincos”
refer to B Triple Crown Finco, LLC and T Triple Crown Finco, LLC. In addition, unless otherwise
stated or unless the context otherwise requires, all references in this offering memorandum to the
“merger agreement” refer to the Agreement and Plan of Merger, dated November 16, 2006, as amended
by Amendment No. 1, dated April 18, 2007, Amendment No. 2, dated May 17, 2007, and Amendment No. 3,
dated May 13, 2008, by and among Clear Channel, Merger Sub, the Fincos and CCM Parent, and all
references to the “merger” refer to the merger contemplated by the merger agreement. Upon
satisfaction of the conditions set forth in the merger agreement, Merger Sub will merge with and
into Clear Channel, with Clear Channel continuing as the surviving corporation and as the issuer of
the notes offered hereby. The offering of the notes and the merger will be consummated on a
substantially concurrent basis. We refer to the merger, the offer and sale of the notes offered
hereby, the borrowings under our new senior secured credit facilities and our new receivables based
credit facility, and the application of proceeds thereof, including the repayment of certain of our
existing indebtedness, as the “Transactions.”

     The following summary contains basic information about Clear Channel and this offering. It
likely does not contain all the information that is important to you. For a more complete
understanding of this offering, we encourage you to read this entire document and the documents we
have referred you to.

Overview

     We are the largest outdoor media and the largest radio company in the world, with leading
market positions in each of our operating segments: Americas Outdoor Advertising, International
Outdoor Advertising and Radio Broadcasting.

	 	•	 	Americas Outdoor Advertising. We are the largest outdoor media company in the
Americas, which includes the United States, Canada and Latin America. We own or operate
approximately 209,000 displays in our Americas Outdoor Advertising segment. Our outdoor
assets consist of billboards, street furniture and transit displays, airport displays,
mall displays, and wallscapes and other spectaculars which we believe are in premier real
estate locations in each of our markets throughout the Americas. We have operations in 49
of the top 50 markets in the United States, including all of the top 20 markets. For the
last twelve months ended March 31, 2008, Americas Outdoor Advertising represented 21% of
our net revenue and 27% of pro forma Adjusted EBITDA.
	 
	 	•	 	International Outdoor Advertising. We are a leading outdoor media company
internationally with operations in Asia, Australia and Europe. We own or operate
approximately 688,000 displays in 34 countries, including key positions in attractive
international growth markets. Our international outdoor assets consist of billboards,
street furniture displays, transit displays and other out-of-home advertising displays.
For the last twelve months ended March 31, 2008, International Outdoor Advertising
represented 26% of our net revenue and 14% of pro forma Adjusted EBITDA.

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	 	•	 	Radio Broadcasting. We are the largest radio broadcaster in the United States. As of December
31, 2007, we owned 890 domestic radio stations, with 275 stations operating in the top 50
markets. Our portfolio of stations offers a broad assortment of programming formats, including
adult contemporary, country, contemporary hit radio, rock, urban and oldies, among others, to a
total weekly listening base of approximately 103 million individuals. In addition, we owned 115
smaller market non-core radio stations, of which 63 were sold subsequent to December 31, 2007,
and 32 of which were subject to sale under definitive asset purchase agreements at March 31,
2008. We also operate a national radio network that produces, distributes, or represents more
than 70 syndicated radio programs and services for more than 5,000 radio stations. Some of our
more popular syndicated programs include Rush Limbaugh, Steve Harvey, Ryan Seacrest and Jeff
Foxworthy. We also own various sports, news and agriculture networks as well as equity
interests in various international radio broadcasting companies located in Australia, Mexico
and New Zealand. For the last twelve months ended March 31, 2008, Radio Broadcasting
represented 50% of our net revenue and 58% of pro forma Adjusted EBITDA.
	 
	 	•	 	Other. The “other” (“Other”) category includes our media representation business,
Katz Media Group, Inc. (“Katz Media”), and general support services and initiatives which
are ancillary to our other businesses. Katz Media is a full-service media representation
firm that sells national spot advertising time for clients in the radio and television
industries throughout the United States. Katz Media represents over 3,200 radio stations
and 380 television stations. For the last twelve months ended March 31, 2008, the Other
category represented 3% of our net revenue and 1% of pro forma Adjusted EBITDA.

     For the last twelve months ended March 31, 2008, we generated consolidated net revenues of
$6,980 million and pro forma Adjusted EBITDA of $2,302 million.

Our Strengths

     Global Scale and Local Market Leadership. We are the largest outdoor media and the largest
radio company in the world. We believe we have unmatched asset quality in both businesses. We
operate over 897,000 outdoor advertising displays worldwide, in what we believe are premier real
estate locations. We own 890 radio stations in the top United States markets with strong signals
and brand names. Our real estate locations, signals and brands provide a distinct local competitive
advantage. Our global scale enables productive and cost-effective investment across our portfolio,
which support our strong competitive position.

	 	•	 	Our outdoor advertising business is focused on urban markets with dense populations.
Our real estate locations in these urban markets provide outstanding reach and therefore a
compelling value proposition for our advertisers, enabling us to achieve more attractive
economics. In the United States, we believe we hold the #1 market share in eight of the
top 10 markets and are either #1 or #2 in 18 of the top 20 markets. Internationally, we
believe we hold leading positions in France, Italy, Spain and the United Kingdom, as well
as several attractive growth countries, including Australia and China.
	 
	 	•	 	Our scale has enabled cost-effective investment in new display technologies, such as
digital billboards, which we believe will continue to support future growth. This

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	 	 	 	technology will enable us to transition from selling space on a display to a single advertiser
to selling time on that display to multiple advertisers, creating new revenue opportunities
from both new and existing clients. We have enjoyed significantly higher revenue per digital
billboard than the revenue per vinyl billboard with relatively minimal capital costs.
	 
	 	•	 	We own the #1 or #2 ranked radio station clusters in eight of the top 10 markets and
in 18 of the top 25 markets in the United States. We have an average market share of 26%
in the top 25 markets. With a total weekly listening base of approximately 103 million
individuals, our portfolio of 890 stations generated twice the revenue as the next largest
competitor in 2007. With over 5,000 sales people in local markets, we believe the
aggregation of our local sales forces comprises the media industry’s largest local-based
sales force with national scope. Our national scope has facilitated cost-effective
investment in unique yield management and pricing systems that enable our local
salespeople to maximize revenue. Additionally, our scale has allowed us to implement
industry-changing initiatives that we believe differentiate us from the rest of the radio
industry and position us to outperform other radio broadcasters.

     Strong Collection of Unique Assets. Through acquisitions and organic growth, we have
aggregated a unique portfolio of assets.

	 	•	 	The domestic outdoor industry is regulated by the federal government as well as state
and municipal governments. Statutes and regulations govern the construction, repair,
maintenance, lighting, spacing, location, replacement and content of outdoor advertising
structures. Due to such regulation, it has become increasingly difficult to construct new
outdoor advertising structures. Further, for many of our existing billboards, a permit for
replacement cannot be sought by our competitors or landlords. As a result, our existing
billboards in top demographic areas, which we believe are in premier locations, have
significant value.
	 
	 	•	 	Ownership and operation of radio broadcast stations is governed by the Federal
Communications Commission’s (“FCC”) licensing process, which limits the number of radio
licenses available in any market. Any party seeking to acquire or transfer radio licenses
must go through a detailed review process with the FCC. Over several decades, we have
aggregated multiple licenses in local market clusters across the United States. A cluster
of multiple radio stations in a market allows us to provide listeners with more diverse
programming and advertisers with a more efficient means to reach those listeners. In
addition, we are also able to operate our market clusters efficiently by eliminating
duplicative operating expenses and realizing economies of scale.

     Attractive Out-of-home Industry Fundamentals. Both outdoor advertising and radio
broadcasting offer compelling value propositions to advertisers, unparalleled reach and valuable
out-of-home positions.

	 	•	 	Compelling Value Propositions. Outdoor media and radio broadcasting offer
compelling value propositions to advertisers by providing the #1 and #2 most
cost-effective media advertising outlets, respectively, as measured by cost per thousand
persons reached (“CPM”). According to the Radio Advertising Bureau, radio advertising’s
return on investment is 49% higher than that of television advertising. With low CPMs, we
believe outdoor media and radio broadcasting have opportunity for growth even in
relatively softer advertising environments.

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	 	•	 	Unparalleled Audience Reach. According to Arbitron, 98% of Americans travel in a car each
month, with an average of 310 miles traveled per week. The captive in-car audience is
protected from media fragmentation and is subject to increasing out-of-home advertiser
exposures as time and distance of commutes increase. Additionally, radio programming
reaches 93% of all United States consumers in a given week, with the average consumer
listening for almost three hours per day. On a weekly basis, this represents nearly 233
million unique listeners.
	 
	 	•	 	Valuable Out-of-home Position. Both outdoor media and radio broadcasting reach
potential consumers outside of the home, a valuable position as it is closer to the
purchase decision. Today, consumers spend a significant portion of their day out-of-home,
while out-of-home media (outdoor and radio) garner a disproportionately smaller share of
media spending than in-home media. We believe this discrepancy represents an opportunity
for growth.

     Consistent, Defensible Growth Profile. Both outdoor advertising and radio in the United
States have demonstrated consistent growth over the last 40 years and are resilient in economic
downturns.

	 	•	 	United States outdoor advertising revenue has grown to approximately $7 billion in
2007, representing a 9% compound annual growth rate (“CAGR”) since 1970. Growth has come
via traditional billboards along highways and major roadways, as well as alternative
advertising including transit displays, street furniture and mall displays. The outdoor
industry has experienced only two negative growth years between 1970 and 2007.
Additionally, the growth rate in the two years following an economic recession has
averaged 8%. Outdoor media continues to be one of the fastest growing forms of
advertising. According to the eMarketer industry forecast, total outdoor advertising is
expected to grow at an 8% CAGR from 2007 to 2011, driven by an increased share of media
spending due to the high value proposition of outdoor relative to other media and the
rollout of digital billboards.
	 
	 	•	 	United States radio advertising revenue has grown to approximately $19 billion in
2007, representing an 8% CAGR since 1970. Radio broadcasting has been one of the most
resilient forms of advertising, weathering several competitive and technological
advancements over time, including the introduction of television, audio cassettes, CDs and
other portable audio devices, and remaining an important component of local advertiser
marketing budgets. The radio industry has experienced only three negative growth years
from 1970 through 2007. Historically, the growth rate in the two years following an
economic recession has averaged 9%. While revenue in the radio industry (according to the
Radio Advertising Bureau) declined during 2007 and the first three months of 2008, the
eMarketer industry forecast expects radio broadcast advertising to grow at a stable 3%
CAGR from 2007 to 2011. We expect growth to be driven by increased advertising, due to a
captive audience spending more time in their cars and the adoption of new technologies
such as high definition (“HD”) radio.

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     Strong Cash Flow Generation. We have strong operating margins, driven by our significant
scale and leading market share in both outdoor advertising and radio broadcasting. In addition,
both outdoor media and radio broadcasting are low capital intensity businesses. For the twelve
months ended March 31, 2008, our capital expenditures were only 6% of net revenue with
maintenance capital expenditures comprising only 3% of net revenue. The change in net working
capital from 2006 to 2007 was approximately 0.08% of net revenue. As a result of our high
margins and low capital requirements, we have been able to convert a significant portion of our
revenue into cash flow. By continuing to grow our business while maintaining costs, we expect
to further improve our cash flow generation.

     Individual, Saleable Assets with High Value. Our business is comprised of numerous individual
operating units, independently successful in local markets throughout the United States and the
rest of the world. This creates tremendous asset value, with outdoor media and radio broadcasting
businesses that are saleable at attractive multiples. Furthermore, at March 31, 2008, we have a
capital loss carryforward of approximately $809 million that can be used to offset capital gains
recognized on asset sales over the next three years.

     Business Diversity Provides Stability. Currently, approximately half of our revenue is
generated from our Americas Outdoor Advertising and our International Outdoor Advertising segments,
with the remaining half comprised of our Radio Broadcasting segment, as well as other support
services and initiatives. We offer advertisers a diverse platform of media assets across
geographies, outdoor products and radio programming formats. Further, we enjoy substantial
diversity in our outdoor business, with no market and no ad category greater than 8% of our 2007
outdoor revenue. We also enjoy substantial diversity in our radio business, with no market greater
than 9%, no format greater than 18%, and no ad category greater than 19% of our 2007 radio revenue.
Through our multiple business units, we are able to reduce revenue volatility resulting from
softness in any one advertising category or geographic market.

     Experienced Management Team and Entrepreneurial Culture. We have an experienced management
team from our senior executives to our local market managers. Our executive officers and certain
radio and outdoor senior managers possess an average of 20 years of industry experience, and have
combined experience of over 220 years. The core of the executive management team includes Chief
Executive Officer Mark P. Mays, who has been with the Company for over 19 years, and President and
Chief Financial Officer Randall T. Mays, who has been with the Company for over 15 years. We also
maintain an entrepreneurial culture empowering local market managers to operate their markets as
separate profit centers, subject to centralized oversight. A portion of our managers’ compensation
is dependent upon the financial success of their individual market. Our managers also have full
access to our centralized resources, including sales training, research tools, shared best
practices, global procurement and financial and legal support. Our culture and our centralization
allow our local managers to maximize cash flow.

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Our Strategy

     Our goal is to strengthen our position as a leading global media company specializing in
“out-of-home” advertising and to maximize cash flow. We plan to achieve this objective by
capitalizing on our competitive strengths and pursuing the following strategies:

Outdoor

     We seek to capitalize on our global outdoor network and diversified product mix to maximize
revenue and cash flow. In addition, by sharing best practices among our business segments, we
believe we can quickly and effectively replicate our successes throughout the markets in which we
operate. Our diversified product mix and long-standing presence in many of our existing markets
provide us with the platform to launch new products and test new initiatives in a reliable and
cost-effective manner.

     Drive Outdoor Media Spending. Outdoor advertising only represented 2.4% of total dollars
spent on advertising in the United States in 2007. Given the attractive industry fundamentals of
outdoor media and our depth and breadth of relationships with both local and national advertisers,
we believe we can drive outdoor advertising’s share of total media spending by highlighting the
value of outdoor advertising relative to other media. We have made and continue to make significant
investments in research tools that enable our clients to better understand how our displays can
successfully reach their target audiences and promote their advertising campaigns. Also, we are
working closely with clients, advertising agencies and other diversified media companies to develop
more sophisticated systems that will provide improved demographic measurements of outdoor
advertising. We believe that these measurement systems will further enhance the attractiveness of
outdoor advertising for both existing clients and new advertisers and further foster outdoor media
spending growth. According to the eMarketer industry forecast, outdoor advertising’s share of total
advertising spending will grow by approximately 34% from 2007 to 2011.

     Increase Our Share of Outdoor Media Spending. Domestically, we own and operate billboards on
real estate in the highest trafficked areas of top markets—a compelling advertising opportunity for
both local and national businesses. Internationally, we own and operate a variety of outdoor
displays on real estate in large urban areas. We intend to continue to work toward ensuring that
our customers have a superior experience by leveraging our unparalleled presence and our
best-in-class sales force, and by increasing our focus on customer satisfaction and improved
measurement systems. We believe our commitment to superior customer service, highlighted by our
unique “Proof of Performance” system, and our superior products led to over 12,000 new advertisers
in 2007. We have generated growth in many categories, including telecom, automotive and retail.

     Roll Out Digital Billboards. Advances in electronic displays, including flat screens, LCDs
and LEDs, allow us to provide these technologies as complements to traditional methods of outdoor
advertising. These electronic displays may be linked through centralized computer systems to
instantaneously and simultaneously change static advertisements on a large number of displays.
Digital outdoor advertising provides numerous advantages to advertisers, including the
unprecedented flexibility to change messaging over the course of a day, the ability to quickly
change messaging and the ability to enhance targeting by reaching different demographics at
different times of day. Digital outdoor displays provide us with advantages, as they are
operationally efficient and eliminate safety issues from manual copy changes. Additionally, digital
outdoor displays have, at times, enhanced our relationship with regulators, as in certain
circumstances we have offered emergency messaging services and public service

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announcements on our digital boards. We recently began converting a limited number of vinyl boards
to networked digital boards. We have enjoyed significantly higher revenue per digital billboard
than the revenue per vinyl billboard with relatively minimal capital costs. We believe that the
costs of digital upgrades will decrease over time as technologies improve and more digital boards
come to market.

Radio

     Our radio broadcasting strategy centers on providing programming and services to the local
communities in which we operate and being a contributing member of those communities. We believe
that by serving the needs of local communities, we will be able to grow listenership and deliver
target audiences to advertisers, thereby growing revenue and cash flow. Our radio broadcasting
strategy also entails improving the ongoing operations of our stations through effective
programming, promotion, marketing, sales and careful management of costs and expanded distribution
of content.

     Drive Local and National Advertising. We intend to drive growth in our radio business via a
strong focus on yield management, increased sales force effectiveness and expansion of our sales
channels. In late 2004, we implemented what we believe are industry-leading price and yield
optimization systems and invested in new information systems, which provide station level inventory
yield and pricing information previously unavailable in the industry. We shifted our sales force
compensation plan from a straight “volume-based” commission percentages system to a “value-based”
system to reward success in optimizing price and inventory. We believe that utilization of our
unique systems throughout our distribution and sales platform will drive continued revenue growth
in excess of market radio revenue growth. We also intend to focus on driving advertisers to our
radio stations through new sales channels and partnerships. For example, we recently formed an
alliance with Google whereby we have gained access to an entirely new group of advertisers within a
new and complementary sales channel.

     Continue to Capitalize on “Less is More.” In late 2004, we launched the Less is More
initiative to position the Company for long-term radio growth. The implementation of the Less is
More initiative reduced advertising clutter, enhanced listener experience and improved radio’s
attractiveness as a medium for advertisers. On average, we reduced ad inventory by 20% and
promotion time by 50%, which has led to more time for listeners to enjoy our compelling content. In
addition, we changed our available advertising spots from 60 second ads to a combination of 60, 30,
15 and five second ads in order to give advertisers more flexibility. As anticipated, our reduction
in ad inventory led to a decline in Radio Broadcasting revenue in 2005. Revenue growth of 6%
followed in 2006, outperforming an index of other radio broadcasters. We continued to outperform
the radio industry in 2007. Our Less is More strategy has separated us from our competitors and we
believe it positions us to continue to outperform the radio industry.

     Continue to Enhance the Radio Listener Experience. We will continue to focus on enhancing the
radio listener experience by offering a wide variety of compelling content. Our investments in
radio programming over time have created a collection of leading on-air talent and our Premiere
Radio Network offers over 70 syndicated radio programs and services for more than 5,000 radio
stations across the United States. Our distribution platform allows us to attract top talent and
more effectively utilize programming, sharing the best and most compelling content across many
stations. Finally, we are continually expanding content choices for our listeners, including
utilization of HD radio, Internet and other distribution channels with complementary formats.
Ultimately, compelling content improves audience share which, in turn, drives revenue and cash flow
generation.

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     Deliver Content via New Distribution Technologies. We intend to drive company and industry
development through new distribution technologies. Some examples of such innovation are as follows:

	 	•	 	Alternative Devices. The FM radio feature is increasingly integrated into MP3
players and cell phones. This should expand FM listenership by “putting a radio in every
pocket” with free music and local content and represents the first meaningful increase in
the radio installed base in more than 25 years.
	 
	 	•	 	HD Radio. HD radio enables crystal clear reception, interactive features, data
services and new applications. For example, the interactive capabilities of HD radio will
potentially permit us to participate in commercial download services. Further, HD radio
allows for many more stations, providing greater variety of content which we believe will
enable advertisers to target consumers more effectively. On December 6, 2005, we joined a
consortium of radio operators in announcing plans to create the HD Digital Radio Alliance
to lobby auto makers, radio manufacturers and retailers for the rollout of digital
radios. We plan to continue to develop compelling HD content and applications and to
support the alliance to foster industry conversion. We currently operate 804 HD stations,
comprised of 454 HD and 350 HD2 signals.
	 
	 	•	 	Internet. Clear Channel websites had over 10.5 million unique visitors in April
2008, making the collection of these websites one of the top five trafficked music
websites. Streaming audio via the Internet provides increased listener reach and new
listener applications as well as new advertising capabilities.
	 
	 	•	 	Mobile. We have pioneered mobile applications which allow subscribers to use their
cell phones to interact directly with the station, including finding titles or artists,
requesting songs and downloading station wallpapers.

Consolidated

     Maintain High Free Cash Flow Conversion. Our business segments benefit from high margins and
low capital intensity, which leads to strong free cash flow generation. We intend to closely manage
expense growth and to continue to focus on achieving operating efficiencies throughout our
businesses. Within each of our operating segments, we share best practices across our markets and
continually look for innovative ways to contain costs. Historically, we have been able to contain
costs in all of our segments during periods of slower revenue growth. For example, while our Radio
Broadcasting segment experienced flat growth in net revenue for the year ended December 31, 2007,
we were able to reduce Radio Broadcasting operating expenses and increase Radio Broadcasting
operating income by 1% during this period. We will continue to seek new ways of reducing costs
across our global network. We also intend to deploy growth capital with discipline to generate
continued high free cash flow yield.

     Pursue Strategic Opportunities and Optimize Our Portfolio of Assets. An inherent benefit of
both our outdoor advertising and radio broadcasting businesses is that they represent a collection
of saleable assets at attractive multiples. Furthermore, at March 31, 2008, we have a capital loss
carryforward of approximately $809 million that can be used to offset capital gains recognized on
asset sales over the next three years. We continually evaluate strategic opportunities both within
and outside our existing lines of business and may from time to time sell, swap, or purchase assets
or businesses in order to maximize the efficiency of our portfolio.

8

 

Recent Developments

Updated Financial Information

     On December 17, 2007, we announced that we commenced a cash tender offer and consent
solicitation for our outstanding $750 million principal amount of 7.65% senior notes due 2010 on
the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 17, 2007. On July 1, 2008, we announced that we terminated such tender offer and
consent solicitation. None of our outstanding 7.65% senior notes due 2010 were purchased in the
offer, and all such notes previously tendered and not withdrawn were promptly returned to their
respective holders and remain outstanding as of the date of this offering memorandum.

     Accordingly, we no longer expect to borrow any amounts available to us under the delayed draw
1 term loan facility upon the consummation of the Transactions in order to redeem our outstanding
7.65% senior notes due 2010. Consequently, upon the consummation of the Transactions, our actual
financial position will differ in certain respects from certain of the financial data and other
information set forth in this offering memorandum under the headings “Offering Memorandum Summary,”
“Risk Factors,” “Use of Proceeds,” “Capitalization,” “Unaudited Pro Forma Condensed Consolidated
Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Description of Other Indebtedness,” which is based on our original intention to
borrow $750 million under the delayed draw 1 term loan facility.

     Upon the consummation of the Transactions, we continue to expect to have total debt
outstanding of approximately $19,861 million, including the notes offered hereby. However, $5,025
million aggregate principal amount of our existing senior notes will remain outstanding following
the consummation of the Transactions in light of the termination of the tender offer for our 7.65%
senior notes due 2010. Furthermore, approximately $15,661 million of debt will be incurred in
connection with the consummation of the Transactions, accounting for our decision not to draw on
the delayed draw 1 term loan facility.

     For
the year ended December 31, 2007 and for the last twelve months ended March 31, 2008, as
adjusted for the foregoing discussion, pro forma interest expense will be approximately $1,673
million, as compared to $1,633 million as estimated in this offering memorandum. For the last
twelve months ended March 31, 2008, as adjusted for the foregoing discussion, pro forma cash
interest expense will be approximately $1,438 million as compared to $1,415 million originally
estimated. Upon the consummation of the Transactions, the ratio of our total debt to our pro forma
Adjusted EBITDA for the last twelve months ended March 31, 2008 will remain 8.6x. Upon the
consummation of the Transactions, the ratio of our total guaranteed/subsidiary debt (our total debt
less the amount of our existing senior notes anticipated to remain outstanding following the
consummation of the Transactions, which are not guaranteed by, or direct obligations of, our
subsidiaries) to our pro forma Adjusted EBITDA for the last twelve months ended March 31, 2008 will
be 6.9x, as compared to 7.2x, as estimated in this offering memorandum.

     The foregoing discussion should be read in connection with “Selected Historical Consolidated
Financial and Other Data,” “Unaudited Pro Forma Condensed Consolidated Financial Statements” and
our consolidated financial statements and the related notes thereto set forth in this offering
memorandum.

9

 

Certain Regulatory Matters in Connection with the Merger

     In connection with the merger, the FCC released on January 24, 2008 an order (the “FCC Order”)
approving the transfer of control of our FCC licenses to affiliates of the Fincos subject to
compliance with certain conditions. Those conditions include the assignment prior to the closing of
the merger of our FCC licenses for 57 radio stations (42 of which are included in our 890 radio
stations as of December 31, 2007) to Aloha Station Trust, LLC (“AST”), an entity in which neither
we nor Bain Capital Partners, LLC or Thomas H. Lee Partners, L.P. holds an interest pursuant to the
FCC attribution standards. Pursuant to the FCC Order, the FCC licenses for radio stations assigned
to AST are to be divested by AST within six months of the closing of the merger. The parties intend
to satisfy the conditions included in the FCC Order prior to the closing date of the Transactions.
The consents granted by the FCC Order remain in effect as granted or as extended. The FCC grants
extensions of authority to consummate previously approved transfers of control either by right or
for good cause shown. We anticipate that the FCC will grant any necessary extensions of the
effective period of the FCC Order for consummation of the transfer.

     In addition, we agreed with the United States Department of Justice (“DOJ”) to enter into a
Final Judgment in accordance with and subject to the Antitrust Procedures and Penalties Act, 15
U.S.C. §16 (the “Tunney Act”), as stipulated in the Hold Separate Stipulation and Order filed by
the DOJ on February 13, 2008, whereby we have agreed to divest within 90 days of the closing of the
merger, subject to the conditions set forth therein, six additional core radio stations in
Cincinnati, Houston, Las Vegas and San Francisco.

Sale of Certain Radio Stations

     On November 16, 2006, we announced plans to sell 448 non-core radio stations. During the first
quarter of 2008, we revised our plans to sell 173 of these stations because we determined that
market conditions were not advantageous to complete the sales. We intend to hold and operate these
stations.

     Since November 16, 2006, we have sold 223 non-core radio stations. In addition, we have 20
non-core radio stations that are no longer under a definitive asset purchase agreement as of March
31, 2008. However, we continue to actively market these radio stations and they continue to meet
the criteria for classification as discontinued operations.

The following table presents the activity related to our planned divestitures of radio stations:

	 	 	 	 	 
	Total radio stations announced as being marketed for sale on November 16, 2006
	 	 	448	 
	Total radio stations no longer being marketed for sale
	 	 	(173	)
	 
	 	 	 	 
	Adjusted number of radio stations being marketed for sale (“non-core” radio stations)
	 	 	275	 
	Non-core radio stations sold through March 31, 2008
	 	 	(223	)
	 
	 	 	 	 
	Remaining non-core radio stations at March 31, 2008 classified as discontinued
operations
	 	 	52	 
	Non-core
radio stations under definitive asset purchase agreements
	 	 	(32	)
	 
	 	 	 	 
	Non-core radio stations being marketed for sale
	 	 	20	 
	 
	 	 	 	 

10

 

     In addition to the non-core radio stations mentioned above, we had definitive asset purchase
agreements for eight radio stations at March 31, 2008. Through May 7, 2008, we executed definitive
asset purchase agreements for the sale of 17 radio stations in addition to the radio stations under
definitive asset purchase agreements at March 31, 2008.

     The closing of these radio sales is subject to antitrust clearances, FCC approval and other
customary closing conditions. The sale of these assets is not a condition to the closing of the
Transactions and is not contingent on the closing of the Transactions.

Sale of Our Television Business

     On November 16, 2006, we announced plans to sell all of our television stations. We entered
into a definitive agreement on April 20, 2007 with an affiliate of Providence Equity Partners Inc.
(“Providence”) to sell our television business. The FCC issued its consent order on November 29,
2007 approving the assignment of our television station licenses to the affiliate of Providence. On
March 14, 2008, we completed the sale of all of our television stations to an affiliate of
Providence for $1.0 billion, adjusted for certain items including proration of expenses and
adjustments for working capital.

Sale of Certain Equity Investments

     On January 17, 2008, we entered into an agreement to sell our equity investment in Clear
Channel Independent, an out-of-home advertising company with operations in South Africa and other
sub-Saharan countries. We closed the transaction on March 28, 2008.

     On May 28, 2008, we entered into a definitive agreement to sell our 40% equity interest in the
Mexican radio broadcasting company, Grupo Acir, for total consideration of $94 million. The sale is
subject to Mexican regulatory approvals and is expected to close in June 2008. At closing, the
buyer will purchase half of our equity interest and is obligated to purchase our remaining equity
interest in Grupo Acir within five years from the closing date.

11

 

The Transactions

Overview

     Upon the satisfaction of the conditions set forth in the merger agreement, CCM Parent will
acquire Clear Channel. The acquisition will be effected by the merger of Merger Sub with and into
Clear Channel. As a result of the merger, Clear Channel will become a wholly-owned subsidiary of
CCM Parent, held indirectly through intermediate holding companies as described in the diagram of
our corporate structure following the Transactions included on the following pages. Clear Channel,
as the surviving corporation in the merger, will assume, by operation of law, all of the rights and
obligations of Merger Sub under the notes offered hereby and the related indenture. The merger
agreement contains representations, warranties and covenants with respect to the conduct of the
business and certain closing conditions. Although there are no remaining regulatory approvals
required in order to consummate the Transactions, the adoption of the merger agreement is subject
to the approval of our shareholders. Following the Transactions, CCM Parent will be a public
company and Clear Channel will no longer be a public company.

Capital Structure of CCM Parent Following the Transactions

     The following discussion assumes the approval of the adoption of the merger agreement by our
shareholders.

     One or more new entities controlled by Bain Capital Investors, LLC and its affiliates
(collectively, “Bain Capital”) and Thomas H. Lee Partners, L.P. and its affiliates (collectively,
“THL” and, together with Bain Capital, the “Sponsors”) and their co-investors will acquire directly
or indirectly through newly formed companies (each of which will be ultimately controlled jointly
by the Sponsors) shares of stock in CCM Parent. At the effective time of the merger, those shares
will represent, in the aggregate, between 66% and 82% (whether measured by voting power or economic
interest) of the equity of CCM Parent, depending on the percentage of shares certain members of our
management commit, or are permitted and subsequently elect, to rollover and the number of shares
issued to our public shareholders pursuant to the merger agreement, as more fully described below.
The capital stock held by the Sponsors will consist of a combination of shares of “strong voting”
Class B common stock and nonvoting Class C common stock of CCM Parent with aggregate votes equal to
one vote per share. As an illustration only, assuming there were one million shares of Class B
common stock issued and outstanding and nine million shares of Class C common stock issued and
outstanding, then each share of Class B common stock would have ten votes; and therefore, in the
aggregate the Class B common stock would be entitled to ten million votes (a total number of votes
equal to the total number of shares of Class B common stock and Class C common stock outstanding).

     At the effective time of the merger, our shareholders who elect to receive cash consideration
in connection with the merger will receive $36.00 in cash for each pre-merger share of our
outstanding common stock they own, subject to the payment of additional equity consideration
(defined below), if applicable. Pursuant to the merger agreement, as an alternative to receiving
the $36.00 per share cash consideration, our shareholders will be offered the opportunity to
exchange some or all of their pre-merger shares on a one-for-one basis for shares of Class A common
stock in CCM Parent, subject to aggregate and individual caps

12

 

discussed below (“stock elections”). Shares of Class A common stock are entitled to one vote
per share. Each share of Class A common stock, Class B common stock and Class C common stock will
have the same economic rights.

     The merger agreement provides that no more than 30% of the capital stock of CCM Parent is
issuable pursuant to stock elections in exchange for our outstanding common stock, including shares
issuable upon conversion of our outstanding options. If our shareholders make stock elections
exceeding the 30% aggregate cap, then each shareholder (other than certain shareholders who have
separately agreed with CCM Parent to make stock elections with respect to an aggregate of
13,888,890 shares of our common stock whose respective stock elections are subject to proration
only in the event of a reduction in the equity financing funded by the Sponsors and their
co-investors) will receive a proportionate allocation of shares of CCM Parent’s Class A common
stock. Furthermore, no shareholder making a stock election may receive more than 11,111,112 shares
of Class A common stock of CCM Parent in connection with the merger. Our shareholders which are
subject to proration or the individual cap will receive $36.00 per share cash consideration for
such prorated or capped shares, subject to the payment of additional equity consideration, if
applicable.

     In limited circumstances, our shareholders electing to receive cash consideration for some or
all of their shares of our outstanding common stock, including shares issuable upon conversion of
our outstanding options, will, on a pro rata basis, instead be issued shares of CCM Parent’s Class
A common stock (“additional equity consideration”). CCM Parent may reduce the cash consideration to
be paid to our shareholders in the event the total funds that CCM Parent determines it needs to
fund the Transactions exceed the total funds available to CCM Parent in connection with the
Transactions, as described more fully in “—Sources and Uses” herein. If CCM Parent elects to reduce
the cash consideration based on such determination, CCM Parent may reduce the cash consideration to
be paid to our shareholders by an amount not to exceed 1/36th of the total amount of
cash consideration that our shareholders elected to receive and, in lieu thereof, issue shares of
Class A common stock to such shareholders. The issuance of any additional equity consideration may
result in the issuance of more than 30% of the total shares of capital stock of CCM Parent in
exchange for shares of our outstanding common stock, including shares issuable upon conversion of
our outstanding options.

     The merger agreement provides for payment of additional cash consideration if the merger
closes after November 1, 2008 (“additional cash consideration”). If the merger is consummated after
November 1, 2008, but on or before December 1, 2008, our shareholders will receive additional cash
consideration based upon the number of days elapsed since November 1, 2008 (including November 1,
2008), equal to $36.00 multiplied by 4.5% per annum, per share. If the merger is consummated after
December 1, 2008, the additional cash consideration will increase and our shareholders will receive
additional cash consideration based on the number of days elapsed since December 1, 2008 (including
December 1, 2008), equal to $36.00 multiplied by 6% per annum, per share (plus the additional cash
consideration accrued during November 2008).

Equity Rollover by Our Management and Related Equity Arrangements

     In connection with the merger agreement, the Fincos and Messrs. Mark P. Mays, Randall T. Mays
and L. Lowry Mays entered into a letter agreement, as supplemented on May 17, 2007, and as further
supplemented on May 13, 2008 (the “Letter Agreement”). Pursuant to the Letter Agreement, Messrs.
Mark P. Mays, Randall T. Mays and L. Lowry Mays agreed to roll over

13

 

unrestricted common stock, restricted equity securities and “in the money” stock options
exercisable for common stock of Clear Channel, with an aggregate value of approximately $45
million, in exchange for equity securities of CCM Parent (based upon the per share price paid by
the Sponsors for shares of CCM Parent in connection with the merger).

     In connection with the Transactions and pursuant to the Letter Agreement, Messrs. Mark P. Mays
and Randall T. Mays committed to a rollover exchange pursuant to which they will surrender a
portion of the equity securities of Clear Channel they own, with a value of $10 million ($20
million in the aggregate), in exchange for $10 million worth of the equity securities of CCM Parent
($20 million in the aggregate, based upon the per share price paid by the Sponsors for shares of
CCM Parent in connection with the merger). In May 2007, Messrs. Mark P. Mays, Randall T. Mays and
L. Lowry Mays and certain members of our management received grants of restricted equity securities
of Clear Channel (the “May 2007 equity grants”). Each of Messrs. Mark P. Mays and Randall T. Mays’
May 2007 equity grants, individually valued at approximately $2.9 million, will be used to reduce
their respective $10 million rollover commitments. The remainder of Messrs. Mark P. Mays and
Randall T. Mays’ rollover commitments will be satisfied through the rollover of a combination of
unrestricted common stock of Clear Channel and “in the money” stock options exercisable for common
stock of Clear Channel in exchange for equity securities of CCM Parent.

     Furthermore, in connection with the Transactions and pursuant to the Letter Agreement, Mr. L.
Lowry Mays committed to a rollover exchange pursuant to which he will surrender a portion of the
equity securities of Clear Channel he owns, with an aggregate value of $25 million, in exchange for
$25 million worth of the equity securities of CCM Parent (based upon the per share price paid by
the Sponsors for shares of CCM Parent in connection with the merger). Mr. L. Lowry Mays’ May 2007
equity grant, valued at approximately $1.4 million, will be used to reduce his $25 million rollover
commitment. The remainder of Mr. L. Lowry Mays’ rollover commitment will be satisfied through the
rollover of a combination of unrestricted common stock of Clear Channel and “in the money” stock
options exercisable for common stock of Clear Channel in exchange for equity securities of CCM
Parent.

     Pursuant to the Letter Agreement and the escrow agreement described herein, by May 28, 2008,
each of Messrs. L. Lowry Mays, Mark P. Mays and Randall T. Mays deposited into escrow unrestricted
shares of Clear Channel common stock and vested Clear Channel stock options that will be used to
satisfy a portion of the foregoing equity commitments.

     In addition to the foregoing rollover arrangements, upon the consummation of the Transactions
and pursuant to the Letter Agreement, Messrs. Mark P. Mays and Randall T. Mays will each receive a
grant of approximately $20 million worth of shares of Class A common stock of CCM Parent, subject
to certain vesting requirements, pursuant to their new employment arrangements with CCM Parent.
Furthermore, each of Mr. Mark P. Mays and Mr. Randall T. Mays will receive grants of options equal
to 2.5% of the fully diluted equity of CCM Parent upon the consummation of the Transactions.

     The merger agreement contemplates that the Fincos and CCM Parent may agree to permit certain
members of our management to elect that some of their outstanding shares of our common stock,
including shares issuable upon conversion of our outstanding options, and shares of our restricted
stock be converted into shares or options to purchase shares of CCM Parent Class A common stock
following the consummation of the merger. We contemplate that such conversions, if any, would be
based on the fair market value on the date of conversion, which we contemplate to be the per share
price paid by the Sponsors for shares of CCM Parent

14

 

in connection with the merger, and would also, in the case of our stock options, preserve the
aggregate spread value of the rolled options. As of the date of this offering memorandum, except
for the Letter Agreement and with respect to shares of restricted stock discussed below, no member
of our management nor any of our directors has entered into any agreement, arrangement, or
understanding regarding any such arrangements. However, unvested options to acquire a maximum of
225,704 shares of Clear Channel common stock that are not “in the money” on the date of the merger
may not, by their terms, be cancelled prior to their stated expiration date; the Fincos and Merger
Sub have agreed to allow these stock options to be converted into stock options to acquire shares
of CCM Parent Class A common stock.

     The Fincos and Merger Sub have informed us that they anticipate converting approximately
625,000 shares of Clear Channel restricted stock held by management and employees pursuant to the
May 2007 equity grants into CCM Parent Class A common stock on a one-for-one basis. Such CCM Parent
Class A common stock will continue to vest ratably on each of the next three anniversaries of the
date of grant in accordance with their terms. The Fincos and Merger Sub have also informed us that
they anticipate offering to certain members of our management and certain of our employees the
opportunity to purchase up to an aggregate of $15 million of equity interests in CCM Parent (based
upon the per share price paid by the Sponsors for shares of CCM Parent in connection with the
merger).

     Other than with respect to 580,361 shares of our common stock included within Mr. L. Lowry
Mays’ rollover commitment described above, shares of CCM Parent Class A common stock issued
pursuant to the foregoing arrangements will not reduce the shares of CCM Parent Class A common
stock available for issuance as stock consideration.

Financing of the Transactions

     The Transactions will be financed with the net proceeds of this offering, initial borrowings
under new senior secured credit facilities and a new receivables based credit facility, available
cash at Clear Channel and equity contributions to Merger Sub at closing, as more fully described
under “ — Sources and Uses” herein. In connection with Amendment No. 3 to the merger agreement, on
May 13, 2008, Merger Sub entered into a purchase agreement with the initial purchasers (the
“purchase agreement”), pursuant to which Merger Sub has agreed to sell to the initial purchasers,
and the initial purchasers have agreed, severally, to purchase from Merger Sub the notes offered
hereby. Similarly, on May 13, 2008, Merger Sub entered into senior secured credit facilities and a
receivables based credit facility with a syndicate of institutional lenders and financial
institutions affiliated with the initial purchasers. See “Description of Other Indebtedness” for a
summary of the terms of the senior secured credit facilities and the receivables based credit
facility. Following the consummation of the Transactions, Clear Channel, as the surviving
corporation in the merger, will assume, by operation of law, all of the rights and obligations of
Merger Sub under the purchase agreement, the senior secured credit facilities and the receivables
based credit facility.

Escrow Agreement

     In connection with Amendment No. 3 to the merger agreement, on May 13, 2008, Clear Channel,
CCM Parent, Merger Sub, the Fincos, affiliates of the Sponsors, certain members of our management,
certain of our shareholders, the initial purchasers, the agents and lenders under the senior
secured credit facilities and the receivables based credit facility, and The Bank of New York (the
“escrow agent”) entered into an escrow agreement, pursuant to which such

15

 

parties other than the escrow agent agreed to fund into escrow, as applicable, the total amount of
their respective equity and debt financing obligations and all or a portion of the equity
securities which such parties have agreed to exchange for shares of Class A common stock of CCM
Parent pursuant to stock elections and rollover commitments. On May 28, 2008, the escrow agent
confirmed receipt of all amounts and equity securities required to be deposited in escrow by that
date. The amounts deposited with the escrow agent are to be released upon the consummation of the
Transactions upon confirmation of satisfaction of specified closing conditions set forth in the
merger agreement and the conditions to funding set forth in the purchase agreement, the senior
secured credit facilities and the receivables based credit facility.

Tender Offers and Consent Solicitations

     On December 17, 2007, we announced that we commenced a cash tender offer and consent
solicitation for our outstanding $750.0 million principal amount of our 7.65% senior notes due 2010
on the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 17, 2007. As of June 10, 2008, we had received tenders and consents representing 99%
of our outstanding 7.65% senior notes due 2010.

     Also on December 17, AMFM Operating Inc. commenced a cash tender offer and consent
solicitation for the outstanding $644.9 million principal amount of the 8% Senior Notes due 2008 on
the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 17, 2007. As of June 10, 2008, AMFM Operating Inc. had received tenders and consents
representing 99% of the outstanding 8% senior notes due 2008.

     As a result of receiving the requisite consents, we and AMFM Operating Inc. entered into
supplemental indentures which eliminate substantially all the restrictive covenants in the
indenture governing the respective notes. Each supplemental indenture will become operative upon
acceptance and payment of the tendered notes, as applicable.

     We may elect to terminate the tender offer and consent solicitation for our outstanding 7.65%
senior notes due 2010 and relaunch a new tender offer and consent solicitation for our senior notes
due 2010 prior to the consummation of the Transactions. AMFM Operating Inc. anticipates extending
the tender offer and consent solicitation for its outstanding 8% senior notes due 2008.

     Each of the tender offers is conditioned upon the consummation of our merger. The completion
of the merger and the related debt financings are not subject to, or conditioned upon, the
completion of the tender offers.

     The foregoing discussion should be read in connection with “— Recent Developments-Updated
Financial Information.”

16

 

Corporate Structure

	 	 	 	 	 
	
    Bain Capital/

    
	
 
	
 
	
 
	
 

	
    THL/Co-Investors
	
 
	
    Mays/Management
	
 
	
    Public

	 

	

    66-82%(1)

	
 
	
    2-4%(1)

	
 
	
    14-30%(1)

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    CC Media Holdings, Inc. (DE)

    (CCM Parent)
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    Clear Channel Capital II, LLC

    (DE)
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    Clear Channel Capital I, LLC

    (DE)(4)(6)

	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    $4,275 million aggregate principal amount of existing notes
    to remain
    outstanding(2)

	
 
	
    Clear Channel

    Communications, Inc. (TX)

    (Clear Channel)
	
 
	
    $15,770.638 million senior secured credit
    facilities:(4)

    $2,000 million revolving credit facility

    $1,425 million term loan A
    facility(5)

    $10,700 million term loan B facility

    $705.638 million term loan C – asset sale facility

    $1,250 million delayed draw term loan facilities

    

    $690 million receivables based credit
    facility(4)(5)

    

    $980 million senior cash pay notes offered
    hereby(6)

    $1,330 million senior toggle notes offered
    hereby(6)

	
 
	
 

	
 
	
 
	
    Other operating
    subsidiaries(3)(6)

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    89%(7)

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 	
 
	
    Clear Channel Outdoor

    Holdings,
    Inc.(3)

    (DE)

    (Non-guarantor subsidiary)
	
 
	
    Public

11%(7)

 

			
	(1)	 	Ownership percentages assume that no additional equity consideration is issued. For more
information regarding ownership of the outstanding capital stock of CCM Parent upon the
consummation of the Transactions, see “—The Transactions.”
	 
	(2)	 	Consists of $4,275 million aggregate principal amount of Clear Channel’s existing notes which
will remain outstanding following the closing of the Transactions. Clear Channel’s existing
notes will not be guaranteed by Clear Channel’s subsidiaries following the closing of the
Transactions. The aggregate principal amount of Clear Channel’s existing notes to remain
outstanding assumes the repurchase of $750 million of its outstanding senior notes due 2010.
	 
	(3)	 	There is an additional $119 million aggregate principal amount of subsidiary indebtedness
which will remain outstanding following the closing of the Transactions. The aggregate
principal amount of subsidiary indebtedness to remain outstanding assumes the repurchase of
$645 million aggregate principal amount of AMFM Operating Inc.’s outstanding 8.0% senior notes
due 2008.
	 
	(4)	 	The new senior secured credit facilities and the new receivables based credit facility are
guaranteed on a senior basis by Clear Channel Capital I, LLC and Clear Channel’s material
wholly-owned domestic restricted subsidiaries. For information regarding adjustments and
reallocations of the new senior secured credit facilities and new receivables based credit
facility and the estimated borrowings thereunder upon the closing of the Transactions, see “—
Sources and Uses.”
	 
	(5)	 	The amount available under the term loan A facility and the receivables based credit
facility are subject to adjustment as described under “Description of Other
Indebtedness”.

17

 

 

			
	(6)	 	The notes offered hereby are guaranteed on a senior basis by Clear Channel Capital I,
LLC and all of Clear Channel’s wholly-owned domestic restricted subsidiaries that
guarantee Clear Channel’s new senior secured credit facilities and the receivables
based credit facility, except that such guarantees are subordinated to each such
guarantor’s guarantee of such facilities.
	 
	(7)	 	Clear Channel Outdoor Holdings, Inc. (“CCOH”) became a publicly traded company on November
11, 2005 through an initial public offering in which CCOH sold 35 million shares, or 10%, of
its common stock. Prior to CCOH’s public offering, it was an indirect wholly-owned subsidiary
of Clear Channel. Since that time, CCOH has issued additional shares of common stock to the
public. Pursuant to a cash management arrangement between Clear Channel and CCOH evidenced by
tandem cash management notes, substantially all of the cash generated from CCOH’s domestic
operations is transferred daily into Clear Channel accounts and is available for general
corporate purposes, including making payments on Clear Channel’s indebtedness. Additionally,
on August 2, 2005, CCOH distributed a note in the original principal amount of $2.5 billion to
Clear Channel as a dividend. See “Certain Relationships and Related Transactions —
Intercompany Notes.”

18

 

Sources and Uses

     The following table sets forth our estimated sources and uses in connection with the
Transactions, based on our estimates of certain assets and liabilities at closing and fees
and expenses to be incurred as if the Transactions had occurred on March 31, 2008. The
actual amounts of such sources and uses will differ on the actual closing date of the
Transactions.

	 	 	 	 	 
	Sources	 	 	 
	(In millions)	 	 	 
	Senior secured credit facilities:
	 	 	 	 
	Revolving credit facility (1)
	 	 	 	 
	Domestic based
borrowings
	 	 	—	 
	Foreign subsidiary
borrowings
	 	$	80	 
	Term loan A facility (2)
	 	 	1,425	 
	Term loan B facility (3)
	 	 	10,700	 
	Term loan C-asset sale
facility (4)
	 	 	706	 
	Delayed draw term loan
facilities (5)
	 	 	750	 
	Receivables based credit facility (2) 
	 	 	440	 
	Senior cash pay notes offered
hereby
	 	 	980	 
	Senior toggle notes offered hereby
	 	 	1,330	 
	Cash
	 	 	169	 
	Existing debt to remain
outstanding (6)
	 	 	4,394	 
	Common equity (7)
	 	 	3,519	 
	 
	 	 	 
	Total Sources
	 	$	24,493	 
	 
	 	 	 
	 
	Uses	 	 	 
	(In millions)	 	 	 
	Purchase of common stock (8) 
	 	$	17,959	 
	Refinance existing debt (9)
	 	 	1,593	 
	Existing debt to remain
outstanding (6)
	 	 	4,394	 
	Fees, expenses and other related
costs of the Transactions (10)
	 	 	547	 
	 
	 	 	 
	Total Uses
	 	$	24,493	 
	 
	 	 	 

 

			
	(1)	 	Our senior secured credit facilities provide for a $2,000 million 6-year revolving credit
facility, of which $150 million will be available in alternative currencies. We will have
the ability to designate one or more of our foreign restricted subsidiaries as borrowers
under a foreign currency sublimit of the revolving credit facility. Consistent with our
international cash management practices, at or promptly after the consummation of the
Transactions, we expect one of our foreign subsidiaries to borrow $80 million under the
revolving credit facility’s sublimit for foreign based subsidiary borrowings to refinance
our existing foreign subsidiary intercompany borrowings. The foreign based borrowings allow
us to efficiently manage our liquidity needs in local countries, mitigating foreign exchange
exposure and cash movement among different tax jurisdictions. Based on estimated cash levels
(including estimated cash levels of our foreign subsidiaries), we do not expect to borrow
any additional amounts under the revolving credit facility at the closing of the
Transactions.
	 
	(2)	 	The aggregate amount of the 6-year term loan A facility will be the sum of $1,115 million
plus the excess of $750 million over the borrowing base availability under our receivables
based credit facility on the closing of the Transactions. The aggregate amount of our
receivables based credit facility will correspondingly be reduced by the excess of $750
million over the borrowing base availability on the closing of the Transactions. Assuming
that the borrowing base availability under the receivables based credit facility is $440
million, the term loan A facility would be $1,425 million and the aggregate receivables
based credit facility (without regard to borrowing base limitations) would be $690 million.
However, our actual borrowing base availability may be greater or less than this amount.
	 
	(3)	 	Our senior secured credit facilities provide for a $10,700 million 7.5-year term loan B
facility.
	 
	(4)	 	Our senior secured credit facilities provide for a $705.638 million 7.5-year term loan
C–asset sale facility. To the extent specified assets are sold after March 27, 2008 and
prior to the closing of the Transactions, actual borrowings under the term loan C–asset sale
facility will be reduced by the net cash proceeds received therefrom. Proceeds from the sale
of specified assets after the closing of the Transactions will be applied to prepay the term
loan C–

19

 

			
	 	 	asset sale facility (and thereafter to prepay any remaining term loan facilities) without right
of reinvestment under our senior secured credit facilities. In addition, if the net proceeds of
any other asset sales are not reinvested, but instead applied to prepay the senior secured
credit facilities, such proceeds would first be applied to the term loan C—asset sale facility
and thereafter pro rata to the remaining term loan facilities.
	 
	(5)	 	Our senior secured credit facilities provide for two 7.5-year delayed draw  term loans
facilities aggregating $1,250 million. Proceeds from the delayed draw 1 term loan facility,
available in the aggregate amount of $750 million, can only be used to redeem any of our
existing senior notes due 2010. Proceeds from the delayed draw 2 term loan facility, available
in the aggregate amount of $500 million, can only be used to redeem any of our existing 4.25%
senior notes due 2009. Upon the consummation of the Transactions, we expect to borrow all
amounts available to us under the delayed draw 1 term loan facility in order to redeem
substantially all of our outstanding senior notes due 2010. We do not expect to borrow any
amount available to us under the delayed draw 2 term loan facility upon the consummation of
the Transactions. Any unused commitment to lend will expire on September 30, 2010 in the case
of the delayed draw 1 term loan facility and on the second anniversary of the closing in the
case of the delayed draw 2 term loan facility.
	 
	(6)	 	We anticipate that a portion of our existing senior notes and other existing subsidiary
indebtedness will remain outstanding after the closing of the Transactions. The aggregate
principal amount of the existing senior notes and the subsidiary indebtedness that is
estimated to remain outstanding is $4,275 million and $119 million, respectively, at March 31,
2008. The aggregate principal amount of the existing senior notes and the subsidiary
indebtedness to remain outstanding assumes the repurchase of $750 million of our outstanding
senior notes due 2010 and the repurchase of $645 million aggregate principal amount of AMFM
Operating Inc.’s outstanding 8.0% senior notes due 2008.
	 
	(7)	 	Represents total equity as a result of rollover equity of our existing shareholders who have
elected to receive shares of CCM Parent as merger consideration, rollover equity from the Mays
family, restricted stock and estimated cash equity contributed to us indirectly by CCM Parent
from cash equity investments in CCM Parent by entities associated with the Sponsors and their
co-investors. Actual cash equity would be decreased by the amount of Clear Channel cash
available on the closing date to be used in the Transactions, subject to a minimum of $3,000
million total equity.
	 
	(8)	 	The amount assumes, as of March 31, 2008, approximately 498.0 million issued and outstanding
common shares and the settlement of 836,800 outstanding employee stock options at a per share
price of $36.00, payable in either cash or rollover equity as selected by existing
shareholders (subject to aggregate caps and individual limits).
	 
	(9)	 	Represents the refinancing of $125 million of our senior notes due June 2008, the repurchase
of $645 million aggregate principal amount of AMFM Operating Inc.’s outstanding 8.0% senior
notes due 2008 and the repurchase of $750 million of our outstanding senior notes due 2010,
plus any premiums related thereto and accrued and unpaid interest thereon.
	 
	(10)	 	Reflects estimated fees, expenses and other costs incurred in connection with the
Transactions, including placement and other financing fees, advisory fees, transaction fees
paid to affiliates of the Sponsors, costs associated with certain restricted stock grants to
management, change-in-control payments, excess cash and other transaction costs and
professional fees. All fees, expenses and other costs are estimates and actual amounts may
differ from those set forth in this offering memorandum.

20

 

The Sponsors

Bain Capital Partners, LLC

     Founded in 1984, Bain Capital Partners, LLC is a leading global investment firm managing more
than $65 billion in assets across private equity, venture capital, high-yield debt and public
equity asset classes, and has more than 300 investment professionals. Headquartered in Boston, Bain
Capital Partners, LLC has offices in New York, London, Munich, Hong Kong, Shanghai, Tokyo and
Mumbai and has one of the largest in-country private equity investment teams in Europe and Asia.
Bain Capital Partners, LLC has raised thirteen private equity funds, including ten in North
America, and has made investments and add-on acquisitions in more than 300 companies. Bain Capital
Partners, LLC has deep experience in a variety of industries and its group of dedicated operating
professionals provide its portfolio companies and management partners with significant strategic
and operational support. Bain Capital Partners, LLC has recently invested in a variety of media
businesses including Warner Music Group, Cumulus Media Partners, Houghton Mifflin, ProSiebenSat.1,
SuperPages Canada and DoubleClick.

Thomas H. Lee Partners, L.P.

     THL is one of the oldest and most successful private equity investment firms in the United
States. Since its founding in 1974, THL has become the preeminent growth buyout firm, raising
approximately $22 billion of equity capital and investing in more than 100 businesses with an
aggregate purchase price of more than $125 billion, completing over 200 add-on acquisitions for
portfolio companies and generating superior returns for its investors and partners. Notable recent
transactions sponsored by the firm include Aramark, Ceridian, Dunkin’ Brands, Fidelity Information
Services, Grupo ONO, Houghton Mifflin, Michael Foods, The Nielsen Company, Nortek, ProSiebenSat.1,
Simmons, Univision, Warner Chilcott, Warner Music Group and West Corp.

Corporate Information

     The Company was founded in 1972 and our principal executive offices are located at 200 East
Basse Road, San Antonio, Texas 78209 (telephone: 210-822-2828).

21

 

The Offering

     The summary below describes the principal terms of the notes. Certain of the terms and
conditions described below are subject to important limitations and exceptions. The “Description of
the Notes” section of this offering memorandum contains a more detailed description of the terms
and conditions of the notes.

	 	 	 
	Issuer

	 	BT Triple Crown Merger Co., Inc. prior to the merger, and
Clear Channel, as the surviving corporation in the merger.
	 
	 	 
	Notes Offered

	 	$980,000,000 aggregate principal amount of 10.75% senior
cash pay notes due 2016 and $1,330,000,000 aggregate
principal amount of 11.00%/11.75% senior toggle notes
due 2016.
	 
	 	 
	Maturity

	 	The senior cash pay notes will mature on August 1, 2016
and the senior toggle notes will mature on August 1, 2016.
	 
	 	 
	Interest Rate

	 	Interest on the senior cash pay notes will be payable in
cash and will accrue at a rate of 10.75% per annum.
	 
	 	 
	 

	 	Cash interest on the senior toggle notes will accrue at a
rate of 11.00% per annum, and PIK Interest will accrue at a
rate of 11.75% per annum. We may elect, at our option, to
either (a) pay interest on the entire principal amount of the
outstanding senior toggle notes in cash, (b) pay interest by
increasing the principal amount of the senior toggle notes
or issuing new senior toggle notes (any such increase or
issuance, a “PIK Election”) on 100% of the principal
amount of the outstanding senior toggle notes or (c) pay
interest on 50% of such principal amount in cash and make
a PIK Election with respect to interest on the remaining
50% of such principal amount. Interest on the senior toggle
notes will be paid in cash on the first interest payment
date.
	 
	 	 
	Interest Payment Dates

	 	Interest on the notes will be payable on February 1 and
August 1 of each year, beginning on February 1, 2009 and
will accrue from the issue date of the notes.
	 
	 	 
	Ranking

	 	The notes will be our senior unsecured obligations and will:

	 	 	 	 	 
	 

	 	•
	 	rank senior in right of payment to our future debt and
other obligations that are, by their terms, expressly
subordinated in right of payment to the notes;
	 
	 	 	 	 
	 

	 	•
	 	rank equally in right with all of our existing and future
unsecured senior debt and other obligations that are
not, by their terms, expressly subordinated in right of
payment to the notes; and

22

 

	 	 	 	 	 
	 

	 	•
	 	be effectively subordinated to all of our existing and
future secured debt, to the extent of the value of the
assets securing that debt, including our senior secured
credit facilities and our receivables based credit facility,
and be structurally subordinated to all obligations of
each of our subsidiaries that is not a guarantor of the
notes.

	 	 	 
	 

	 	Similarly, the guarantees will be senior unsecured
obligations of the guarantors and will:

	 	 	 	 	 
	 

	 	•
	 	rank senior in right of payment to all of the applicable
guarantor’s future debt and other obligations that are,
by their terms, expressly subordinated in right of
payment to the notes;
	 
	 	 	 	 
	 

	 	•
	 	rank equally in right with all of the applicable
guarantor’s existing and future unsecured senior debt
and other obligations that are not, by their terms,
expressly subordinated in right of payment to the
notes;
	 
	 	 	 	 
	 

	 	•
	 	be subordinated in right of payment to the applicable
guarantor’s guarantee of our senior secured credit
facilities and our receivables based credit facility; and
	 
	 	 	 	 
	 

	 	•
	 	be effectively subordinated to all of the applicable
guarantor’s existing and future secured debt, to the
extent of the value of the assets securing that debt, and
be structurally subordinated to all obligations of each
of such applicable guarantor’s subsidiaries that is not
also a guarantor of the notes.

	 	 	 
	Guarantees

	 	Our direct parent and our wholly-owned domestic
restricted subsidiaries on the issue date that guarantee the
obligations under our senior secured credit facilities and
our receivables based credit facility will guarantee the
notes with unconditional guarantees. Any of our
subsidiaries that is released as a guarantor of our senior
secured credit facilities and our receivables based credit
facility will automatically be released as a guarantor of the
notes.
	 
	 	 
	 

	 	On a pro forma basis after giving effect to the Transactions,
the non-guarantor subsidiaries would have accounted for
approximately $3.4 billion, or 49%, of our total net revenue,
approximately $1.1 billion, or 46%, of our EBITDA and
approximately $983 million, or 43%, of our Adjusted
EBITDA, in each case, for the last twelve months ended
March 31, 2008, and approximately $12.7 billion, or 44%, of
our total assets as of March 31, 2008. See “Risk Factors-
Risks Related to the Notes and this Offering—The notes are
structurally subordinated to the liabilities of our

23

 

	 	 	 
	 

	 	subsidiaries that do not guarantee the notes. Your right to
receive payments on the notes could be adversely affected if
any of our non-guarantor subsidiaries or non-wholly-owned
subsidiaries declare bankruptcy, liquidate, or reorganize.”

	 	 	 
	Optional Redemption

	 	We may redeem the notes, in whole or in part, at any time
on or after August 1, 2012 at the redemption prices set
forth in “Description of the Notes—Optional Redemption.”
In addition, we may redeem some or all of the notes at any
time prior to August 1, 2012 at a price equal to 100% of the
principal amount of such notes plus accrued and unpaid
interest thereon to the redemption date and a “make-whole
premium” (as described in “Description of the Notes—
Optional Redemption”).
	 
	 	 
	Special Redemption Amount

	 	On August 1, 2015 (the “Special Redemption Date”), we
will be required to redeem for cash a portion (the “Special
Redemption Amount”) of the senior toggle notes equal to
the product of (x) $30 million and (y) a fraction which, for
the avoidance of doubt, cannot exceed one, the numerator
of which is the aggregate principal amount outstanding on
such date of the senior toggle notes for United States
federal income tax purposes and the denominator of which
is $1,330,000,000, as determined by us in good faith and
rounded to the nearest $2,000 (such redemption, the
“Special Redemption”). The redemption price for each
portion of a senior toggle note so redeemed pursuant to
the Special Redemption will equal 100% of the principal
amount of such portion plus any accrued and unpaid
interest thereon to the Special Redemption Date.
	 
	 	 
	AHYDO Catch-Up Payments

	 	On the first interest payment date following the fifth
anniversary of the “issue date” (as defined in Treasury
Regulation Section 1.1273-2(a)(2)) of each series of notes
(i.e., the senior cash pay notes and the senior toggle notes)
and on each interest payment date thereafter, we will
redeem a portion of the principal amount of each then
outstanding note in such series in an amount equal to the
AHYDO Catch-Up Payment for such interest payment date
with respect to such note. The “AHYDO Catch-Up
Payment” for a particular interest payment date with
respect to each note in a series means the minimum
principal prepayment sufficient to ensure that as of the
close of such interest payment date, the aggregate amount
which would be includible in gross income with respect to
such note before the close of such interest payment date
(as described in Section 163(i)(2)(A) of the Internal Revenue
Code of 1986, as amended (the “Code”)) does not exceed
the sum (described in Section 163(i)(2)(B) of the Code) of
(i) the aggregate amount of interest to be paid on such note

24

 

	 	 	 
	 

	 	(including for this purpose any AHYDO Catch-Up
Payments) before the close of such interest payment date
plus (ii) the product of the “issue price” of such note as
defined in Section 1273(b) of the Code (that is, the first
price at which a substantial amount of the notes in such
series is sold, disregarding for this purpose sales to bond
houses, brokers or similar persons acting in the capacity of
underwriters, placement agents or wholesalers) and its
yield to maturity (within the meaning of Section 163(i)(2)(B)
of the Code), with the result that such note is not treated as
having “significant original issue discount” within the
meaning of Section 163(i)(1)(C) of the Code; provided,
however, for avoidance of doubt, that if the yield to
maturity of such note is less than the amount described in
Section 163(i)(1)(B) of the Code, the AHYDO Catch-Up
Payment shall be zero for each interest payment date with
respect to such note. It is intended that no senior cash pay
note and that no senior toggle note will be an “applicable
high yield discount obligation” (an “AHYDO”) within the
meaning of Section 163(i)(1) of the Code, and this provision
will be interpreted consistently with such intent. The
computations and determinations required in connection
with any AHYDO Catch-Up Payment will be made by us in
our good faith reasonable discretion and will be binding
upon the holders absent manifest error.
	 
	 	 
	Optional Redemption After Certain

Equity Offerings

	 	
At any time (which may be more than once) on or prior to
August 1, 2011, we may choose to redeem up to 40% of any
series of the outstanding notes with the net cash proceeds
that we raise in one or more equity offerings, as long as:

	 	 	 	 	 
	 

	 	•
	 	we pay 110.75% of the aggregate principal amount of
the senior cash pay notes being redeemed or 111.00%
of the aggregate principal amount of the senior toggle
notes being redeemed, in each case plus accrued and
unpaid interest thereon to the applicable redemption
date;
	 
	 	 	 	 
	 

	 	•
	 	we redeem the notes within 180 days of completing the
applicable public equity offering; and
	 
	 	 	 	 
	 

	 	•
	 	at least 50% of the aggregate principal amount of the
senior cash pay notes or the senior toggle notes, as
applicable, issued as of such redemption date remains
outstanding afterwards.

	 	 	 
	Change of Control Offer

	 	If we experience a change of control, we must give holders
of the notes the opportunity to sell us their notes at 101%
of the aggregate principal amount thereof, plus accrued
and unpaid interest thereon.

25

 

	 	 	 
	 

	 	We might not be able to pay you the required price for
notes you present to us at the time of a change of control,
because:

	 	 	 	 	 
	 

	 	•
	 	we might not have enough funds at that time; or
	 
	 	 	 	 
	 

	 	•
	 	the terms of our senior secured credit facilities and our
receivables based credit facility may prevent us from
paying.

	 	 	 
	Asset Sale Proceeds

	 	If we or any of our restricted subsidiaries engages in
certain asset sales, we or such restricted subsidiary
generally must either invest the net cash proceeds from
such sales in our business within a period of time, repay
senior debt (including our senior secured credit facilities of
our receivables based credit facility), or make an offer to
purchase a principal amount of the notes equal to the
excess net cash proceeds (if applicable, on a pro rata basis
with other senior debt). The purchase price of the notes will
be 100% of their principal amount, plus accrued and unpaid
interest thereon.
	 
	 	 
	Certain Covenants

	 	The indenture governing the notes will contain covenants
limiting our ability and the ability of our restricted
subsidiaries to:

	 	 	 	 	 
	 

	 	•
	 	incur additional debt or issue preferred stock of
restricted subsidiaries;
	 
	 	 	 	 
	 

	 	•
	 	pay dividends or distributions on or repurchase capital
stock of the issuer or its restricted subsidiaries;
	 
	 	 	 	 
	 

	 	•
	 	make certain investments;
	 
	 	 	 	 
	 

	 	•
	 	create liens on assets of the issuer or its restricted
subsidiaries to secure debt;
	 
	 	 	 	 
	 

	 	•
	 	enter into transactions with affiliates; and
	 
	 	 	 	 
	 

	 	•
	 	merge or consolidate with another company.
These covenants are subject to a number of important
limitations and exceptions. See “Description of the Notes.”

	 	 	 
	Exchange Offer; Registration
Rights

	 	We will use commercially reasonable efforts to enter into a
registration rights agreement with the initial purchasers
within five business days following the issue date of the
notes.
	 
	 	 
	 

	 	Pursuant to such registration rights agreement, we will use
our commercially reasonable efforts to register notes

26

 

	 	 	 
	 

	 	(which we will refer to as the “exchange notes”) having
substantially identical terms as the notes with the SEC as
part of an offer to exchange freely tradable exchange notes
for the notes (the “exchange offer”). Subject to the terms
and conditions set forth in the registration rights
agreement, we will use our commercially reasonable
efforts to cause the exchange offer to be completed within
300 days after the issue date of the notes or, if required, to
file one or more resale shelf registration statements within
300 days after the issue date of the notes and declared
effective within the time frames specified in the registration
rights agreement.
	 
	 	 
	 

	 	If we fail to meet the targets listed above (a “registration
default”), the annual interest rate on the notes will increase
by 0.25%. The annual interest rate on the notes will
increase by an additional 0.25% for each subsequent
90-day period during which the registration default
continues, up to a maximum additional interest rate of
0.50% per year over the interest rate shown on the cover of
this offering memorandum. If we correct the registration
default, the interest rate on the notes will revert to the
original level.
	 
	 	 
	 

	 	If we must pay additional interest, we will pay it to you in
the same manner and on the same dates that we make
other interest payments on the notes, until we correct the
registration default.
	 
	 	 
	Transfer Restrictions

	 	We have not registered the notes under the Securities Act.
	 
	 	 
	 

	 	The notes are subject to restrictions on transfer and may
only be offered or sold in transactions exempt from or not
subject to the registration requirements of the Securities
Act. See “Notice to Investors.”
	 
	 	 
	Use of Proceeds

	 	We are using the money raised from the notes to finance,
in part, the Transactions. See “Use of Proceeds.”
	 
	 	 
	Risk Factors

	 	Investing in the notes involves substantial risks. See “Risk
Factors” for a description of certain of the risks you should
consider before investing in the notes.

27

 

Summary Historical and Unaudited Pro Forma Consolidated Financial and Other Data

     The following table sets forth our summary historical and unaudited pro forma consolidated
financial and other data as of the dates and for the periods indicated. The summary historical
financial data for, and as of, the years ended December 31, 2007, 2006 and 2005 are derived from
our audited consolidated financial statements. The summary historical financial data for, and as
of, the three-month periods ended March 31, 2008 and 2007 are derived from our unaudited
consolidated financial statements. In the opinion of management, the interim data reflects all
adjustments consisting only of normal and recurring adjustments necessary for a fair presentation
of the results for the interim periods. The selected historical financial data for the years ended
December 31, 2007, 2006 and 2005 and for each of the three-month periods ended March 31, 2008 and
2007 are included elsewhere in this offering memorandum. Historical results are not necessarily
indicative of the results to be expected for future periods and operating results for the
three-month period ended March 31, 2008 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2008.

     The unaudited pro forma financial data for, and as of, the last twelve months ended March 31,
2008 gives effect to the Transactions in the manner described in “Unaudited Pro Forma Condensed
Consolidated Financial Statements.” We have derived the pro forma financial data for the last
twelve months ended March 31, 2008 by adding the pro forma financial data for the year ended
December 31, 2007 and the pro forma financial data for the three months ended March 31, 2008 and
subtracting the pro forma financial data for the three months ended March 31, 2007. The pro forma
adjustments are based upon available data and certain assumptions we believe are reasonable. The
summary unaudited pro forma condensed consolidated financial data is for informational purposes
only and does not purport to represent what our results of operations or financial position would
actually be if the Transactions occurred at any date, nor does such data purport to project the
results of operations for any future period.

     The summary historical and unaudited pro forma consolidated financial and other data should be
read in conjunction with “Selected Historical Consolidated Financial and Other Data,” “Unaudited
Pro Forma Condensed Consolidated Financial Statements,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our consolidated financial statements and the
related notes thereto appearing elsewhere in this offering memorandum. The amounts in the tables
may not add due to rounding.

28

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Historical	 	 	Pro Forma	 
	 	 	Year ended	 	 	Three Months	 	 	Twelve Months	 
	 	 	December 31,	 	 	Ended March 31,	 	 	Ended March 31,	 
	 	 	2007	 	 	2006	 	 	2005	 	 	2008	 	 	2007	 	 	2008 (1)	 
	 	 	(Dollars in millions)	 	 	(unaudited)	 	 	(unaudited)	 
	Statement of Operations:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue
	 	$	6,921	 	 	$	6,568	 	 	$	6,127	 	 	$	1,564	 	 	$	1,505	 	 	$	6,980	 
	Direct operating expenses (excludes
depreciation and amortization) (2)
	 	 	2,733	 	 	 	2,532	 	 	 	2,352	 	 	 	706	 	 	 	628	 	 	 	2,811	 
	Selling, general and administrative expenses
(excludes depreciation and
amortization) (2)
	 	 	1,762	 	 	 	1,709	 	 	 	1,651	 	 	 	426	 	 	 	416	 	 	 	1,772	 
	Depreciation and amortization
	 	 	567	 	 	 	600	 	 	 	594	 	 	 	152	 	 	 	140	 	 	 	694	 
	Corporate expenses (excludes depreciation
and amortization) (2)
	 	 	181	 	 	 	196	 	 	 	167	 	 	 	46	 	 	 	48	 	 	 	189	 
	Merger expenses
	 	 	7	 	 	 	8	 	 	 	—	 	 	 	1	 	 	 	2	 	 	 	—	 
	Gain on disposition of assets—net
	 	 	14	 	 	 	71	 	 	 	50	 	 	 	2	 	 	 	7	 	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	 	1,685	 	 	 	1,594	 	 	 	1,413	 	 	 	235	 	 	 	278	 	 	 	1,523	 
	Interest expense
	 	 	452	 	 	 	484	 	 	 	443	 	 	 	100	 	 	 	118	 	 	 	1,633	 
	Gain (loss) on marketable securities
	 	 	7	 	 	 	2	 	 	 	(1	)	 	 	6	 	 	 	1	 	 	 	13	 
	Equity in earnings of nonconsolidated
affiliates
	 	 	35	 	 	 	38	 	 	 	38	 	 	 	83	 	 	 	5	 	 	 	113	 
	Other income (expense) —net
	 	 	6	 	 	 	(9	)	 	 	11	 	 	 	12	 	 	 	—	 	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest
and discontinued operations
	 	 	1,281	 	 	 	1,141	 	 	 	1,018	 	 	 	236	 	 	 	166	 	 	 	33	 
	Income tax benefit (expense)
	 	 	(441	)	 	 	(470	)	 	 	(403	)	 	 	(67	)	 	 	(71	)	 	 	60	 
	Minority interest expense, net of tax
	 	 	47	 	 	 	32	 	 	 	18	 	 	 	8	 	 	 	—	 	 	 	55	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations
	 	 	793	 	 	 	639	 	 	 	597	 	 	 	161	 	 	 	95	 	 	$	38	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income from discontinued operations, net 
	 	 	146	 	 	 	53	 	 	 	339	 	 	 	638	 	 	 	7	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income
	 	$	939	 	 	$	692	 	 	$	936	 	 	$	799	 	 	$	102	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash Flow Data:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash interest expense (3)
	 	$	462	 	 	$	461	 	 	$	430	 	 	$	122	 	 	$	142	 	 	$	1,415	 
	Capital expenditures (4)
	 	 	363	 	 	 	337	 	 	 	303	 	 	 	94	 	 	 	65	 	 	 	392	 
	Net cash provided by operating activities
	 	$	1,576	 	 	$	1,748	 	 	$	1,304	 	 	$	368	 	 	$	321	 	 	 	 	 
	Net cash used in investing activities
	 	 	(483	)	 	 	(607	)	 	 	(350	)	 	 	(154	)	 	 	(71	)	 	 	 	 
	Net cash used in financing activities
	 	 	(1,431	)	 	 	(1,179	)	 	 	(1,061	)	 	 	(754	)	 	 	(283	)	 	 	 	 
	Net cash provided by discontinued
operations
	 	 	366	 	 	 	69	 	 	 	157	 	 	 	998	 	 	 	26	 	 	 	 	 
	Other Financial Data:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total debt (5)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	19,861	 
	Total guaranteed/subsidiary debt (6)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	16,530	 
	EBITDA (7)
	 	$	2,293	 	 	$	2,223	 	 	$	2,056	 	 	$	482	 	 	$	423	 	 	 	2,347	 
	OIBDAN (7)
	 	 	2,289	 	 	 	2,173	 	 	 	1,963	 	 	 	396	 	 	 	421	 	 	 	2,263	 
	Adjusted EBITDA (7)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,302	 
	Ratio of total debt to Adjusted EBITDA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8.6	x
	Ratio of total guaranteed/subsidiary debt to
Adjusted EBITDA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7.2	x
	Balance Sheet Data:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	145	 	 	$	116	 	 	$	84	 	 	$	602	 	 	$	109	 	 	$	433	 
	Working capital (8)
	 	 	856	 	 	 	850	 	 	 	748	 	 	 	846	 	 	 	773	 	 	 	889	 
	Total assets
	 	 	18,806	 	 	 	18,887	 	 	 	18,719	 	 	 	19,053	 	 	 	18,686	 	 	 	28,499	 
	Total debt
	 	 	6,575	 	 	 	7,663	 	 	 	7,047	 	 	 	5,942	 	 	 	7,425	 	 	 	19,861	 
	Shareholders’ equity (9)
	 	 	8,797	 	 	 	8,042	 	 	 	8,826	 	 	 	9,662	 	 	 	8,129	 	 	 	2,644	 

29

 

 

			
	(1)	 	Information for the twelve months ended March 31, 2008 is presented on a pro forma basis to
give effect to the merger transaction. Pro forma adjustments are made to depreciation and
amortization, corporate expenses, merger expenses, interest expense and income tax (benefit)
expense.
	 
	(2)	 	Includes non-cash compensation expense.
	 
	(3)	 	Pro forma cash interest expense, a non-GAAP financial measure, includes cash paid for
interest expense and excludes amortization of deferred financing costs and purchase accounting
discount. Pro forma cash interest expense assumes that the PIK Election has not been made. The
actual interest rates on the indebtedness incurred to consummate the Transactions and this
offering could vary from those used to compute cash interest expense.
	 
	(4)	 	Capital expenditures include additions to our property, plant and equipment and do not
include any proceeds from disposal of assets, nor any expenditures for acquisitions of
operating (revenue-producing) assets.
	 
	(5)	 	Represents the sum of the indebtedness to be incurred in connection with the closing of the
Transactions, which will be guaranteed by Clear Channel Capital I, LLC and our material
wholly-owned domestic restricted subsidiaries, and existing indebtedness of us and our
restricted subsidiaries anticipated to remain outstanding after the closing of the
Transactions. The existing indebtedness amount reflects purchase accounting fair value
adjustments of a negative $931 million related to our existing senior notes.
	 
	(6)	 	Represents total debt described in footnote 5 above, less the amount of our existing senior
notes anticipated to remain outstanding after the closing of the Transactions, which are not
guaranteed by, or direct obligations of, our subsidiaries.
	 
	(7)	 	The following table discloses the Company’s EBITDA (income (loss) from continuing operations
before interest expense, income tax (benefit) expense, depreciation and amortization, (gain)
loss on marketable securities and minority interest expense, net of tax), OIBDAN (defined as
EBITDA excluding non-cash compensation expense and the following line items presented in the
Statement of Operations: merger expenses; gain (loss) on disposition of assets—net; equity in
earnings of nonconsolidated affiliates and other income (expense)—net) and Adjusted EBITDA
(OIBDAN adjusted for the annual management fee to be paid to the Sponsors, if any, and other
items described below), which are non-GAAP financial measures. Generally, a non-GAAP financial
measure is a numerical measure of a company’s performance, financial position, or cash flows
that either excludes or includes amounts that are not normally included or excluded in the
most directly comparable measure calculated and presented in accordance with GAAP. EBITDA,
OIBDAN and Adjusted EBITDA do not represent and should not be considered as alternatives to
net income or cash flow from operations, as determined under GAAP. We believe that EBITDA,
OIBDAN and Adjusted EBITDA provide investors with helpful information with respect to our
operations and cash flows. We present EBITDA, OIBDAN and Adjusted EBITDA to provide additional
information with respect to our ability to meet our future debt service, capital expenditures
and working capital requirements. Some adjustments to EBITDA may not be in accordance with
current SEC practice or with regulations adopted by the SEC that apply to registration
statements filed under the Securities Act and periodic reports presented under the Exchange
Act. Accordingly, Adjusted EBITDA may be presented differently in filings made with the SEC
than as presented in this offering memorandum.
	 
	 	 	EBITDA, OIBDAN and Adjusted EBITDA have limitations as analytical tools, and you should not
consider them either in isolation or as substitutes for analyzing our results as reported under
GAAP. Some of these limitations are:

	 	•	 	EBITDA, OIBDAN and Adjusted EBITDA do not reflect (i) changes in, or cash
requirements for, our working capital needs; (ii) our interest expense, or the cash
requirements necessary to service interest or principal payments, on our debt; (iii) our
tax expense or the cash requirements to pay our taxes; and (iv) our historical cash
expenditures or future requirements for capital expenditures or contractual commitments;
	 
	 	•	 	although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and EBITDA, OIBDAN
and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
	 
	 	•	 	other companies in our industry may calculate EBITDA, OIBDAN and Adjusted EBITDA
differently, limiting their usefulness as comparative measures.

30

 

The following table summarizes the calculation of the Company’s historical and pro forma EBITDA,
OIBDAN and pro forma Adjusted EBITDA and provides a reconciliation to the Company’s net income
(loss) from continuing operations for the periods indicated:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Historical	 	 	Pro Forma	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Twelve Months	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Three Months Ended	 	 	Ended	 
	 	 	Year Ended December 31,	 	 	March 31,	 	 	March 31,	 
	 	 	2007	 	 	2006	 	 	2005	 	 	2008	 	 	2007	 	 	2008(a)	 
	 	 	(Dollars in millions)	 	 	(unaudited)	 	 	(unaudited)	 
	Income (loss) from continuing
operations
	 	$	793	 	 	$	639	 	 	$	597	 	 	$	161	 	 	$	95	 	 	$	38	 
	Interest expense
	 	 	452	 	 	 	484	 	 	 	443	 	 	 	100	 	 	 	118	 	 	 	1,633	 
	Income tax (benefit)
expense
	 	 	441	 	 	 	470	 	 	 	403	 	 	 	67	 	 	 	71	 	 	 	(60	)
	Depreciation and
amortization
	 	 	567	 	 	 	600	 	 	 	594	 	 	 	152	 	 	 	140	 	 	 	694	 
	(Gain) loss on marketable
securities
	 	 	(7	)	 	 	(2	)	 	 	1	 	 	 	(6	)	 	 	(1	)	 	 	(13	)
	Minority interest expense, net
of tax
	 	 	47	 	 	 	32	 	 	 	18	 	 	 	8	 	 	 	—	 	 	 	55	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	EBITDA
	 	$	2,293	 	 	$	2,223	 	 	$	2,056	 	 	$	482	 	 	$	423	 	 	$	2,347	 
	Non-cash compensation
	 	 	44	 	 	 	42	 	 	 	6	 	 	 	10	 	 	 	8	 	 	 	55	 
	Gain on disposition of
assets — net
	 	 	(14	)	 	 	(71	)	 	 	(50	)	 	 	(2	)	 	 	(7	)	 	 	(9	)
	Merger expenses
	 	 	7	 	 	 	8	 	 	 	—	 	 	 	1	 	 	 	2	 	 	 	—	 
	Equity in earnings of
nonconsolidated affiliates 
	 	 	(35	)	 	 	(38	)	 	 	(38	)	 	 	(83	)	 	 	(5	)	 	 	(113	)
	Other (income)
expense—net
	 	 	(6	)	 	 	9	 	 	 	(11	)	 	 	(12	)	 	 	—	 	 	 	(17	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OIBDAN
	 	$	2,289	 	 	$	2,173	 	 	$	1,963	 	 	$	396	 	 	$	421	 	 	$	2,263	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash received from
nonconsolidated affiliates (b)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	32	 
	Non-core radio EBITDA (c) 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3	 
	Non-cash rent expense (d)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjusted EBITDA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	2,302	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(a)	 	Information for the twelve months ended March 31, 2008 is presented on a pro forma
basis to give effect to the merger transaction. Pro forma adjustments are made to
depreciation and amortization, corporate expenses, merger expenses, interest expense and
income tax (benefit) expense.
	 
	(b)	 	Represents expected recurring cash dividends received from nonconsolidated affiliates
as the equity in earnings from these investments has been deducted in the calculation of
OIBDAN.
	 
	(c)	 	Represents the EBITDA from our non-core radio stations that were not sold as of
March 31, 2008 and whose results of operations are included in “Income from
discontinued operations, net” in the income statement.
	 
	(d)	 	Represents the difference between cash rent expense and GAAP rent expense.

	(8)	 	Working capital is defined as (i) current assets except for cash, cash from discontinued
operations, income taxes receivable
and current deferred tax assets less (ii) current liabilities except for current portion of
long-term debt, accrued interest, income taxes payable, current deferred tax liabilities and
income taxes payable from discontinued operations.
	 
	(9)	 	The pro forma amount represents total shareholders’ equity from equity investments of $3,449
million, excluding $40 million of restricted stock of CCM Parent, presented on a pro forma
basis less accounting adjustments of $805 million mainly related to continuing shareholders’
basis in accordance with Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout
Transactions (“EITF 88-16”).

31

 

RISK FACTORS

     An investment in the notes involves a high degree of risk. You should carefully consider the
risks described below, together with the other information contained in this offering memorandum,
before making your decision to invest in the notes. Any of the following risks, as well as other
risks and uncertainties, could harm the value of the notes directly, or our business and financial
results and thus indirectly cause the value of the notes to decline. The risks described below are
not the only ones that could impact the Company or the value of the notes. Additional risks and
uncertainties not currently known to us or that we currently deem to be immaterial may also
materially and adversely affect our business, financial condition, or results of operations. As a
result of any of these risks, known or unknown, you may lose all or part of your investment in the
notes.

Risks Related to the Notes and this Offering

Our substantial indebtedness could adversely affect our operations and your investment in
the notes.

     As a result of the Transactions, we will have a significant amount of indebtedness. As of
March 31, 2008, on a pro forma basis after giving effect to the Transactions, we would have had
outstanding total indebtedness of approximately $19,861 million, including the notes offered hereby
and expected purchase accounting fair value adjustments of a negative $931 million. We also would
have had an additional $1,920 million available for borrowing under our revolving credit facility
and an additional $250 million (subject to borrowing base limitations) available for borrowing
under our receivables based credit facility (after taking into account the temporary reduction in
aggregate amount thereof), before taking into account outstanding letters of credit of
approximately $83 million as of March 31, 2008.

     Our substantial level of indebtedness and other financial obligations increase the possibility
that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on,
or other amounts due, in respect of our indebtedness, including the notes. Our substantial debt
could also have other significant consequences. For example, it could:

	 	•	 	increase our vulnerability to general adverse economic, competitive and
industry conditions;
	 
	 	•	 	limit our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes, or other purposes on
satisfactory terms, or at all;
	 
	 	•	 	require us to dedicate a substantial portion of our cash flow from operations to
the payment of our indebtedness, thereby reducing the funds available to us for
operations and any future business opportunities;
	 
	 	•	 	expose us to the risk of increased interest rates as certain of our borrowings,
including borrowings under our new senior secured credit facilities and our receivables
based credit facility, are at variable rates of interest;
	 
	 	•	 	restrict us from making strategic acquisitions or cause us to make
non-strategic divestitures;
	 
	 	•	 	limit our planning flexibility for, or ability to react to, changes in our business
and the industries in which we operate;

32

 

	 	•	 	limit our ability to adjust to changing market conditions; and
	 
	 	•	 	place us at a competitive disadvantage with competitors who may have less
indebtedness and other obligations or greater access to financing.

     If we fail to make any required payment under our new senior secured credit facilities or our
new receivables based credit facility or to comply with any of the financial and operating
covenants included in the new senior secured credit facilities or the new receivables based credit
facility, we will be in default. Lenders under such facilities could then vote to accelerate the
maturity of the indebtedness and foreclose upon our and our subsidiaries’ assets securing such
indebtedness. Other creditors might then accelerate other indebtedness. If any of our creditors
accelerates the maturity of their indebtedness, we may not have sufficient assets to satisfy our
obligations under the new senior secured credit facilities, the new receivables based credit
facility, or our other indebtedness, including the notes offered hereby.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur
substantially more debt. This could further exacerbate the risks associated with our
substantial leverage.

     We and our subsidiaries may be able to incur substantial additional indebtedness in the
future. Although the indenture governing the notes offered hereby will contain and our new senior
secured credit facilities and our new receivables based credit facility do contain restrictions on
the incurrence of additional indebtedness, these restrictions are subject to a number of
qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions
could be substantial. For example, we will have up to $1,920 million of borrowings available under
our new revolving credit facility (before taking into account outstanding letters of credit of
approximately $83 million as of March 31, 2008), up to $250 million (subject to borrowing base
limitations) of borrowings available under our new receivables based credit facility (after taking
into account the temporary reduction in aggregate amount thereof) and $500 million of borrowings
available under our new delayed draw term loan facilities following the consummation of the
Transactions. After the closing date, we may, at our option, subject to certain conditions, raise
incremental term loans or incremental commitments under the revolving credit facility of up to (a)
$1.5 billion, plus (b) the excess, if any, of (x) 0.65 times pro forma consolidated adjusted EBITDA
(as calculated in the manner provided in the senior secured credit facilities documentation), over
(y) $1.5 billion, plus (c) the aggregate amount of principal payments made in respect of the term
loans under the senior secured credit facilities (other than mandatory prepayments with net cash
proceeds of certain asset sales). We may also, at our option, subject to certain conditions,
increase the receivables based credit facility in an aggregate amount not to exceed $750 million if
certain non-wholly-owned subsidiaries guarantee the receivables based credit facility. Any
additional borrowings under our new senior secured credit facilities and our new receivables based
credit facility would be effectively senior to the notes to the extent of the value of the assets
securing such indebtedness and the related guarantees of the notes would be subordinated to the
guarantees of any additional borrowings under the senior secured credit facilities and receivables
based credit facility. Moreover, the indenture governing the notes offered hereby will not impose
any limitation on our incurrence of liabilities that are not considered “indebtedness” under the
indenture, and will not impose any limitation on liabilities incurred by our subsidiaries that
might be designated as “unrestricted subsidiaries.” If we incur additional debt above the levels in
effect upon the closing of the Transactions, the risks associated with our substantial leverage
would increase.

33

 

Our ability to generate the significant amount of cash needed to pay interest and principal on the
notes and service our other debt and financial obligations and our ability to refinance all or a
portion of our indebtedness or obtain additional financing depends on many factors beyond our
control.

     Our ability to make payments on and refinance our debt, including the notes, amounts borrowed
under our senior secured credit facilities and our receivables based credit facility and other
financial obligations, and to fund our operations will depend on our ability to generate
substantial operating cash flow. Our cash flow generation will depend on our future performance,
which will be subject to prevailing economic conditions and to financial, business and other
factors, many of which are beyond our control.

     Our business may not generate sufficient cash flow from operations and future borrowings may
not be available to us under our senior secured credit facilities, our receivables based credit
facility, or otherwise in amounts sufficient to enable us to service our indebtedness, including
the notes, our existing senior notes to remain outstanding (the “Existing Notes”) and borrowings
under our senior secured credit facilities and our receivables based credit facility, or to fund
our other liquidity needs. If we cannot service our debt, we will have to take actions such as
reducing or delaying capital investments, selling assets, restructuring or refinancing our debt, or
seeking additional equity capital. Any of these remedies may not, if necessary, be effected on
commercially reasonable terms, or at all. Also, the indenture governing the notes will restrict us
and the indenture governing our Existing Notes and the credit agreements for our senior secured
credit facilities and receivables based credit facility do restrict us from adopting certain of
these alternatives. Because of these and other factors beyond our control, we may be unable to pay
the principal, premium, if any, interest, or other amounts on the notes.

The notes are effectively subordinated to our total secured indebtedness.

     The indenture governing the notes will permit us to incur certain secured indebtedness,
including indebtedness under our new senior secured credit facilities and our new receivables based
credit facility. Indebtedness under our new senior secured credit facilities and our new
receivables based credit facility of approximately $14,101 million will be secured by liens on
certain of our assets, including, in the case of the senior secured credit facilities, a pledge of
our capital stock. The notes are unsecured and will, therefore, be effectively subordinated to our
total secured indebtedness (which includes certain of our existing indebtedness) in an amount equal
to $14,109 million (to the extent of the value of the collateral). Accordingly, if we are involved
in a bankruptcy, liquidation, dissolution, reorganization, or similar proceeding, or upon a default
in payment on, or the acceleration of, any indebtedness under our new senior secured credit
facilities, our new receivables based credit facility, or our other secured indebtedness, our
assets will be available to pay obligations on the notes only after all indebtedness under our new
senior secured credit facilities, our new receivables based credit facility, or other secured
indebtedness have been paid in full from those assets. In addition, a default under the indenture
governing the notes would cause an event of default under the senior secured credit facilities and
the receivables based credit facility, and the acceleration of debt under the senior secured credit
facilities or the receivables based credit facility or the failure to pay such debt when due would,
in certain circumstances, cause an event of default under the indenture governing the notes. See
“Description of the Notes—Events of Default and Remedies.” The lenders under our senior secured
credit facilities and our receivables based credit facility also have the right upon an event of
default thereunder to terminate any commitments they have to provide further borrowings. Further,
following an event of default under our senior secured credit facilities and our receivables based
credit facility, the lenders under such facilities will have the right to proceed against the
collateral granted to them to secure that debt. If the debt under our senior

34

 

secured credit facilities, our receivables based credit facility, or the notes offered hereby were
to be accelerated, our assets may not be sufficient to repay in full that debt, or any other debt
that may become due as a result of that acceleration.

The guarantees of the notes are subordinated to the guarantees of our new senior secured credit
facilities and our new receivables based credit facility.

     The guarantees will be subordinated to the guarantees of the guarantors of the senior secured
credit facilities and receivables based credit facility. As of March 31, 2008, on a pro forma basis
after giving effect to the Transactions, the guarantees thereof would have been subordinated to
guarantees of approximately $14,101 million of debt outstanding under our senior secured credit
facilities and our receivables based credit facility. We will also have up to $1,920 million of
additional borrowings available under our new revolving credit facility (before taking into account
outstanding letters of credit of approximately $83 million as of March 31, 2008), up to $250
million (subject to borrowing base limitations) of borrowings available under our new receivables
based credit facility and $500 million of borrowings available under our new delayed draw term loan
facilities following the consummation of the Transactions. After the closing date, we may, at our
option, subject to certain conditions, raise incremental term loans or incremental commitments
under the revolving credit facility of up to (a) $1.5 billion, plus (b) the excess, if any, of (x)
0.65 times pro forma consolidated adjusted EBITDA (as calculated in the manner provided in the
senior secured credit facilities documentation), over (y) $1.5 billion, plus (c) the aggregate
amount of principal payments made in respect of the term loans under the senior secured credit
facilities (other than mandatory prepayments with net cash proceeds of certain asset sales), and we
may increase commitments under our receivables based credit facility in an aggregate amount not to
exceed $750 million if certain non-wholly-owned subsidiaries guarantee the receivables based credit
facility. The guarantees of such additional borrowings would be senior in right of payment to the
guarantees of the notes.

     As a result of such subordination, upon any distribution to our creditors or the creditors of
any guarantor of the notes in a bankruptcy, liquidation, reorganization, or similar proceeding, the
holders of our debt under the senior secured credit facilities and receivables based credit
facility will be entitled to be paid in full before any payment will be made on that guarantor’s
guarantee.

The notes are structurally subordinated to the liabilities of our subsidiaries that do not
guarantee the notes. Your right to receive payments on the notes could be adversely affected if any
of our non-guarantor subsidiaries or non-wholly-owned subsidiaries declare bankruptcy, liquidate,
or reorganize.

     CCOH and our other non-wholly-owned domestic subsidiaries and our foreign subsidiaries will
not guarantee the notes. As a result, the notes will also be structurally subordinated to all
existing and future obligations, including indebtedness, of our subsidiaries that do not guarantee
the notes, and the claims of creditors of these subsidiaries, including trade creditors, will have
priority as to the assets of these subsidiaries. In the event of a bankruptcy, liquidation, or
reorganization of any of our non-guarantor subsidiaries, holders of their indebtedness and their
trade and other creditors will generally be entitled to payment of their claims from the assets of
those subsidiaries before any assets are made available for distribution to us and, in turn, to our
creditors.

     On a pro forma basis after giving effect to the Transactions, the non-guarantor subsidiaries
would have accounted for approximately $3.4 billion, or 49%, of our total net revenue,

35

 

approximately $1.1 billion, or 46%, of our EBITDA and approximately $983 million, or 43%, of our
Adjusted EBITDA, in each case, for the last twelve months ended March 31, 2008, and approximately
$12.7 billion, or 44%, of our total assets as of March 31, 2008. On a historical basis without
giving pro forma effect to the Transactions, the non-guarantor subsidiaries accounted for
approximately 38% of our total assets as of March 31, 2008. The difference between the historical
percentage and the pro forma percentage of total assets principally relates to the creation of
significant goodwill and intangibles in connection with the application of purchase accounting for
the Transactions. On a pro forma basis after giving effect to the Transactions, our non-guarantor
subsidiaries would have had $5.3 billion of total balance sheet liabilities (including trade
payables) to which the notes would have been structurally subordinated.

We may not have access to the cash flow and other assets of our subsidiaries that may be needed to
make payment on the notes.

     We derive a substantial portion of our operating income from our subsidiaries. We are
dependent on the earnings and cash flow of our subsidiaries to meet our obligations with respect to
the notes. We cannot assure you that our subsidiaries will be able to, or be permitted to, pay to
us the amounts necessary to service the notes. Provisions of law, such as those requiring that
dividends be paid only out of surplus, will also limit the ability of our subsidiaries to make
distributions, loans, or other payments to us. In the event we do not receive distributions from
our subsidiaries, we may be unable to make required principal and interest payments on our
indebtedness, including the notes.

     On November 10, 2005, we entered into a cash management arrangement with CCOH whereby we
provide day-to-day cash management services. As part of this arrangement, substantially all of the
cash generated from CCOH’s domestic operations is transferred daily into Clear Channel accounts
and, in return, we fund certain of CCOH’s operations. This arrangement is evidenced by tandem cash
management notes issued by Clear Channel to CCOH and by CCOH to Clear Channel. Each of the cash
management notes is a demand obligation; however, we are not under any contractual commitment to
advance funds to CCOH beyond the amounts outstanding under the note. The consummation of the
Transactions will not permit CCOH to terminate these arrangements and we may continue to use the
cash flows of the domestic operations of CCOH for our own general corporate purposes pursuant to
the terms of the existing cash management and intercompany arrangements between us and CCOH, which
may include making payments on our indebtedness.

     On August 2, 2005, CCOH distributed a note in the original principal amount of $2.5 billion to
us as a dividend. This note matures on August 2, 2010 and may be prepaid in whole or in part at any
time. The note accrues interest at a variable per annum rate equal to our weighted average cost of
debt, calculated on a monthly basis. This note is mandatorily payable upon a change of control of
CCOH and, subject to certain exceptions, all proceeds from new debt issued or equity raised by CCOH
must be used to prepay such note. At March 31, 2008, the interest rate on the $2.5 billion note was
5.8%.

     The $2.5 billion note requires CCOH to comply with various negative covenants, including
restrictions on the following activities: incurring consolidated funded indebtedness (as defined in
the note), excluding intercompany indebtedness, in a principal amount in excess of $400 million at
any one time outstanding; creating liens; making investments; entering into sale and leaseback
transactions (as defined in the note), which when aggregated with consolidated funded indebtedness
secured by liens, will not exceed an amount equal to 10% of CCOH’s total consolidated stockholders’
equity (as defined in the note) as shown on its most recently

36

 

reported annual audited consolidated financial statements; disposing of all or substantially all of
its assets; entering into mergers and consolidations; declaring or making dividends or other
distributions; repurchasing its equity; and entering into transactions with its affiliates. The
existence of these restrictions could limit CCOH’s ability to grow and increase its revenue or
respond to competitive changes.

Restrictive covenants in the senior secured credit facilities, receivables based credit facility
and the indenture governing the notes restrict our ability to pursue our business strategies.

     Our senior secured credit facilities and our receivables based credit facility do contain, and
the indenture governing the notes offered hereby will contain, a number of restrictive covenants
that impose significant operating and financial restrictions on us and may limit our ability to
engage in acts that may be in our long-term best interests. These agreements governing our
indebtedness do or will include covenants restricting, among other things, our ability to:

	 	•	 	incur or guarantee additional debt or issue certain preferred stock;
	 
	 	•	 	pay dividends or make distributions on our capital stock, or redeem, repurchase,
or retire our capital stock and subordinated debt;
	 
	 	•	 	make certain investments;
	 
	 	•	 	create liens on our or our restricted subsidiaries’ assets to secure debt;
	 
	 	•	 	create restrictions on the payment of dividends or other amounts to us from our
restricted subsidiaries that are not guarantors of the notes;
	 
	 	•	 	enter into transactions with affiliates;
	 
	 	•	 	merge or consolidate with another person, or sell or otherwise dispose of all or
substantially all of our assets;
	 
	 	•	 	sell certain assets, including capital stock of our subsidiaries;
	 
	 	•	 	alter the business that we conduct; and
	 
	 	•	 	designate our subsidiaries as unrestricted subsidiaries.

     Notwithstanding the restrictions on our ability to pay dividends, redeem, or purchase capital
stock and make certain other restricted payments, the indenture governing the notes will allow us
to make significant restricted payments in certain circumstances. See “Description of the
Notes—Certain Covenants—Limitation on Restricted Payments.”

We may not be able to fulfill our repurchase obligations in the event of a change of control.

     Upon the occurrence of any change of control, we will be required to make a change of control
offer to repurchase the notes at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase. Any change of control also would
constitute a default under our senior secured credit facilities and our receivables based credit
facility. Therefore, upon the occurrence of a change of control, the lenders under our senior
secured credit facilities and our receivables based credit facility would have the right to

37

 

accelerate their loans, and if so accelerated, we would be required to repay all of our outstanding
obligations under our senior secured credit facilities and our receivables based credit facility.
Also, our senior secured credit facilities and our receivables based credit facility generally
prohibit us from purchasing any notes if we do not repay all borrowings under such facilities first
or obtain the consent of the lenders under such facilities. Accordingly, unless we first repay all
such borrowings or obtain the consent of such lenders, we are prohibited from purchasing the notes
upon a change of control.

     In addition, if a change of control occurs, there can be no assurance that we will have
available funds sufficient to pay the change of control purchase price for any of the notes that
might be delivered by holders of the notes seeking to accept the change of control offer and,
accordingly, none of the holders of the notes may receive the change of control purchase price for
their notes. Our failure to make the change of control offer or to pay the change of control
purchase price with respect to the notes when due would result in a default under the indenture
governing the notes. See “Description of the Notes—Events of Default and Remedies.”

The lenders under our new senior secured credit facilities have the discretion to release the
guarantors under our new senior secured credit facilities, and our new senior secured credit
facilities documentation provides for the automatic release of one or more guarantors in a variety
of circumstances, which will cause those guarantors to be released from their guarantees of the
notes.

     If the lenders under our new senior secured credit facilities release a guarantor from its
guarantee of obligations under our new senior secured credit facilities, or any guarantor is
automatically released from its guarantee of obligations under our new senior secured credit
facilities pursuant to the terms thereof, then the guarantee of the notes by such guarantor will be
released automatically without action by, or consent of, any holder of the notes or the Trustee
under the indenture governing the notes offered hereby. See “Description of the Notes.” You will
not have a claim as a creditor against any subsidiary that is no longer a guarantor of the notes,
and the indebtedness and other liabilities, including trade payables, whether secured or unsecured,
of those subsidiaries will effectively be senior to claims of noteholders.

Federal and state statutes allow courts, under specific circumstances, to void guarantees of our
subsidiaries and require note holders to return payments received from subsidiary guarantors.

     Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws,
a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other
debts of that subsidiary guarantor if, among other things, the subsidiary guarantor, at the time it
incurred the indebtedness evidenced by its guarantee:

	 	•	 	intended to hinder, delay, or defraud creditors; or
	 
	 	•	 	received less than reasonably equivalent value or fair consideration for the
incurrence of such guarantee; and
	 
	 	•	 	was insolvent or rendered insolvent by reason of such incurrence; or
	 
	 	•	 	was engaged in a business or transaction for which the subsidiary
guarantor’s remaining assets constituted unreasonably small capital; or
	 
	 	•	 	intended to incur, or believed that it would incur, debts beyond its ability to pay
such debts as they mature.

38

 

     In addition, any payment by that subsidiary guarantor pursuant to its guarantee could
be voided and required to be returned to the subsidiary guarantor, or to a fund for the benefit
of the creditors of the guarantor.

     The measures of insolvency for purposes of these fraudulent transfer laws will vary depending
upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred.
Generally, however, a subsidiary guarantor would be considered insolvent if:

	 	•	 	the sum of its debts, including contingent liabilities, was greater than the then
fair saleable value of all of its assets; or
	 
	 	•	 	if the present fair saleable value of its assets was less than the amount that would
be required to pay its probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature; or
	 
	 	•	 	it could not pay its debts as they become due.

     On the basis of historical financial information, recent operating history and other factors,
we believe that each subsidiary guarantor, after giving effect to its guarantee of each series of
notes, will not be insolvent, will not have unreasonably small capital for the business in which it
is engaged and will not have incurred debts beyond its ability to pay such debts as they mature.
There can be no assurance, however, as to what standard a court would apply in making such
determinations or that a court would agree with our or any subsidiary guarantor’s conclusions in
this regard.

You will be required to pay United States federal income tax on the senior toggle notes even if we
do not pay cash interest.

     None of the interest payments on the senior toggle notes will be qualified stated interest for
United States federal income tax purposes, even if we never exercise the option to pay PIK
Interest, because the senior toggle notes provide us with the option to pay cash interest or PIK
Interest for any interest payment period through the maturity of the senior toggle notes.
Consequently, the senior toggle notes will be treated as issued with original issue discount
(“OID”) for United States federal income tax purposes, and United States holders will be required
to include the OID in gross income on a constant yield to maturity basis, regardless of whether
interest is paid currently in cash and regardless of their regular method of tax accounting. See
“Certain United States Federal Income Tax Considerations.”

We may only be entitled to deduct a portion of any interest or OID on the senior toggle notes for
United States federal income tax purposes, and only at such time as such interest or OID is
considered paid in cash.

     The senior toggle notes may constitute “applicable high yield discount obligations” for United
States federal income tax purposes. If so, any interest deductions with respect to any OID relating
to the senior toggle notes will be deferred until paid in cash, and will be disallowed to the
extent the yield to maturity on the senior toggle notes exceeds six percentage points over the
“applicable federal rate” (as determined under the Code) in effect for the calendar month in which
the senior toggle notes are issued. The deferral and disallowance of deductions for payments of
interest or OID on the senior toggle notes may reduce the amount of cash available to us to meet
our obligations under the notes.

39

 

United States Holders will be required to pay United States federal income tax on the accrual of
original issue discount on the senior cash pay notes.

     We expect that the “stated redemption price at maturity” of the senior cash pay notes will
exceed their “issue price” by more than the statutory de minimis threshold, in which case, the
senior cash pay notes will be treated as being issued with original issue discount for United
States federal income tax purposes. A United States Holder (as defined in “Certain United States
Federal Income Tax Considerations”) of a senior cash pay note issued with original issue discount
will be required to include such original issue discount in gross income for United Sates federal
income tax purposes on a constant yield-to-maturity basis, in advance of the receipt of cash
attributable to that income and regardless of the United States Holder’s regular method of
accounting for United States federal income tax purposes. See “Certain United States Federal Income
Tax Considerations” for more detail.

United States Holders will be required to pay United States federal income tax as interest accrues
on the senior toggle notes whether or not we pay cash interest.

     Because the senior toggle notes provide us with the option to pay PIK Interest in lieu of
paying cash interest in any interest payment period after the initial interest payment, and because
the senior toggle notes may be issued at a discount to their stated principal amount, we will treat
the senior toggle notes as issued with original issue discount. As a result, United States Holders
will be required to include such original issue discount in gross income for United Sates federal
income tax purposes on a constant yield-to-maturity basis, in advance of the receipt of cash
attributable to that income and regardless of the United States Holder’s regular method of
accounting for United States federal income tax purposes. See “Certain United States Federal Income
Tax Considerations” for more detail.

There are restrictions on your ability to resell your notes.

     The notes are being offered and sold pursuant to an exemption from registration under United
States and applicable state securities laws. Therefore, you may transfer or resell the notes in the
United States only in a transaction registered under or exempt from the registration requirements
of the United States and applicable state securities laws, and you may be required to bear the risk
of your investment for an indefinite period of time.

     We will use commercially reasonable efforts to enter into a registration rights agreement
within five business days following the issue date of the notes. Pursuant to such registration
rights agreement, we have agreed to use commercially reasonable efforts to file an exchange offer
registration statement with the SEC and to use commercially reasonable efforts to cause such
registration statement to become effective with respect to each series of the exchange notes. The
SEC, however, has broad discretion to declare any registration statement effective and may delay,
defer, or suspend the effectiveness of any registration statement for a variety of reasons. If
issued under an effective registration statement, the exchange notes generally may be resold or
otherwise transferred (subject to restrictions described under “Notice to Investors”) by each
holder of the exchange notes with no need for further registration. However, each series of the
exchange notes will constitute a new issue of securities with no established trading market. We
cannot assure you that there will be an active trading market for the exchange notes, or, in the
case of non-exchanging holders of each series of the notes, the trading market for the notes
following the exchange offer. See “Exchange Offer; Registration Rights.”

40

 

An active trading market may not develop for these notes.

     The notes are new issues of securities for which there is no established public market.
Although the notes are expected to be designated for trading in The PORTALSM Market, we
do not intend to apply to list the notes for trading on any securities exchange or to arrange for
quotation on any automated dealer quotation system. As a result of this and the other factors
listed below, an active trading market for the notes may not develop, in which case the market
price and liquidity of the notes may be adversely affected.

     In addition, you may not be able to sell your notes at a particular time or at a price
favorable to you. Future trading prices of the notes will depend on many factors, including:

	 	•	 	our operating performance and financial condition;
	 
	 	•	 	our prospects or the prospects for companies in our industry generally;
	 
	 	•	 	the fact that the notes will not be registered under the Securities Act;
	 
	 	•	 	the interest of securities dealers in making a market in the notes;
	 
	 	•	 	the market for similar securities;
	 
	 	•	 	prevailing interest rates; and
	 
	 	•	 	the other factors described in this offering memorandum under “Risk Factors.”

     Historically, the market for non-investment grade debt has been subject to disruptions that
have caused volatility in prices. It is possible that the market for the notes will be subject to
disruptions. A disruption may have a negative effect on you as a holder of the notes, regardless of
our prospects or performance.

     Although the initial purchasers have advised us that they intend to make a market in the
notes, they are not obligated to do so. The initial purchasers may also discontinue any market
making activities at any time, in their sole discretion, which could further negatively impact your
ability to sell the notes or the prevailing market price at the time you choose to sell.

Risks Related to Our Business

Our business is dependent upon the performance of on-air talent and program hosts, as well as our
management team and other key employees.

     We employ or independently contract with several on-air personalities and hosts of syndicated
radio programs with significant loyal audiences in their respective markets. Although we have
entered into long-term agreements with some of our key on-air talent and program hosts to protect
our interests in those relationships, we can give no assurance that all or any of these persons
will remain with us or will retain their audiences. Competition for these individuals is intense
and many of these individuals are under no legal obligation to remain with us. Our competitors may
choose to extend offers to any of these individuals on terms which we may be unwilling to meet.
Furthermore, the popularity and audience loyalty of our key on-air talent and program hosts is
highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty
is beyond our control and could limit our ability to generate revenue.

41

 

     Our business is also dependent upon the performance of our management team and other key
employees. Although we have entered into long-term agreements with some of these individuals, we
can give no assurance that all or any of our executive officers or key employees will remain with
us. Competition for these individuals is intense and many of our key employees are at-will
employees who are under no legal obligation to remain with us. In addition, any or all of our
executive officers or key employees may decide to leave for a variety of personal or other reasons
beyond our control. The loss of members of our management team or other key employees could have a
negative impact on our business and results of operations.

Doing business in foreign countries creates certain risks not found in doing business in the United
States.

     Doing business in foreign countries carries with it certain risks that are not found in doing
business in the United States. The risks of doing business in foreign countries that could result
in losses against which we are not insured include:

	 	•	 	exposure to local economic conditions;
	 
	 	•	 	potential adverse changes in the diplomatic relations of foreign countries with the
United States;
	 
	 	•	 	hostility from local populations;
	 
	 	•	 	the adverse effect of currency exchange controls;
	 
	 	•	 	restrictions on the withdrawal of foreign investment and earnings;
	 
	 	•	 	government policies against businesses owned by foreigners;
	 
	 	•	 	investment restrictions or requirements;
	 
	 	•	 	expropriations of property;
	 
	 	•	 	the potential instability of foreign governments;
	 
	 	•	 	the risk of insurrections;
	 
	 	•	 	risks of renegotiation or modification of existing agreements with governmental
authorities;
	 
	 	•	 	foreign exchange restrictions;
	 
	 	•	 	withholding and other taxes on remittances and other payments by subsidiaries; and
	 
	 	•	 	changes in taxation structure.

Exchange rates may cause future losses in our international operations.

     Because we own assets in foreign countries and derive revenue from our international
operations, we may incur currency translation losses due to changes in the values of foreign
currencies and in the value of the United States dollar. We cannot predict the effect of exchange
rate fluctuations upon future operating results.

42

 

Extensive government regulation may limit our broadcasting operations.

     The federal government extensively regulates the domestic broadcasting industry, and any
changes in the current regulatory scheme could significantly affect us. Our broadcasting businesses
depend upon maintaining broadcasting licenses issued by the FCC for maximum terms of eight years.
Renewals of broadcasting licenses can be attained only through the FCC’s grant of appropriate
applications. Although the FCC rarely denies a renewal application, the FCC could deny future
renewal applications resulting in the loss of one or more of our broadcasting licenses.

     The federal communications laws limit the number of broadcasting properties we may own in a
particular area. While the Telecommunications Act of 1996 (the “1996 Act”) relaxed the FCC’s
multiple ownership limits, any subsequent modifications that tighten those limits could make it
impossible for us to complete potential acquisitions or require us to divest stations we have
already acquired. Most significantly, in June 2003, the FCC adopted a decision comprehensively
modifying its media ownership rules. The modified rules significantly changed the FCC’s regulations
governing radio ownership. Soon after their adoption, however, a federal court issued a stay
preventing the implementation of the modified media ownership rules while it considered appeals of
the rules by numerous parties (including Clear Channel). In a June 2004 decision, the court upheld
the modified rules in certain respects, remanded them to the FCC for further justification in other
respects and left in place the stay on their implementation. In September 2004, the court partially
lifted its stay on the modified radio ownership rules, putting into effect aspects of those rules
that establish a new methodology for defining local radio markets and counting stations within
those markets, limit our ability to transfer intact combinations of stations that do not comply
with the new rules and require us to terminate within two years certain of our agreements whereby
we provide programming to or sell advertising on radio stations we do not own. In June 2006, the
FCC commenced its proceeding on remand of the modified media ownership rules. On December 18, 2007,
the FCC adopted a decision in that proceeding which made no changes to the local radio ownership
rules currently in effect. The FCC also adopted rules to promote diversification of broadcast
ownership. The media ownership rules, as modified by the FCC’s 2003 decision and by the FCC’s
December 2007 actions, are subject to various further FCC and court proceedings and recent and
possible future actions by Congress. We cannot predict the ultimate outcome of the media ownership
proceedings or their effects on our ability to acquire broadcast stations in the future, to
complete acquisitions that we have agreed to make, to continue to own and freely transfer groups of
stations that we have already acquired, or to continue our existing agreements to provide
programming to or sell advertising on stations we do not own.

     Other changes in governmental regulations and policies may have a material impact on us. For
example, the FCC has adopted rules which under certain circumstances subject previously
non-attributable debt and equity interests in communications media to the FCC’s multiple ownership
restrictions. These rules may limit our ability to expand our media holdings. Moreover, recent and
possible future actions by the FCC in the areas of localism and public interest obligations may
impose additional regulatory requirements on us.

We may be adversely affected by new statutes dealing with indecency.

     Provisions of federal law regulate the broadcast of obscene, indecent, or profane material.
The FCC has substantially increased its monetary penalties for violations of these regulations.
Congressional legislation enacted in 2006 provides the FCC with authority to impose fines of up to
$325,000 per violation for the broadcast of such material. We therefore face increased costs in the
form of fines for indecency violations, and cannot predict whether Congress will consider or adopt
further legislation in this area.

43

 

Antitrust regulations may limit future acquisitions.

     Additional acquisitions by us of radio stations and outdoor advertising properties may require
antitrust review by federal antitrust agencies and may require review by foreign antitrust agencies
under the antitrust laws of foreign jurisdictions. We can give no assurances that the DOJ or the
Federal Trade Commission (“FTC”) or foreign antitrust agencies will not seek to bar us from
acquiring additional radio stations or outdoor advertising properties in any market where we
already have a significant position. Following passage of the 1996 Act, the DOJ has become more
aggressive in reviewing proposed acquisitions of radio stations, particularly in instances where
the proposed acquiror already owns one or more radio station properties in a particular market and
seeks to acquire another radio station in the same market. The DOJ has, in some cases, obtained
consent decrees requiring radio station divestitures in a particular market based on allegations
that acquisitions would lead to unacceptable concentration levels. For example, we agreed with the
DOJ to enter into a Final Judgment in accordance with and subject to the Tunney Act, as stipulated
in the Hold Separate Stipulation and Order filed by the DOJ on February 13, 2008, whereby we have
agreed to divest within 90 days of the closing of the merger, subject to the conditions set forth
therein, six additional core radio stations in Cincinnati, Houston, Las Vegas and San Francisco.
The DOJ also actively reviews proposed acquisitions of outdoor advertising properties. In addition,
the antitrust laws of foreign jurisdictions will apply if we acquire international broadcasting
properties.

Environmental, health, safety and land use laws and regulations may limit or restrict some of our
operations.

     As the owner or operator of various real properties and facilities, especially in our outdoor
advertising operations, we must comply with various foreign, federal, state and local
environmental, health, safety and land use laws and regulations. We and our properties are subject
to such laws and regulations relating to the use, storage, disposal, emission and release of
hazardous and non-hazardous substances and employee health and safety as well as zoning
restrictions. Historically, we have not incurred significant expenditures to comply with these
laws. However, additional laws which may be passed in the future, or a finding of a violation of or
liability under existing laws, could require us to make significant expenditures and otherwise
limit or restrict some of our operations.

Government regulation of outdoor advertising may restrict our outdoor advertising operations.

     United States federal, state and local regulations have a significant impact on the outdoor
advertising industry and our outdoor advertising business. One of the seminal laws was the Highway
Beautification Act of 1965 (the “HBA”), which regulates outdoor advertising on the 306,000 miles of
Federal-Aid Primary, Interstate and National Highway Systems (“controlled roads”). The HBA
regulates the size and location of billboards, mandates a state compliance program, requires the
development of state standards, promotes the expeditious removal of illegal signs and requires just
compensation for takings. Construction, repair, maintenance, lighting, upgrading, height, size,
spacing and the location of billboards and the use of new technologies for changing displays, such
as digital displays, are regulated by federal, state and local governments. From time to time,
states and municipalities have prohibited or significantly limited the construction of new outdoor
advertising structures and also permitted non-conforming structures to be rebuilt by third parties.
Changes in laws and regulations affecting outdoor advertising at any level of government, including
laws of the foreign jurisdictions in which we operate, could have a significant financial impact on
us by requiring us to make significant expenditures or otherwise limiting or restricting some of
our operations.

44

 

     From time to time, certain state and local governments and third parties have attempted to
force the removal of our displays under various state and local laws, including condemnation and
amortization. Amortization is the attempted forced removal of legal but non-conforming billboards
(billboards which conformed with applicable zoning regulations when built, but which do not conform
to current zoning regulations) or the commercial advertising placed on such billboards after a
period of years. Pursuant to this concept, the governmental body asserts that just compensation is
earned by continued operation of the billboard over time. Amortization is prohibited along all
controlled roads and generally prohibited along non-controlled roads. Amortization has, however,
been upheld along non-controlled roads in limited instances where provided by state and local law.
Other regulations limit our ability to rebuild, replace, repair, maintain and upgrade
non-conforming displays. In addition, from time to time third parties or local governments assert
that we own or operate displays that either are not properly permitted or otherwise are not in
strict compliance with applicable law. Although we believe that the number of our billboards that
may be subject to removal based on alleged noncompliance is immaterial, from time to time we have
been required to remove billboards for alleged noncompliance. Such regulations and allegations have
not had a material impact on our results of operations to date, but if we are increasingly unable
to resolve such allegations or obtain acceptable arrangements in circumstances in which our
displays are subject to removal, modification, or amortization, or if there occurs an increase in
such regulations or their enforcement, our operating results could suffer.

     A number of state and local governments have implemented or initiated legislative billboard
controls, including taxes, fees and registration requirements in an effort to decrease or restrict
the number of outdoor signs and/or to raise revenue. While these controls have not had a material
impact on our business and financial results to date, we expect state and local governments to
continue these efforts. The increased imposition of these controls and our inability to pass on the
cost of these items to our clients could negatively affect our operating income.

     International regulation of the outdoor advertising industry varies by region and country, but
generally limits the size, placement, nature and density of out-of-home displays. Significant
international regulations include the Law of December 29, 1979 in France, the Town and Country
Planning (Control of Advertisements) Regulations 1992 in the United Kingdom, and Règlement Régional
Urbain de I’agglomération Bruxelloise in Belgium. These laws define issues such as the extent to
which advertisements can be erected in rural areas, the hours during which illuminated signs may be
lighted and whether the consent of local authorities is required to place a sign in certain
communities. Other regulations limit the subject matter and language of out-of-home displays. For
instance, the United States and most European Union countries, among other nations, have banned
outdoor advertisements for tobacco products. Our failure to comply with these or any future
international regulations could have an adverse impact on the effectiveness of our displays or
their attractiveness to clients as an advertising medium and may require us to make significant
expenditures to ensure compliance. As a result, we may experience a significant impact on our
operations, revenue, international client base and overall financial condition.

Additional restrictions on outdoor advertising of tobacco, alcohol and other products may further
restrict the categories of clients that can advertise using our products.

     Out-of-court settlements between the major United States tobacco companies and all 50 states,
the District of Columbia, the Commonwealth of Puerto Rico and four other United States territories
include a ban on the outdoor advertising of tobacco products. Other products and services may be
targeted in the future, including alcohol products. Legislation regulating

45

 

tobacco and alcohol advertising has also been introduced in a number of European countries in which
we conduct business and could have a similar impact. Any significant reduction in alcohol-related
advertising due to content-related restrictions could cause a reduction in our direct revenue from
such advertisements and an increase in the available space on the existing inventory of billboards
in the outdoor advertising industry.

Future acquisitions could pose risks.

     We may acquire media-related assets and other assets or businesses that we believe will assist
our customers in marketing their products and services. Our acquisition strategy involves numerous
risks, including:

	 	•	 	certain of our acquisitions may prove unprofitable and fail to generate anticipated
cash flows;
	 
	 	•	 	to successfully manage our large portfolio of broadcasting, outdoor advertising and
other properties, we may need to:

	 	•	 	recruit additional senior management as we cannot be assured that senior
management of acquired companies will continue to work for us and, in this highly
competitive labor market, we cannot be certain that any of our recruiting efforts
will succeed, and
	 
	 	•	 	expand corporate infrastructure to facilitate the integration of our
operations with those of acquired properties, because the failure to do so may cause
us to lose the benefits of any expansion that we decide to undertake by leading to
disruptions in our ongoing businesses or by distracting our management;

	 	•	 	entry into markets and geographic areas where we have limited or no experience;
	 
	 	•	 	we may encounter difficulties in the integration of operations and systems;
	 
	 	•	 	our management’s attention may be diverted from other business concerns; and
	 
	 	•	 	we may lose key employees of acquired companies or stations.

     We frequently evaluate strategic opportunities both within and outside our existing lines of
business. We expect from time to time to pursue additional acquisitions and may decide to dispose
of certain businesses. These acquisitions or dispositions could be material.

Capital requirements necessary to implement strategic initiatives could pose risks.

     The purchase price of possible acquisitions and/or other strategic initiatives could require
additional debt or equity financing on our part. Since the terms and availability of this financing
depend to a large degree upon general economic conditions and third parties over which we have no
control, we can give no assurance that we will obtain the needed financing or that we will obtain
such financing on attractive terms. In addition, our ability to obtain financing depends on a
number of other factors, many of which are also beyond our control, such as interest rates and
national and local business conditions. If the cost of obtaining needed financing is too high or
the terms of such financing are otherwise unacceptable in relation to the strategic opportunity we
are presented with, we may decide to forego that opportunity. Additional indebtedness could
increase our leverage and make us more vulnerable to economic downturns and may limit our ability
to withstand competitive pressures.

46

 

We face intense competition in the broadcasting and outdoor advertising industries.

     Our business segments are in highly competitive industries, and we may not be able to maintain
or increase our current audience ratings and advertising and sales revenue. Our radio stations and
outdoor advertising properties compete for audiences and advertising revenue with other radio
stations and outdoor advertising companies, as well as with other media, such as newspapers,
magazines, television, direct mail, satellite radio and Internet-based media, within their
respective markets. Audience ratings and market shares are subject to change, which could have the
effect of reducing our revenue in that market. Our competitors may develop services or advertising
media that are equal or superior to those we provide or that achieve greater market acceptance and
brand recognition than we achieve. It is possible that new competitors may emerge and rapidly
acquire significant market share in any of our business segments. An increased level of competition
for advertising dollars may lead to lower advertising rates as we attempt to retain customers or
may cause us to lose customers to our competitors who offer lower rates that we are unable or
unwilling to match.

Our financial performance may be adversely affected by certain variables which are not in our
control.

     Certain variables that could adversely affect our financial performance by, among other
things, leading to decreases in overall revenue, the numbers of advertising customers, advertising
fees, or profit margins include:

	 	•	 	unfavorable economic conditions, both general and relative to the radio broadcasting,
outdoor advertising and all related media industries, which may cause companies to reduce
their expenditures on advertising;
	 
	 	•	 	unfavorable shifts in population and other demographics which may cause us to lose
advertising customers as people migrate to markets where we have a smaller presence, or
which may cause advertisers to be willing to pay less in advertising fees if the general
population shifts into a less desirable age or geographical demographic from an
advertising perspective;
	 
	 	•	 	an increased level of competition for advertising dollars, which may lead to lower
advertising rates as we attempt to retain customers or which may cause us to lose
customers to our competitors who offer lower rates that we are unable or unwilling to
match;
	 
	 	•	 	unfavorable fluctuations in operating costs which we may be unwilling or unable to
pass through to our customers;
	 
	 	•	 	technological changes and innovations that we are unable to adopt or are late in
adopting that offer more attractive advertising or listening alternatives than what we
currently offer, which may lead to a loss of advertising customers or to lower advertising
rates;
	 
	 	•	 	the impact of potential new royalties charged for terrestrial radio broadcasting
which could materially increase our expenses;
	 
	 	•	 	unfavorable changes in labor conditions which may require us to spend more to retain
and attract key employees; and
	 
	 	•	 	changes in governmental regulations and policies and actions of federal regulatory
bodies which could restrict the advertising media which we employ or restrict some or all
of our customers that operate in regulated areas from using certain advertising media, or
from advertising at all.

47

 

New technologies may affect our broadcasting operations.

     Our broadcasting businesses face increasing competition from new broadcast technologies, such
as broadband wireless and satellite television and radio, and new consumer products, such as
portable digital audio players and personal digital video recorders. These new technologies and
alternative media platforms compete with our radio stations for audience share and advertising
revenue, and in the case of some products, allow listeners and viewers to avoid traditional
commercial advertisements. The FCC has also approved new technologies for use in the radio
broadcasting industry, including the terrestrial delivery of digital audio broadcasting, which
significantly enhances the sound quality of radio broadcasts. We have currently converted
approximately 454 of our radio stations to digital broadcasting. We are unable to predict the
effect such technologies and related services and products will have on our broadcasting
operations, but the capital expenditures necessary to implement such technologies could be
substantial and other companies employing such technologies could compete with our businesses.

We may be adversely affected by a general deterioration in economic conditions.

     The risks associated with our businesses become more acute in periods of a slowing economy or
recession, which may be accompanied by a decrease in advertising. A decline in the level of
business activity of our advertisers could have an adverse effect on our revenue and profit
margins. During economic slowdowns in the United States, many advertisers have reduced their
advertising expenditures. The impact of slowdowns on our business is difficult to predict, but they
may result in reductions in purchases of advertising.

We may be adversely affected by the occurrence of extraordinary events, such as terrorist attacks.

     The occurrence of extraordinary events, such as terrorist attacks, intentional or
unintentional mass casualty incidents, or similar events may substantially decrease the use of and
demand for advertising, which may decrease our revenue or expose us to substantial liability. The
September 11, 2001 terrorist attacks, for example, caused a nationwide disruption of commercial
activities. As a result of the expanded news coverage following the attacks and subsequent military
actions, we experienced a loss in advertising revenue and increased incremental operating expenses.
The occurrence of future terrorist attacks, military actions by the United States, contagious
disease outbreaks, or similar events cannot be predicted, and their occurrence can be expected to
further negatively affect the economies of the United States and other foreign countries where we
do business generally, specifically the market for advertising.

Significant equity investors will control us and their interests may not be in line with your
interests.

     Upon the consummation of the Transactions, private equity funds sponsored by or co-investors
with Bain Capital and THL will indirectly own a majority of our outstanding capital stock and will
exercise control over matters requiring approval of our shareholders and Board of Directors.
Because of this control, transactions may be pursued that could enhance this equity investment
while involving risks to your interests. There can be no assurance that the interests of our
controlling equity investors will not conflict with your interests.

48

 

     Additionally, the Sponsors are in the business of making investments in companies and may from time
to time acquire and hold interests in businesses that compete directly or indirectly with us. One
or more of the Sponsors may also pursue acquisition opportunities that may be complimentary to our
business and, as a result, those acquisition opportunities may not be available to us. So long as
private equity funds sponsored by or co-investors with the Sponsors continue to indirectly own a
significant amount of the outstanding shares of our common stock, even if such amount is less than
50%, the Sponsors will continue to be able to strongly influence or effectively control our
decisions.

49

 

USE OF PROCEEDS

     The following table sets forth our estimated sources and uses in connection with the
Transactions, based on our estimates of certain assets and liabilities at closing and fees and
expenses to be incurred as if the Transactions had occurred on March 31, 2008. The actual amounts
of such sources and uses will differ on the actual closing date of the Transactions.

	 	 	 	 
	Sources	 	 	 
	(In millions)	 	 	 
	Senior secured credit facilities:
	 	 	 
	Revolving credit facility (1)
	 	 	 
	Domestic
based borrowings
	 	 	—
	Foreign subsidiary
borrowings
	 	$	80
	Term loan A facility (2)
	 	 	1,425
	Term loan B facility (3)
	 	 	10,700
	Term loan C—asset sale
facility (4)
	 	 	706
	Delayed draw term loan
facilities (5)
	 	 	750
	Receivables based credit facility (2)
	 	 	440
	Senior cash pay notes offered
hereby
	 	 	980
	Senior toggle notes offered hereby
	 	 	1,330
	Cash
	 	 	169
	Existing debt to remain
outstanding (6)
	 	 	4,394
	Common equity (7)
	 	 	3,519
	 
	 	 
	Total Sources
	 	$	24,493
	 
	 	 

	 	 	 	 
	Uses	 	 	 
	(In millions)	 	 	 
	Purchase of common stock (8)	 	$	17,959
	Refinance existing debt (9)	 	 	1,593
	Existing debt to remain outstanding(6)	 	 	4,394
	Fees, expenses and other related costs of the Transactions (10)	 	 	547
	 	 	 
	Total Uses
	 	$	24,493
	 	 	 

 

			
	(1)	 	Our senior secured credit facilities provide for a $2,000 million 6-year revolving credit
facility, of which $150 million will be available in alternative currencies. We will have the
ability to designate one or more of our foreign restricted subsidiaries as borrowers under a
foreign currency sublimit of the revolving credit facility. Consistent with our international
cash management practices, at or promptly after the consummation of the Transactions, we
expect one of our foreign subsidiaries to borrow $80 million under the revolving credit
facility’s sublimit for foreign based subsidiary borrowings to refinance our existing foreign
subsidiary intercompany borrowings. The foreign based borrowings allow us to efficiently
manage our liquidity needs in local countries, mitigating foreign exchange exposure and cash
movement among different tax jurisdictions. Based on estimated cash levels (including
estimated cash levels of our foreign subsidiaries), we do not expect to borrow any additional
amounts under the revolving credit facility at the closing of the Transactions.
	 
	(2)	 	The aggregate amount of the 6-year term loan A facility will be the sum of $1,115 million
plus the excess of $750 million over the borrowing base availability under our receivables
based credit facility on the closing of the Transactions. The aggregate amount of our
receivables based credit facility will correspondingly be reduced by the excess of $750
million over the borrowing base availability on the closing of the Transactions. Assuming that
the borrowing base availability under the receivables based credit facility is $440 million,
the term loan A facility would be $1,425 million and the aggregate receivables based credit
facility (without regard to borrowing base limitations) would be $690 million. However, our
actual borrowing base availability may be greater or less than this amount.
	 
	(3)	 	Our senior secured credit facilities provide for a $10,700 million 7.5-year term loan B
facility.
	 
	(4)	 	Our senior secured credit facilities provide for a $705.638 million 7.5-year term loan
C—asset sale facility. To the extent specified assets are sold after March 27, 2008 and prior
to the closing of the Transactions, actual borrowings under the term loan C—asset sale
facility will be reduced by the net cash proceeds received therefrom. Proceeds from the sale
of specified assets after the closing of the Transactions will be applied to prepay the term
loan C— asset sale facility (and thereafter to prepay any remaining term loan facilities)
without right of reinvestment under our senior secured credit facilities. In addition, if the
net proceeds of any other asset sales are not reinvested, but

50

 

 

			
	 	 	instead applied to prepay the senior secured credit facilities, such proceeds would first be
applied to the term loan C—asset sale facility and thereafter pro rata to the remaining term
loan facilities.
	 
	(5)	 	Our senior secured credit facilities provide for two 7.5-year delayed draw term loans
facilities aggregating $1,250 million. Proceeds from the delayed draw 1 term loan facility,
available in the aggregate amount of $750 million, can only be used to redeem any of our
existing senior notes due 2010. Proceeds from the delayed draw 2 term loan facility, available
in the aggregate amount of $500 million, can only be used to redeem any of our existing 4.25%
senior notes due 2009. Upon the consummation of the Transactions, we expect to borrow all
amounts available to us under the delayed draw 1 term loan facility in order to redeem
substantially all of our outstanding senior notes due 2010. We do not expect to borrow any
amount available to us under the delayed draw 2 term loan facility upon the consummation of
the Transactions. Any unused commitment to lend will expire on September 30, 2010 in the case
of the delayed draw 1 term loan facility and on the second anniversary of the closing in the
case of the delayed draw 2 term loan facility.
	 
	(6)	 	We anticipate that a portion of our existing senior notes and other existing subsidiary
indebtedness will remain outstanding after the closing of the Transactions. The aggregate
principal amount of the existing senior notes and the subsidiary indebtedness that is
estimated to remain outstanding is $4,275 million and $119 million, respectively, at March 31,
2008. The aggregate principal amount of the existing senior notes and the subsidiary
indebtedness to remain outstanding assumes the repurchase of $750 million of our outstanding
senior notes due 2010 and the repurchase of $645 million aggregate principal amount of AMFM
Operating Inc.’s outstanding 8.0% senior notes due 2008.
	 
	(7)	 	Represents total equity as a result of rollover equity of our existing shareholders who have
elected to receive shares of CCM Parent as merger consideration, rollover equity from the Mays
family, restricted stock and estimated cash equity contributed to us indirectly by CCM Parent
from cash equity investments in CCM Parent by entities associated with the Sponsors and their
co-investors. Actual cash equity would be decreased by the amount of Clear Channel cash
available on the closing date to be used in the Transactions, subject to a minimum of $3,000
million total equity.
	 
	(8)	 	The amount assumes, as of March 31, 2008, approximately 498.0 million issued and outstanding
common shares and the settlement of 836,800 outstanding employee stock options at a per share
price of $36.00, payable in either cash or rollover equity as selected by existing
shareholders (subject to aggregate caps and individual limits).
	 
	(9)	 	Represents the refinancing of $125 million of our senior notes due June 2008, the repurchase
of $645 million aggregate principal amount of AMFM Operating Inc.’s outstanding 8.0% senior
notes due 2008 and the repurchase of $750 million of our outstanding senior notes due 2010,
plus any premiums related thereto and accrued and unpaid interest thereon.
	 
	(10)	 	Reflects estimated fees, expenses and other costs incurred in connection with the
Transactions, including placement and other financing fees, advisory fees, transaction fees
paid to affiliates of the Sponsors, costs associated with certain restricted stock grants to
management, change-in-control payments, excess cash and other transaction costs and
professional fees. All fees, expenses and other costs are estimates and actual amounts may
differ from those set forth in this offering memorandum.

51

 

CAPITALIZATION

     The following table sets forth our cash and cash equivalents and capitalization as of March
31, 2008 (i) on an actual basis and (ii) on a pro forma basis to give effect to the Transactions as
if the Transactions had occurred as of such date. You should read this table along with “Unaudited
Pro Forma Condensed Consolidated Financial Statements,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our historical consolidated financial statements
and related notes appearing elsewhere in this offering memorandum.

	 	 	 	 	 	 	 	 	 
	 	 	As of March 31,	 
	 	 	2008	 
	 	 	Historical	 	 	Pro Forma	 
	 	 	(In millions)	 
	Cash and Cash Equivalents
	 	$	602	 	 	$	433	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Debt:
	 	 	 	 	 	 	 	 
	Existing revolving credit facility
	 	 	 	 	 	 	 	 
	Domestic based borrowings
	 	$	—	 	 	$	—	 
	Foreign subsidiary borrowings
	 	 	—	 	 	 	—	 
	Senior secured credit facilities:
	 	 	—	 	 	 	—	 
	Revolving credit facility (1)
	 	 	 	 	 	 	 	 
	Domestic based borrowings
	 	 	—	 	 	 	—	 
	Foreign subsidiary borrowings
	 	 	—	 	 	 	80	 
	Term loan A facility (2)
	 	 	—	 	 	 	1,425	 
	Term loan B facility (3)
	 	 	—	 	 	 	10,700	 
	Term loan C—asset sale facility (4)
	 	 	—	 	 	 	706	 
	Delayed draw term loan facilities (5)
	 	 	—	 	 	 	750	 
	Receivables based credit facility (2)
	 	 	—	 	 	 	440	 
	Senior cash pay notes offered hereby
	 	 	—	 	 	 	980	 
	Senior toggle notes offered hereby
	 	 	—	 	 	 	1,330	 
	Existing subsidiary debt (6)
	 	 	766	 	 	 	119	 
	 
	 	 	 	 	 	 
	Total guaranteed/subsidiary debt (7)(8)
	 	$	766	 	 	$	16,530	 
	Existing structurally subordinated Clear Channel notes
to remain outstanding (8)(9)
	 	 	5,176	 	 	 	3,331	 
	 
	 	 	 	 	 	 
	Total Debt
	 	 	5,942	 	 	 	19,861	 
	Total Shareholders’ Equity (10)
	 	 	9,662	 	 	 	2,644	 
	 
	 	 	 	 	 	 
	Total Capitalization
	 	$	15,604	 	 	$	22,505	 
	 
	 	 	 	 	 	 

 

			
	(1)	 	Our senior secured credit facilities provide for a $2,000 million 6-year revolving credit
facility, of which $150 million will be available in alternative currencies. We will have the
ability to designate one or more of our foreign restricted subsidiaries as borrowers under a
foreign currency sublimit of the revolving credit facility. Consistent with our international
cash management practices, we expect one of our foreign subsidiaries to borrow $80 million
under the revolving credit facility’s sublimit for foreign based subsidiary borrowings to
refinance our existing foreign subsidiary intercompany borrowings. The foreign based
borrowings allow us to efficiently manage our liquidity needs in local countries, mitigating
foreign exchange exposure and cash movement among different tax jurisdictions. Based on
estimated cash levels (including estimated cash levels of our foreign subsidiaries), we do not
expect to borrow any additional amounts under the revolving credit facility at the closing of
the Transactions.
	 
	(2)	 	The aggregate amount of the 6-year term loan A facility will be the sum of $1,115 million
plus the excess of $750 million over the borrowing base availability under our receivables
based credit facility on the closing of the Transactions. The aggregate amount of our
receivables based credit facility will correspondingly be reduced by the excess of $750
million over the borrowing base availability on the closing of the Transactions. Assuming that
the borrowing base availability under the receivables based credit facility is $440 million,
the term loan A facility would be $1,425 million and the aggregate receivables based credit
facility (without regard to borrowing base limitations) would be $690 million. However, our
actual borrowing base availability may be greater or less than this amount.

52

 

			
	(3)	 	Our senior secured credit facilities provide for a $10,700 million 7.5-year term loan B
facility.
	 
	(4)	 	Our senior secured credit facilities provide for a $705.638 million 7.5-year term loan
C—asset sale facility. To the extent specified assets are sold after March 27, 2008 and prior
to the closing of the Transactions, actual borrowings under the term loan C—asset sale
facility will be reduced by the net cash proceeds received therefrom. Proceeds from the sale
of specified assets after the closing of the Transactions will be applied to prepay the term
loan C— asset sale facility (and thereafter to prepay any remaining term loan facilities)
without right of reinvestment under our senior secured credit facilities. In addition, if the
net proceeds of any other asset sales are not reinvested, but instead applied to prepay the
senior secured credit facilities, such proceeds would first be applied to the term loan
C—asset sale facility and thereafter pro rata to the remaining term loan facilities.
	 
	(5)	 	Our senior secured credit facilities provide for two 7.5-year
delayed draw term loans
facilities aggregating $1,250 million. Proceeds from the delayed draw 1 term loan facility,
available in the aggregate amount of $750 million, can only be used to redeem any of our
existing senior notes due 2010. Proceeds from the delayed draw 2 term loan facility, available
in the aggregate amount of $500 million, can only be used to redeem any of our existing 4.25%
senior notes due 2009. Upon the consummation of the Transactions, we expect to borrow all
amounts available to us under the delayed draw 1 term loan facility in order to redeem
substantially all of our outstanding senior notes due 2010. We do not expect to borrow any
amount available to us under the delayed draw 2 term loan facility upon the consummation of
the Transactions. Any unused commitment to lend will expire on September 30, 2010 in the case
of the delayed draw 1 term loan facility and on the second anniversary of the closing in the
case of the delayed draw 2 term loan facility.
	 
	(6)	 	Represents existing subsidiary indebtedness which is anticipated to remain outstanding after
the closing of the Transactions. The aggregate principal amount of subsidiary indebtedness to
remain outstanding assumes the repurchase of $645 million aggregate principal amount of AMFM
Operating Inc.’s outstanding 8.0% senior notes due 2008.
	 
	(7)	 	Represents the sum of the indebtedness to be incurred in connection with the closing of the
Transactions, which will be guaranteed by Clear Channel Capital I, LLC and our material
wholly-owned domestic restricted subsidiaries, and existing indebtedness of us and our
restricted subsidiaries anticipated to remain outstanding after the closing of the
Transactions, which amount reflects the purchase accounting fair value adjustments.
	 
	(8)	 	Represents total debt, less the amount of our existing senior notes anticipated to remain
outstanding after the closing of the Transactions, which are not guaranteed by, or direct
obligations of, our subsidiaries.
	 
	(9)	 	Represents our existing senior notes, which are not guaranteed by, or direct obligations of,
our subsidiaries, a portion of which is anticipated to remain outstanding after the closing of
the Transactions. The aggregate principal amount of our existing senior notes to remain
outstanding assumes the repurchase of $750 million of our outstanding senior notes due 2010.
The pro forma amount includes purchase accounting fair value adjustments of $(931) million.
	 
	(10)	 	The pro forma amount represents total shareholders’ equity from equity investments of $3,449
million, excluding $40 million of restricted stock of CCM Parent, presented on a pro forma
basis less an accounting adjustment of $805 million mainly related to continuing shareholders’
basis in accordance with EITF 88-16. See “Unaudited Pro Forma Condensed Consolidated Financial
Statements—Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.”

53

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     The following unaudited pro forma condensed consolidated financial data has been derived by
the application of pro forma adjustments to Clear Channel’s audited historical consolidated
financial statements for the year ended December 31, 2007 and Clear Channel’s unaudited historical
consolidated financial statements for the three months ended March 31, 2008 and 2007.

     The following unaudited pro forma condensed consolidated financial data gives effect to the
merger which will be accounted for as a purchase in conformity with Statement of Financial
Accounting Standards No. 141, Business Combinations (“Statement 141”), and EITF 88-16. As a result
of the potential continuing ownership in CCM Parent by certain members of Clear Channel’s
management and large shareholders, CCM Parent expects to allocate a portion of the consideration to
the assets and liabilities at their respective fair values with the remaining portion recorded at
the continuing shareholders’ historical basis. The pro forma adjustments are based on the
preliminary assessments of allocation of the consideration paid using information available to date
and certain assumptions believed to be reasonable. The allocation will be determined following the
close of the merger based on a formal valuation analysis and will depend on a number of factors,
including: (i) the final valuation of Clear Channel’s assets and liabilities as of the effective
time of the merger, (ii) the number of equity securities which are subject to agreements between
certain officers or employees of Clear Channel and CCM Parent, pursuant to which such shares or
options are to be converted into equity securities of CCM Parent in the merger, (iii) the identity
of the shareholders who elect to receive stock consideration in the merger and the number of shares
of Class A common stock allocated to them, after giving effect to the 30% aggregate cap and the
individual cap of 11,111,112 shares of CCM Parent’s Class A common stock governing the stock
election, (iv) the extent to which CCM Parent determines that additional equity consideration is
needed and (v) the historical basis of continuing ownership under EITF 88-16. Differences between
the preliminary and final allocation may have a material impact on amounts recorded for total
assets, total liabilities, shareholders’ equity and income (loss). For purposes of the unaudited
pro forma condensed consolidated financial data, the management of CCM Parent has assumed that the
fair value of equity after the merger is $3.4 billion. Based on the commitments of certain
affiliated shareholders and discussions with certain other large shareholders that could materially
impact the EITF 88-16 calculation, management assumed that Clear Channel shareholders will elect to
receive stock consideration with a value of approximately $658.9 million in connection with the
merger and an additional $390.1 million of stock consideration will be distributed as additional
equity consideration. Based on these assumptions, it is anticipated that 9.9% of each asset and
liability will be recorded at historic carryover basis and 90.1% at fair value. For purposes of the
pro forma adjustment, the historical book basis of equity was used as a proxy for historical or
predecessor basis of the control group’s ownership. The actual predecessor basis will be used, to
the extent practicable, in the final purchase adjustments.

     The unaudited pro forma condensed consolidated balance sheet was prepared based upon the
historical consolidated balance sheet of Clear Channel, adjusted to reflect the merger as if it
had occurred on March 31, 2008.

     The unaudited pro forma condensed consolidated statements of operations for the year ended
December 31, 2007, the three months ended March 31, 2008 and 2007, and the last twelve months ended
March 31, 2008 were prepared based upon the historical consolidated statements of operations of
Clear Channel, adjusted to reflect the merger as if it had occurred on January 1, 2007.

54

 

     The unaudited pro forma condensed consolidated statements of operations do not reflect
nonrecurring charges that have been or will be incurred in connection with the merger, including
(i) compensation charges of $44.0 million for the acceleration of vesting of stock options and
restricted shares, (ii) certain non-recurring advisory and legal costs of $204.0 million and (iii)
costs for the early redemption of certain Clear Channel debt of $51.9 million. In addition, Clear
Channel currently anticipates approximately $311.0 million will be used to fund certain liabilities
and post closing transactions. These funds will be provided through either additional equity
contributions from the Sponsors or their affiliates or Clear Channel’s available cash balances.

     The unaudited pro forma condensed consolidated financial statements should be read in
conjunction with the historical financial statements and the notes thereto of Clear Channel
included in this offering memorandum and the other financial information contained in “Summary
Historical and Unaudited Pro Forma Consolidated and Other Data,” “Selected Historical Consolidated
Financial and Other Data” and “Management’s Discussion and Analysis of the Financial Condition and
Results of Operations” included herein.

     The unaudited pro forma condensed consolidated data is not necessarily indicative of the
actual results of operations or financial position had the above described transactions occurred on
the dates indicated, nor are they necessarily indicative of future operating results or financial
position.

55

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AT MARCH 31, 2008

(In thousands)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Clear	 	 	 	 	 	 	 
	 	 	Channel	 	 	Transaction	 	 	 	 
	 	 	Historical	 	 	Adjustments	 	 	Pro Forma	 
	ASSETS
	 	 	 	 	 	 	 	 	 	 	 	 
	Current assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	602,112	 	 	$	(168,897	)(G)	 	$	433,215	 
	Accounts receivable, net
	 	 	1,681,514	 	 	 	—	 	 	 	1,681,514	 
	Prepaid expenses
	 	 	125,387	 	 	 	—	 	 	 	125,387	 
	Other current assets
	 	 	270,306	 	 	 	43,015 	(A), (B)	 	 	313,321	 
	 
	 	 	 	 	 	 	 	 	 
	Total Current Assets
	 	 	2,679,319	 	 	 	(125,882	)	 	 	2,553,437	 
	Property, plant & equipment, net
	 	 	3,074,741	 	 	 	148,701 	(A)	 	 	3,223,442	 
	Property, plant and equipment from discontinued operations, net
	 	 	15,487	 	 	 	4,482 	(A)	 	 	19,969	 
	Definite-lived intangibles, net
	 	 	489,542	 	 	 	437,067 	(A)	 	 	926,609	 
	Indefinite-lived intangibles — licenses
	 	 	4,213,262	 	 	 	2,420,063 	(A)	 	 	6,633,325	 
	Indefinite-lived intangibles — permits
	 	 	252,576	 	 	 	2,954,805 	(A)	 	 	3,207,381	 
	Goodwill
	 	 	7,268,059	 	 	 	3,246,222 	(A)	 	 	10,514,281	 
	Goodwill and intangible assets from discontinued operations, net
	 	 	31,889	 	 	 	3,263 	(A)	 	 	35,152	 
	Other assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Notes receivable
	 	 	11,630	 	 	 	—	 	 	 	11,630	 
	Investments in, and advances to, nonconsolidated affiliates
	 	 	296,481	 	 	 	221,897 	(A)	 	 	518,378	 
	Other assets
	 	 	361,281	 	 	 	134,826	(A), (B)	 	 	496,107	 
	Other investments
	 	 	351,216	 	 	 	—	 	 	 	351,216	 
	Other assets from discontinued operations
	 	 	7,728	 	 	 	—	 	 	 	7,728	 
	 
	 	 	 	 	 	 	 	 	 
	Total Assets
	 	$	19,053,211	 	 	$	9,445,444	 	 	$	28,498,655	 
	 
	 	 	 	 	 	 	 	 	 
	LIABILITIES AND SHAREHOLDERS’ EQUITY
	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable, accrued expenses and accrued interest
	 	$	1,037,592	 	 	$	—	 	 	$	1,037,592	 
	Current portion of long-term debt
	 	 	869,631	 	 	 	—	 	 	 	869,631	 
	Deferred income
	 	 	242,861	 	 	 	—	 	 	 	242,861	 
	Accrued income taxes
	 	 	148,833	 	 	 	—	 	 	 	148,833	 
	 
	 	 	 	 	 	 	 	 	 
	Total Current Liabilities
	 	 	2,298,917	 	 	 	—	 	 	 	2,298,917	 
	Long-term debt
	 	 	5,072,000	 	 	 	13,919,095	(A), (C)	 	 	18,991,095	 
	Other long-term obligations
	 	 	167,775	 	 	 	—	 	 	 	167,775	 
	Deferred income taxes
	 	 	830,937	 	 	 	2,576,190	(A), (D)	 	 	3,407,127	 
	Other long-term liabilities
	 	 	560,945	 	 	 	(31,761	)(A), (E)	 	 	529,184	 
	Minority interest
	 	 	460,728	 	 	 	—	 	 	 	460,728	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Shareholders’ Equity
	 	 	 	 	 	 	 	 	 	 	 	 
	Common stock
	 	 	49,817	 	 	 	(49,317	)(F)	 	 	500	 
	Additional paid-in capital
	 	 	26,871,648	 	 	 	(24,228,319	)(F)	 	 	2,643,329	(G)
	Retained deficit
	 	 	(17,689,490	)	 	 	17,689,490 	(F)	 	 	—	 
	Accumulated other comprehensive income
	 	 	436,544	 	 	 	(436,544	)(F)	 	 	—	 
	Cost of shares held in treasury
	 	 	(6,610	)	 	 	6,610 	(F)	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 
	Total Shareholders’ Equity
	 	 	9,661,909	 	 	 	(7,018,080	)(F)	 	 	2,643,829	(G)
	 
	 	 	 	 	 	 	 	 	 
	Total Liabilities and Shareholders’ Equity
	 	$	19,053,211	 	 	$	9,445,444	 	 	$	28,498,655	 
	 
	 	 	 	 	 	 	 	 	 

56

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF

OPERATIONS

YEAR ENDED DECEMBER 31, 2007

(In thousands)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Clear	 	 	 	 	 	 	 
	 	 	Channel	 	 	Transaction	 	 	 	 
	 	 	Historical	 	 	Adjustments	 	 	Pro Forma	 
	Revenue
	 	$	6,921,202	 	 	$	—	 	 	$	6,921,202	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes depreciation and
amortization)
	 	 	2,733,004	 	 	 	—	 	 	 	2,733,004	 
	Selling, general and administrative expenses (excludes
depreciation and amortization)
	 	 	1,761,939	 	 	 	—	 	 	 	1,761,939	 
	Depreciation and amortization
	 	 	566,627	 	 	 	115,324 	(H)	 	 	681,951	 
	Corporate expenses (excludes depreciation and amortization)
	 	 	181,504	 	 	 	9,729 	(K)	 	 	191,233	 
	Merger expenses
	 	 	6,762	 	 	 	(6,762	)(J)	 	 	—	 
	Gain on disposition of assets — net
	 	 	14,113	 	 	 	—	 	 	 	14,113	 
	 
	 	 	 	 	 	 	 	 	 
	Operating income (loss)
	 	 	1,685,479	 	 	 	(118,291	)	 	 	1,567,188	 
	Interest expense
	 	 	451,870	 	 	 	1,181,169	(l)	 	 	1,633,039	 
	Gain on marketable securities
	 	 	6,742	 	 	 	—	 	 	 	6,742	 
	Equity in earnings of nonconsolidated affiliates
	 	 	35,176	 	 	 	—	 	 	 	35,176	 
	Other income (expense) — net
	 	 	5,326	 	 	 	—	 	 	 	5,326	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) before income taxes and minority interest
	 	 	1,280,853	 	 	 	(1,299,460	)	 	 	(18,607	)
	Income tax (expense) benefit
	 	 	(441,148	)	 	 	490,238 	(D)	 	 	49,090	 
	Minority interest expense, net of tax
	 	 	47,031	 	 	 	—	 	 	 	47,031	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) from continuing operations
	 	$	792,674	 	 	$	(809,222	)	 	$	(16,548	)
	 
	 	 	 	 	 	 	 	 	 

57

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF

OPERATIONS

THREE MONTHS ENDED MARCH 31, 2007

(In thousands)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Clear Channel	 	 	Transaction	 	 	 	 
	 	 	Historical	 	 	Adjustments	 	 	Pro Forma	 
	Revenue
	 	$	1,505,077	 	 	$	—	 	 	$	1,505,077	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes
depreciation and amortization)
	 	 	627,879	 	 	 	—	 	 	 	627,879	 
	Selling, general and administrative expenses
(excludes depreciation and amortization)
	 	 	416,319	 	 	 	—	 	 	 	416,319	 
	Depreciation and amortization
	 	 	139,685	 	 	 	28,831 	(H)	 	 	168,516	 
	Corporate expenses (excludes depreciation
and amortization)
	 	 	48,150	 	 	 	2,432 	(K)	 	 	50,582	 
	Merger expenses
	 	 	1,686	 	 	 	(1,686	)(J)	 	 	—	 
	Gain on disposition of assets—net
	 	 	6,947	 	 	 	—	 	 	 	6,947	 
	 
	 	 	 	 	 	 	 	 	 
	Operating income (loss)
	 	 	278,305	 	 	 	(29,577	)	 	 	248,728	 
	Interest expense
	 	 	118,077	 	 	 	290,183	(l)	 	 	408,260	 
	Gain on marketable securities
	 	 	395	 	 	 	—	 	 	 	395	 
	Equity in earnings of nonconsolidated affiliates
	 	 	5,264	 	 	 	—	 	 	 	5,264	 
	Other income (expense) — net
	 	 	(12	)	 	 	—	 	 	 	(12	)
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) before income taxes and minority
interest
	 	 	165,875	 	 	 	(319,760	)	 	 	(153,885	)
	Income tax (expense) benefit
	 	 	(70,466	)	 	 	120,619 	(D)	 	 	50,153	 
	Minority interest expense, net of tax
	 	 	276	 	 	 	—	 	 	 	276	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) from continuing operations
	 	$	95,133	 	 	$	(199,141	)	 	$	(104,008	)
	 
	 	 	 	 	 	 	 	 	 

58

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF

OPERATIONS

THREE MONTHS ENDED MARCH 31, 2008

(In thousands)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Clear	 	 	 	 	 	 	 
	 	 	Channel	 	 	Transaction	 	 	 	 
	 	 	Historical	 	 	Adjustments	 	 	Pro Forma	 
	Revenue
	 	$	1,564,207	 	 	$	—	 	 	$	1,564,207	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes depreciation
and amortization)
	 	 	705,947	 	 	 	—	 	 	 	705,947	 
	Selling, general and administrative expenses
(excludes depreciation and amortization)
	 	 	426,381	 	 	 	—	 	 	 	426,381	 
	Depreciation and amortization
	 	 	152,278	 	 	 	28,831 	(H)	 	 	181,109	 
	Corporate expenses (excludes depreciation and
amortization)
	 	 	46,303	 	 	 	2,432 	(K)	 	 	48,735	 
	Merger expenses
	 	 	389	 	 	 	(389	)(J)	 	 	—	 
	Gain on disposition of assets—net
	 	 	2,097	 	 	 	—	 	 	 	2,097	 
	 
	 	 	 	 	 	 	 	 	 
	Operating income (loss)
	 	 	235,006	 	 	 	(30,874	)	 	 	204,132	 
	Interest expense
	 	 	100,003	 	 	 	308,313	(l)	 	 	408,316	 
	Gain on marketable securities
	 	 	6,526	 	 	 	—	 	 	 	6,526	 
	Equity in earnings of nonconsolidated affiliates
	 	 	83,045	 	 	 	—	 	 	 	83,045	 
	Other income (expense) — net
	 	 	11,787	 	 	 	—	 	 	 	11,787	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) before income taxes and minority interest
	 	 	236,361	 	 	 	(339,187	)	 	 	(102,826	)
	Income tax (expense) benefit
	 	 	(66,581	)	 	 	128,002 	(D)	 	 	61,421	 
	Minority interest expense, net of tax
	 	 	8,389	 	 	 	—	 	 	 	8,389	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) from continuing operations
	 	$	161,391	 	 	$	(211,185	)	 	$	(49,794	)
	 
	 	 	 	 	 	 	 	 	 

59

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF

OPERATIONS

TWELVE MONTHS ENDED MARCH 31, 2008

(In thousands)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Clear Channel	 	 	Transaction	 	 	 	 
	 	 	Historical	 	 	Adjustments	 	 	Pro Forma	 
	Revenue
	 	$	6,980,332	 	 	$	—	 	 	$	6,980,332	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes depreciation and
amortization)
	 	 	2,811,072	 	 	 	—	 	 	 	2,811,072	 
	Selling, general and administrative expenses
(excludes depreciation and amortization)
	 	 	1,772,001	 	 	 	—	 	 	 	1,772,001	 
	Depreciation and amortization
	 	 	579,220	 	 	 	115,324 	(H)	 	 	694,544	 
	Corporate expenses (excludes depreciation and
amortization)
	 	 	179,657	 	 	 	9,729 	(K)	 	 	189,386	 
	Merger expenses
	 	 	5,465	 	 	 	(5,465	)(J)	 	 	—	 
	Gain on disposition of assets—net
	 	 	9,263	 	 	 	—	 	 	 	9,263	 
	 
	 	 	 	 	 	 	 	 	 
	Operating income (loss)
	 	 	1,642,180	 	 	 	(119,588	)	 	 	1,522,592	 
	Interest expense
	 	 	433,796	 	 	 	1,199,299	(l)	 	 	1,633,095	 
	Gain on marketable securities
	 	 	12,873	 	 	 	—	 	 	 	12,873	 
	Equity in earnings of nonconsolidated affiliates
	 	 	112,957	 	 	 	—	 	 	 	112,957	 
	Other income (expense) — net
	 	 	17,125	 	 	 	—	 	 	 	17,125	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) before income taxes and minority interest
	 	 	1,351,339	 	 	 	(1,318,887	)	 	 	32,452	 
	Income tax (expense) benefit
	 	 	(437,263	)	 	 	497,621 	(D)	 	 	60,358	 
	Minority interest expense, net of tax
	 	 	55,144	 	 	 	—	 	 	 	55,144	 
	 
	 	 	 	 	 	 	 	 	 
	Income (loss) from continuing operations
	 	$	858,932	 	 	$	(821,266	)	 	$	37,666	 
	 
	 	 	 	 	 	 	 	 	 

60

 

NOTES TO UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL DATA

     The unaudited pro forma condensed consolidated financial data includes the following pro forma
assumptions and adjustments.

     (A) The pro forma adjustments include the fair value adjustments to assets and liabilities in
accordance with Statement 141 and the historical basis of the continuing shareholders of the
“control group” in accordance with EITF 88-16. The control group under EITF 88-16 includes members
of management of Clear Channel who exchange pre-merger Clear Channel equity securities for shares
of capital stock of CCM Parent and greater than 5% shareholders whose ownership has increased as a
result of making a stock election in the merger. Based upon information currently available to
Clear Channel, it is anticipated that the continuing aggregate ownership of the control group will
be approximately 9.9%. However, the actual continuing aggregate ownership of the control group will
not be determinable until after the consummation of the merger and will depend on a number of
factors including the identity of the shareholders who elect to receive stock consideration and the
actual fair value of equity after the merger.

     The following table shows (i) the impact of the currently anticipated continuing aggregate
ownership by the control group and (ii) the impact of each 100 basis point change in the continuing
aggregate ownership by the control group on the pro forma balances of CCM Parent’s definite-lived
intangibles, indefinite-lived intangibles, goodwill, total assets and total shareholders’ equity at
March 31, 2008, and income (loss) from continuing operations for the year ended December 31, 2007,
the three months ended March 31, 2008 and 2007, and the last twelve months ended March 31, 2008.

Control Group Continuing Ownership

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	9.9%	 	100 bps increase	 	100 bps decrease
	 	 	 	 	 	 	(In thousands)	 	 	 	 
	Definite-lived intangibles, net
	 	$	926,609	 	 	$	(4,851	)	 	$	4,851	 
	Indefinite-lived intangibles—Licenses
	 	 	6,633,325	 	 	 	(26,859	)	 	 	26,859	 
	Indefinite-lived intangibles—Permits
	 	 	3,207,381	 	 	 	(32,795	)	 	 	32,795	 
	Goodwill
	 	 	10,514,281	 	 	 	(33,388	)	 	 	33,388	 
	Total assets
	 	 	28,498,655	 	 	 	(102,093	)	 	 	102,093	 
	Total shareholders’ equity
	 	 	2,643,829	 	 	 	(82,664	)	 	 	82,664	 
	Income (loss) from continuing operations for
the year ended December 31, 2007
	 	 	(16,548	)	 	 	2,071	 	 	 	(2,071	)
	Income (loss) from continuing operations for
the three months ended March 31, 2008
	 	 	(49,794	)	 	 	518	 	 	 	(518	)
	Income (loss) from continuing operations for
the three months ended March 31, 2007
	 	 	(104,008	)	 	 	518	 	 	 	(518	)
	Income (loss) from continuing operations for
the last twelve months ended March 31,
2008
	 	 	37,666	 	 	 	2,071	 	 	 	(2,071	)

     For purposes of the pro forma adjustments, the historical book basis of equity was used as a
proxy for historical or predecessor basis of the control group’s ownership. The actual predecessor
basis will be used, to the extent practicable, in the final purchase adjustments.

61

 

     A summary of the merger is presented below:

	 	 	 	 	 
	 	 	(In thousands)	 
	Consideration for Equity (i)
	 	$	17,928,262	 
	Rollover of restricted stock awards
	 	 	13,567	 
	Estimated transaction costs
	 	 	235,359	 
	 
	 	 	 
	 
	 	 	 	 
	Total Consideration
	 	 	18,177,188	 
	Less: Net assets acquired
	 	 	9,661,909	 
	Less: Adjustment for historical carryover basis per EITF 88-16
	 	 	818,369	 
	 
	 	 	 
	Excess Consideration to be Allocated
	 	$	7,696,910	 
	 
	 	 	 
	 
	 	 	 	 
	Allocation:
	 	 	 	 
	Fair Value Adjustments:
	 	 	 	 
	Other current assets (B)
	 	$	(4,108	)
	Property,
plant and equipment, net
	 	 	148,701	 
	Property,
plant and equipment from discontinued operations, net
	 	 	4,482	 
	Definite-lived intangibles (ii)
	 	 	437,067	 
	Indefinite-lived intangibles — Licenses (iii)
	 	 	2,420,063	 
	Indefinite-lived intangibles — Permits (iii)
	 	 	2,954,805	 
	Intangible
assets from discontinued operations, net
	 	 	3,263	 
	Investments
in, and advances to, nonconsolidated affiliates
	 	 	221,897	 
	Other assets (B)
	 	 	(162,736	)
	Long-term debt (C)
	 	 	931,310	 
	Deferred income taxes recorded for fair value adjustments to assets and liabilities (D)
	 	 	(2,576,190	)
	Other long term liabilities (E)
	 	 	31,761	 
	Termination of interest rate swaps (C)
	 	 	40,373	 
	Goodwill (iv)
	 	 	3,246,222	 
	 
	 	 	 
	Total Adjustments
	 	$	7,696,910	 
	 
	 	 	 

 

			
	(i)	 	Consideration for equity:

	 	 	 	 	 
	Total shares outstanding (1)

	 	 	498,007	 
	Multiplied by: Price per share (2)

	 	$	36.00	 
	 
	 	 	 
	 

	 	$	17,928,262	 
	 
	 	 	 

	 	 	 
	(1)	 	Total shares outstanding include 836,800 equivalent shares subject to employee stock
options.
	 
	(2)	 	Price per share is assumed to be $36.00 per share, which is equal to the amount of the cash
consideration.
	 
	(ii)	 	Identifiable intangible assets acquired subject to amortization includes contracts
amortizable over a weighted average amortization period of approximately 5.1 years.
	 
	(iii)	 	The licenses and permits were deemed to be indefinite-lived assets that can be separated
from any other asset, do not have legal, regulatory, contractual, competitive, economic, or
other factors that limit the useful lives and require no material levels of maintenance to
retain their cash flows. As such, licenses and permits are not currently subject to
amortization. Annually, the licenses and permits will be reviewed for impairment and useful
lives evaluated to determine whether facts and circumstances continue to support an indefinite
life for these assets.
	 
	(iv)	 	The pro forma adjustment to goodwill consists of:

	 	 	 	 	 
	Removal of historical goodwill

	 	$	(7,268,059	)
	Goodwill arising from the merger

	 	 	10,514,281	 
	 
	 	 	 
	 

	 	$	3,246,222	 
	 
	 	 	 

     (B) These pro forma adjustments record the deferred loan costs of $344.7 million arising
from the debt issued in conjunction with the merger, the removal of historical deferred loan costs,
and adjustments for the liquidation of assets for a non-qualified employee benefit plan required
upon a change of control as a result of the merger.

62

 

     (C) This pro forma adjustment reflects long-term debt to be issued in connection with
the merger and the fair value adjustments to existing Clear Channel long-term debt.

	 	 	 	 	 
	Total debt to be redeemed (i)
	 	$	(1,519,860	)
	Issuance of debt in merger (ii)
	 	 	16,410,638	 
	Fair value adjustment ($1,047,090 related to senior notes less $12,119
related to other fair value adjustments and $103,661 related to historical
carryover basis per EITF 88-16)
	 	 	(931,310	)
	Less: termination of interest rate swaps in connection with the merger
	 	 	(40,373	)
	 
	 	 	 
	Debt adjustment ($13,919,095 long-term less $0 current portion)
	 	$	13,919,095	 
	 
	 	 	 

 

			
	(i)	 	Total Debt to be Redeemed:

	 	 	 	 	 
	Clear Channel bank credit facilities (1)
	 	$	125,000	 
	Clear Channel senior notes due 2010
	 	 	750,000	 
	AMFM Operating Inc. 8% senior
notes due 2008
	 	 	644,860	 
	 
	 	 	 
	Total
	 	$	1,519,860	 
	 
	 	 	 

 

			
	(1)	 	The pro forma balance of $125 million on our bank credit facilities
reflects the June 15, 2008 maturity of our 6.625% senior notes due 2008.
	 
	(ii)	 	Issuance of Debt in the Merger:

	 	 	 	 	 
	Senior secured credit facilities:
	 	 	 	 
	Revolving credit facility
	 	 	 	 
	Domestic based borrowings
	 	$	—	 
	Foreign subsidiary borrowings
	 	 	80,000	 
	Term loan A facility
	 	 	1,425,000	 
	Term loan B facility
	 	 	10,700,000	 
	Term loan C — asset sale facility
	 	 	705,638	 
	Delayed draw term loan facilities
	 	 	750,000	 
	Receivables based credit facility
	 	 	440,000	 
	Notes offered hereby
	 	 	2,310,000	 
	 
	 	 	 
	Total
	 	$	16,410,638	 
	 
	 	 	 

     Our senior secured credit facilities provide for a $2,000 million 6-year revolving
credit facility, of which $150 million will be available in alternative currencies. We will have
the ability to designate one or more of our foreign restricted subsidiaries as borrowers under a
foreign currency sublimit of the revolving credit facility. Consistent with our international cash
management practices, we expect one of our foreign subsidiaries to borrow $80 million under the
revolving credit facility’s sublimit for foreign based subsidiary borrowings to refinance our
existing foreign subsidiary intercompany borrowings. The foreign based borrowings allow us to
efficiently manage our liquidity needs in local countries, mitigating foreign exchange exposure and
cash movement among different tax jurisdictions. Based on estimated cash levels (including
estimated cash levels of our foreign subsidiaries), we do not expect to borrow any additional
amounts under the revolving credit facility at the closing of the Transactions.

     The aggregate amount of the 6-year term loan A facility will be the sum of $1,115 million plus
the excess of $750 million over the borrowing base availability under our receivables based credit
facility on the closing of the Transactions. The aggregate amount of our receivables based credit
facility will correspondingly be reduced by the excess of $750 million over the borrowing

63

 

base availability on the closing of the Transactions. Assuming that the borrowing base
availability under the receivables based credit facility is $440 million, the term loan A facility
would be $1,425 million and the aggregate receivables based credit facility (without regard to
borrowing base limitations) would be $690 million. However, our actual borrowing base availability
may be greater or less than this amount.

     Our senior secured credit facilities provide for a $10,700 million 7.5-year term loan B
facility.

     Our senior secured credit facilities further provide for a $705.638 million 7.5-year term loan
C—asset sale facility. To the extent specified assets are sold after March 27, 2008 and prior to
the closing of the Transactions, actual borrowings under the term loan C—asset sale facility will
be reduced by the net cash proceeds received therefrom. Proceeds from the sale of specified assets
after the closing of the Transactions will be applied to prepay the term loan C—asset sale
facility (and thereafter to prepay any remaining term loan facilities) without right of
reinvestment under our senior secured credit facilities. In addition, if the net proceeds of any
other asset sales are not reinvested, but instead applied to prepay the senior secured credit
facilities, such proceeds would first be applied to the term loan C—asset sale facility and
thereafter pro rata to the remaining term loan facilities.

     Our senior secured credit facilities provide for two 7.5-year delayed draw term loans
facilities aggregating $1,250 million. Proceeds from the delayed draw 1 term loan facility,
available in the aggregate amount of $750 million, can only be used to redeem any of our existing
senior notes due 2010. Proceeds from the delayed draw 2 term loan facility, available in the
aggregate amount of $500 million, can only be used to redeem any of our existing 4.25% senior notes
due 2009. Upon the consummation of the Transactions, we expect to borrow all amounts available to
us under the delayed draw 1 term loan facility in order to redeem substantially all of our
outstanding senior notes due 2010. We do not expect to borrow any amount available to us under the
delayed draw 2 term loan facility upon the consummation of the Transactions. Any unused commitment
to lend will expire on September 30, 2010 in the case of the delayed draw 1 term loan facility and
on the second anniversary of the closing in the case of the delayed draw 2 term loan facility.

     Our $1,000 million receivables based credit facility will have availability that is limited by
a borrowing base. We estimate that borrowing base availability under the receivables based credit
facility at the closing of the Transactions will be $440 million, although our actual availability
may be greater or less than our estimation.

     (D) Deferred income taxes in the unaudited pro forma condensed consolidated balance
sheet are recorded at the statutory rate in effect for the various tax jurisdictions in which
Clear Channel operates. Deferred income tax liabilities increased $2.6 billion on the unaudited pro
forma consolidated balance sheet primarily due to the fair value adjustments for licenses,
permits and other intangibles, partially offset by adjustments for deferred tax assets from
net operating losses generated by transaction costs associated with the merger.

     The pro forma adjustment for income tax expense was determined using statutory rates for the
year ended December 31, 2007, the three months ended March 31, 2008 and 2007, and the last twelve
months ended March 31, 2008.

     (E) This pro forma adjustment is for the fair value adjustment of an existing other long-term
liability and the payment of $38.1 million for a non-qualified employee benefit plan required
upon a change of control as a result of the merger.

64

 

     (F) These pro forma adjustments eliminate the historical shareholders’ equity to the extent
that it is not carryover basis for the control group under EITF 88-16 (90.1% eliminated with
9.9% at carryover basis).

     (G) Pro forma shareholders’ equity was calculated as follows:

	 	 	 	 	 
	 	 	(In thousands)	 
	Fair value
of shareholders’ equity at March 31, 2008
	 	$	17,928,262	 
	Net cash proceeds from debt due to merger (i)
	 	 	(14,479,631	)
	 
	 	 	 
	Fair value of equity after merger (ii)
	 	$	3,448,631	 
	 
	 	 	 
	Pro forma shareholder’s equity under EITF 88-16

	 
	Fair value of equity after merger
	 	$	3,448,631	 
	Less: 9.9%
of fair value of equity after merger ($3,448,631 multiplied by 9.9%)
	 	 	(341,414	)
	Plus: 9.9% of shareholders’ historical carryover basis (9,661,909
multiplied by 9.9%)
	 	 	956,529	 
	Less: Deemed dividend (14,479,631 multiplied by 9.9%)
	 	 	(1,433,484	)
	 
	 	 	 
	Adjustment for historical carryover basis per EITF 88-16
	 	 	(818,369	)
	Adjustment for rollover of restricted stock awards
	 	$	13,567	 
	 
	 	 	 
	Total pro forma shareholders’ equity under EITF 88-16 (iii)
	 	$	2,643,829	 
	 
	 	 	 

 

			
	(i)	 	Net increase in debt in merger:

	 	 	 	 	 
	Issuance of debt in merger
	 	$	16,410,638	 
	Total debt redeemed
	 	 	(1,519,860	)
	Total decrease in cash
	 	 	168,897	 
	Estimated transaction and loan costs
	 	 	(580,044	)
	 
	 	 	 
	Total increase in debt due to merger
	 	$	14,479,631	 
	 
	 	 	 

 

			
	(ii)	 	For purposes of the unaudited pro forma condensed consolidated financial data, the
management of CCM Parent has assumed that the fair value of equity after the merger is $3.4
billion.
	 
	(iii)	 	Total pro forma shareholders’ equity under EITF 88-16:

	 	 	 	 	 
	Common stock, par value $.001 per share
	 	$	500	 
	Additional paid-in capital
	 	 	2,643,329	 
	 
	 	 	 
	 
	 	$	2,643,829	 
	 
	 	 	 

     (H) This pro forma adjustment is for the additional depreciation and amortization
related to the fair value adjustments on property, plant and equipment and definite-lived
intangible assets based on the estimated remaining useful lives ranging from two to twenty years
for such assets.

     (I) This pro forma adjustment is for the incremental interest expense resulting from the new
capital structure resulting from the merger and the fair value adjustments to existing Clear
Channel long-term debt.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Three	 	 	Three	 	 	Twelve	 
	 	 	 	 	 	 	Months	 	 	Months	 	 	Months	 
	 	 	Year Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	 	 	December 31,	 	 	March 31,	 	 	March 31,	 	 	March 31,	 
	 	 	2007	 	 	2008	 	 	2007	 	 	2008	 
	 	 	(In thousands)	 
	Interest expense on revolving credit facility (1)
	 	$	14,476	 	 	$	3,619	 	 	$	3,619	 	 	$	14,476	 
	Interest expense on receivables based credit
facility (2)
	 	 	23,356	 	 	 	5,895	 	 	 	5,839	 	 	 	23,412	 
	Interest expense on term loan facilities (3)
	 	 	867,229	 	 	 	216,807	 	 	 	216,807	 	 	 	867,229	 
	Interest expense on notes offered hereby (4)
	 	 	251,650	 	 	 	62,913	 	 	 	62,913	 	 	 	251,650	 
	Amortization of deferred financing fees and fair
value adjustments on Clear Channel senior
notes (5)
	 	 	232,887	 	 	 	58,222	 	 	 	58,222	 	 	 	232,887	 
	Reduction in interest expense on debt redeemed 
	 	 	(208,429	)	 	 	(39,143	)	 	 	(57,217	)	 	 	(190,355	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total pro forma interest adjustment
	 	$	1,181,169	 	 	$	308,313	 	 	$	290,183	 	 	$	1,199,299	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

65

 

 

			
	(1)	 	Pro forma interest expense reflects an $80 million outstanding balance on the $2,000
million revolving credit facility
at a rate equal to an applicable margin (assumed to be 3.4%) over LIBOR (assumed to be 2.7%)
plus a commitment
fee of 0.5% on the assumed undrawn balance of the revolving credit facility. For each 0.125% per
annum change in
LIBOR, annual interest expense on the revolving credit facility would change by $0.1 million.
	 
	(2)	 	Reflects pro forma interest expense on the receivables based credit facility at a rate equal
to an applicable margin
(assumed to be 2.4%) over LIBOR (assumed to be 2.7%) and assumes a commitment fee of 0.375% on
the unutilized
portion of the receivables based credit facility. For each 0.125% per annum change in LIBOR,
annual interest
expense on the receivables based credit facility would change by $0.6 million.
	 
	(3)	 	Reflects pro forma interest expense on the term loan facilities at a rate equal to an
applicable margin over LIBOR.
The pro forma adjustment assumes margins of 3.4% to 3.65% and LIBOR of 2.7%. Assumes a
commitment fee of
1.82% on the unutilized portion of the delayed draw term loan facilities. For each 0.125% per
annum change in
LIBOR, annual interest expense on the term loan facilities would change by $17.0 million.
	 
	(4)	 	Assumes a fixed rate of 10.75% on the senior cash pay notes offered hereby and a fixed rate
of 11.00% on the senior
toggle notes offered hereby.

	 	(i)	 	These pro forma financial statements include the assumptions that interest expense
is calculated at the rates under each tranche of the debt per the purchase agreement and
that the PIK Election has not been made in all available periods to the fullest extent
possible.

	 	 	 	The table below quantifies the effects for the period presented of two possible alternate
scenarios available to Clear Channel with regard to the payment of required interest, a)
paying 100% payment-in-kind (“PIK”) for all periods presented and b) electing to pay 50% in
cash and 50% through use of the PIK Election for all periods presented:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	100% PIK	 	50% Cash/50% PIK
	 	 	Increase in	 	Increase	 	Increase in	 	Increase
	 	 	interest	 	in net	 	interest	 	in net
	 	 	expense	 	loss	 	expense	 	loss
	Year ended December 31, 2007
	 	$	14,566	 	 	$	9,031	 	 	$	7,283	 	 	$	4,515	 
	Three months ended March 31, 2008
	 	 	7,219	 	 	 	4,476	 	 	 	3,610	 	 	 	2,238	 
	Three months ended March 31, 2007
	 	 	2,494	 	 	 	1,547	 	 	 	1,247	 	 	 	773	 
	Twelve months ended March 31, 2008
	 	 	19,291	 	 	 	11,960	 	 	 	9,646	 	 	 	5,980	 

	 	 	 	The use of the 100% PIK Election will increase cash balances by approximately $146 million,
net of tax, in the first year that the debt is outstanding. The use of the 50% cash pay /
50% PIK Election will increase cash balances by approximately $73 million, net of tax, in
the first year that the debt is outstanding.

	(5)	 	Represents debt issuance costs associated with our new bank facilities amortized over 6
years for the receivables based credit facility and the revolving credit facility, 6 to 7.5
years for the term loan facilities and 8 years for the notes offered hereby.

     (J) This pro forma adjustment reverses merger expenses as they are non-recurring
charges incurred in connection with the merger.

     (K) This pro forma adjustment records non-cash compensation expense of $9.7 million, $2.4
million, $2.4 million and $9.7 million for the year ended December 31, 2007, the three months ended
March 31, 2008 and 2007, and the last twelve months ended March 31, 2008, respectively, associated
with common stock options of CCM Parent that will be granted to certain key executives upon
completion of the merger in accordance with new employment agreements described elsewhere in this
offering memorandum. The assumptions used to calculate the fair value of these awards were
consistent with the assumptions used by Clear Channel disclosed in its Form 10-K for the year ended
December 31, 2007. It is likely that actual results will differ from these estimates due to changes
in the underlying assumptions and the pro forma results of operations could be materially impacted.

66

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

     The following table sets forth our selected historical consolidated financial data as of and
for the five years ended December 31, 2007, and as of and for the three-month periods ended March
31, 2008 and 2007. The summary historical consolidated financial data as of December 31, 2007 and
2006, and for the three years ended December 31, 2007 are derived from our audited consolidated
financial statements and related notes included elsewhere in this offering memorandum. The summary
historical consolidated financial data as of December 31, 2005, 2004 and 2003, and for the two
years ended December 31, 2004 are derived from our audited consolidated financial statements and
related notes not included herein. The financial data as of December 31, 2005, 2004 and 2003, and
for the two years ended December 31, 2004 has been revised to reflect the reclassification of the
assets, liabilities, revenues and expenses of our television business and certain radio stations as
discontinued operations in accordance with Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-lived Assets (“Statement 144”). The summary
historical consolidated financial data as of and for the three-month periods ended March 31, 2008
and 2007 are derived from our unaudited consolidated financial statements and related notes
included elsewhere in this offering memorandum. The unaudited consolidated financial statements
include all adjustments, consisting of normal recurring accruals, which we consider necessary for a
fair presentation of our consolidated financial position and consolidated results of operations for
these periods. Due to seasonality and other factors, operating results for the three-month period
ended March 31, 2008 are not necessarily indicative of the results that may be expected for the
entire year ending December 31, 2008.

     Acquisitions and dispositions significantly impact the comparability of the historical consolidated financial data reflected in this financial data. This
information is only a summary and you should read the information presented below in conjunction with our historical consolidated financial statements and related notes included elsewhere in this offering memorandum, as well as the section entitled
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

67

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Three Months Ended	 
	 	 	Year Ended December 31,	 	 	March 31,	 
	 	 	2007(1)	 	 	2006(2)	 	 	2005	 	 	2004	 	 	2003	 	 	2008	 	 	2007	 
	 	 	(In thousands)	 	 	(Unaudited)	 
	Statement of Operations:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue
	 	$	6,921,202	 	 	$	6,567,790	 	 	$	6,126,553	 	 	$	6,132,880	 	 	$	5,786,048	 	 	$	1,564,207	 	 	$	1,505,077	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes depreciation and amortization)
	 	 	2,733,004	 	 	 	2,532,444	 	 	 	2,351,614	 	 	 	2,216,789	 	 	 	2,024,442	 	 	 	705,947	 	 	 	627,879	 
	Selling, general and administrative expenses (excludes depreciation and amortization)
	 	 	1,761,939	 	 	 	1,708,957	 	 	 	1,651,195	 	 	 	1,644,251	 	 	 	1,621,599	 	 	 	426,381	 	 	 	416,319	 
	Depreciation and amortization
	 	 	566,627	 	 	 	600,294	 	 	 	593,477	 	 	 	591,670	 	 	 	575,134	 	 	 	152,278	 	 	 	139,685	 
	Corporate expenses (excludes depreciation and amortization)
	 	 	181,504	 	 	 	196,319	 	 	 	167,088	 	 	 	163,263	 	 	 	149,697	 	 	 	46,303	 	 	 	48,150	 
	Merger expenses
	 	 	6,762	 	 	 	7,633	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	389	 	 	 	1,686	 
	Gain on disposition of assets—net
	 	 	14,113	 	 	 	71,571	 	 	 	49,656	 	 	 	43,040	 	 	 	7,377	 	 	 	2,097	 	 	 	6,947	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	 	1,685,479	 	 	 	1,593,714	 	 	 	1,412,835	 	 	 	1,559,947	 	 	 	1,422,553	 	 	 	235,006	 	 	 	278,305	 
	Interest expense
	 	 	451,870	 	 	 	484,063	 	 	 	443,442	 	 	 	367,511	 	 	 	392,215	 	 	 	100,003	 	 	 	118,077	 
	Gain (loss) on marketable securities
	 	 	6,742	 	 	 	2,306	 	 	 	(702	)	 	 	46,271	 	 	 	678,846	 	 	 	6,526	 	 	 	395	 
	Equity in earnings of nonconsolidated affiliates
	 	 	35,176	 	 	 	37,845	 	 	 	38,338	 	 	 	22,285	 	 	 	20,669	 	 	 	83,045	 	 	 	5,264	 
	Other income (expense)—net 
	 	 	5,326	 	 	 	(8,593	)	 	 	11,016	 	 	 	(30,554	)	 	 	20,407	 	 	 	11,787	 	 	 	(12	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest, discontinued operations and cumulative effect of a change in accounting principle
	 	 	1,280,853	 	 	 	1,141,209	 	 	 	1,018,045	 	 	 	1,230,438	 	 	 	1,750,260	 	 	 	236,361	 	 	 	165,875	 
	Income tax expense
	 	 	441,148	 	 	 	470,443	 	 	 	403,047	 	 	 	471,504	 	 	 	753,564	 	 	 	66,581	 	 	 	70,466	 
	Minority
interest expense, net of tax
	 	 	47,031	 	 	 	31,927	 	 	 	17,847	 	 	 	7,602	 	 	 	3,906	 	 	 	8,389	 	 	 	276	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations and cumulative effect of a change in accounting principle
	 	 	792,674	 	 	 	638,839	 	 	 	597,151	 	 	 	751,332	 	 	 	992,790	 	 	 	161,391	 	 	 	95,133	 
	Income from discontinued operations, net (3)
	 	 	145,833	 	 	 	52,678	 	 	 	338,511	 	 	 	94,467	 	 	 	152,801	 	 	 	638,262	 	 	 	7,089	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before cumulative effect of a change in accounting principle
	 	 	938,507	 	 	 	691,517	 	 	 	935,662	 	 	 	845,799	 	 	 	1,145,591	 	 	 	799,653	 	 	 	102,222	 
	Cumulative effect of a change in accounting principle, net of tax of, $2,959,003 in 2004(4)
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(4,883,968	)	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income (loss)
	 	$	938,507	 	 	$	691,517	 	 	$	935,662	 	 	$	(4,038,169	)	 	$	1,145,591	 	 	$	799,653	 	 	$	102,222	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

68

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Three Months Ended
	 	 	Year Ended December 31,	 	March 31,
	 	 	2007	 	2006	 	2005	 	2004	 	2003	 	2008	 	2007
	 	 	(In thousands)	 	(Unaudited)
	Balance Sheet Data:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current assets
	 	$	2,294,583	 	 	$	2,205,730	 	 	$	2,398,294	 	 	$	2,269,922	 	 	$	2,185,682	 	 	$	2,679,319	 	 	$	2,065,806	 
	Property, plant and equipment—net,
including discontinued operations (5) 
	 	 	3,215,088	 	 	 	3,236,210	 	 	 	3,255,649	 	 	 	3,328,165	 	 	 	3,476,900	 	 	 	3,090,228	 	 	 	3,188,918	 
	Total assets
	 	 	18,805,528	 	 	 	18,886,455	 	 	 	18,718,571	 	 	 	19,959,618	 	 	 	28,352,693	 	 	 	19,053,211	 	 	 	18,686,330	 
	Current liabilities
	 	 	2,813,277	 	 	 	1,663,846	 	 	 	2,107,313	 	 	 	2,184,552	 	 	 	1,892,719	 	 	 	2,298,917	 	 	 	1,815,182	 
	Long-term debt, net of current
maturities
	 	 	5,214,988	 	 	 	7,326,700	 	 	 	6,155,363	 	 	 	6,941,996	 	 	 	6,898,722	 	 	 	5,072,000	 	 	 	6,862,109	 
	Shareholders’ equity
	 	 	8,797,491	 	 	 	8,042,341	 	 	 	8,826,462	 	 	 	9,488,078	 	 	 	15,553,939	 	 	 	9,661,909	 	 	 	8,128,722	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Statement of Cash Flows Data:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash flows provided by (used in):
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating activities
	 	$	1,576,428	 	 	$	1,748,057	 	 	$	1,303,880	 	 	 	 	 	 	 	 	 	 	$	367,772	 	 	$	321,463	 
	Investing activities
	 	 	(482,677	)	 	 	(607,011	)	 	 	(349,796	)	 	 	 	 	 	 	 	 	 	 	(154,257	)	 	 	(71,021	)
	Financing activities
	 	 	(1,431,014	)	 	 	(1,178,610	)	 	 	(1,061,392	)	 	 	 	 	 	 	 	 	 	 	(754,449	)	 	 	(283,165	)
	Discontinued operations
	 	 	366,411	 	 	 	69,227	 	 	 	157,118	 	 	 	 	 	 	 	 	 	 	 	997,898	 	 	 	25,913	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Financial Data:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Capital expenditures
	 	$	363,309	 	 	$	336,739	 	 	$	302,655	 	 	 	 	 	 	 	 	 	 	$	93,693	 	 	$	64,986	 
	Ratio of earnings to fixed
charges
	 	 	2.38	x	 	 	2.27	x	 	 	2.24	x	 	 	2.76	x	 	 	3.56	x	 	 	1.72	x	 	 	1.78	x

 

			
	(1)	 	Effective January 1, 2007, we adopted Financial Accounting Standards Board Interpretation
No. 48, Accounting for
Uncertainty in Income Taxes (“FIN 48”). In accordance with the provisions of FIN 48, the effects
of adoption were
accounted for as a cumulative-effect adjustment recorded to the balance of retained earnings on
the date of
adoption. The adoption of FIN 48 resulted in a decrease of $0.2 million to the January 1, 2007
balance of “Retained
deficit”, an increase of $101.7 million in “Other long-term liabilities” for unrecognized tax
benefits and a decrease of
$123.0 million in “Deferred income taxes”.
	 
	(2)	 	Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123
(revised 2004), Share-
Based Payment (“Statement 123(R)”). In accordance with the provisions of Statement 123(R), we
elected to adopt
the standard using the modified prospective method.
	 
	(3)	 	Includes the results of operations of our live entertainment and sports representation
businesses, which we spun-off
on December 21, 2005, our television business sold on March 14, 2008 and certain of our non-core
radio stations.
	 
	(4)	 	We recorded a non-cash charge of $4.9 billion, net of deferred taxes of $3.0 billion, as a
cumulative effect of a
change in accounting principle during the fourth quarter of 2004 as a result of the adoption of
EITF Topic D-108, Use
of the Residual Method to Value Acquired Assets other than Goodwill (“Topic D-108”).
	 
	(5)	 	Excludes the property, plant and equipment—net of our live entertainment and sports
representation businesses,
which we spun-off on December 21, 2005.

69

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read the following discussion of our financial condition and results of
operations with “Selected Historical Consolidated Financial and Other Data,” “Unaudited Pro Forma
Condensed Consolidated Financial Statements” and the historical consolidated financial statements
and related notes included elsewhere in this offering memorandum. In this section, the terms “we,”
“our,” “ours,” “us” and “Clear Channel” refer collectively to Clear Channel and its consolidated
subsidiaries. This discussion contains forward-looking statements about our markets, the demand for
our products and services and our future results. We based these statements on assumptions that we
consider reasonable. Actual results may differ materially from those suggested by our
forward-looking statements for various reasons including those discussed in the “Risk Factors” and
“Forward-Looking Statements” sections of this offering memorandum. Those sections expressly qualify
all subsequent oral and written forward-looking statements attributable to us or persons acting on
our behalf. We do not have any intention or obligation to update forward-looking statements
included in this offering memorandum.

Format of Presentation

     Management’s discussion and analysis of our results of operations and financial
condition should be read in conjunction with the consolidated financial statements and related
footnotes. Our discussion is presented on both a consolidated and segment basis. Our reportable
operating segments are Americas Outdoor Advertising, International Outdoor Advertising and Radio
Broadcasting, which includes our national syndication business. Included in the Other segment are
our media representation business, Katz Media, and other general support services and initiatives.

     We manage our operating segments primarily focusing on their operating income, while corporate
expenses, merger expenses, gain on disposition of assets—net, interest expense, gain on marketable
securities, equity in earnings of nonconsolidated affiliates, other
income (expense) — net, income tax expense and minority interest expense—net of tax are managed on a total company basis and are,
therefore, included only in our discussion of consolidated results.

Recent Events

Merger with a Group Co-led by Bain Capital and THL

     The following discussion assumes the approval of the adoption of the merger agreement
by our shareholders.

     One or more new entities controlled by the Sponsors and their co-investors will acquire
directly or indirectly through newly formed companies (each of which will be ultimately controlled
jointly by the Sponsors) shares of stock in CCM Parent. At the effective time of the merger, those
shares will represent, in the aggregate, between 66% and 82% (whether measured by voting power or
economic interest) of the equity of CCM Parent, depending on the percentage of shares certain
members of our management commit, or are permitted and subsequently elect, to rollover and the
number of shares issued to our public shareholders pursuant to the merger agreement, as more fully
described below. The capital stock held by the Sponsors will consist of a combination of shares of
“strong voting” Class B common stock and nonvoting Class C common stock of CCM Parent with
aggregate votes equal to one vote per share. As an illustration only, assuming there were one
million shares of Class B common stock

70

 

issued and outstanding and nine million shares of Class C common stock issued and outstanding, then
each share of Class B common stock would have ten votes; and therefore, in the aggregate the Class
B common stock would be entitled to ten million votes (a total number of votes equal to the total
number of shares of Class B common stock and Class C common stock outstanding).

     At the effective time of the merger, our shareholders who elect to receive cash consideration
in connection with the merger will receive $36.00 in cash for each pre-merger share of our
outstanding common stock they own, subject to the payment of additional equity consideration, if
applicable. Pursuant to the merger agreement, as an alternative to receiving the $36.00 per share
cash consideration, our shareholders will be offered the opportunity to exchange some or all of
their pre-merger shares on a one-for-one basis for shares of Class A common stock in CCM Parent,
subject to aggregate and individual caps discussed below. Shares of Class A common stock are
entitled to one vote per share. Each share of Class A common stock, Class B
common stock and Class C common stock will have the same economic rights.

     The merger agreement provides that no more than 30% of the capital stock of CCM Parent is
issuable pursuant to stock elections in exchange for our outstanding common stock, including shares
issuable upon conversion of our outstanding options. If our shareholders make stock elections
exceeding the 30% aggregate cap, then each shareholder (other than certain shareholders who have
separately agreed with CCM Parent to make stock elections with respect to an aggregate of
13,888,890 shares of our common stock whose respective stock elections are subject to proration
only in the event of a reduction in the equity financing funded by the Sponsors and their
co-investors) will receive a proportionate allocation of shares of CCM Parent’s Class A common
stock. Furthermore, no shareholder making a stock election may receive more than 11,111,112 shares
of Class A common stock of CCM Parent in connection with the merger. Our shareholders which are
subject to proration or the individual cap will receive $36.00 per share cash consideration for
such prorated or capped shares, subject to the payment of additional equity consideration, if
applicable.

     In limited circumstances, our shareholders electing to receive cash consideration for some or
all of their shares of our outstanding common stock, including shares issuable upon conversion of
our outstanding options, will, on a pro rata basis, instead be issued shares of CCM Parent’s Class
A common stock. CCM Parent may reduce the cash consideration to be paid to our shareholders in the
event the total funds that CCM Parent determines it needs to fund the Transactions exceed the total
funds available to CCM Parent in connection with the Transactions, as described more fully in “Use
of Proceeds” herein. If CCM Parent elects to reduce the cash consideration based on such
determination, CCM Parent may reduce the cash consideration to be paid to our shareholders by an
amount not to exceed 1/36th of the total amount of cash consideration that our
shareholders elected to receive and, in lieu thereof, issue shares of Class A common stock to such
shareholders. The issuance of any additional equity consideration may result in the issuance of
more than 30% of the total shares of capital stock of CCM Parent in exchange for shares of our
outstanding common stock, including shares issuable upon conversion of our outstanding options.

     The merger agreement provides for payment of additional cash consideration if the merger
closes after November 1, 2008. If the merger is consummated after November 1, 2008, but on or
before December 1, 2008, our shareholders will receive additional cash consideration based upon the
number of days elapsed since November 1, 2008 (including November 1, 2008), equal to $36.00
multiplied by 4.5% per annum, per share. If the merger is consummated after December 1, 2008, the
additional cash consideration will increase and our shareholders will

71

 

receive additional cash consideration based on the number of days elapsed since December 1, 2008
(including December 1, 2008), equal to $36.00 multiplied by 6% per annum, per share (plus the
additional cash consideration accrued during November 2008).

Certain Regulatory Matters in Connection with the Merger

     In connection with the merger, the FCC released on January 24, 2008 the FCC Order
approving the transfer of control of our FCC licenses to affiliates of the Fincos subject to
compliance with certain conditions. Those conditions include the assignment prior to the closing of
the merger of our FCC licenses for 57 radio stations (42 of which are included in our 890 radio
stations as of December 31, 2007) to AST, an entity in which neither we nor Bain Capital or THL
holds an interest pursuant to the FCC attribution standards. The parties intend to satisfy the
conditions included in the FCC Order prior to the closing date of the Transactions. The consents
granted by the FCC Order remain in effect as granted or as extended. The FCC grants extensions of
authority to consummate previously approved transfers of control either by right or for good cause
shown. We anticipate that the FCC will grant any necessary extensions of the effective period of
the FCC Order for consummation of the transfer.

     In addition, we agreed with the DOJ to enter into a Final Judgment in accordance with and
subject to the Tunney Act, as stipulated in the Hold Separate Stipulation and Order filed by the
DOJ on February 13, 2008, whereby we have agreed to divest within 90 days of the closing of the
merger, subject to the conditions set forth therein, six additional core radio stations in
Cincinnati, Houston, Las Vegas and San Francisco.

Sale of Certain Radio Stations

     On November 16, 2006, we announced plans to sell 448 non-core radio stations. During
the first quarter of 2008, we revised our plans to sell 173 of these stations because we determined
that market conditions were not advantageous to complete the sales. We intend to hold and operate
these stations. Of these, 145 were classified as discontinued operations at December 31, 2007. At
March 31, 2008, these 145 non-core stations no longer met the requirements of Statement 144 for
classification as discontinued operations. Therefore, the assets, results of operations and cash
flows from these 145 stations were reclassified to continuing operations in our consolidated
financial statements as of and for the period ended March 31, 2008, for the period ended March 31,
2007 and as of December 31, 2007.

     We have 20 non-core radio stations that are no longer under a definitive asset purchase
agreement as of March 31, 2008. However, we continue to actively market these radio stations and
they continue to meet the criteria in Statement 144 for classification as discontinued operations.
Therefore, the assets, results of operations and cash flows from these stations remain classified
as discontinued operations in our consolidated financial statements as of and for the period ended
March 31, 2008, for the period ended March 31, 2007 and as of December 31, 2007.

72

 

     The following table presents the activity related to our planned divestitures of radio stations:

	 	 	 	 	 
	Total radio stations announced as being marketed for sale on November 16, 2006
	 	 	448	 
	Total radio stations no longer being marketed for sale
	 	 	(173	)
	 
	 	 	 	 
	Adjusted number of radio stations being marketed for sale (non-core radio
stations)
	 	 	275	 
	Non-core
radio stations sold through March 31, 2008
	 	 	(223	)
	 
	 	 	 	 
	Remaining non-core radio stations at March 31, 2008 classified as
discontinued operations
	 	 	52	 
	Non-core radio stations under definitive asset purchase agreements
	 	 	(32	)
	 
	 	 	 	 
	Non-core radio stations being marketed for sale
	 	 	20	 
	 
	 	 	 	 

     In addition to our non-core stations, we had definitive asset purchase agreements for
eight stations at March 31, 2008. We determined that each of these radio station markets represents
disposal groups. Consistent with the provisions of Statement 144, we classified these assets that
are subject to transfer under the definitive asset purchase agreements as discontinued operations
as of and for the period ended March 31, 2008, for the period ended March 31, 2007 and as of
December 31, 2007. Accordingly, depreciation and amortization associated with these assets was
discontinued. Additionally, we determined that these assets comprise operations and cash flows that
can be clearly distinguished, operationally and for financial reporting purposes, from the rest of
the Company. As of March 31, 2008, we determined that the estimated fair value less costs to sell
attributable to these assets was in excess of the carrying value of their related net assets held
for sale.

     Through May 7, 2008, we executed definitive asset purchase agreements for the sale of 17 radio
stations in addition to the radio stations under definitive asset purchase agreements at March 31,
2008.

     The closing of these radio sales is subject to antitrust clearances, FCC approval and other
customary closing conditions. The sale of these radio assets is not a condition to the closing of
the Transactions and is not contingent on the closing of the Transactions.

Sale of Our Television Business

     On November 16, 2006, we announced plans to sell all of our television stations. We entered
into a definitive agreement on April 20, 2007 with an affiliate of Providence to sell our
television business. The FCC issued its consent order on November 29, 2007 approving the assignment
of our television station licenses to the affiliate of Providence. On March 14, 2008, we completed
the sale of all of our television stations to an affiliate of Providence for $1.0 billion, adjusted
for certain items including proration of expenses and adjustments for working capital.

     As a result, we recorded a gain of $666.7 million as a component of “Income from discontinued
operations, net” in our consolidated statement of operations during the quarter ended March 31,
2008. Additionally, net income and cash flows from the television business were classified as
discontinued operations in the consolidated statements of operations and the consolidated
statements of cash flows, respectively, for the first quarter of 2008 and 2007. The net assets
related to the television business were classified as discontinued operations as of December 31,
2007.

Sale of Certain Equity Investments

     On January 17, 2008, we entered into an agreement to sell our equity investment in
Clear Channel Independent, an out-of-home advertising company with operations in South Africa and
other sub-Saharan countries. We closed the transaction on March 28, 2008.

73

 

     On May 28, 2008, we entered into a definitive agreement to sell our 40% equity interest
in the Mexican radio broadcasting company, Grupo Acir, for total consideration of $94 million. The
sale is subject to Mexican regulatory approvals and is expected to close in June 2008. At closing,
the buyer will purchase half of our equity interest and is obligated to purchase our remaining
equity interest in Grupo Acir within five years from the closing date.

Americas Outdoor Advertising and International Outdoor Advertising

     Our revenue is derived from selling advertising space on the displays we own or operate in key
markets worldwide consisting primarily of billboards, street furniture and transit displays. We own
the majority of our advertising displays, which typically are located on sites that we either lease
or own or for which we have acquired permanent easements. Our advertising contracts typically
outline the number of displays reserved, the duration of the advertising campaign and the unit
price per display.

     Our advertising rates are based on a number of different factors including location,
competition, size of display, illumination, market and gross ratings points. Gross ratings points
are the total number of impressions delivered, expressed as a percentage of a market population, of
a display or group of displays. The number of impressions delivered by a display is measured by the
number of people passing the site during a defined period of time and, in some international
markets, is weighted to account for such factors as illumination, proximity to other displays and
the speed and viewing angle of approaching traffic. Management typically monitors our business by
reviewing the average rates, average revenue per display, or yield, occupancy and inventory levels
of each of our display types by market. In addition, because a significant portion of our
advertising operations are conducted in foreign markets, the largest being France and the United
Kingdom, management reviews the operating results from our foreign operations on a constant dollar
basis. A constant dollar basis allows for comparison of operations independent of foreign exchange
movements.

     The significant expenses associated with our operations include (i) direct production,
maintenance and installation expenses, (ii) site lease expenses for land under our displays and
(iii) revenue-sharing or minimum guaranteed amounts payable under our billboard, street furniture
and transit display contracts. Our direct production, maintenance and installation expenses include
costs for printing, transporting and changing the advertising copy on our displays, the related
labor costs, the vinyl and paper costs and the costs for cleaning and maintaining our displays.
Vinyl and paper costs vary according to the complexity of the advertising copy and the quantity of
displays. Our site lease expenses include lease payments for use of the land under our displays, as
well as any revenue-sharing arrangements or minimum guaranteed amounts payable that we may have
with the landlords. The terms of our site leases and revenue-sharing or minimum guaranteed
contracts generally range from one to 20 years.

     In our International Outdoor Advertising business, normal market practice is to sell
billboards and street furniture as network packages with contract terms typically ranging from one
to two weeks, compared to contract terms typically ranging from four weeks to one year in the
United States. In addition, competitive bidding for street furniture and transit contracts, which
constitute a larger portion of our International Outdoor Advertising business, and a different
regulatory environment for billboards, result in higher site lease cost in our International
Outdoor Advertising business compared to our Americas Outdoor Advertising business. As a result,
our margins are typically less in our International Outdoor Advertising business than in the
Americas Outdoor Advertising.

74

 

     Our street furniture and transit display contracts, the terms of which range from three to 20
years, generally require us to make upfront investments in property, plant and equipment. These
contracts may also include upfront lease payments and/or minimum annual guaranteed lease payments.
We can give no assurance that our cash flows from operations over the terms of these contracts will
exceed the upfront and minimum required payments.

Radio Broadcasting

     Our revenue is derived from selling advertising time (“spots”) on our radio stations, with
advertising contracts typically less than one year. The formats are designed to reach audiences
with targeted demographic characteristics that appeal to our advertisers. Management monitors
average advertising rates, which are principally based on the length of the spot and how many
people in a targeted audience listen to our stations, as measured by an independent ratings
service. The size of the market influences rates as well, with larger markets typically receiving
higher rates than smaller markets. Also, our advertising rates are influenced by the time of day
the advertisement airs, with morning and evening drive-time hours typically the highest. Management
monitors yield per available minute in addition to average rates because yield allows management to
track revenue performance across our inventory. Yield is defined by management as revenue earned
divided by commercial capacity available.

     Management monitors macro level indicators to assess our radio broadcasting operations’
performance. Due to the geographic diversity and autonomy of our markets, we have a multitude of
market specific advertising rates and audience demographics. Therefore, management reviews average
unit rates across all of our stations.

     Management looks at our radio broadcasting operations’ overall revenue as well as local
advertising, which is sold predominately in a station’s local market, and national advertising,
which is sold across multiple markets. Local advertising is sold by each radio station’s sales
staffs while national advertising is sold, for the most part, through our national representation
firm. Local advertising, which is our largest source of advertising revenue, and national
advertising revenues are tracked separately, because these revenue streams have different sales
forces and respond differently to changes in the economic environment.

     Management also looks at radio revenue by market size, as defined by Arbitron. Typically,
larger markets can reach larger audiences with wider demographics than smaller markets.
Additionally, management reviews our share of target demographics listening to the radio in an
average quarter hour. This metric gauges how well our formats are attracting and retaining
listeners.

     A portion of our Radio Broadcasting segment’s expenses vary in connection with changes in
revenue. These variable expenses primarily relate to costs in our sales department, such as
salaries, commissions and bad debt. Our programming and general and administrative departments
incur most of our fixed costs, such as talent costs, rights fees, utilities and office salaries.
Lastly, our highly discretionary costs are in our marketing and promotions department, which we
primarily incur to maintain and/or increase our audience share.

75

 

Statement 123(R)

     We adopted Statement 123(R) on January 1, 2006 under the modified-prospective approach
which requires us to recognize employee compensation cost related to our stock option grants in the
same line items as cash compensation for all options granted after the date of adoption as well as
for any options that were unvested at adoption. Under the modified-prospective approach, no stock
option expense attributable to these options is reflected in the financial statements for years
prior to adoption. The amounts recorded as share-based payments in the financial statements during
2005 relate to the expense associated with restricted stock awards. As of December 31, 2007, there
was $89.8 million of total unrecognized compensation cost, net of estimated forfeitures, related to
nonvested share-based compensation arrangements. As of March 31, 2008, there was $78.5 million of
total unrecognized compensation cost, net of estimated forfeitures, related to nonvested
share-based compensation arrangements. The unrecognized compensation cost is expected to be
recognized over a weighted average period of approximately three years. The following table details
compensation costs related to share-based payments for the year ended December 31, 2007 and the
three-month period ended March 31, 2008 and 2007:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Three
	 	 	 	 	 	 	Months
	 	 	Year Ended	 	Ended
	 	 	December 31	 	March 31,
	 	 	2007	 	2008	 	2007
	 	 	(In millions)
	Americas Outdoor Advertising
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct Operating Expenses
	 	$	5.7	 	 	$	1.1	 	 	$	0.8	 
	SG&A
	 	 	2.2	 	 	 	0.4	 	 	 	0.3	 
	International Outdoor Advertising
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct Operating Expenses
	 	$	1.2	 	 	$	0.3	 	 	$	0.2	 
	SG&A
	 	 	0.5	 	 	 	0.1	 	 	 	0.1	 
	Radio Broadcasting
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct Operating Expenses
	 	$	10.0	 	 	$	2.2	 	 	$	2.0	 
	SG&A
	 	 	12.2	 	 	 	2.6	 	 	 	2.5	 
	Other
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct Operating Expenses
	 	$	—	 	 	$	—	 	 	$	—	 
	SG&A
	 	 	—	 	 	 	—	 	 	 	—	 
	Corporate
	 	$	12.2	 	 	$	2.9	 	 	$	2.4	 

76

 

The Comparison of Three Months Ended March 31, 2008 to Three Months Ended March 31, 2007
is as Follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 	 	%	 
	 	 	March 31,	 	 	Change	 
	 	 	2008	 	 	2007	 	 	 	 
	 	 	(In thousands)	 	 	 	 
	Revenue
	 	$	1,564,207	 	 	$	1,505,077	 	 	 	4	%
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct
operating expenses (excludes depreciation and amortization)
	 	 	705,947	 	 	 	627,879	 	 	 	12	%
	Selling, general and administrative expenses
(excludes depreciation and amortization)
	 	 	426,381	 	 	 	416,319	 	 	 	2	%
	Depreciation and amortization
	 	 	152,278	 	 	 	139,685	 	 	 	9	%
	Corporate expenses (excludes depreciation and
	 	 	46,303	 	 	 	48,150	 	 	 	(4	%)
	Merger expenses
	 	 	389	 	 	 	1,686	 	 	 	 	 
	Gain on disposition of assets—net
	 	 	2,097	 	 	 	6,947	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	 	235,006	 	 	 	278,305	 	 	 	(16	%)
	Interest expense
	 	 	100,003	 	 	 	118,077	 	 	 	 	 
	Gain on marketable securities
	 	 	6,526	 	 	 	395	 	 	 	 	 
	Equity in earnings of nonconsolidated affiliates
	 	 	83,045	 	 	 	5,264	 	 	 	 	 
	Other income
(expense) — net
	 	 	11,787	 	 	 	(12	)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest
expense and discontinued operations
	 	 	236,361	 	 	 	165,875	 	 	 	 	 
	Income tax expense:
	 	 	 	 	 	 	 	 	 	 	 	 
	Current
	 	 	(23,833	)	 	 	(32,359	)	 	 	 	 
	Deferred
	 	 	(42,748	)	 	 	(38,107	)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income tax expense
	 	 	(66,581	)	 	 	(70,466	)	 	 	 	 
	Minority interest expense, net of tax
	 	 	8,389	 	 	 	276	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations
	 	 	161,391	 	 	 	95,133	 	 	 	 	 
	Income from discontinued operations, net
	 	 	638,262	 	 	 	7,089	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Net income
	 	$	799,653	 	 	$	102,222	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 

Consolidated Results of Operations

Revenue

     Our consolidated revenue increased $59.1 million during the first quarter of 2008 compared to
the same period of 2007. Our International Outdoor Advertising revenue increased $68.4 million,
with roughly $46.4 million from movements in foreign exchange. The remainder of our International
Outdoor Advertising revenue growth was mostly associated with increases in China, Italy, Spain and
Australia. Our Americas Outdoor Advertising revenue grew $16.3 million primarily from increases in
airport and street furniture revenues and digital display revenue. These gains were partially
offset by a revenue decline of $29.6 million from our Radio Broadcasting segment associated with
decreases in local and national advertising.

Direct Operating Expenses

     Direct operating expenses increased $78.1 million during the first quarter of 2008 compared to
the same period of 2007. Our International Outdoor Advertising segment contributed $55.3 million of
the increase, of which $31.7 million related to movements in foreign exchange, and the remainder of
the increase was associated with an increase in site lease expenses. Americas Outdoor Advertising
direct operating expenses increased $21.3 million driven by increased site lease expenses
associated with new contracts and the increase in airport, street furniture and

77

 

digital display revenues. Partially offsetting these increases were less direct operating
expenses in our Radio Broadcasting segment of $3.0 million primarily attributable to a decline in
programming expenses.

Selling, General and Administrative Expenses (“SG&A”)

     SG&A increased $10.1 million during the first quarter of 2008 compared to the same
period of 2007. Our International Outdoor Advertising SG&A expenses increased $12.9 million
primarily attributable to $8.9 million from movements in foreign exchange. SG&A increased $4.1
million in our Americas Outdoor Advertising segment principally related to an increase in
commission expenses associated with the increase in revenue. Our Radio Broadcasting SG&A declined
$7.4 million from fewer advertising expenses and decreases in commission expenses associated with
the revenue decline.

Depreciation and Amortization

     Depreciation and amortization increased $12.6 million in the first quarter of 2008
compared to the same period of 2007 primarily as a result of a $6.6 million adjustment related to
radio stations that were reclassified to continuing operations for depreciation and amortization
that would have been recognized had the stations been continuously classified as continuing
operations and approximately $4.9 million related to increases in foreign exchange.

Corporate Expenses

     Corporate expenses declined approximately $1.8 million related to a decline in Radio
Broadcasting bonus expense associated with the decline in Radio Broadcasting operating
income.

Gain on Disposition of Assets—Net

     The $2.1 million gain in 2008 primarily relates to a gain on disposition of Americas Outdoor
Advertising assets of $2.6 million plus net gains of various miscellaneous items of $0.9 million,
partially offset by a loss on the disposal of land of $1.4 million in one of our Americas Outdoor
Advertising markets.

     The gain on disposition of assets—net for 2007 was $6.9 million related primarily to a $5.5
million gain on the disposition of street furniture assets.

Interest Expense

     The decline in interest expense of $18.1 million primarily relates to the decline in average
debt outstanding as well as a decline in the weighted average cost of debt in the first quarter of
2008 compared to the same period of 2007.

Gain on Marketable Securities

     The gain on marketable securities for the first quarters of 2008 and 2007 relates solely to
the change in value of secured forward exchange contracts and the underlying shares.

Equity in Earnings of Nonconsolidated Affiliates

     Equity in earnings of nonconsolidated affiliates increased $77.8 million primarily from
a $75.6 million gain on the sale of our 50% interest in Clear Channel Independent, a South African
outdoor advertising company.

78

 

Other Income (Expense)—Net

     Other income increased $11.8 million in the current quarter over the same period of 2007
primarily related to foreign exchange gains.

Income Tax Benefit (Expense)

     Current tax expense decreased by $8.5 million during 2008 as compared to 2007 primarily due to
current tax benefits of approximately $10.2 million recorded in 2008 related to additional tax
depreciation deductions as a result of the bonus depreciation provisions enacted as part of the
Economic Stimulus Act of 2008. Additionally, we sold our 50% interest in Clear Channel Independent,
which was structured as a tax free disposition. The sale resulted in a gain of $75.6 million with
no current tax expense.

     Deferred tax expense increased $4.6 million during 2008 as compared to 2007 mostly due to the
additional tax depreciation deductions taken in 2008 mentioned above. This increase was partially
offset by additional deferred tax expense recorded during 2007 as a result of the utilization of
deferred tax assets related to capital expenditures in certain foreign jurisdictions.

Minority Interest Expense, Net of Tax

     The increase in minority interest expense in 2008 compared to 2007 relates to the increase in
net income of our majority-owned subsidiary, CCOH.

Income from Discontinued Operations, Net

     Included in income from discontinued operations in the first quarter of 2008 is a gain of
$633.2 million, net of tax, related to the sale of our television business and the sale of radio
stations. We estimate utilization of approximately $577.3 million of capital loss carryforwards to
offset a portion of the taxes associated with these gains. As of March 31, 2008, we had
approximately $809.2 million in capital loss carryforwards remaining.

Americas Outdoor Advertising Results of Operations

     Our Americas Outdoor Advertising operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 	 	 	 
	 	 	March 31,	 	 	%	 
	 	 	2008	 	 	2007	 	 	Change	 
	 	 	(In thousands)	 	 	 	 
	Revenue
	 	$	333,362	 	 	$	317,023	 	 	 	5	%
	Direct operating expenses
	 	 	156,245	 	 	 	134,914	 	 	 	16	%
	Selling, general and administrative expenses
	 	 	58,375	 	 	 	54,243	 	 	 	8	%
	Depreciation and amortization
	 	 	50,099	 	 	 	46,561	 	 	 	8	%
	 
	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	68,643	 	 	$	81,305	 	 	 	(16	%)
	 
	 	 	 	 	 	 	 	 	 

     Revenue increased approximately $16.3 million during the first quarter of 2008 compared to the
first quarter of 2007 primarily from increases in airport and street furniture revenues as well as
digital display revenue. The increase in street furniture revenue was primarily the result of a new
contract in San Francisco while the increase in airport revenue was due to increased rates and
occupancy. We benefited from contract wins in our airport business as well. Digital display

79

 

revenue growth was primarily attributable to an increase in digital displays. Partially
offsetting the revenue increase was a decline in bulletin and poster revenue of approximately $4.5
million. The decline in bulletin revenue was primarily attributable to decreased occupancy while
the decline in poster revenue was primarily attributable to a decrease in rate. Leading advertising
categories during the quarter were telecommunications, retail, automotive, financial services and
amusements. Revenue growth was led by Los Angeles, San Francisco, Seattle and Milwaukee and America
Outdoor Advertising’s international markets of Canada, Mexico and Peru.

     Our Americas Outdoor Advertising direct operating expenses increased $21.3 million primarily
from higher site lease expenses of $18.9 million. Approximately $8.9 million of this increase was
associated with new airport and street furniture contracts and the remainder is primarily
associated with the increase in airport, street furniture and digital revenue. Our SG&A expenses
increased $4.1 million primarily from commission expenses associated with the increase in revenue.

International Outdoor Advertising Results of Operations

	 	 	Our International Outdoor Advertising operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 	 	 	 
	 	 	March 31,	 	 	%	 
	 	 	2008	 	 	2007	 	 	Change	 
	 	 	(In thousands)	 	 	 	 
	Revenue
	 	$	442,217	 	 	$	373,833	 	 	 	18	%
	Direct operating
expenses
	 	 	314,589	 	 	 	259,291	 	 	 	21	%
	Selling, general and
administrative expenses
	 	 	86,235	 	 	 	73,290	 	 	 	18	%
	Depreciation and
amortization
	 	 	54,991	 	 	 	49,109	 	 	 	12	%
	 
	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	(13,598	)	 	$	(7,857	)	 	NA	 
	 
	 	 	 	 	 	 	 	 	 

     Revenue increased approximately $68.4 million, with roughly $46.4 million from movements
in foreign exchange. The remainder of the revenue growth was primarily attributable to growth in
China, Italy, Spain, Romania and Australia, partially offset by a revenue decline in the United
Kingdom. We experienced weak advertising markets in both France and the United Kingdom during the
quarter. China, Italy, Spain and Australia all benefited from strong advertising environments. We
acquired operations in Romania at the end of the second quarter of 2007, which contributed to the
revenue growth in 2008. We also benefited from political spending for the national elections in
Italy. The revenue growth in Spain was primarily a result of our Barcelona bike contract, which we
began operating during the first quarter of 2007.

     Direct operating expenses increased $55.3 million. Included in the increase is approximately
$31.7 million related to movements in foreign exchange. The remaining increase in direct operating
expenses was primarily attributable to an increase in site lease expenses and other direct
operating expenses associated with the increase in revenue. SG&A expenses increased $12.9 million
in 2008 over 2007 from approximately $8.9 million related to movements in foreign exchange and an
increase in selling expenses associated with the increase in revenue.

80

 

Radio Broadcasting Results of Operations

     Our Radio Broadcasting operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 	 	 	 
	 	 	March 31,	 	 	%	 
	 	 	2008	 	 	2007	 	 	Change	 
	 	 	(In thousands)	 	 	 	 
	Revenue 
	 	$	769,611	 	 	$	799,201	 	 	 	(4	%)
	Direct operating expenses 
	 	 	231,496	 	 	 	234,518	 	 	 	(1	%)
	Selling, general and administrative expenses 
	 	 	269,282	 	 	 	276,693	 	 	 	(3	%)
	Depreciation and amortization 
	 	 	31,487	 	 	 	29,901	 	 	 	5	%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income 
	 	$	237,346	 	 	$	258,089	 	 	 	(8	%)
	 
	 	 	 	 	 	 	 	 	 	 

     Our Radio Broadcasting revenue declined $29.6 million during the first quarter of 2008 as
compared to the same period of 2007. Decreases in local and national revenues were partially offset
by increases in traffic, on-line and syndicated radio revenues. Local and national revenues were
down partially as a result of overall weakness in advertising as well as declines in automotive,
retail and services advertising categories. Our yield per available minute decreased in the first
quarter of 2008 compared to the first quarter of 2007.

     Direct operating expenses declined $3.0 million primarily related to a decline of $11.5
million in programming expenses attributable to decreases in outside research and salaries
partially offset by increases in syndicated radio and other infrastructure support expenses.
SG&A expenses decreased approximately $7.4 million primarily from reduced advertising expenses
and a decline in commission expenses associated with the revenue decline.

Reconciliation of Segment Operating Income (Loss)

	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 
	 	 	March 31,	 
	 	 	2008	 	 	2007	 
	 	 	(In thousands)	 
	Americas Outdoor Advertising 
	 	$	68,643	 	 	$	81,305	 
	International Outdoor Advertising 
	 	 	(13,598	)	 	 	(7,857	)
	Radio Broadcasting 
	 	 	237,346	 	 	 	258,089	 
	Other 
	 	 	(8,644	)	 	 	(6,195	)
	Gain on disposition of assets—net 
	 	 	2,097	 	 	 	6,947	 
	Corporate and merger expenses 
	 	 	(50,838	)	 	 	(53,984	)
	 
	 	 	 	 	 	 
	Consolidated operating income 
	 	$	235,006	 	 	$	278,305	 
	 
	 	 	 	 	 	 

81

 

The Comparison of Year Ended December 31, 2007 to Year Ended December 31, 2006 is as Follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended	 	 	 	 
	 	 	December 31,	 	 	%	 
	 	 	2007	 	 	2006	 	 	Change	 
	 	 	(In thousands)	 	 	 	 
	Revenue 
	 	$	6,921,202	 	 	$	6,567,790	 	 	 	5	%
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes depreciation and
amortization) 
	 	 	2,733,004	 	 	 	2,532,444	 	 	 	8	%
	Selling, general and administrative expenses (excludes
depreciation and amortization) 
	 	 	1,761,939	 	 	 	1,708,957	 	 	 	3	%
	Depreciation and amortization 
	 	 	566,627	 	 	 	600,294	 	 	 	(6	)%
	Corporate expenses (excludes depreciation and
amortization) 
	 	 	181,504	 	 	 	196,319	 	 	 	(8	)%
	Merger expenses 
	 	 	6,762	 	 	 	7,633	 	 	 	 	 
	Gain on disposition of assets—net 
	 	 	14,113	 	 	 	71,571	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income 
	 	 	1,685,479	 	 	 	1,593,714	 	 	 	6	%
	Interest expense 
	 	 	451,870	 	 	 	484,063	 	 	 	 	 
	Gain (loss) on marketable securities 
	 	 	6,742	 	 	 	2,306	 	 	 	 	 
	Equity in earnings of nonconsolidated affiliates 
	 	 	35,176	 	 	 	37,845	 	 	 	 	 
	Other income
(expense) — net 
	 	 	5,326	 	 	 	(8,593	)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest expense
and discontinued operations 
	 	 	1,280,853	 	 	 	1,141,209	 	 	 	 	 
	Income tax expense:
	 	 	 	 	 	 	 	 	 	 	 	 
	Current 
	 	 	252,910	 	 	 	278,663	 	 	 	 	 
	Deferred 
	 	 	188,238	 	 	 	191,780	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income tax expense 
	 	 	441,148	 	 	 	470,443	 	 	 	 	 
	Minority interest expense, net of tax 
	 	 	47,031	 	 	 	31,927	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations 
	 	 	792,674	 	 	 	638,839	 	 	 	 	 
	Income from discontinued operations, net 
	 	 	145,833	 	 	 	52,678	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Net income 
	 	$	938,507	 	 	$	691,517	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 

82

 

Consolidated Results of

Operations Revenue

     Our consolidated revenue increased $353.4 million during 2007 compared to 2006. Our
International Outdoor Advertising revenue increased $240.4 million, including approximately $133.3
million related to movements in foreign exchange and the remainder associated with growth across
inventory categories. Our Americas Outdoor Advertising revenue increased $143.7 million driven by
increases in bulletin, street furniture, airports and taxi display revenues as well as $32.1
million from Interspace Airport Advertising (“Interspace”). Our Radio Broadcasting revenue was
essentially flat. Declines in local and national advertising revenue were partially offset by an
increase in our syndicated radio programming, traffic and on-line businesses. These increases were
also partially offset by declines from operations classified in our Other segment.

Direct Operating Expenses

     Our direct operating expenses increased $200.6 million in 2007 compared to 2006. International
Outdoor Advertising direct operating expenses increased $163.8 million principally from $88.0
million related to movements in foreign exchange. Americas Outdoor Advertising direct operating
expenses increased $56.2 million primarily attributable to increased site lease expenses associated
with new contracts and the increase in transit revenue as well as approximately $14.9 million from
Interspace. Partially offsetting these increases was a decline in our Radio Broadcasting direct
operating expenses of approximately $11.7 million primarily from a decline in programming and
expenses associated with non-traditional revenue.

Selling, General and Administrative Expenses

     Our SG&A increased $53.0 million in 2007 compared to 2006. International Outdoor Advertising
SG&A expenses increased $31.9 million primarily related to movements in foreign exchange. Americas
Outdoor Advertising SG&A expenses increased $19.1 million mostly attributable to sales expenses
associated with the increase in revenue and $6.7 million from Interspace. Our Radio Broadcasting
SG&A expenses increased $4.3 million for the comparative periods primarily from an increase in our
marketing and promotions department which was partially offset by a decline in bonus and commission
expenses.

Depreciation and Amortization

     Depreciation and amortization expense decreased approximately $33.7 million primarily from a
decrease in the radio segments fixed assets and a reduction in amortization from international
outdoor contracts.

Corporate Expenses

     Corporate expenses decreased $14.8 million during 2007 compared to 2006 primarily related
to a decline in radio bonus expenses.

Merger Expenses

     We entered into the merger agreement in the fourth quarter of 2006. Expenses associated with
the merger were $6.8 million and $7.6 million for the years ended December 31, 2007 and 2006,
respectively, and include accounting, investment banking, legal and other expenses.

83

 

Gain on Disposition of Assets—Net

     The gain on disposition of assets—net of $14.1 million for the year ended December 31, 2007
related primarily to a $8.9 million gain from the sale of street furniture assets and land in our
International Outdoor Advertising segment, as well as $3.4 million from the disposition of assets
in our Radio Broadcasting segment.

     Gain on disposition of assets—net of $71.6 million for the year ended December 31, 2006
mostly related to $34.6 million in our Radio Broadcasting segment primarily from the sale of
stations and programming rights and $13.2 million in our Americas Outdoor Advertising segment from
the exchange of assets in one of our markets for the assets of a third party located in a different
market.

Interest Expense

     Interest expense declined $32.2 million for the year ended December 31, 2007 compared to the
same period of 2006. The decline was primarily associated with the reduction in our average
outstanding debt during 2007.

Gain (Loss) on Marketable Securities

     The $6.7 million gain on marketable securities for 2007 primarily related to changes in fair
value of the American Tower Corporation (“AMT”) shares and the related forward exchange contracts.
The gain of $2.3 million for the year ended December 31, 2006 related to a $3.8 million gain from
terminating our secured forward exchange contract associated with our investment in XM Satellite
Radio Holdings Inc. partially offset by a loss of $1.5 million from the change in fair value of AMT
securities that are classified as trading and the related secured forward exchange contracts
associated with those securities.

Other Income (Expense)—Net

     Other income of $5.3 million recorded in 2007 primarily relates to foreign exchange gains
while other expense of $8.6 million recorded in 2006 primarily relates to foreign exchange losses.

Income Tax Benefit (Expense)

     Current tax expense decreased $25.8 million for the year ended December 31, 2007 as compared
to the year ended December 31, 2006 primarily due to current tax benefits of approximately $45.7
million recorded in 2007 related to the settlement of several tax positions with the Internal
Revenue Service (“IRS”) for the 1999 through 2004 tax years. In addition, we recorded current tax
benefits of approximately $14.6 million in 2007 related to the utilization of capital loss
carryforwards. The 2007 current tax benefits were partially offset by additional current tax
expense due to an increase in income before income taxes of $139.6 million.

     Deferred tax expense decreased $3.5 million for the year ended December 31, 2007 as compared
to the year ended December 31, 2006 primarily due to additional deferred tax benefits of
approximately $8.3 million recorded in 2007 related to accrued interest and state tax expense on
uncertain tax positions. In addition, we recorded deferred tax expense of approximately $16.7
million in 2006 related to the uncertainty of our ability to utilize certain tax losses in the

84

 

future for certain international operations. The changes noted above were partially offset by
additional deferred tax expense recorded in 2007 as a result of tax depreciation expense related to
capital expenditures in certain foreign jurisdictions.

Minority Interest Expense, Net of Tax

     Minority interest expense increased $15.1 million in 2007 compared to 2006 primarily from an
increase in net income attributable to our subsidiary, CCOH.

Income from Discontinued Operations, Net

     We closed on the sale of 160 stations in 2007 and five stations in 2006. The gain on sale of
assets recorded in discontinued operations for these sales was $144.6 million and $0.3 million in
2007 and 2006, respectively. The remaining $1.2 million and $52.4 million are associated with the
net income from radio stations and our television business that are recorded as income from
discontinued operations for 2007 and 2006, respectively.

Americas Outdoor Advertising Results of Operations

     Our Americas Outdoor Advertising operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2007	 	 	2006	 	 	Change	 
	 	 	(In thousands)	 	 	 	 
	Revenue 
	 	$	1,485,058	 	 	$	1,341,356	 	 	 	11	%
	Direct operating expenses 
	 	 	590,563	 	 	 	534,365	 	 	 	11	%
	Selling, general and administrative expenses 
	 	 	226,448	 	 	 	207,326	 	 	 	9	%
	Depreciation and amortization 
	 	 	189,853	 	 	 	178,970	 	 	 	6	%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income 
	 	$	478,194	 	 	$	420,695	 	 	 	14	%
	 
	 	 	 	 	 	 	 	 	 	 

     Americas Outdoor Advertising revenue increased $143.7 million, or 11%, during 2007 as compared
to 2006 with Interspace contributing approximately $32.1 million to the increase. The growth
occurred across our inventory, including bulletins, street furniture, airports and taxi displays.
The revenue growth was primarily driven by bulletin revenue attributable to increased rates and
airport revenue which had both increased rates and occupancy. Leading advertising categories during
the year were telecommunications, retail, automotive, financial services and amusements. Revenue
growth occurred across our markets, led by Los Angeles, New York, Washington/Baltimore, Atlanta,
Boston, Seattle and Minneapolis.

     Our Americas Outdoor Advertising direct operating expenses increased $56.2 million primarily
from an increase of $46.6 million in site lease expenses associated with new contracts and the
increase in airport, street furniture and taxi revenues. Interspace contributed $14.9 million to
the increase. Our SG&A expenses increased $19.1 million primarily from bonus and commission
expenses associated with the increase in revenue and from Interspace, which contributed
approximately $6.7 million to the increase.

     Depreciation and amortization increased $10.9 million during 2007 compared to 2006
primarily associated with $5.9 million from Interspace.

85

 

International Outdoor Advertising Results of Operations

     Our International Outdoor Advertising operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2007	 	 	2006	 	 	Change	 
	 	 	(In thousands)	 
	Revenue
	 	$	1,796,778	 	 	$	1,556,365	 	 	 	15	%
	Direct operating expenses
	 	 	1,144,282	 	 	 	980,477	 	 	 	17	%
	Selling, general and administrative expenses
	 	 	311,546	 	 	 	279,668	 	 	 	11	%
	Depreciation and amortization
	 	 	209,630	 	 	 	228,760	 	 	 	(8	)%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	131,320	 	 	$	67,460	 	 	 	95	%
	 
	 	 	 	 	 	 	 	 	 	 

     International Outdoor Advertising revenue increased $240.4 million, or 15%, in 2007 as
compared to 2006. Included in the increase was approximately $133.3 million related to movements in
foreign exchange. Revenue growth occurred across inventory categories including billboards, street
furniture and transit, driven by both increased rates and occupancy. Growth was led by increased
revenues in France, Italy, Australia, Spain and China.

     Our International Outdoor Advertising direct operating expenses increased approximately $163.8
million in 2007 compared to 2006. Included in the increase was approximately $88.0 million related
to movements in foreign exchange. The remaining increase in direct operating expenses was primarily
attributable to an increase in site lease expenses associated with the increase in revenue. SG&A
expenses increased $31.9 million in 2007 over 2006 from approximately $23.4 million related to
movements in foreign exchange and an increase in selling expenses associated with the increase in
revenue. Additionally, we recorded a $9.8 million reduction to SG&A in 2006 as a result of the
favorable settlement of a legal proceeding.

     Depreciation and amortization declined $19.1 million during 2007 compared to 2006 primarily
from contracts which were recorded at fair value in purchase accounting in prior years and became
fully amortized at December 31, 2006.

Radio Broadcasting Results of Operations

     Our Radio Broadcasting operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2007	 	 	2006	 	 	Change	 
	 	 	(In thousands)	 
	Revenue
	 	$	3,558,534	 	 	$	3,567,413	 	 	 	0	%
	Direct operating expenses
	 	 	982,966	 	 	 	994,686	 	 	 	(1	)%
	Selling, general and administrative expenses
	 	 	1,190,083	 	 	 	1,185,770	 	 	 	0	%
	Depreciation and amortization
	 	 	107,466	 	 	 	125,631	 	 	 	(14	)%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	1,278,019	 	 	$	1,261,326	 	 	 	1	%
	 
	 	 	 	 	 	 	 	 	 	 

     Our Radio Broadcasting revenue was essentially flat. Declines in local and national
revenues were partially offset by increases in network, traffic, syndicated radio and on-line
revenues. Local and national revenues were down partially as a result of overall weakness in
advertising as well as declines in automotive, retail and political advertising categories. During
2007, our average minute rate declined
compared to 2006.

86

 

     Our Radio Broadcasting direct operating expenses declined approximately $11.7 million in 2007
compared to 2006. The decline was primarily from a $14.8 million decline in programming expenses
partially related to salaries, a $16.5 million decline in non-traditional expenses primarily
related to fewer concert events sponsored by us in the current year and $5.1 million in other
direct operating expenses. Partially offsetting these declines were increases of $5.7 million in
traffic expenses and $19.1 million in internet expenses associated with the increased revenue in
these businesses. SG&A expenses increased $4.3 million during 2007 as compared to 2006 primarily
from an increase of $16.2 million in our marketing and promotions department partially offset by a
decline of $9.5 million in bonus and commission expenses.

Reconciliation of Segment Operating Income (Loss)

	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	Americas Outdoor Advertising
	 	$	478,194	 	 	$	420,695	 
	International Outdoor Advertising
	 	 	131,320	 	 	 	67,460	 
	Radio Broadcasting
	 	 	1,278,019	 	 	 	1,261,326	 
	Other
	 	 	(11,659	)	 	 	(4,225	)
	Gain on disposition of assets—net
	 	 	14,113	 	 	 	71,571	 
	Merger expenses
	 	 	(6,762	)	 	 	(7,633	)
	Corporate
	 	 	(197,746	)	 	 	(215,480	)
	 
	 	 	 	 	 	 
	Consolidated operating income
	 	$	1,685,479	 	 	$	1,593,714	 
	 
	 	 	 	 	 	 

87

 

The Comparison of Year Ended December 31, 2006 to Year Ended December 31, 2005 is as
Follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2006	 	 	2005	 	 	Change	 
	 	 	(In thousands)	 
	Revenue
	 	$	6,567,790	 	 	$	6,126,553	 	 	 	7	%
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (excludes depreciation and
amortization)
	 	 	2,532,444	 	 	 	2,351,614	 	 	 	8	%
	Selling, general and administrative expenses
(excludes depreciation and amortization)
	 	 	1,708,957	 	 	 	1,651,195	 	 	 	3	%
	Depreciation and amortization
	 	 	600,294	 	 	 	593,477	 	 	 	1	%
	Corporate expenses (excludes depreciation and
amortization)
	 	 	196,319	 	 	 	167,088	 	 	 	17	%
	Merger expenses
	 	 	7,633	 	 	 	—	 	 	 	 	 
	Gain on disposition of assets—net
	 	 	71,571	 	 	 	49,656	 	 	 	44	%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	 	1,593,714	 	 	 	1,412,835	 	 	 	13	%
	Interest expense
	 	 	484,063	 	 	 	443,442	 	 	 	 	 
	Gain (loss) on marketable securities
	 	 	2,306	 	 	 	(702	)	 	 	 	 
	Equity in earnings of nonconsolidated affiliates
	 	 	37,845	 	 	 	38,338	 	 	 	 	 
	Other income
(expense) — net
	 	 	(8,593	)	 	 	11,016	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest expense
and discontinued operations
	 	 	1,141,209	 	 	 	1,018,045	 	 	 	 	 
	Income tax expense:
	 	 	 	 	 	 	 	 	 	 	 	 
	Current
	 	 	278,663	 	 	 	33,765	 	 	 	 	 
	Deferred
	 	 	191,780	 	 	 	369,282	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income tax benefit (expense)
	 	 	470,443	 	 	 	403,047	 	 	 	 	 
	Minority interest expense, net of tax
	 	 	31,927	 	 	 	17,847	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations
	 	 	638,839	 	 	 	597,151	 	 	 	 	 
	Income from discontinued operations, net
	 	 	52,678	 	 	 	338,511	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Net income
	 	$	691,517	 	 	$	935,662	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 

Consolidated Results of Operations

Revenue

     Consolidated revenue increased $441.2 million during 2006 compared to 2005. Radio Broadcasting
contributed $186.6 million attributable to increased average rates on local and national sales. Our
Americas Outdoor Advertising segment’s revenue increased $125.0 million from an increase in revenue
across our displays as well as the acquisition of Interspace which contributed approximately $30.2
million to revenue in 2006. Our International Outdoor Advertising segment contributed $106.7
million, of which approximately $44.9 million during the first six months of 2006 related to Clear
Media Limited (“Clear Media”), a Chinese outdoor advertising company. We began consolidating Clear
Media in the third quarter of 2005. Increased street furniture revenue also contributed to our
International
Outdoor Advertising revenue growth. Our 2006 revenue increased $17.4 million due to movements
in foreign exchange.

88

 

Direct Operating Expenses

     Direct operating expenses increased $180.8 million for 2006 compared to 2005. Our Radio
Broadcasting segment contributed $70.1 million primarily from increased programming expenses.
Americas Outdoor Advertising direct operating expenses increased $44.5 million driven by increased
site lease expenses associated with the increase in revenue and the acquisition of Interspace which
contributed $13.0 million to direct operating expenses in 2006. Our International Outdoor
Advertising segment contributed $65.4 million, of which $18.0 million during the first six months
of 2006 related to our consolidation of Clear Media and the remainder was principally due to an
increase in site lease expenses. Included in our direct operating expense growth in 2006 was $10.6
million from increases in foreign exchange.

Selling, General and Administrative Expenses

     SG&A increased $57.8 million during 2006 compared 2005. Our Radio Broadcasting SG&A increased
$45.1 million primarily as a result of an increase in salary, bonus and commission expenses in our
sales department associated with the increase in revenue. SG&A increased $20.6 million in our
Americas Outdoor Advertising segment principally related to an increase in bonus and commission
expenses associated with the increase in revenue as well as $6.2 million from our acquisition of
Interspace. Our International Outdoor Advertising SG&A expenses declined $11.9 million primarily
attributable to a $9.8 million reduction recorded in 2006 as a result of the favorable settlement
of a legal proceeding as well as $26.6 million related to restructuring our businesses in France
recorded in the third quarter of 2005. Partially offsetting this decline in our international SG&A
was $9.5 million from our consolidation of Clear Media. Included in our SG&A expense growth in 2006
was $3.9 million from increases in foreign exchange.

Corporate Expenses

     Corporate expenses increased $29.2 million during 2006 compared to 2005 primarily related to
increases in bonus expense and share-based payments.

Merger Expenses

     We entered into the merger agreement in the fourth quarter of 2006. Expenses associated with
the merger were $7.6 million for the year ended December 31, 2006 and include accounting,
investment banking, legal and other costs.

Gain on Disposition of Assets–Net

     Gain on disposition of assets—net of $71.6 million for the year ended December 31, 2006 mostly
related to $34.6 million in our Radio Broadcasting segment primarily from the sale of stations and
programming rights and $13.2 million in our Americas Outdoor Advertising segment from the exchange
of assets in one of our markets for the assets of a third party located in a different market.

Interest Expense

     Interest expense increased $40.6 million for the year ended December 31, 2006 over 2005
primarily due to increased interest rates. Interest on our floating rate debt, which includes our

89

 

credit facility and fixed-rate debt on which we have entered into interest rate swap agreements, is
influenced by changes in LIBOR. Average LIBOR for 2006 and 2005 was 5.2% and 3.6%, respectively.

Gain (Loss) on Marketable Securities

     The gain of $2.3 million for the year ended December 31, 2006 related to a $3.8 million gain
from terminating our secured forward exchange contract associated with our investment in XM
Satellite Radio Holdings Inc. partially offset by a loss of $1.5 million from the change in fair
value of AMT securities that are classified as trading and a related secured forward exchange
contract associated with those securities. The loss of $0.7 million recorded in 2005 related to the
change in fair value of AMT securities that were classified as trading and a related secured
forward exchange contract associated with those securities.

Other Income (Expense) — Net

     Other expense of $8.6 million recorded in 2006 primarily relates to foreign exchange losses
while the income of $11.0 million recorded in 2005 was comprised of various miscellaneous amounts.

Income Taxes

     Current tax expense increased $244.9 million in 2006 as compared to 2005. In addition to
higher earnings before tax in 2006, we received approximately $204.7 million in current tax
benefits in 2005 from ordinary losses for tax purposes resulting from restructuring our
international businesses consistent with our strategic realignment, the July 2005 maturity of our
Euro denominated bonds and a 2005 current tax benefit related to an amendment on a previously filed
return. Deferred tax expense decreased $177.5 million primarily related to the tax losses mentioned
above that increased deferred tax expense in 2005.

Minority Interest, Net of Tax

     Minority interest expense increased $14.1 million during 2006 as compared to 2005 as a result
of the initial public offering of 10% of our subsidiary CCOH, which we completed on November 11,
2005.

Discontinued Operations

     We completed the spin-off of our live entertainment and sports representation businesses on
December 21, 2005. Therefore, we reported the results of operations for these businesses through
December 21, 2005 in discontinued operations. We also reported the results of operations associated
with our radio stations and our television business discussed above as income from discontinued
operations for 2006 and 2005, respectively.

90

 

Americas Outdoor Advertising Results of Operations

     Our Americas Outdoor Advertising operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2006	 	 	2005	 	 	Change	 
	 	 	(In thousands)	 
	Revenue
	 	$	1,341,356	 	 	$	1,216,382	 	 	 	10	%
	Direct operating expenses
	 	 	534,365	 	 	 	489,826	 	 	 	9	%
	Selling, general and administrative expenses
	 	 	207,326	 	 	 	186,749	 	 	 	11	%
	Depreciation and amortization
	 	 	178,970	 	 	 	180,559	 	 	 	(1	)%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	420,695	 	 	$	359,248	 	 	 	17	%
	 
	 	 	 	 	 	 	 	 	 	 

     Our Americas Outdoor Advertising revenue increased 10% during 2006 as compared to 2005 from
revenue growth across our displays. We experienced rate increases on most of our inventory, with
occupancy essentially unchanged during 2006 as compared to 2005. Our airport revenue increased
$44.8 million primarily related to $30.2 million from our acquisition of Interspace. Revenue growth
occurred across both our large and small markets including Albuquerque, Des Moines, Miami,
Sacramento and San Antonio.

     Direct operating expenses increased $44.5 million in 2006 as compared to 2005 primarily from
an increase in site lease expenses of approximately $30.2 million as well as $3.4 million related
to the adoption of Statement 123(R). Interspace contributed $13.0 million to direct operating
expenses in 2006. Our SG&A expenses increased $20.6 million in 2006 over 2005 primarily from an
increase in bonus and commission expenses of $7.6 million related to the increase in revenue, $6.2
million from Interspace and $1.3 million of share-based payments related to the adoption of
Statement 123(R).

International Outdoor Advertising Results of Operations

     Our International Outdoor Advertising operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2006	 	 	2005	 	 	Change	 
	 	 	(In thousands)	 
	Revenue
	 	$	1,556,365	 	 	$	1,449,696	 	 	 	7	%
	Direct operating expenses
	 	 	980,477	 	 	 	915,086	 	 	 	7	%
	Selling, general and administrative expenses
	 	 	279,668	 	 	 	291,594	 	 	 	(4	)%
	Depreciation and amortization
	 	 	228,760	 	 	 	220,080	 	 	 	4	%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	67,460	 	 	$	22,936	 	 	 	194	%
	 
	 	 	 	 	 	 	 	 	 	 

     Revenue in our International Outdoor Advertising segment increased 7% in 2006 as compared to
2005. The increase includes approximately $44.9 million during the first six months of 2006 related
to our consolidation of Clear Media which we began consolidating in the third quarter of 2005. Also
contributing to the increase was approximately $25.9 million from growth in street furniture
revenue and $11.9 million related to movements in foreign exchange, partially offset by a decline
in billboard revenue for 2006 as compared to 2005.

     Direct operating expenses increased $65.4 million during 2006 as compared to 2005. The
increase was primarily attributable to $18.0 million during the first six months of 2006 related to

91

 

our consolidation of Clear Media as well as an increase of approximately $37.7 million in site
lease expenses and approximately $7.7 million related to movements in foreign exchange. Also
included in the increase was $0.9 million related to the adoption of Statement 123(R). Our SG&A
expenses declined $11.9 million primarily attributable to a $9.8 million reduction recorded in 2006
as a result of the favorable settlement of a legal proceeding as well as $26.6 million related to
restructuring our businesses in France recorded in the third quarter of 2005. Partially offsetting
this decline was $9.5 million from our consolidation of Clear Media and $2.9 million from movements
in foreign exchange.

Radio Broadcasting Results of Operations

     Our Radio Broadcasting operating results were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 	 	%	 
	 	 	2006	 	 	2005	 	 	Change	 
	 	 	(In thousands)	 
	Revenue
	 	$	3,567,413	 	 	$	3,380,774	 	 	 	6	%
	Direct operating expenses
	 	 	994,686	 	 	 	924,635	 	 	 	8	%
	Selling, general and administrative expense
	 	 	1,185,770	 	 	 	1,140,694	 	 	 	4	%
	Depreciation and amortization
	 	 	125,631	 	 	 	128,443	 	 	 	(2	)%
	 
	 	 	 	 	 	 	 	 	 	 
	Operating income
	 	$	1,261,326	 	 	$	1,187,002	 	 	 	6	%
	 
	 	 	 	 	 	 	 	 	 	 

     Our Radio Broadcasting revenue increased 6% during 2006 as compared to 2005 primarily from an
increase in both local and national advertising revenues. This growth was driven by an increase in
yield and average unit rates. The number of 30 second and 15 second commercials broadcast as a
percent of total minutes sold increased during 2006 as compared to 2005. The overall revenue growth
was primarily focused in our top 100 media markets. Significant advertising categories contributing
to the revenue growth for the year were political, services, automotive, retail and entertainment.

     Our Radio Broadcasting direct operating expenses increased $70.1 million during 2006 as
compared to 2005. Included in direct operating expenses for 2006 were share-based payments of $11.1
million as a result of adopting Statement 123(R). Also contributing to the increase were added
costs of approximately $45.2 million from programming expenses primarily related to an increase in
talent expenses, music license fees, new shows and affiliations in our syndicated radio business
and new distribution initiatives. Our SG&A expenses increased $45.1 million primarily as a result
of approximately $12.3 million in salary, bonus and commission expenses in our sales department
associated with the increase in revenue as well as $14.1 million from the adoption of Statement
123(R).

Reconciliation of Segment Operating Income (Loss)

	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 
	 	 	2006	 	 	2005	 
	 	 	(In thousands)	 
	Americas Outdoor Advertising
	 	$	420,695	 	 	$	359,248	 
	International Outdoor Advertising
	 	 	67,460	 	 	 	22,936	 
	Radio Broadcasting
	 	 	1,261,326	 	 	 	1,187,002	 
	Other
	 	 	(4,225	)	 	 	(20,061	)
	Gain on disposition of assets—net
	 	 	71,571	 	 	 	49,656	 
	Merger expenses
	 	 	(7,633	)	 	 	—	 
	Corporate
	 	 	(215,480	)	 	 	(185,946	)
	 
	 	 	 	 	 	 
	Consolidated operating income
	 	$	1,593,714	 	 	$	1,412,835	 
	 
	 	 	 	 	 	 

92

 

Liquidity and Capital Resources Cash

Flows

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Three Months Ended	 
	 	 	Year Ended December 31,	 	 	March 31,	 
	 	 	2007	 	 	2006	 	 	2005	 	 	2008	 	 	2007	 
	 	 	(In thousands)	 
	Cash provided by (used in):
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating activities
	 	$	1,576,428	 	 	$	1,748,057	 	 	$	1,303,880	 	 	$	367,772	 	 	$	321,463	 
	Investing activities
	 	 	(482,677	)	 	 	(607,011	)	 	 	(349,796	)	 	 	(154,257	)	 	 	(71,021	)
	Financing activities
	 	 	(1,431,014	)	 	 	(1,178,610	)	 	 	(1,061,392	)	 	 	(754,449	)	 	 	(283,165	)
	Discontinued operations 
	 	 	366,411	 	 	 	69,227	 	 	 	157,118	 	 	 	997,898	 	 	 	25,913	 

Operating Activities

     Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

     Cash flows from operating activities for the first quarter of 2008 primarily reflects income
before discontinued operations of $156.2 million plus depreciation and amortization of $152.3
million and deferred taxes of $42.7 million. In addition, we recorded a $75.6 million gain in
equity in earnings of nonconsolidated affiliates related to the sale of our 50% interest in Clear
Channel Independent based on the fair value of the equity securities received. Cash flows from
operating activities for the first quarter of 2007 primarily reflects income before discontinued
operations of $95.1 million plus depreciation and amortization of $139.7 million and deferred taxes
of $38.1 million.

     Fiscal Year 2007

     Net cash flow from operating activities during 2007 primarily reflected income before
discontinued operations of $792.7 million plus depreciation and amortization of $566.6 million and
deferred taxes of $188.2 million.

     Fiscal Year 2006

     Net cash flow from operating activities of $1.7 billion for the year ended December 31, 2006
principally reflects net income from continuing operations of $638.8 million and depreciation and
amortization of $600.3 million. Net cash flows from operating activities also reflects an increase
of $190.2 million in accounts receivable as a result of the increase in revenue and a $390.4
million federal income tax refund related to restructuring our international businesses consistent
with our strategic realignment and the utilization of a portion of the capital loss generated on
the spin-off of Live Nation.

     Fiscal Year 2005

     Net cash flow from operating activities of $1.3 billion for the year ended December 31, 2005
principally reflects net income from continuing operations of $597.2 million and depreciation and
amortization of $593.5 million. Net cash flows from operating activities also reflects decreases in
accounts payable, other accrued expenses and income taxes payable. Taxes payable decreased
principally as result of the carryback of capital tax losses generated on the spin-off of Live
Nation which were used to offset taxes paid on previously recognized taxable capital gains as well
as approximately $210.5 million in current tax benefits from ordinary losses

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for tax purposes resulting from restructuring our international businesses consistent with our
strategic realignment, the July 2005 maturity of our Euro denominated bonds and a current tax
benefit related to an amendment on a previously filed tax return.

Investing Activities

     Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

     Cash used in investing activities for the first quarter of 2008 principally reflects
capital expenditures of $93.7 million and the purchase of outdoor advertising assets and two
FCC licenses for $83.9 million. Cash used in investing activities for the first quarter of
2007 principally reflects capital expenditures of $65.0 million.

     Fiscal Year 2007

     Net cash used in investing activities of $482.7 million for the year ended December 31, 2007
principally reflects the purchase of property, plant and equipment of $363.3 million.

     Fiscal Year 2006

     Net cash used in investing activities of $607.0 million for the year ended December 31, 2006
principally reflects capital expenditures of $336.7 million related to purchases of property, plant
and equipment and $341.2 million primarily related to acquisitions of operating assets, partially
offset by proceeds from the sale of other assets of $99.7 million.

     Fiscal Year 2005

     Net cash used in investing activities of $349.8 million for the year ended December 31, 2005
principally reflects capital expenditures of $302.7 million related to purchases of property,
plant and equipment and $150.8 million primarily related to acquisitions of operating assets,
partially offset by proceeds from the sale other assets of $102.0 million.

     Financing Activities

     Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

     Cash used in financing activities for the three months ended March 31, 2008 principally
reflects net payments on our credit facility of $162.8 million, the January 15, 2008 maturity of
our $500.0 million 4.625% senior notes and $93.4 million in dividends paid. Cash used in financing
activities for the three months ended March 31, 2007 principally reflects net draws on our credit
facility of $13.3 million offset by $250.0 million related to the February 2007 maturity of our
3.125% senior notes and $92.6 million in dividends paid.

     Fiscal Year 2007

     Net cash used in financing activities for the year ended December 31, 2007 principally
reflects $372.4 million in dividend payments, decrease in debt of $1.1 billion, partially offset by
the proceeds from the exercise of stock options of $80.0 million.

     Fiscal Year 2006

     Net cash used in financing activities for the year ended December 31, 2006 principally
reflects $1.4 billion for shares repurchased, $382.8 million in dividend payments, partially offset
by the net increase in debt of $601.3 million and proceeds from the exercise of stock options of
$57.4 million.

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     Fiscal Year 2005

     Net cash used in financing activities for the year ended December 31, 2005 principally reflect
the net reduction in debt of $288.7 million, $343.3 million in dividend payments, $1.1 billion in
share repurchases, all partially offset by the proceeds from the initial public offering of CCOH of
$600.6 million, and proceeds of $40.2 million related to the exercise of stock options.

Discontinued Operations

     During the first quarter of 2008, we completed the sale of our television business to an
affiliate of Providence for $1.0 billion and completed the sales of certain radio stations for
$76.0 million. The cash received from these sales was recorded as a component of cash flows from
discontinued operations during the first quarter of 2008. We had definitive asset purchase
agreements signed for the sale of 40 of our radio stations as of March 31, 2008. The cash flows
from these stations, along with the 20 stations no longer under definitive asset purchase
agreements discussed above, were reported for both periods as cash flows from discontinued
operations.

     We completed the spin-off of Live Nation on December 21, 2005. Included in cash flows from
discontinued operations for 2005 is approximately $220.0 million from the repayment of
intercompany notes owed to us by Live Nation.

Disposal of Assets

     We received proceeds of $26.2 million primarily related to the sale of representation
contracts and outdoor assets recorded in cash flows from investing activities during 2007. We also
received proceeds of $341.9 million related to the sale of radio stations recorded as investing
cash flows from discontinued operations during 2007.

Anticipated Cash Requirements

     We expect to fund anticipated cash requirements (including payments of principal and interest
on outstanding indebtedness and commitments, acquisitions, anticipated capital expenditures, share
repurchases and quarterly dividends) for the foreseeable future with cash flows from operations and
various externally generated funds.

     Sources of Capital

     As of March 31, 2008 and December 31, 2007, we had the following debt outstanding and cash and
cash equivalents:

	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 	 	Year Ended	 
	 	 	March 31,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(In millions)	 
	Credit facilities
	 	$	—	 	 	$	174.6	 
	Long-term bonds (a)
	 	 	5,823.1	 	 	 	6,294.5	 
	Other borrowings
	 	 	118.5	 	 	 	106.1	 
	 
	 	 	 	 	 	 
	Total debt
	 	 	5,941.6	 	 	 	6,575.2	 
	Less: Cash and cash equivalents
	 	 	602.1	 	 	 	145.1	 
	 
	 	 	 	 	 	 
	 
	 	$	5,339.5	 	 	$	6,430.1	 
	 
	 	 	 	 	 	 

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	(a)	 	Includes $2.3 million and $3.2 million at March 31, 2008 and December 31, 2007,
respectively, in unamortized
purchase accounting fair value adjustment premiums related to the merger with AMFM Operating
Inc. Also includes positive $40.4 million and $11.4 million related to purchase accounting fair
value adjustments for interest rate swap agreements at March 31, 2008 and December 31, 2007,
respectively.

     Credit Facility

     We have a multi-currency revolving credit facility in the amount of $1.75 billion, which can
be used for general working capital purposes, including commercial paper support, as well as to
fund capital expenditures, share repurchases, acquisitions and the refinancing of public debt
securities. At March 31, 2008, there was no outstanding balance on this facility and, taking into
account letters of credit of $82.8 million, approximately $1.7 billion was available for future
borrowings, with the entire balance to be repaid on July 12, 2009.

     During the three months ended March 31, 2008, we made principal payments totaling $862.9
million and drew down $700.1 million on the credit facility. As of May 7, 2008, there was no
outstanding balance on the credit facility, and, taking into account outstanding letters of credit,
approximately $1.7 billion was available for future borrowings.

     Other Borrowings

     Other debt includes various borrowings and capital leases utilized for general operating
purposes. Included in the $106.1 million balance at December 31, 2007 is $87.2 million that
matures in less than one year, which we have historically refinanced with new twelve month
notes and anticipate these refinancings to continue.

Guarantees of Third Party Obligations

     As of March 31, 2008, we did not guarantee any debt of third parties.

Uses of Capital

     Dividends

     Our Board of Directors declared quarterly cash dividends as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount	 	 	 	 	 	 	 	 
	 	 	per	 	 	 	 	 	 	 	 
	 	 	Common	 	 	 	 	 	 	Total	 
	Declaration Date	 	Share	 	 	Record Date	 	Payment Date	 	Payment	 
	 	 	 	 	 	 	(In millions, except per share data)	 
	October 25, 2006
	 	 	0.1875	 	 	December 31, 2006	 	January 15, 2007	 	$	92.6	 
	February 21, 2007
	 	 	0.1875	 	 	March 31, 2007	 	April 15, 2007	 	 	93.0	 
	April 19, 2007
	 	 	0.1875	 	 	June 30, 2007	 	July 15, 2007	 	 	93.4	 
	July 27, 2007
	 	 	0.1875	 	 	September 30, 2007	 	October 15, 2007	 	 	93.4	 
	December 3, 2007
	 	 	0.1875	 	 	December 31, 2007	 	January 15, 2008	 	 	93.4	 

     Our Board of Directors determined to defer consideration of a first quarter dividend payable
to shareholders. Historically, the Board of Directors has declared a dividend to shareholders of
record on the last day of a quarter, with payment on or before the 15th of the following month. The
Board of Directors took this action after receiving a request from the Sponsors to defer the
payment date in light of the delayed closing of our merger. In support of their continued efforts
to close the merger, we agreed to honor that request.

96

 

     Debt Redemptions

     On February 1, 2007, we redeemed our 3.125% senior notes at their maturity for $250.0
million plus accrued interest with proceeds from our bank credit facility.

     On November 13, 2007, AMFM Operating Inc., our wholly-owned subsidiary, redeemed $26.4
million of its 8% senior notes. Following the redemption, $644.9 million remained outstanding.

     On January 15, 2008, we redeemed our 4.625% senior notes at their maturity for $500.0
million plus accrued interest with proceeds from our bank credit facility.

     Tender Offers and Consent Solicitations

     On December 17, 2007, we announced that we commenced a cash tender offer and consent
solicitation for our outstanding $750.0 million principal amount of our 7.65% senior notes due 2010
on the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 17, 2007. As of June 10, 2008, we had received tenders and consents representing 99%
of our outstanding 7.65% senior notes due 2010.

     Also on December 17, AMFM Operating Inc. commenced a cash tender offer and consent
solicitation for the outstanding $644.9 million principal amount of the 8% Senior Notes due 2008 on
the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 17, 2007. As of June 10, 2008, AMFM Operating Inc. had received tenders and consents
representing 99% of the outstanding 8% senior notes due 2008.

     As a result of receiving the requisite consents, we and AMFM Operating Inc. entered into
supplemental indentures which eliminate substantially all the restrictive covenants in the
indenture governing the respective notes. Each supplemental indenture will become operative upon
acceptance and payment of the tendered notes, as applicable.

     We may elect to terminate the tender offer and consent solicitation for our outstanding 7.65%
senior notes due 2010 and relaunch a new tender offer and consent solicitation for our senior notes
due 2010 prior to the consummation of the Transactions. AMFM Operating Inc. anticipates extending
the tender offer and consent solicitation for its outstanding 8% senior notes due 2008.

     Each of the tender offers is conditioned upon the consummation of our merger. The
completion of the merger and the related debt financings are not subject to, or conditioned
upon, the completion of the tender offers.

Acquisitions

     We acquired two FCC licenses in our Radio Broadcasting segment for $11.6 million in cash
during 2008. We acquired outdoor display faces and additional equity interests in international
outdoor companies for $68.6 million in cash during 2008. Our national representation business
acquired representation contracts for $3.7 million in cash during 2008.

     During 2008, we exchanged assets in one of our Americas Outdoor Advertising markets for assets
located in a different market and recognized a gain of $2.6 million in “Gain on disposition of
assets—net.” In addition, we sold our 50% interest in Clear Channel Independent and recognized a
gain of $75.6 million in “Equity in earnings of nonconsolidated affiliates” based on the fair value
of the equity securities received.

     We acquired domestic outdoor display faces and additional equity interests in international
outdoor companies for $69.1 million in cash during 2007. Our national representation business
acquired representation contracts for $53.0 million in cash during 2007.

97

 

Capital Expenditures

     Capital expenditures were $93.7 million and $65.0 million in the three months ended March
31, 2008 and 2007, respectively.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended March 31, 2008	 
	 	 	 	 	 	 	Americas	 	 	International	 	 	 	 	 	 	 
	 	 	Radio	 	 	Outdoor	 	 	Outdoor	 	 	Corporate	 	 	 	 
	 	 	Broadcasting	 	 	Advertising	 	 	Advertising	 	 	and Other	 	 	Total	 
	 	 	(In millions)	 
	Non-revenue producing
	 	$	18.4	 	 	$	9.6	 	 	$	13.4	 	 	$	2.0	 	 	$	43.4	 
	Revenue producing
	 	 	—	 	 	 	20.5	 	 	 	29.8	 	 	 	—	 	 	 	50.3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	$	18.4	 	 	$	30.1	 	 	$	43.2	 	 	$	2.0	 	 	$	93.7	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     We define non-revenue producing capital expenditures as those expenditures that are required
on a recurring basis. Revenue producing capital expenditures are discretionary capital investments
for new revenue streams, similar to an acquisition.

Commitments, Contingencies and Future Obligations

     Commitments and Contingencies

     There are various lawsuits and claims pending against us. Based on current assumptions, we
have accrued an estimate of the probable costs for the resolution of these claims. Future results
of operations could be materially affected by changes in these assumptions.

     Certain agreements relating to acquisitions provide for purchase price adjustments and other
future contingent payments based on the financial performance of the acquired companies generally
over a one to five year period. We will continue to accrue additional amounts related to such
contingent payments if and when it is determinable that the applicable financial performance
targets will be met. The aggregate of these contingent payments, if performance targets are met,
would not significantly impact our financial position or results of operations.

     Future Obligations

     In addition to our scheduled maturities on our debt, we have future cash obligations under
various types of contracts. We lease office space, certain broadcast facilities, equipment and the
majority of the land occupied by our outdoor advertising structures under long-term operating
leases. Some of our lease agreements contain renewal options and annual rental escalation clauses
(generally tied to the consumer price index), as well as provisions for our payment of utilities
and maintenance.

     We have minimum franchise payments associated with non-cancelable contracts that enable us to
display advertising on such media as buses, taxis, trains, bus shelters and terminals. The majority
of these contracts contain rent provisions that are calculated as the greater of a percentage of
the relevant advertising revenue or a specified guaranteed minimum annual payment. Also, we have
non-cancelable contracts in our Radio Broadcasting operations related to program rights and music
license fees.

     In the normal course of business, our broadcasting operations have minimum future
payments associated with employee and talent contracts. These contracts typically contain
cancellation provisions that allow us to cancel the contract with good cause.

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     The scheduled maturities of our credit facility, other long-term debt outstanding, future
minimum rental commitments under non-cancelable lease agreements, minimum payments under other
non-cancelable contracts, payments under employment/talent contracts, capital expenditure
commitments and other long-term obligations as of December 31, 2007 are as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Payment due by Period	 
	 	 	 	 	 	 	Less than 1	 	 	1 to 3	 	 	3 to 5	 	 	More than	 
	Contractual Obligations	 	Total	 	 	year	 	 	Years	 	 	Years	 	 	5 Years	 
	 	 	(In thousands)	 
	Long-term debt
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Credit facility
	 	$	174,619	 	 	 	—	 	 	$	174,619	 	 	 	—	 	 	 	—	 
	Senior notes (1)
	 	 	5,650,000	 	 	$	625,000	 	 	 	1,500,000	 	 	$	1,300,000	 	 	$	2,225,000	 
	Subsidiary long-term
debt (2)
	 	 	750,979	 	 	 	732,047	 	 	 	11,972	 	 	 	2,250	 	 	 	4,710	 
	Interest payments on long-term debt
	 	 	1,799,610	 	 	 	365,285	 	 	 	548,355	 	 	 	311,044	 	 	 	574,926	 
	Non-cancelable operating
leases
	 	 	2,711,559	 	 	 	372,474	 	 	 	632,063	 	 	 	472,761	 	 	 	1,234,261	 
	Non-cancelable contracts 
	 	 	3,269,567	 	 	 	776,203	 	 	 	1,081,912	 	 	 	655,293	 	 	 	756,159	 
	Employment/talent
contracts
	 	 	436,526	 	 	 	177,552	 	 	 	188,343	 	 	 	65,417	 	 	 	5,214	 
	Capital expenditures
	 	 	159,573	 	 	 	106,187	 	 	 	45,930	 	 	 	7,224	 	 	 	232	 
	Other long-term obligations
(3)
	 	 	272,601	 	 	 	—	 	 	 	13,424	 	 	 	107,865	 	 	 	151,312	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total (4)
	 	$	15,225,034	 	 	$	3,154,748	 	 	$	4,196,618	 	 	$	2,921,854	 	 	$	4,951,814	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	The balance includes the portion of the principal amount of the senior notes due 2010 to be
repaid by our delayed draw 1 term loan facility.
	 
	(2)	 	The balance includes the $644.9 million principal amount of the 8% senior notes due 2008
discussed above.
	 
	(3)	 	Other long-term obligations consist of $70.5 million related to asset retirement obligations
recorded pursuant to Statement of Financial Accounting Standards No. 143, Accounting for Asset
Retirement Obligations, which assumes the underlying assets will be removed at some period
over the next 50 years. Also included is $103.0 million related to the maturity value of loans
secured by forward exchange contracts that we accrete to maturity using the effective interest
method and can be settled in cash or the underlying shares. These contracts had an accreted
value of $86.9 million and the underlying shares had a fair value of $124.4 million recorded
on our consolidated balance sheets at December 31, 2007. Also included is $75.6 million
related to deferred compensation and retirement plans and $23.5 million of various other
long-term obligations.
	 
	(4)	 	Excluded from the table is $144.4 million related to the fair value of cross-currency swap
agreements and secured forward exchange contracts. Also excluded is $294.5 million related to
various obligations with no specific contractual commitment or maturity, $237.1 million of
which relates to unrecognized tax benefits recorded pursuant to FIN 48.

Liquidity and Capital Resources Following the Transactions

     In connection with the Transactions, we will incur substantial amounts of debt, including
amounts outstanding under our new senior secured credit facilities, our new receivables based
credit facility and the notes offered hereby. Interest payments on this indebtedness will
significantly reduce our cash flow from operations. Upon the consummation of the Transactions, we
expect to have total debt of approximately $19,861 million.

     Our senior secured credit facilities provide for a $2,000 million 6-year revolving credit
facility, of which $150 million will be available in alternative currencies. We will have the
ability to designate one or more of our foreign restricted subsidiaries as borrowers under a
foreign currency sublimit of the revolving credit facility. Consistent with our international cash
management practices, at or promptly after the consummation of the Transactions, we expect one of
our foreign subsidiaries to borrow $80 million under the revolving credit facility’s

99

 

sublimit for foreign based subsidiary borrowings to refinance our existing foreign subsidiary
intercompany borrowings. The foreign based borrowings allow us to efficiently manage our liquidity
needs in local countries, mitigating foreign exchange exposure and cash movement among different
tax jurisdictions. Based on estimated cash levels (including estimated cash levels of our foreign
subsidiaries), we do not expect to borrow any additional amounts under the revolving credit
facility at the closing of the Transactions.

     The aggregate amount of the 6-year term loan A facility will be the sum of $1,115 million plus
the excess of $750 million over the borrowing base availability under our receivables based credit
facility on the closing of the Transactions. The aggregate amount of our receivables based credit
facility will correspondingly be reduced by the excess of $750 million over the borrowing base
availability on the closing of the Transactions. Assuming that the borrowing base availability
under the receivables based credit facility is $440 million, the term loan A facility would be
$1,425 million and the aggregate receivables based credit facility (without regard to borrowing
base limitations) would be $690 million. However, our actual borrowing base availability may be
greater or less than this amount.

     Our senior secured credit facilities provide for a $10,700 million 7.5-year term loan B
facility. Furthermore, our senior secured credit facilities provide for a $705.638 million 7.5-year
term loan C—asset sale facility. To the extent specified assets are sold after March 27, 2008 and
prior to the closing of the Transactions, actual borrowings under the term loan C—asset sale
facility will be reduced by the net cash proceeds received therefrom. Proceeds from the sale of
specified assets after the closing of the Transactions will be applied to prepay the term loan
C—asset sale facility (and thereafter to prepay any remaining term loan facilities) without right
of reinvestment under our senior secured credit facilities. In addition, if the net proceeds of any
other asset sales are not reinvested, but instead applied to prepay the senior secured credit
facilities, such proceeds would first be applied to the term loan C—asset sale facility and
thereafter pro rata to the remaining term loan facilities.

     Our senior secured credit facilities provide for two 7.5-year delayed draw term loans
facilities aggregating $1,250 million. Proceeds from the delayed draw 1 term loan facility,
available in the aggregate amount of $750 million, can only be used to redeem any of our existing
senior notes due 2010. Proceeds from the delayed draw 2 term loan facility, available in the
aggregate amount of $500 million, can only be used to redeem any of our existing 4.25% senior notes
due 2009. Upon the consummation of the Transactions, we expect to borrow all amounts available to
us under the delayed draw 1 term loan facility in order to redeem substantially all of our
outstanding senior notes due 2010. We do not expect to borrow any amount available to us under the
delayed draw 2 term loan facility upon the consummation of the Transactions. Any unused commitment
to lend will expire on September 30, 2010 in the case of the delayed draw 1 term loan facility and
on the second anniversary of the closing in the case of the delayed draw 2 term loan facility.

     Finally, we will have a $1,000 million receivables based credit facility with availability
that is limited by a borrowing base. We estimate that borrowing base availability under the
receivables based credit facility at the closing of the Transactions will be $440 million, although
our actual availability may be greater or less than our estimation.

     Following the Transactions, our primary source of liquidity will continue to be cash flow from
operations. Based on our current and anticipated levels of operations and conditions in our
markets, we believe that cash on hand, cash flow from operations and availability under our new
senior secured credit facilities and our new receivables based credit facility will enable us to
meet our working capital, capital expenditure, debt service and other funding requirements

100

 

for the foreseeable future. Our ability to fund our working capital needs, debt payments and other
obligations, and to comply with the financial covenants under our debt agreements, however, depends
on our future operating performance and cash flow, which are in turn subject to prevailing economic
conditions and other factors, many of which are beyond our control. Subject to restrictions in our
new senior secured credit facilities, our new receivables based credit facility and the indenture
governing the notes, we may incur more debt for working capital, capital expenditures, acquisitions
and for other purposes. In addition, we may require additional financing if our plans materially
change in an adverse manner or prove to be materially inaccurate. There can be no assurance that
such financing, if permitted under the terms of our debt agreements, will be available on terms
acceptable to us or at all. The inability to obtain additional financing could have a material
adverse effect on our financial condition and on our ability to meet our obligations under the
notes.

Market Risk

Interest Rate Risk

     At March 31, 2008, approximately 19% of our long-term debt, including fixed-rate debt on which
we have entered into interest rate swap agreements, bears interest at variable rates. Accordingly,
our earnings 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 average interest rate under these
borrowings, it is estimated that our interest expense for the three months ended March 31, 2008
would have changed by $5.7 million and that our net income for the three months ended March 31,
2008 would have changed by $4.1 million. In the event of an adverse change in interest rates,
management may take actions to further mitigate its exposure. However, due to the uncertainty of
the actions that would be taken and their possible effects, this interest rate analysis assumes no
such actions. Further, the analysis does not consider the effects of the change in the level of
overall economic activity that could exist in such an environment.

     At March 31, 2008, we had entered into interest rate swap agreements with a $1.1 billion
aggregate notional amount that effectively float interest at rates based upon LIBOR. These
agreements expire from May 2009 to March 2012. The fair value of these agreements at March 31, 2008
was an asset of $40.4 million.

Equity Price Risk

     The carrying value of our available-for-sale and trading 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 March 31, 2008 by $68.0 million and would
change accumulated comprehensive income and net income by $37.6 million and $11.4 million,
respectively. At March 31, 2008, we also held $11.4 million of investments that do not have a
quoted market price, but are subject to fluctuations in their value.

     We maintain derivative instruments on certain of our trading equity securities to limit our
exposure to and benefit from price fluctuations on those securities.

Foreign Currency

     We have operations in countries throughout the world. Foreign operations are measured in their
local currencies except in hyper-inflationary countries in which we operate. As a result, our
financial results could be affected by factors such as changes in foreign currency exchange rates

101

 

or weak economic conditions in the foreign markets in which we have operations. To mitigate a
portion of the exposure of international currency fluctuations, we maintain a natural hedge through
borrowings in currencies other than the United States dollar. In addition, we have United States
dollar—Euro cross currency swaps which are also designated as a hedge of our net investment in Euro
denominated assets. These hedge positions are reviewed monthly. Our foreign operations reported net
income of $78.2 million for the three months ended March 31, 2008. It is estimated that a 10%
change in the value of the United States dollar to foreign currencies would change net income for
the three months ended March 31, 2008 by $7.8 million.

     Our earnings are also affected by fluctuations in the value of the United States dollar as
compared to foreign currencies as a result of our investments in various countries, all of which
are accounted for under the equity method. It is estimated that the result of a 10% fluctuation in
the value of the dollar relative to these foreign currencies at March 31, 2008 would change our
equity in earnings of nonconsolidated affiliates by $7.7 million and would change our net income by
approximately $5.5 million for the three months ended March 31, 2008.

     This analysis does not consider the implications that such fluctuations could have on the
overall economic activity that could exist in such an environment in the United States or the
foreign countries or on the results of operations of these foreign entities.

Recent Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards No. 157, Fair Value Measurements (“Statement 157”). Statement 157
defines fair value, establishes a framework for measuring fair value and expands disclosure
requirements for fair value measurements. Statement 157 applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value. Statement 157 does not expand the
use of fair value in any new circumstances. Companies will need to apply the recognition and
disclosure provisions of Statement 157 for financial assets and financial liabilities and for
nonfinancial assets and nonfinancial liabilities that are remeasured at least annually effective
January 1, 2008. The effective date in Statement 157 is delayed for one year for certain
nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually). Excluded from the
scope of Statement 157 are certain leasing transactions accounted for under Statement of Financial
Accounting Standards No. 13, Accounting for Leases. The exclusion does not apply to fair value
measurements of assets and liabilities recorded as a result of a lease transaction but measured
pursuant to other pronouncements within the scope of Statement 157. We are currently evaluating the
impact of adopting Statement 157 on our financial position or results of operations.

     On March 19, 2008, the FASB issued Statement of Financial Accounting Standards No. 161,
Disclosures about Derivative Instruments and Hedging Activities (“Statement 161”). Statement 161
requires additional disclosures about how and why an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for and how derivative instruments
and related hedged items effect an entity’s financial position, results of operations and cash
flows. It is effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. We will adopt the disclosure
requirements beginning January 1, 2009.

     Statement of Financial Accounting Standards No. 141(R), Business Combinations (“Statement
141(R)”), was issued in December 2007. Statement 141(R) requires that upon initially obtaining
control, an acquirer will recognize 100% of the fair values of acquired assets,

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including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has
not acquired 100% of its target. Additionally, contingent consideration arrangements will be fair
valued at the acquisition date and included on that basis in the purchase price consideration and
transaction costs will be expensed as incurred. Statement 141(R) also modifies the recognition for
preacquisition contingencies, such as environmental or legal issues, restructuring plans and
acquired research and development value in purchase accounting. Statement 141(R) amends Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes, to require the acquirer to
recognize changes in the amount of its deferred tax benefits that are recognizable because of a
business combination either in income from continuing operations in the period of the combination
or directly in contributed capital, depending on the circumstances. Statement 141(R) is effective
for fiscal years beginning after December 15, 2008. Adoption is prospective and early adoption is
not permitted. We expect to adopt Statement 141(R) on January 1, 2009. Statement 141(R)’s impact on
accounting for business combinations is dependent upon acquisitions at that time.

     Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—including an amendment of FASB Statement No. 115 (“Statement
159”), was issued in February 2007. Statement 159 permits entities to choose to measure many
financial instruments and certain other items at fair value that are not currently required to be
measured at fair value. Statement 159 also establishes presentation and disclosure requirements
designed to facilitate comparisons between entities that choose different measurement attributes
for similar types of assets and liabilities. Statement 159 does not affect any existing accounting
literature that requires certain assets and liabilities to be carried at fair value. Statement 159
does not eliminate disclosure requirements included in other accounting standards, including
requirements for disclosures about fair value measurements included in Statement 157, and Statement
of Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments.
Statement 159 is effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. We adopted Statement 159 on January 1, 2008 and do not anticipate adoption to
materially impact our financial position or results of operations.

     Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated
Financial Statements—an amendment of ARB No. 51 (“Statement 160”), was issued in December 2007.
Statement 160 clarifies the classification of noncontrolling interests in consolidated statements
of financial position and the accounting for and reporting of transactions between the reporting
entity and holders of such noncontrolling interests. Under Statement 160, noncontrolling interests
are considered equity and should be reported as an element of consolidated equity, net income will
encompass the total income of all consolidated subsidiaries and there will be separate disclosure
on the face of the income statement of the attribution of that income between the controlling and
noncontrolling interests, and increases and decreases in the noncontrolling ownership interest
amount will be accounted for as equity transactions. Statement 160 is effective for the first
annual reporting period beginning on or after December 15, 2008, and earlier application is
prohibited. Statement 160 is required to be adopted prospectively, except for reclassify
noncontrolling interests to equity, separate from the parent’s shareholders’ equity, in the
consolidated statement of financial position and recasting consolidated net income (loss) to
include net income (loss) attributable to both the controlling and noncontrolling interests, both
of which are required to be adopted retrospectively. We expect to adopt Statement 160 on January 1,
2009 and are currently assessing the potential impact that the adoption could have on our financial
statements.

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Critical Accounting Estimates

     The preparation of our financial statements in conformity with GAAP requires management to
make estimates, judgments and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of expenses during the reporting period. On an ongoing basis, we
evaluate our estimates that are based on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. The result of these evaluations forms
the basis for making judgments about the carrying values of assets and liabilities and the reported
amount of expenses that are not readily apparent from other sources. Because future events and
their effects cannot be determined with certainty, actual results could differ from our assumptions
and estimates, and such difference could be material. Our significant accounting policies are
discussed in the notes to our consolidated financial statements in this offering memorandum.
Management believes that the following accounting estimates are the most critical to aid in fully
understanding and evaluating our reported financial results, and they require management’s most
difficult, subjective, or complex judgments, resulting from the need to make estimates about the
effect of matters that are inherently uncertain. Management has reviewed these critical accounting
policies and related disclosures with our independent auditor and the Audit Committee of our Board
of Directors. The following narrative describes these critical accounting estimates, the judgments
and assumptions and the effect if actual results differ from these assumptions.

Stock Based Compensation

     We adopted Statement 123(R) on January 1, 2006 using the modified-prospective-transition
method. Under the fair value recognition provisions of this statement, stock based compensation
cost is measured at the grant date based on the value of the award and is recognized as expense on
a straight-line basis over the vesting period. Determining the fair value of share-based awards at
the grant date requires assumptions and judgments about expected volatility and forfeiture rates,
among other factors. If actual results differ significantly from these estimates, our results of
operations could be materially impacted.

Allowance for Doubtful Accounts

     We
evaluate the collectibility of our accounts receivable based on a combination of factors.
In circumstances where we are aware of a specific customer’s inability to meet its financial
obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be
collected. For all other customers, we recognize reserves for bad debt based on historical
experience of bad debts as a percent of revenue for each business unit, adjusted for relative
improvements or deteriorations in the agings and changes in current economic conditions.

     If our agings were to improve or deteriorate resulting in a 10% change in our allowance, it is
estimated that our 2007 bad debt expense would have changed by $5.9 million and our 2007 net income
would have changed by $3.5 million.

Long-Lived Assets

     Long-lived assets, such as property, plant and equipment are reviewed for impairment when
events and circumstances indicate that depreciable and amortizable long-lived assets might be
impaired and the undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of those assets. When specific assets are determined to be unrecoverable, the
cost basis of the asset is reduced to reflect the current fair market value.

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     We use various assumptions in determining the current fair market value of these assets,
including future expected cash flows and discount rates, as well as future salvage values. Our
impairment loss calculations require management to apply judgment in estimating future cash flows,
including forecasting useful lives of the assets and selecting the discount rate that reflects the
risk inherent in future cash flows.

     Using the impairment review described, we found no impairment charge required for the year
ended December 31, 2007. If actual results are not consistent with our assumptions and judgments
used in estimating future cash flows and asset fair values, we may be exposed to future impairment
losses that could be material to our results of operations.

Goodwill

     Goodwill represents the excess of the purchase price over the fair value of identifiable net
assets acquired in business combinations. We review goodwill for potential impairment annually
using the income approach to determine the fair value of our reporting units. The fair value of our
reporting units is used to apply value to the net assets of each reporting unit. To the extent that
the carrying amount of net assets would exceed the fair value, an impairment charge may be required
to be recorded.

     The income approach we use for valuing goodwill involves estimating future cash flows expected
to be generated from the related assets, discounted to their present value using a risk-adjusted
discount rate. Terminal values were also estimated and discounted to their present value. In
accordance with Financial Accounting Standards Statement 142, Goodwill and Other Intangible Assets
(“Statement 142”), we performed our annual impairment tests as of October 1, 2005, 2006 and 2007 on
goodwill. No impairment charges resulted from these tests. We may incur impairment charges in
future periods under Statement 142 to the extent we do not achieve our expected cash flow growth
rates, and to the extent that market values decrease and long-term interest rates increase.

Indefinite-lived Assets

     Indefinite-lived assets are reviewed annually for possible impairment using the direct method
as prescribed in Topic D-108. Under the direct method, it is assumed that rather than acquiring
indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically
obtains indefinite-lived intangible assets and builds a new operation with similar attributes from
scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally
associated with going concern value. Initial capital costs are deducted from the discounted cash
flows model which results in value that is directly attributable to the indefinite-lived intangible
assets.

     Our key assumptions using the direct method are market revenue growth rates, market share,
profit margin, duration and profile of the build-up period, estimated start-up capital costs and
losses incurred during the build-up period, the risk-adjusted discount rate and terminal values.
This data is populated using industry normalized information representing an average station within
a market.

     If actual results are not consistent with our assumptions and estimates, we may be exposed to
impairment charges in the future. Our annual impairment test was performed as of October 1, 2007,
which resulted in no impairment.

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Tax Accruals

     The IRS and other taxing authorities routinely examine our tax returns. From time to time, the
IRS challenges certain of our tax positions. We believe our tax positions comply with applicable
tax law and we would vigorously defend these positions if challenged. The final disposition of any
positions challenged by the IRS could require us to make additional tax payments. We believe that
we have adequately accrued for any foreseeable payments resulting from tax examinations and
consequently do not anticipate any material impact upon their ultimate resolution.

     Our estimates of income taxes and the significant items giving rise to the deferred assets and
liabilities are shown in the notes to our audited consolidated financial statements included in
this offering memorandum and reflect our assessment of actual future taxes to be paid on items
reflected in the financial statements, giving consideration to both timing and probability of these
estimates. Actual income taxes could vary from these estimates due to future changes in income tax
law or results from the final review of our tax returns by federal, state, or foreign tax
authorities.

     We have considered these potential changes in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, and FIN 48 which requires us to record
reserves for estimates of probable settlements of federal and state audits. We adopted FIN 48 on
January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the
financial statements. FIN 48 prescribes a recognition threshold for the financial statement
recognition and measurement of a tax position taken or expected to be taken within an income tax
return. The adoption of FIN 48 resulted in a decrease of $0.2 million to the January 1, 2007
balance of “retained deficit”, an increase of $101.7 million in “other long term-liabilities” for
unrecognized tax benefits and a decrease of $123.0 million in “deferred income taxes”.

Litigation Accruals

     We are currently involved in certain legal proceedings and, as required, have accrued our
estimate of the probable costs for the resolution of these claims.

     Management’s estimates used have been developed in consultation with counsel and are based
upon an analysis of potential results, assuming a combination of litigation and settlement
strategies.

     It is possible, however, that future results of operations for any particular period could be
materially affected by changes in our assumptions or the effectiveness of our strategies related to
these proceedings.

Insurance Accruals

     We are currently self-insured beyond certain retention amounts for various insurance
coverages, including general liability and property and casualty. Accruals are recorded based on
estimates of actual claims filed, historical payouts, existing insurance coverage and projections
of future development of costs related to existing claims.

     Our self-insured liabilities contain uncertainties because management must make
assumptions and apply judgment to estimate the ultimate cost to settle reported claims and
claims incurred but not reported as of December 31, 2007.

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     If actual results are not consistent with our assumptions and judgments, we may be exposed to
gains or losses that could be material. A 10% change in our self-insurance liabilities at December
31, 2007, would have affected net income by approximately $3.5 million for the year ended December
31, 2007.

Inflation

     Inflation has affected our performance in terms of higher costs for wages, salaries and
equipment. Although the exact impact of inflation is indeterminable, we believe we have offset
these higher costs in various manners.

Ratio of Earnings to Fixed Charges

     The ratio of earnings to fixed charges is as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Three Months Ended	 	 	 	 
	March 31,	 	 	Year Ended December 31,	 
	2008
	 	2007
	 	 	2007
	 	 	2006
	 	 	2005
	 	 	2004
	 	 	2003
	 
	1.72
	 	 	1.78	 	 	 	2.38	 	 	 	2.27	 	 	 	2.24	 	 	 	2.76	 	 	 	3.56	 

     The ratio of earnings to fixed charges was 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. We
had no preferred stock outstanding for any period presented.

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BUSINESS

     We are the largest outdoor media and the largest radio company in the world, with leading
market positions in each of our operating segments: Americas Outdoor Advertising, International
Outdoor Advertising and Radio Broadcasting.

	 	•	 	Americas Outdoor Advertising. We are the largest outdoor media company in the
Americas, which includes the United States, Canada and Latin America. We own or operate
approximately 209,000 displays in our Americas Outdoor Advertising segment. Our outdoor
assets consist of billboards, street furniture and transit displays, airport displays, mall
displays, and wallscapes and other spectaculars which we believe are in premier real estate
locations in each of our markets throughout the Americas. We have operations in 49 of the
top 50 markets in the United States, including all of the top 20 markets. For the last
twelve months ended March 31, 2008, Americas Outdoor Advertising represented 21% of our net
revenue and 27% of pro forma Adjusted EBITDA.
	 
	 	•	 	International Outdoor Advertising. We are a leading outdoor media company
internationally with operations in Asia, Australia and Europe. We own or operate
approximately 688,000 displays in 34 countries, including key positions in attractive
international growth markets. Our international outdoor assets consist of billboards,
street furniture displays, transit displays and other out-of-home advertising displays.
For the last twelve months ended March 31, 2008, International Outdoor Advertising
represented 26% of our net revenue and 14% of pro forma Adjusted EBITDA.
	 
	 	•	 	Radio Broadcasting. We are the largest radio broadcaster in the United States. As
of December 31, 2007, we owned 890 domestic radio stations, with 275 stations operating in
the top 50 markets. Our portfolio of stations offers a broad assortment of programming
formats, including adult contemporary, country, contemporary hit radio, rock, urban and
oldies, among others, to a total weekly listening base of approximately 103 million
individuals. In addition, we owned 115 smaller market non-core radio stations, of which 63
were sold subsequent to December 31, 2007, and 32 of which were subject to sale under
definitive asset purchase agreements at March 31, 2008. We also operate a national radio
network that produces, distributes, or represents more than 70 syndicated radio programs
and services for more than 5,000 radio stations. Some of our more popular syndicated
programs include Rush Limbaugh, Steve Harvey, Ryan Seacrest and Jeff Foxworthy. We also own
various sports, news and agriculture networks as well as equity interests in various
international radio broadcasting companies located in Australia, Mexico and New Zealand.
For the last twelve months ended March 31, 2008, Radio Broadcasting represented 50% of our
net revenue and 58% of pro forma Adjusted EBITDA.
	 
	 	•	 	Other. The Other category includes our media representation business, Katz Media,
and general support services and initiatives which are ancillary to our other businesses.
Katz Media is a full-service media representation firm that sells national spot advertising
time for clients in the radio and television industries throughout the United States. Katz
Media represents over 3,200 radio stations and 380 television stations. For the last twelve
months ended March 31, 2008, the Other category represented 3% of our net revenue and 1% of
pro forma Adjusted EBITDA.

     For the last twelve months ended March 31, 2008, we generated consolidated net revenues of
$6,980 million and pro forma Adjusted EBITDA of $2,302 million.

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Our Strengths

     Global Scale and Local Market Leadership. We are the largest outdoor media and the largest
radio company in the world. We believe we have unmatched asset quality in both businesses. We
operate over 897,000 outdoor advertising displays worldwide, in what we believe are premier real
estate locations. We own 890 radio stations in the top United States markets with strong signals
and brand names. Our real estate locations, signals and brands provide a distinct local competitive
advantage. Our global scale enables productive and cost-effective investment across our portfolio,
which support our strong competitive position.

	 	•	 	Our outdoor advertising business is focused on urban markets with dense populations.
Our real estate locations in these urban markets provide outstanding reach and therefore a
compelling value proposition for our advertisers, enabling us to achieve more attractive
economics. In the United States, we believe we hold the #1 market share in eight of the
top 10 markets and are either #1 or #2 in 18 of the top 20 markets. Internationally, we
believe we hold leading positions in France, Italy, Spain and the United Kingdom, as well
as several attractive growth countries, including Australia and China.
	 
	 	•	 	Our scale has enabled cost-effective investment in new display technologies, such as
digital billboards, which we believe will continue to support future growth. This
technology will enable us to transition from selling space on a display to a single
advertiser to selling time on that display to multiple advertisers, creating new revenue
opportunities from both new and existing clients. We have enjoyed significantly higher
revenue per digital billboard than the revenue per vinyl billboard with relatively minimal
capital costs.
	 
	 	•	 	We own the #1 or #2 ranked radio station clusters in eight of the top 10 markets and in
18 of the top 25 markets in the United States. We have an average market share of 26% in
the top 25 markets. With a total weekly listening base of approximately 103 million
individuals, our portfolio of 890 stations generated twice the revenue as the next largest
competitor in 2007. With over 5,000 sales people in local markets, we believe the
aggregation of our local sales forces comprises the media industry’s largest local-based
sales force with national scope. Our national scope has facilitated cost-effective
investment in unique yield management and pricing systems that enable our local salespeople
to maximize revenue. Additionally, our scale has allowed us to implement industry-changing
initiatives that we believe differentiate us from the rest of the radio industry and
position us to outperform other radio broadcasters.

     Strong Collection of Unique Assets. Through acquisitions and organic growth, we have
aggregated a unique portfolio of assets.

	 	•	 	The domestic outdoor industry is regulated by the federal government as well as state
and municipal governments. Statutes and regulations govern the construction, repair,
maintenance, lighting, spacing, location, replacement and content of outdoor
advertising structures. Due to such regulation, it has become increasingly difficult to
construct new outdoor advertising structures. Further, for many of our existing
billboards, a permit for replacement cannot be sought by our competitors or landlords.
As a result, our existing billboards in top demographic areas, which we believe are in
premier locations, have significant value.

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	 	•	 	Ownership and operation of radio broadcast stations is governed by the FCC’s licensing
process, which limits the number of radio licenses available in any market. Any party
seeking to acquire or transfer radio licenses must go through a detailed review process
with the FCC. Over several decades, we have aggregated multiple licenses in local
market clusters across the United States. A cluster of multiple radio stations in a market
allows us to provide listeners with more diverse programming and advertisers with a
more efficient means to reach those listeners. In addition, we are also able to operate
our market clusters efficiently by eliminating duplicative operating expenses and
realizing economies of scale.

     Attractive Out-of-home Industry Fundamentals. Both outdoor advertising and radio
broadcasting offer compelling value propositions to advertisers, unparalleled reach and valuable
out-of-home positions.

	 	•	 	Compelling Value Propositions. Outdoor media and radio broadcasting offer compelling
value propositions to advertisers by providing the #1 and #2 most cost-effective media
advertising outlets, respectively, as measured by cost per thousand persons reached.
According to the Radio Advertising Bureau, radio advertising’s return on investment is
49% higher than that of television advertising. With low CPMs, we believe outdoor media
and radio broadcasting have opportunity for growth even in relatively softer advertising
environments.
	 
	 	•	 	Unparalleled Audience Reach. According to Arbitron, 98% of Americans travel in a
car each month, with an average of 310 miles traveled per week. The captive in-car
audience is protected from media fragmentation and is subject to increasing out-of-home
advertiser exposures as time and distance of commutes increase. Additionally, radio
programming reaches 93% of all United States consumers in a given week, with the average
consumer listening for almost three hours per day. On a weekly basis, this represents
nearly 233 million unique listeners.
	 
	 	•	 	Valuable Out-of-home Position. Both outdoor media and radio broadcasting reach
potential consumers outside of the home, a valuable position as it is closer to the
purchase decision. Today, consumers spend a significant portion of their day out-of-home,
while out-of-home media (outdoor and radio) garner a disproportionately smaller share of
media spending than in-home media. We believe this discrepancy represents an opportunity
for growth.

	 	 	Consistent, Defensible Growth Profile. Both outdoor advertising and radio in the United
States have demonstrated consistent growth over the last 40 years and are resilient in economic
downturns.

	 	•	 	United States outdoor advertising revenue has grown to approximately $7 billion in
2007, representing a 9% CAGR since 1970. Growth has come via traditional billboards
along highways and major roadways, as well as alternative advertising including transit
displays, street furniture and mall displays. The outdoor industry has experienced only
two negative growth years between 1970 and 2007. Additionally, the growth rate in the
two years following an economic recession has averaged 8%. Outdoor media continues
to be one of the fastest growing forms of advertising. According to the eMarketer
industry forecast, total outdoor advertising is expected to grow at an 8% CAGR from
2007 to 2011, driven by an increased share of media spending due to the high value
proposition of outdoor relative to other media and the rollout of digital billboards.

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	 	•	 	United States radio advertising revenue has grown to approximately $19 billion in
2007, representing an 8% CAGR since 1970. Radio broadcasting has been one of the most
resilient forms of advertising, weathering several competitive and technological
advancements over time, including the introduction of television, audio cassettes, CDs and
other portable audio devices, and remaining an important component of local advertiser
marketing budgets. The radio industry has experienced only three negative growth years from
1970 through 2007. Historically, the growth rate in the two years following an economic
recession has averaged 9%. While revenue in the radio industry (according to the Radio
Advertising Bureau) declined during 2007 and the first three months of 2008, the eMarketer
industry forecast expects radio broadcast advertising to grow at a stable 3% CAGR from 2007
to 2011. We expect growth to be driven by increased advertising, due to a captive audience
spending more time in their cars and the adoption of new technologies such as HD radio.

     Strong Cash Flow Generation. We have strong operating margins, driven by our significant
scale and leading market share in both outdoor advertising and radio broadcasting. In addition,
both outdoor media and radio broadcasting are low capital intensity businesses. For the twelve
months ended March 31, 2008, our capital expenditures were only 6% of net revenue with maintenance
capital expenditures comprising only 3% of net revenue. The change in net working capital from 2006
to 2007 was approximately 0.08% of net revenue. As a result of our high margins and low capital
requirements, we have been able to convert a significant portion of our revenue into cash flow. By
continuing to grow our business while maintaining costs, we expect to further improve our cash flow
generation.

     Individual, Saleable Assets with High Value. Our business is comprised of numerous
individual operating units, independently successful in local markets throughout the United States
and the rest of the world. This creates tremendous asset value, with outdoor media and radio
broadcasting businesses that are saleable at attractive multiples. Furthermore, at March 31, 2008,
we have a capital loss carryforward of approximately $809 million that can be used to offset
capital gains recognized on asset sales over the next three years subject to the limitations of
Section 383(b) of the Code and the regulations thereunder.

     Business Diversity Provides Stability. Currently, approximately half of our revenue is
generated from our Americas Outdoor Advertising and our International Outdoor Advertising segments,
with the remaining half comprised of our Radio Broadcasting segment, as well as other support
services and initiatives. We offer advertisers a diverse platform of media assets across
geographies, outdoor products and radio programming formats. Further, we enjoy substantial
diversity in our outdoor business, with no market and no ad category greater than 8% of our 2007
outdoor revenue. We also enjoy substantial diversity in our radio business, with no market greater
than 9%, no format greater than 18%, and no ad category greater than 19% of our 2007 radio revenue.
Through our multiple business units, we are able to reduce revenue volatility resulting from
softness in any one advertising category or geographic market.

     Experienced Management Team and Entrepreneurial Culture. We have an experienced management
team from our senior executives to our local market managers. Our executive officers and certain
radio and outdoor senior managers possess an average of 20 years of industry experience, and have
combined experience of over 220 years. The core of the executive management team includes Chief
Executive Officer Mark P. Mays, who has been with the Company for over 19 years, and President and
Chief Financial Officer Randall T. Mays, who has been with the Company for over 15 years. We also
maintain an entrepreneurial culture empowering local market managers to operate their markets as
separate profit centers, subject to centralized oversight. A portion of our managers’ compensation
is dependent upon the

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financial success of their individual market. Our managers also have full access to our centralized
resources, including sales training, research tools, shared best practices, global procurement and
financial and legal support. Our culture and our centralization allow our local managers to
maximize cash flow.

Our Strategy

     Our goal is to strengthen our position as a leading global media company specializing in
“out-of-home” advertising and to maximize cash flow. We plan to achieve this objective by
capitalizing on our competitive strengths and pursuing the following strategies:

Outdoor

     We seek to capitalize on our global outdoor network and diversified product mix to maximize
revenue and cash flow. In addition, by sharing best practices among our business segments, we
believe we can quickly and effectively replicate our successes throughout the markets in which we
operate. Our diversified product mix and long-standing presence in many of our existing markets
provide us with the platform to launch new products and test new initiatives in a reliable and
cost-effective manner.

     Drive Outdoor Media Spending. Outdoor advertising only represented 2.4% of total dollars
spent on advertising in the United States in 2007. Given the attractive industry fundamentals of
outdoor media and our depth and breadth of relationships with both local and national advertisers,
we believe we can drive outdoor advertising’s share of total media spending by highlighting the
value of outdoor advertising relative to other media. We have made and continue to make significant
investments in research tools that enable our clients to better understand how our displays can
successfully reach their target audiences and promote their advertising campaigns. Also, we are
working closely with clients, advertising agencies and other diversified media companies to develop
more sophisticated systems that will provide improved demographic measurements of outdoor
advertising. We believe that these measurement systems will further enhance the attractiveness of
outdoor advertising for both existing clients and new advertisers and further foster outdoor media
spending growth. According to the eMarketer industry forecast, outdoor advertising’s share of total
advertising spending will grow by approximately 34% from 2007 to 2011.

     Increase Our Share of Outdoor Media Spending. Domestically, we own and operate billboards
on real estate in the highest trafficked areas of top markets—a compelling advertising opportunity
for both local and national businesses. Internationally, we own and operate a variety of outdoor
displays on real estate in large urban areas. We intend to continue to work toward ensuring that
our customers have a superior experience by leveraging our unparalleled presence and our
best-in-class sales force, and by increasing our focus on customer satisfaction and improved
measurement systems. We believe our commitment to superior customer service, highlighted by our
unique “Proof of Performance” system, and our superior products led to over 12,000 new advertisers
in 2007. We have generated growth in many categories, including telecom, automotive and retail.

     Roll Out Digital Billboards. Advances in electronic displays, including flat screens, LCDs
and LEDs, allow us to provide these technologies as complements to traditional methods of outdoor
advertising. These electronic displays may be linked through centralized computer systems to
instantaneously and simultaneously change static advertisements on a large number of displays.
Digital outdoor advertising provides numerous advantages to advertisers, including the
unprecedented flexibility to change messaging over the course of a day, the ability to quickly
change messaging and the ability to enhance targeting by reaching different

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demographics at different times of day. Digital outdoor displays provide us with advantages, as
they are operationally efficient and eliminate safety issues from manual copy changes.
Additionally, digital outdoor displays have, at times, enhanced our relationship with regulators,
as in certain circumstances we have offered emergency messaging services and public service
announcements on our digital boards. We recently began converting a limited number of vinyl boards
to networked digital boards. We have enjoyed significantly higher revenue per digital billboard
than the revenue per vinyl billboard with relatively minimal capital costs. We believe that the
costs of digital upgrades will decrease over time as technologies improve and more digital boards
come to market.

Radio

     Our radio broadcasting strategy centers on providing programming and services to the local
communities in which we operate and being a contributing member of those communities. We believe
that by serving the needs of local communities, we will be able to grow listenership and deliver
target audiences to advertisers, thereby growing revenue and cash flow. Our radio broadcasting
strategy also entails improving the ongoing operations of our stations through effective
programming, promotion, marketing, sales and careful management of costs and expanded distribution
of content.

     Drive Local and National Advertising. We intend to drive growth in our radio business via a
strong focus on yield management, increased sales force effectiveness and expansion of our sales
channels. In late 2004, we implemented what we believe are industry-leading price and yield
optimization systems and invested in new information systems, which provide station level inventory
yield and pricing information previously unavailable in the industry. We shifted our sales force
compensation plan from a straight “volume-based” commission percentages system to a “value-based”
system to reward success in optimizing price and inventory. We believe that utilization of our
unique systems throughout our distribution and sales platform will drive continued revenue growth
in excess of market radio revenue growth. We also intend to focus on driving advertisers to our
radio stations through new sales channels and partnerships. For example, we recently formed an
alliance with Google whereby we have gained access to an entirely new group of advertisers within a
new and complementary sales channel.

     Continue to Capitalize on “Less is More.” In late 2004, we launched the Less is More
initiative to position the Company for long-term radio growth. The implementation of the Less is
More initiative reduced advertising clutter, enhanced listener experience and improved radio’s
attractiveness as a medium for advertisers. On average, we reduced ad inventory by 20% and
promotion time by 50%, which has led to more time for listeners to enjoy our compelling content. In
addition, we changed our available advertising spots from 60 second ads to a combination of 60, 30,
15 and five second ads in order to give advertisers more flexibility. As anticipated, our reduction
in ad inventory led to a decline in Radio Broadcasting revenue in 2005. Revenue growth of 6%
followed in 2006, outperforming an index of other radio broadcasters. We continued to outperform
the radio industry in 2007. Our Less is More strategy has separated us from our competitors and we
believe it positions us to continue to outperform the radio industry.

     Continue to Enhance the Radio Listener Experience. We will continue to focus on enhancing
the radio listener experience by offering a wide variety of compelling content. Our investments in
radio programming over time have created a collection of leading on-air talent and our Premiere
Radio Network offers over 70 syndicated radio programs and services for more than 5,000 radio
stations across the United States. Our distribution platform allows us to attract top talent and
more effectively utilize programming, sharing the best and most compelling content across many
stations. Finally, we are continually expanding content choices for our listeners, including
utilization of HD radio, Internet and other distribution channels with

113

 

complementary formats. Ultimately, compelling content improves audience share which, in turn,
drives revenue and cash flow generation.

     Deliver Content via New Distribution Technologies. We intend to drive company and industry
development through new distribution technologies. Some examples of such innovation are as follows:

	 	•	 	Alternative Devices. The FM radio feature is increasingly integrated into MP3 players
and cell phones. This should expand FM listenership by “putting a radio in every pocket”
with free music and local content and represents the first meaningful increase in the
radio installed base in more than 25 years.
	 
	 	•	 	HD Radio. HD radio enables crystal clear reception, interactive features, data
services and new applications. For example, the interactive capabilities of HD radio will
potentially permit us to participate in commercial download services. Further, HD radio
allows for many more stations, providing greater variety of content which we believe will
enable advertisers to target consumers more effectively. On December 6, 2005, we joined a
consortium of radio operators in announcing plans to create the HD Digital Radio Alliance
to lobby auto makers, radio manufacturers and retailers for the rollout of digital radios.
We plan to continue to develop compelling HD content and applications and to support the
alliance to foster industry conversion. We currently operate 804 HD stations, comprised of
454 HD and 350 HD2 signals.
	 
	 	•	 	Internet. Clear Channel websites had over 10.5 million unique visitors in April 2008,
making the collection of these websites one of the top five trafficked music websites.
Streaming audio via the Internet provides increased listener reach and new listener
applications as well as new advertising capabilities.
	 
	 	•	 	Mobile. We have pioneered mobile applications which allow subscribers to use their
cell phones to interact directly with the station, including finding titles or artists,
requesting songs and downloading station wallpapers.

Consolidated

     Maintain High Free Cash Flow Conversion. Our business segments benefit from high margins and
low capital intensity, which leads to strong free cash flow generation. We intend to closely manage
expense growth and to continue to focus on achieving operating efficiencies throughout our
businesses. Within each of our operating segments, we share best practices across our markets and
continually look for innovative ways to contain costs. Historically, we have been able to contain
costs in all of our segments during periods of slower revenue growth. For example, while our Radio
Broadcasting segment experienced flat growth in net revenue for the year ended December 31, 2007,
we were able to reduce Radio Broadcasting operating expenses and increase Radio Broadcasting
operating income by 1% during this period. We will continue to seek new ways of reducing costs
across our global network. We also intend to deploy growth capital with discipline to generate
continued high free cash flow yield.

     Pursue Strategic Opportunities and Optimize Our Portfolio of Assets. An inherent
benefit of both our outdoor advertising and radio broadcasting businesses is that they represent a
collection of saleable assets at attractive multiples. At March 31, 2008, we have a capital loss
carryforward of approximately $809 million that can be used to offset capital gains recognized on
asset sales over the next three years subject to the limitations of Section 383(b) of the Code and
the regulations thereunder. We continually evaluate strategic opportunities both within and outside
our existing lines of business and may from time to time sell, swap, or purchase assets or
businesses in order to maximize the efficiency of our portfolio.

114

 

Our Business Segments

Americas Outdoor Advertising

     Our Americas Outdoor Advertising segment consists of our operations in the United States,
Canada and Latin America, with approximately 93% of our 2007 revenue in this segment derived from
the United States. The Americas Outdoor Advertising segment includes advertising display faces
which we own or operate under lease management agreements. Americas Outdoor Advertising generated
21%, 20% and 20% of our consolidated net revenue in 2007, 2006 and 2005, respectively.

Sources of Revenue

     Americas Outdoor Advertising revenue is derived from the sale of advertising copy placed on
our display inventory. Our display inventory consists primarily of billboards, street furniture
displays and transit displays. Billboards comprise approximately 70% of our display revenue. The
margins on our billboard contracts tend to be higher than those on contracts for other displays due
to their greater size, impact and location along major roadways that are highly trafficked. The
following table shows the approximate percentage of revenue derived from each category for our
Americas Outdoor Advertising inventory:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 
	 	 	2007	 	 	2006	 	 	2005	 
	Billboards
	 	 	 	 	 	 	 	 	 	 	 	 
	Bulletins (1)
	 	 	52	%	 	 	52	%	 	 	54	%
	Posters
	 	 	16	 	 	 	18	 	 	 	19	 
	Street furniture displays
	 	 	4	 	 	 	4	 	 	 	4	 
	Transit displays
	 	 	16	 	 	 	14	 	 	 	11	 
	Other displays (2)
	 	 	12	 	 	 	12	 	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 
	Total
	 	 	100	%	 	 	100	%	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	Includes digital displays.
	 
	(2)	 	Includes spectaculars, mall displays and wallscapes.

     Our Americas Outdoor Advertising segment generates revenue from local, regional and
national sales. Advertising rates are based on a number of different factors, including location,
competition, size of display, illumination, market and gross rating points. Gross rating points are
the total number of impressions delivered expressed as a percentage of a market population, of a
display or group of displays. The number of “impressions” delivered by a display is measured by the
number of people passing the site during a defined period of time. For all of our billboards in the
United States, we use independent, third-party auditing companies to verify the number of
impressions delivered by a display. “Reach” is the percent a target audience exposed to an
advertising message at least once during a specified period of time, typically during a period of
four weeks. “Frequency” is the average number of exposures an individual has to an advertising
message during a specified period of time. Out-of-home frequency is typically measured over a
four-week period.

     While location, price and availability of displays are important competitive factors, we
believe that providing quality customer service and establishing strong client relationships are
also critical components of sales. In addition, we have long-standing relationships with a
diversified group of advertising brands and agencies that allow us to diversify client accounts and
establish continuing revenue streams.

115

 

Billboards

     Our billboard inventory primarily includes bulletins and posters.

	 	•	 	Bulletins. Bulletins vary in size, with the most common size being 14 feet high by 48
feet wide. Almost all of the advertising copy displayed on bulletins is computer printed
on vinyl and transported to the bulletin where it is secured to the display surface.
Because of their greater size and impact, we typically receive our highest rates for
bulletins. Bulletins generally are located along major expressways, primary commuting
routes and main intersections that are highly visible and heavily trafficked. Our clients
may contract for individual bulletins or a network of bulletins, meaning the clients’
advertisements are rotated among bulletins to increase the reach of the campaign. Our
client contracts for bulletins generally have terms ranging from one month to one year.
	 
	 	•	 	Posters. Posters are available in two sizes, 30-sheet and eight-sheet displays. The
30-sheet posters are approximately 11 feet high by 23 feet wide, and the eight-sheet
posters are approximately five feet high by 11 feet wide. Advertising copy for posters is
printed using silk-screen or lithographic processes to transfer the designs onto paper
that is then transported and secured to the poster surfaces. Posters generally are located
in commercial areas on primary and secondary routes near point-of-purchase locations,
facilitating advertising campaigns with greater demographic targeting than those displayed
on bulletins. Our poster rates typically are less than our bulletin rates, and our client
contracts for posters generally have terms ranging from four weeks to one year. Two types
of posters are premiere panels and squares. Premiere displays are innovative hybrids
between bulletins and posters that we developed to provide our clients with an alternative
for their targeted marketing campaigns. The premiere displays utilize one or more poster
panels, but with vinyl advertising stretched over the panels similar to bulletins. Our
intent is to combine the creative impact of bulletins with the additional reach and
frequency of posters.

Street Furniture Displays

     Our street furniture displays, marketed under our global AdshelTM brand, are advertising
surfaces on bus shelters, information kiosks, public toilets, freestanding units and other public
structures, and are primarily located in major metropolitan cities and along major commuting
routes. Generally, we own the street furniture structures and are responsible for their
construction and maintenance. Contracts for the right to place our street furniture displays in the
public domain and sell advertising space on them are awarded by municipal and transit authorities
in competitive bidding processes governed by local law. Generally, these contracts have terms
ranging from 10 to 20 years. As compensation for the right to sell advertising space on our street
furniture structures, we pay the municipality or transit authority a fee or revenue share that is
either a fixed amount or a percentage of the revenue derived from the street furniture displays.
Typically, these revenue sharing arrangements include payments by us of minimum guaranteed amounts.
Client contracts for street furniture displays typically have terms ranging from four weeks to one
year, and, similar to billboards, may be for network packages.

Transit Displays

     Our transit displays are advertising surfaces on various types of vehicles or within transit
systems, including on the interior and exterior sides of buses, trains, trams and taxis, and within
the common areas of rail stations and airports. Similar to street furniture, contracts for the
right to place our displays on such vehicles or within such transit systems and to sell advertising

116

 

space on them generally are awarded by public transit authorities in competitive bidding processes
or are negotiated with private transit operators. These contracts typically have terms of up to
five years. Our client contracts for transit displays generally have terms ranging from four weeks
to one year.

Other Inventory

     The balance of our display inventory consists of spectaculars, mall displays and wallscapes.
Spectaculars are customized display structures that often incorporate video, multidimensional
lettering and figures, mechanical devices and moving parts and other embellishments to create
special effects. The majority of our spectaculars are located in Dundas Square in Toronto, Times
Square and Penn Plaza in New York City, Fashion Show in Las Vegas, Sunset Strip in Los Angeles and
across from the Target Center in Minneapolis. Client contracts for spectaculars typically have
terms of one year or longer. We also own displays located within the common areas of malls on which
our clients run advertising campaigns for periods ranging from four weeks to one year. Contracts
with mall operators grant us the exclusive right to place our displays within the common areas and
sell advertising on those displays. Our contracts with mall operators generally have terms ranging
from five to ten years. Client contracts for mall displays typically have terms ranging from four
to eight weeks. A wallscape is a display that drapes over or is suspended from the sides of
buildings or other structures. Generally, wallscapes are located in high-profile areas where other
types of outdoor advertising displays are limited or unavailable. Clients typically contract for
individual wallscapes for extended terms.

Competition

     The outdoor advertising industry in the Americas is fragmented, consisting of several larger
companies involved in outdoor advertising, such as CBS and Lamar Advertising Company, as well as
numerous smaller and local companies operating a limited number of display faces in a single or a
few local markets. We also compete with other advertising media in our respective markets,
including broadcast and cable television, radio, print media, the Internet and direct mail.

117

 

Advertising Inventory and Markets

     As of December 31, 2007, we owned or operated approximately 209,000 displays in our Americas
Outdoor Advertising segment. The following table sets forth certain selected information with
regard to our Americas Outdoor Advertising inventory, with our markets listed in order of their
designated market area (“DMA®”) region ranking (DMA® is a registered service mark of Nielsen Media
Research, Inc.):

	 	 	 	 	 	 	 	 	 	 	 	 	 	    	 	 	 	    	 	 	 	    	 	 	 	    	 	 	 
	DMA®	 	 	 	 	 	 	 	 	 	 	 	Street	 	 	 	 	 	 
	Region	 	 	 	Billboards	 	Furniture	 	Transit	 	Other	 	Total
	Rank	 	Markets	 	Bulletins	 	Posters	 	Displays	 	Displays	 	Displays (1)	 	Displays
	 	 	 	 	United States
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1	 	 	New York, NY
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	16,936	 
	 	2	 	 	Los Angeles, CA
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	11,583	 
	 	3	 	 	Chicago, IL
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	15,293	 
	 	4	 	 	Philadelphia, PA
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	6,618	 
	 	5	 	 	Dallas-Ft. Worth, TX
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	9,981	 
	 	6	 	 	San Francisco-Oakland-San Jose, CA
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	8,971	 
	 	7	 	 	Boston, MA (Manchester, NH)
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	7,219	 
	 	8	 	 	Atlanta, GA
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	3,091	 
	 	9	 	 	Washington, DC (Hagerstown, MD)
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	3,403	 
	 	10	 	 	Houston, TX
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	(2)	 	 	•	 	 	 	4,542	 
	 	11	 	 	Detroit, Ml
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	606	 
	 	12	 	 	Phoenix, AZ
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	2,155	 
	 	13	 	 	Tampa-St. Petersburg (Sarasota), FL
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	2,428	 
	 	14	 	 	Seattle-Tacoma, WA
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	11,092	 
	 	15	 	 	Minneapolis-St. Paul, MN
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	2,552	 
	 	16	 	 	Miami-Ft. Lauderdale, FL
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	4,003	 
	 	17	 	 	Cleveland-Akron (Canton), OH
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	3,484	 
	 	18	 	 	Denver, CO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	861	 
	 	19	 	 	Orlando-Daytona Beach-
Melbourne, FL
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	4,166	 
	 	20	 	 	Sacramento-Stockton-Modesto, CA
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	1,509	 
	 	21	 	 	St. Louis, MO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	279	 
	 	22	 	 	Pittsburgh, PA
	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	(2)	 	 	•	 	 	 	674	 
	 	23	 	 	Portland, OR
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	1,417	 
	 	24	 	 	Baltimore, MD
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	2,533	 
	 	25	 	 	Charlotte, NC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	12	 
	 	26	 	 	Indianapolis, IN
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	1,871	 
	 	27	 	 	San Diecio, CA
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	871	 
	 	28	 	 	RalGigh-Durham (Fayetteville), NC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	449	 
	 	29	 	 	Hartford-NGW Haven, CT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	(2)	 	 	•	 	 	 	374	 
	 	30	 	 	Nashville, TN
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	652	 
	 	31	 	 	Kansas City, KS/MO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	(2)	 	 	 	 	 	 	324	 
	 	32	 	 	Columbus, OH
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	1,525	 
	 	33	 	 	Cincinnati, OH
	 	 	 	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	12	 
	 	34	 	 	Milwaukee, Wl
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	5,838	 
	 	35	 	 	Salt Lake City, UT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	66	 
	 	36	 	 	Greenville-Spartanburg,SC-Asheville,
NC-Anderson, SC
	 	 	 	 	 	 	•	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	88	 
	 	37	 	 	San Antonio, TX
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	(2)	 	 	•	 	 	 	3,799	 
	 	38	 	 	West Palm Beach-Ft. Pierce, FL
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	782	 
	 	39	 	 	Grand Rapids-Kalamazoo-Battle
Creek, Ml
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	100	 
	 	40	 	 	Birmingham, AL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 
	 	41	 	 	Harrisburg-Lancaster-Lebanon-York,
PA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	171	 

118

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DMA®	 	 	 	 	 	 	 	 	 	 	 	Street	 	 	 	 	 	 
	Region	 	 	 	Billboards	 	Furniture	 	Transit	 	Other	 	Total
	Rank	 	Markets	 	Bulletins	 	Posters	 	Displays	 	Displays	 	Displays (1)	 	Displays
	 	42	 	 	Norfolk-Portsmouth-
Newport News, VA
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	470	 
	 	43	 	 	Las Vegas, NV
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	13,362	 
	 	44	 	 	Albuquerque-Santa Fe, NM
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	1,420	 
	 	45	 	 	Oklahoma City, OK
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3	 
	 	46	 	 	Greensboro-High Point-Winston Salem, NC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	999	 
	 	47	 	 	Memphis, TN
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	2,305	 
	 	48	 	 	Louisville, KY
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	134	 
	 	49	 	 	Jacksonville, FL
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	991	 
	 	50	 	 	Buffalo, NY
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	483	 
	 	51-100	 	 	Various United States Cities
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	(2)	 	 	•	 	 	 	12,925	 
	 	101-150	 	 	Various United States Cities
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	(2)	 	 	5,491	 
	 	151+	 	 	Various United States Cities
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	2,458	 
	 	 	 	 	Non-United States Markets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	n/a	 	 	Aruba
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	213	 
	 	n/a	 	 	Australia
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	810	 
	 	n/a	 	 	Barbados
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	61	 
	 	n/a	 	 	Bahamas
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	194	 
	 	n/a	 	 	Belize
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	155	 
	 	n/a	 	 	Brazil
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	7,089	 
	 	n/a	 	 	Canada
	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	4,314	 
	 	n/a	 	 	Chile
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,166	 
	 	n/a	 	 	Costa Rica
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	210	 
	 	n/a	 	 	Dominican Republic
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	285	 
	 	n/a	 	 	Grenada
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	155	 
	 	n/a	 	 	Guam
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	144	 
	 	n/a	 	 	Jamaica
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	213	 
	 	n/a	 	 	Mexico
	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	5,016	 
	 	n/a	 	 	Netherlands Antilles
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	1,019	 
	 	n/a	 	 	New Zealand
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	1,392	 
	 	n/a	 	 	Peru
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	2,860	 
	 	n/a	 	 	Saint Kitts and Nevis
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	144	 
	 	n/a	 	 	Saint Lucia
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	100	 
	 	n/a	 	 	Virgin Islands
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	260	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total Americas Outdoor
Advertising Displays 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	209,171	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	Includes wallscapes, spectaculars, mall and digital displays. Includes other small displays
not counted as separate displays in this offering memorandum since their contribution to our
revenue is not material.
	 
	(2)	 	We have access to additional displays through arrangements with local advertising and other
companies.

International Outdoor Advertising

     Our International Outdoor Advertising segment consists of our advertising operations in Asia,
Australia and Europe, with approximately half of our 2007 revenue in this segment derived from
France and the United Kingdom. The International Outdoor Advertising segment includes advertising
display faces which we own or operate under lease management agreements. Our International Outdoor
Advertising segment generated 26%, 23% and 23% of our consolidated net revenue in 2007, 2006 and
2005, respectively.

119

 

Sources of Revenue

     International Outdoor Advertising revenue is derived from the sale of advertising copy placed
on our display inventory. Our international outdoor display inventory consists primarily of
billboards, street furniture displays, transit displays and other out-of-home advertising displays,
such as neon displays. The following table shows the approximate percentage of revenue derived from
each inventory category of our International Outdoor Advertising segment:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended
	 	 	December 31,
	 	 	2007	 	2006	 	2005
	Billboards (1)
	 	 	39	%	 	 	41	%	 	 	44	%
	Street furniture displays
	 	 	37	 	 	 	37	 	 	 	34	 
	Transit displays (2)
	 	 	8	 	 	 	9	 	 	 	9	 
	Other displays (3)
	 	 	16	 	 	 	13	 	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	100	%	 	 	100	%	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	Includes revenue from spectaculars and neon displays.
	 
	(2)	 	Includes small displays.
	 
	(3)	 	Includes advertising revenue from mall displays, other small displays and non-advertising
revenue from sales of street furniture equipment, cleaning and maintenance services and
production revenue.

     Our International Outdoor Advertising segment generates revenue worldwide from local,
regional and national sales. Similar to our Americas Outdoor Advertising segment, advertising rates
generally are based on the gross rating points of a display or group of displays. The number of
impressions delivered by a display, in some countries, is weighted to account for such factors as
illumination, proximity to other displays and the speed and viewing angle of approaching traffic.

     While location, price and availability of displays are important competitive factors, we
believe that providing quality customer service and establishing strong client relationships are
also critical components of sales. Our entrepreneurial culture allows local managers to operated
their markets as separate profit centers, encouraging customer cultivation and service.

Billboards

     The sizes of our international billboards are not standardized. The billboards vary in both
format and size across our networks, with the majority of our international billboards being
similar in size to our posters used in our Americas outdoor business (30-sheet and eight-sheet
displays). Our international billboards are sold to clients as network packages with contract terms
typically ranging from one to two weeks. Long-term client contracts are also available and
typically have terms of up to one year. We lease the majority of our billboard sites from private
landowners. Billboards include our spectacular and neon displays. DEFI, our international neon
subsidiary, is a leading global provider of neon signs with approximately 400 displays in 15
countries worldwide. Client contracts for international neon displays typically have terms of
approximately five years.

Street Furniture Displays

     Our international street furniture displays are substantially similar to their Americas street
furniture counterparts, and include bus shelters, freestanding units, public toilets, various types
of kiosks and benches. Internationally, contracts with municipal and transit authorities for the

120

 

right to place our street furniture in the public domain and sell advertising on such street
furniture typically provide for terms ranging from 10 to 15 years. The major difference between our
international and Americas street furniture businesses is in the nature of the municipal contracts.
In our international outdoor business, these contracts typically require us to provide the
municipality with a broader range of urban amenities such as public wastebaskets and lampposts, as
well as space for the municipality to display maps or other public information. In exchange for
providing such urban amenities and display space, we are authorized to sell advertising space on
certain sections of the structures we erect in the public domain. Our international street
furniture is typically sold to clients as network packages, with contract terms ranging from one to
two weeks. Long-term client contracts are also available and typically have terms of up to one
year.

Transit Displays

     Our international transit display contracts are substantially similar to their Americas
transit display counterparts, and typically require us to make only a minimal initial investment
and few ongoing maintenance expenditures. Contracts with public transit authorities or private
transit operators typically have terms ranging from three to seven years. Our client contracts for
transit displays generally have terms ranging from one week to one year, or longer.

Other International Inventory and Services

     The balance of our revenue from our International Outdoor Advertising segment consists
primarily of advertising revenue from mall displays, other small displays and non-advertising
revenue from sales of street furniture equipment, cleaning and maintenance services and production
revenue. Internationally, our contracts with mall operators generally have terms ranging from five
to ten years and client contracts for mall displays generally have terms ranging from one to two
weeks, but are available for up to six-month periods. Our international inventory includes other
small displays that are counted as separate displays since they form a substantial part of our
network and International Outdoor Advertising revenue. We also have a bike rental program which
provides bicycles for rent to the general public in several municipalities. In exchange for
providing the bike rental program, we generally derive revenue from advertising rights to the
bikes, bike stations, or additional street furniture displays. Several of our international markets
sell equipment or provide cleaning and maintenance services as part of a billboard or street
furniture contract with a municipality. Production revenue relates to the production of advertising
posters, usually for small customers.

Competition

     The international outdoor advertising industry is fragmented, consisting of several larger
companies involved in outdoor advertising, such as CBS and JC Decaux, as well as numerous smaller
and local companies operating a limited number of display faces in a single or a few local markets.
We also compete with other advertising media in our respective markets including broadcast and
cable television, radio, print media, the Internet and direct mail.

121

 

Advertising Inventory and Markets

     As of December 31, 2007, we owned or operated approximately 688,000 displays in our
International Outdoor Advertising segment. The following table sets forth certain selected
information with regard to our International Outdoor Advertising inventory, which are listed in
descending order according to 2007 revenue contribution:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Street	 	 	 	 	 	 
	 	 	 	 	 	 	Furniture	 	Transit	 	Other	 	Total
	International Markets	 	Billboards (1)	 	Displays	 	Displays (2)	 	Displays (3)	 	Displays
	France
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	162,386	 
	United Kingdom
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	69,418	 
	Italy
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	57,533	 
	China
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	62,573	 
	Australia/New Zealand
	 	 	 	 	 	 	•	 	 	 	•	 	 	 	 	 	 	 	16,958	 
	Sweden
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	111,479	 
	Switzerland
	 	 	•	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	17,663	 
	Belgium
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	23,486	 
	Norway
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	 	 	 	 	18,357	 
	Ireland
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	7,581	 
	Denmark
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	33,986	 
	Turkey
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	10,439	 
	India
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	 	 	 	 	695	 
	Finland
	 	 	•	 	 	 	•	 	 	 	•	 	 	 	•	 	 	 	23,031	 
	Poland
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	•	 	 	 	13,204	 
	Holland
	 	 	•	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	3,326	 
	Baltic States/Russia
	 	 	•	 	 	 	 	 	 	 	•	 	 	 	 	 	 	 	16,135	 
	Greece
	 	 	 	 	 	 	 	 	 	 	•	 	 	 	•	 	 	 	1,219	 
	Singapore
	 	 	 	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	3,847	 
	Japan
	 	 	 	 	 	 	•	 	 	 	 	 	 	 	 	 	 	 	53	 
	Germany
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	53	 
	Hungary
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	30	 
	Austria
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	13	 
	United Arab Emirates
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1	 
	Czech Republic
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7	 
	Ukraine
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2	 
	Indonesia
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1	 
	Portugal
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15	 
	Slovenia
	 	 	•	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total International Outdoor
Advertising Displays
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	687,966	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	Includes spectaculars and neon displays.
	 
	(2)	 	Includes small displays.
	 
	(3)	 	Includes mall displays and other small displays counted as separate displays in this
offering memorandum since they form a substantial part of our network and International
Outdoor Advertising revenue.

122

 

			
	     In addition to the displays listed above, as of December 31, 2007, we had
equity investments in various out-of-home advertising companies that operate in the
following markets:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Street	 	 
	 	 	 	 	 	 	Equity	 	 	 	 	 	Furniture	 	Transit
	Market	 	Company	 	Investment	 	Billboards (1)	 	Displays	 	Displays
	Outdoor
Advertising Companies
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	South Africa (2)
	 	Clear Channel Independent	 	 	50.0	%	 	 	•	 	 	 	•	 	 	 	•	 
	Italy
	 	Alessi	 	 	34.3	%	 	 	•	 	 	 	•	 	 	 	•	 
	Italy
	 	AD Moving SpA	 	 	17.5	%	 	 	•	 	 	 	 	 	 	 	 	 
	Hong Kong
	 	Buspak	 	 	50.0	%	 	 	•	 	 	 	 	 	 	 	 	 
	Spain
	 	Clear Channel CEMUSA	 	 	50.0	%	 	 	•	 	 	 	 	 	 	 	 	 
	Thailand
	 	Master & More	 	 	32.5	%	 	 	•	 	 	 	•	 	 	 	 	 
	Belgium
	 	MTB	 	 	49.0	%	 	 	 	 	 	 	 	 	 	 	•	 
	Belgium
	 	Streep	 	 	25.0	%	 	 	 	 	 	 	 	 	 	 	•	 
	Denmark
	 	City Reklame	 	 	45.0	%	 	 	•	 	 	 	 	 	 	 	 	 
	Other Media Companies
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Norway
	 	CAPA	 	 	50.0	%	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	(1)	 	Includes spectaculars and neon displays.
	 
	(2)	 	On January 17, 2008, we entered into an agreement to sell our investment in Clear Channel
Independent. We closed the transaction on March 28, 2008.

Radio Broadcasting

     Our Radio Broadcasting segment includes radio stations for which we are the licensee and for
which we program and/or sell air time under local marketing agreements (“LMAs”) or joint sales
agreements (“JSAs”). The Radio Broadcasting segment also operates our Premiere Radio Network, a
national radio network, and various other local sports, news and agricultural radio networks, and
owns an equity interest in radio broadcasting companies in Australia, Mexico and New Zealand. Our
Radio Broadcasting segment generated 50%, 53% and 54% of our consolidated net revenue in 2007, 2006
and 2005, respectively.

Sources of Revenue

     The primary source of our revenue in our Radio Broadcasting segment is the sale of spots on
our radio stations for local, regional and national advertising. Our local advertisers cover a wide
range of categories, including automotive dealers, consumer services, retailers, entertainment,
health and beauty products, telecommunications and media. Our contracts with our advertisers
generally provide for a term which extends for less than a one-year period. We also generate
additional revenue from network compensation, the Internet, air traffic, events, barter and other
miscellaneous transactions. These other sources of revenue supplement our traditional advertising
revenue without increasing on-air-commercial time.

     Each radio station’s local sales staff solicits advertising directly from local advertisers or
indirectly through advertising agencies. Our strategy of producing commercials that respond to the
specific needs of our advertisers helps to build local direct advertising relationships. Regional
advertising sales are also generally realized by our local sales staff. To generate national
advertising sales, we engage firms specializing in soliciting radio advertising sales on a national

123

 

level. National sales representatives obtain advertising principally from advertising agencies
located outside the station’s market and receive commissions based on advertising sold.

     Advertising rates are principally based on the length of the spot and how many people in a
targeted audience listen to our stations, as measured by independent ratings services. A station’s
format can be important in determining the size and characteristics of its listening audience, and
advertising rates are influenced by the station’s ability to attract and target audiences that
advertisers aim to reach. The size of the market influences rates as well, with larger markets
typically receiving higher rates than smaller markets. Rates are generally highest during morning
and evening commuting periods.

     We seek to maximize revenue by closely managing on-air inventory of advertising time and
adjusting prices to local market conditions. As part of Less is More, we implemented
industry-leading price and yield optimization systems and invested in new information systems,
which provide detailed inventory information previously unavailable. These systems enable our
station managers and sales directors to adjust commercial inventory and pricing based on local
market demand, as well as to manage and monitor different commercial durations (60 second, 30
second, 15 second and five second) in order to provide more effective advertising for our customers
at optimal prices.

Competition

     We compete in our respective markets for audiences, advertising revenue and programming with
other radio stations owned by companies such as CBS, Citadel, Entercom and Cumulus. We also compete
with other advertising media, including satellite radio, broadcast and cable television, print
media, outdoor advertising, direct mail, the Internet and other forms of advertisement.

Radio Stations

     As of December 31, 2007, we owned 304 AM and 701 FM domestic radio stations, of which 275
stations were in the top 50 United States markets according to the Arbitron rankings as of January
2, 2008. The following table sets forth certain selected information with regard to our radio
broadcasting stations.

124

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number
	 	 	Market	 	of
	Market	 	Rank*	 	Stations
	New York, NY
	 	 	1	 	 	 	5	 
	Los Angeles, CA
	 	 	2	 	 	 	8	 
	Chicago, IL
	 	 	3	 	 	 	7	 
	San Francisco, CA
	 	 	4	 	 	 	7	 
	Dallas-Ft. Worth, TX
	 	 	5	 	 	 	6	 
	Houston-Galveston, TX
	 	 	6	 	 	 	8	 
	Philadelphia, PA
	 	 	7	 	 	 	6	 
	Atlanta, GA
	 	 	8	 	 	 	6	 
	Washington, DC
	 	 	9	 	 	 	8	 
	Boston, MA
	 	 	10	 	 	 	4	 
	Detroit, Ml
	 	 	11	 	 	 	7	 
	Miami-Ft. Lauderdale-Hollywood, FL
	 	 	12	 	 	 	7	 
	Seattle-Tacoma, WA
	 	 	14	 	 	 	6	 
	Phoenix, AZ
	 	 	15	 	 	 	8	 
	Minneapolis-St. Paul, MN
	 	 	16	 	 	 	7	 
	San Diego, CA
	 	 	17	 	 	 	8	 
	Nassau-Suffolk (Long Island), NY
	 	 	18	 	 	 	2	 
	Tampa-St. Petersburg-Clearwater, FL
	 	 	19	 	 	 	8	 
	St. Louis, MO
	 	 	20	 	 	 	6	 
	Baltimore, MD
	 	 	21	 	 	 	3	 
	Denver-Boulder, CO
	 	 	22	 	 	 	8	 
	Portland, OR
	 	 	23	 	 	 	5	 
	Pittsburgh, PA
	 	 	24	 	 	 	6	 
	Charlotte-Gastonia-Rock Hill, NC-SC
	 	 	25	 	 	 	5	 
	Riverside-San Bernardino, CA
	 	 	26	 	 	 	6	 
	Sacramento, CA
	 	 	27	 	 	 	4	 
	Cleveland, OH
	 	 	28	 	 	 	6	 
	Cincinnati, OH
	 	 	29	 	 	 	8	 
	San Antonio, TX
	 	 	30	 	 	 	5	 
	Salt Lake City-Ogden-Provo, UT
	 	 	31	 	 	 	6	 
	Las Vegas, NV
	 	 	33	 	 	 	4	 
	Orlando, FL
	 	 	34	 	 	 	7	 
	San Jose, CA
	 	 	35	 	 	 	3	 
	Milwaukee-Racine,
WI
	 	 	36	 	 	 	6	 
	Columbus, OH
	 	 	37	 	 	 	7	 
	Providence-Warwick-Pawtucket, RI
	 	 	39	 	 	 	4	 
	Indianapolis, IN
	 	 	40	 	 	 	3	 
	Norfolk-Virginia Beach-Newport
News, VA
	 	 	41	 	 	 	4	 
	Austin, TX
	 	 	42	 	 	 	6	 
	Raleigh-Durham, NC
	 	 	43	 	 	 	4	 
	Nashville, TN
	 	 	44	 	 	 	5	 
	Greensboro-Winston Salem-High
Point, NC
	 	 	45	 	 	 	5	 
	West Palm Beach-Boca
Raton, FL
	 	 	46	 	 	 	6	 
	Jacksonville, FL
	 	 	47	 	 	 	7	 
	Oklahoma City, OK
	 	 	48	 	 	 	6	 
	Memphis, TN
	 	 	49	 	 	 	7	 
	Hartford-New Britain-Middletown, CT
	 	 	50	 	 	 	5	 
	Louisville, KY
	 	 	53	 	 	 	8	 
	Rochester, NY
	 	 	54	 	 	 	7	 
	New Orleans, LA
	 	 	55	 	 	 	7	 
	Richmond, VA
	 	 	56	 	 	 	6	 
	Birmingham, AL
	 	 	57	 	 	 	5	 
	McAllen-Brownsville-Harlingen, TX
	 	 	58	 	 	 	5	 
	Greenville-Spartanburg, SC
	 	 	59	 	 	 	6	 
	Dayton, OH
	 	 	60	 	 	 	8	 
	Tucson, AZ
	 	 	61	 	 	 	7	 
	Ft. Myers-Naples-Marco
Island, FL
	 	 	62	 	 	 	6	 
	Albany-Schenectady-Troy, NY
	 	 	63	 	 	 	7	 
	Honolulu, HI
	 	 	64	 	 	 	6	 
	Tulsa, OK
	 	 	65	 	 	 	6	 
	Fresno, CA
	 	 	66	 	 	 	8	 
	Grand
Rapids, MI
	 	 	67	 	 	 	7	 
	Allentown-Bethlehem, PA
	 	 	68	 	 	 	4	 
	Albuquerque, NM
	 	 	69	 	 	 	7	 
	Omaha-Council Bluffs, NE-IA
	 	 	72	 	 	 	5	 
	Sarasota-Bradenton, FL
	 	 	73	 	 	 	6	 
	Akron, OH
	 	 	74	 	 	 	5	 
	Wilmington, DE
	 	 	75	 	 	 	2	 
	El Paso, TX
	 	 	76	 	 	 	5	 
	Bakersfield, CA
	 	 	77	 	 	 	6	 
	Harrisburg-Lebanon-Carlisle, PA
	 	 	78	 	 	 	6	 
	Stockton, CA
	 	 	79	 	 	 	6	 
	Baton Rouge, LA
	 	 	80	 	 	 	6	 
	Monterey-Salinas-Santa
Cruz, CA
	 	 	81	 	 	 	5	 
	Syracuse, NY
	 	 	82	 	 	 	7	 
	Little Rock, AR
	 	 	84	 	 	 	5	 
	Springfield, MA
	 	 	86	 	 	 	5	 
	Charleston, SC
	 	 	87	 	 	 	6	 
	Toledo, OH
	 	 	88	 	 	 	5	 
	Columbia, SC
	 	 	90	 	 	 	6	 
	Des Moines, IA
	 	 	91	 	 	 	5	 
	Spokane, WA
	 	 	92	 	 	 	6	 
	Mobile, AL
	 	 	93	 	 	 	4	 
	Colorado Springs, CO
	 	 	95	 	 	 	3	 
	Ft. Pierce-Stuart-Vero
Beach, FL
	 	 	96	 	 	 	6	 
	Melbourne-Titusville-Cocoa, FL 
	 	 	97	 	 	 	4	 
	Wichita, KS
	 	 	98	 	 	 	4	 

125

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number
	 	 	Market	 	of
	Market	 	Rank*	 	Stations
	Madison, WI
	 	 	99	 	 	 	6	 
	Various United States Cities
	 	 	101-150	 	 	 	104	 
	Various United States Cities
	 	 	151-200	 	 	 	87	 
	Various United States Cities
	 	 	201-250	 	 	 	52	 
	Various United States Cities
	 	 	251+	 	 	 	69	 
	Various United States Cities
	 	unranked	 	 	69	 
	Non-core radio (1)
	 	 	 	 	 	 	115	 
	 
	 	 	 	 	 	 	 	 
	Total (2)(3)
	 	 	 	 	 	 	1,005	 
	 
	 	 	 	 	 	 	 	 

 

			
	*	 	Per Arbitron Rankings as of January 2, 2008.
	 
	(1)	 	Included in the 115 non-core radio stations are 63 stations which were sold subsequent to
December 31, 2007, and 32 stations which were subject to sale under definitive asset purchase
agreements at March 31, 2008.
	 
	(2)	 	In connection with the merger, we have agreed with regulatory authorities to divest of a
total of 62 stations (47 core radio stations and 15 non-core radio stations).
	 
	(3)	 	Excluded from the 1,005 radio stations owned or operated by us are five radio stations
programmed pursuant to a LMA or shared services agreement (where the FCC licenses are not owned
by us) and one Mexican radio station that we provide programming to and for which we sell
airtime for under exclusive sales agency arrangements. Also excluded are radio stations in
Australia, Mexico and New Zealand. We own a 50%, 40% and 50% equity interest in companies that
have radio broadcasting operations in these markets, respectively. On May 28, 2008, we entered
into a definitive agreement to sell our 40% equity interest in the Mexican radio broadcasting
company, Grupo Acir, for total consideration of $94 million. The sale is subject to Mexican
regulatory approvals and is expected to close in June 2008. At closing, the buyer will
purchase half of our equity interest and is obligated to purchase our remaining equity
interest in Grupo Acir within five years from the closing date.

Radio Networks

     In addition to radio stations, our Radio Broadcasting segment includes our Premiere Radio
Network, a national radio network, and various sports, news and agriculture networks serving
Alabama, California, Colorado, Florida, Georgia, Iowa, Kentucky, Missouri, Ohio, Oklahoma,
Pennsylvania, Tennessee and Virginia. Premiere Radio Network produces, distributes, or represents
more than 70 syndicated radio programs and services for more than 5,000 radio station affiliates.
Our broad distribution platform enables us to attract and retain top programming talent. Some of
our more popular radio programs include Rush Limbaugh, Steve Harvey, Ryan Seacrest and Jeff
Foxworthy.

     Recruiting and retaining top talent is an important component of the success of our radio
networks. Given our scale, market position and distribution platform, we believe that we have a
competitive advantage relative to other radio networks with regards to attracting on-air talent.

International Radio Investments

     We own equity interests in various international radio broadcasting companies located in
Australia (50% ownership), Mexico (40% ownership) and New Zealand (50% ownership), which we account
for under the equity method of accounting. On May 28, 2008, we entered into a definitive agreement
to sell our 40% equity interest in the Mexican radio broadcasting company, Grupo Acir, for total
consideration of $94 million. The sale is subject to Mexican regulatory approvals and is expected
to close in June 2008. At closing, the buyer will purchase half of our equity interest and is
obligated to purchase our remaining equity interest in Grupo Acir within five years from the
closing date.

Other

     The Other category includes our media representation firm and other general support
services and initiatives which are ancillary to our other businesses.

126

 

Media Representation

     We own Katz Media, a full-service media representation firm that sells national spot
advertising time for clients in the radio and television industries throughout the United States.
As of December 31, 2007, Katz Media represented over 3,200 radio stations, of which almost
one-third are owned by us, and 380 television stations, of which nearly one-tenth are owned by us.

     Katz Media generates revenue primarily through contractual commissions realized from the sale
of national spot advertising airtime. National spot advertising is commercial airtime sold to
advertisers on behalf of radio and television stations. Katz Media represents its media clients
pursuant to media representation contracts, which typically have terms of up to ten years in
length.

Regulation of our Americas Outdoor Advertising and International Outdoor Advertising
Businesses

     The outdoor advertising industry in the United States is subject to governmental regulation at
the federal, state and local levels. These regulations may include, among others, restrictions on
the construction, repair, maintenance, lighting, upgrading, height, size, spacing and location of
and, in some instances, content of advertising copy being displayed on outdoor advertising
structures. In addition, the outdoor advertising industry outside of the United States is subject
to certain foreign governmental regulation.

     From time to time, legislation has been introduced in both the United States and foreign
jurisdictions attempting to impose taxes on revenue from outdoor advertising. Domestically, several
state and local jurisdictions have already imposed such taxes as a percentage of our outdoor
advertising revenue in that jurisdiction. While these taxes have not had a material impact on our
business and financial results to date, we expect state and local governments to continue to try to
impose such taxes as a way of increasing revenue. These laws may affect prevailing competitive
conditions in our markets in a variety of ways. Such laws may reduce our expansion opportunities,
or may increase or reduce competitive pressure from other members of the outdoor advertising
industry. No assurance can be given that existing or future laws or regulations, and the
enforcement thereof, will not materially and adversely affect the outdoor advertising industry.
However, we contest laws and regulations that we believe unlawfully restrict our constitutional or
other legal rights and may adversely impact the growth of our outdoor advertising business.

     Federal law, principally the HBA, requires the regulation of outdoor advertising on
Federal-Aid Primary and Interstate and National Highway Systems roads within the United States.
Other important outdoor advertising regulations include the Intermodal Surface Transportation
Efficiency Act of 1991, the Bonus Act/Bonus Program and the 1995 Scenic Byways Amendment. The HBA
requires that states regulate the size and placement of billboards, requires the development of
state standards, mandates a state’s compliance program, promotes the expeditious removal of illegal
signs and requires just compensation for takings.

     To satisfy the HBA’s requirements, all states have passed billboard control statutes and
regulations which regulate, among other things, construction, repair, maintenance, lighting,
upgrading, height, size, spacing and the placement of outdoor advertising structures. Other than on
Native American sovereign lands, we are not aware of any state which has passed control statutes
and regulations less restrictive than the prevailing federal requirements, including the

127

 

requirement that an owner remove any non-grandfathered non-compliant signs along the controlled
roads, at the owner’s expense and without compensation. Local governments generally also include
billboard control as part of their zoning laws and building codes regulating those items described
above and include similar provisions regarding the removal of non-grandfathered structures that do
not comply with certain of the local requirements.

     As part of their billboard control laws, state and local governments regulate the construction
of new signs. Some jurisdictions prohibit new construction, some jurisdictions allow new
construction only to replace existing structures and some jurisdictions allow new construction
subject to the various restrictions discussed above. In most jurisdictions, restrictive regulations
also limit our ability to relocate, rebuild, repair, maintain, upgrade, modify, or replace existing
legal non-conforming billboards.

     Federal law neither requires nor prohibits the removal of existing lawful billboards, but it
does mandate the payment of compensation if a state or political subdivision compels the removal of
a lawful billboard along the controlled roads. In the past, state governments have purchased and
removed existing lawful billboards for beautification purposes using federal funding for
transportation enhancement programs, and these jurisdictions may continue to do so in the future.
From time to time, state and local government authorities use the power of eminent domain and
amortization to remove billboards. Thus far, we have been able to obtain satisfactory compensation
for our billboards purchased or removed as a result of these types of governmental action, although
there is no assurance that this will continue to be the case in the future.

     We have introduced and intend to expand the deployment of digital billboards that display
static digital advertising copy from various advertisers, on existing and new billboard locations.
We have encountered some existing regulations that restrict or prohibit these types of digital
displays, but these regulations have not yet materially impacted our digital deployment. However,
since digital technology for changing static copy has only recently been developed and introduced
into the market on a large scale, existing regulations that currently do not apply to digital
technology by their terms could be revised to impose greater restrictions. These regulations may
impose greater restrictions on digital billboards due to alleged concerns over aesthetics, driver
safety, or lighting.

     International regulation of the outdoor advertising industry varies by region and country, but
generally limits the size, placement, nature and density of out-of-home displays. The significant
international regulations include the Law of December 29, 1979 in France, the Town and Country
Planning (Control of Advertisements) Regulations 1992 in the United
Kingdom and Règlement Régional
Urbain de l ’agglomération bruxelloise in Belgium. These laws define issues such as the extent to
which advertisements can be erected in rural areas, the hours during which illuminated signs may be
lit and whether the consent of local authorities is required to place a sign in certain
communities. Other regulations may limit the subject matter and language of out-of-home displays.

Regulation of Our Radio Broadcasting Businesses

Existing Regulation and 1996 Legislation

     Radio broadcasting is subject to the jurisdiction of the FCC under the Communications Act of
1934, as amended (the “Communications Act”). The Communications Act prohibits the operation of a
radio broadcasting station except under a license issued by the FCC and empowers the FCC, among
other things, to:

	 	•	 	issue, renew, revoke and modify broadcasting licenses;
	 
	 	•	 	assign frequency bands;

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	 	•	 	determine stations’ frequencies, locations and power;
	 
	 	•	 	regulate the equipment used by stations;
	 
	 	•	 	adopt other regulations to carry out the provisions of the Communications Act;
	 
	 	•	 	impose penalties for violation of such regulations; and
	 
	 	•	 	impose fees for processing applications and other administrative functions.

     The Communications Act prohibits the assignment of a license or the transfer of control of a
licensee without prior approval of the FCC.

     The 1996 Act represented a comprehensive overhaul of the country’s telecommunications laws.
The 1996 Act changed both the process for renewal of broadcast station licenses and the broadcast
ownership rules. The 1996 Act established a “two-step” renewal process that limited the FCC’s
discretion to consider applications filed in competition with an incumbent’s renewal application.
The 1996 Act also liberalized the national broadcast ownership rules, eliminating the national
radio limits, and relaxed local radio ownership restrictions.

License Grant and Renewal

     Under the 1996 Act, the FCC grants broadcast licenses to radio stations for terms of up to
eight years. The 1996 Act requires the FCC to renew a broadcast license if it finds that:

	 	•	 	the station has served the public interest, convenience and necessity;
	 
	 	•	 	there have been no serious violations of either the Communications Act or the FCC’s
rules and regulations by the licensee; and
	 
	 	•	 	there have been no other violations which taken together constitute a pattern of abuse.

     In making its determination, the FCC may consider petitions to deny and informal objections,
and may order a hearing if such petitions or objections raise sufficiently serious issues. The FCC,
however, may not consider whether the public interest would be better served by a person or entity
other than the renewal applicant. Instead, under the 1996 Act, competing applications for the
incumbent’s spectrum may be accepted only after the FCC has denied the incumbent’s application for
renewal of its license.

     Although in the vast majority of cases broadcast licenses are renewed by the FCC, even when
petitions to deny or informal objections are filed, there can be no assurance that any of our
stations’ licenses will be renewed at the expiration of their terms.

Current Multiple Ownership Restrictions

     The FCC has promulgated rules that, among other things, limit the ability of individuals and
entities to own or have an “attributable interest” in broadcast stations and other specified mass
media entities.

     The 1996 Act mandated significant revisions to the radio ownership rules. With respect to
radio licensees, the 1996 Act directed the FCC to eliminate the national ownership restriction,
allowing one entity to own nationally any number of AM or FM broadcast stations. Other FCC rules
mandated by the 1996 Act greatly eased local radio ownership restrictions. The maximum allowable
number of radio stations that may be commonly owned in a market varies depending

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on the total number of radio stations in that market, as determined using a method prescribed by
the FCC. In markets with 45 or more stations, one company may own, operate, or control eight
stations, with no more than five in any one service (AM or FM). In markets with 30 to 44 stations,
one company may own seven stations, with no more than four in any one service. In markets with 15
to 29 stations, one entity may own six stations, with no more than four in any one service. In
markets with 14 stations or less, one company may own up to five stations or 50% of all of the
stations, whichever is less, with no more than three in any one service.

     Irrespective of FCC rules governing radio ownership, however, the Antitrust Division of the
DOJ (the “Antitrust Division”) and the FTC have the authority to determine that a particular
transaction presents antitrust concerns. Following the passage of the 1996 Act, the Antitrust
Division became more aggressive in reviewing proposed acquisitions of radio stations, particularly
in instances where the proposed purchaser already owned one or more radio stations in a particular
market and sought to acquire additional radio stations in the same market. The Antitrust Division
has, in some cases, obtained consent decrees requiring radio station divestitures in a particular
market based on allegations that acquisitions would lead to unacceptable concentration levels.

     The FCC has adopted rules with respect to LMAs by which the licensee of one radio or
television station provides substantially all of the programming for another licensee’s station in
the same market and sells all of the advertising within that programming. Under these rules, an
entity that owns one or more radio or television stations in a market and programs more than 15% of
the broadcast time on another station in the same service (radio or television) in the same market
pursuant to an LMA is generally required to count the LMA station toward its media ownership limits
even though it does not own the station. As a result, in a market where we own one or more radio
stations, we generally cannot provide programming under an LMA to another radio station if we
cannot acquire that station under the various rules governing media ownership.

     Under the FCC’s ownership rules, an officer or director of our Company or a direct or indirect
purchaser of certain types of our securities could cause us to violate FCC regulations or policies
if that purchaser owned or acquired an “attributable” interest in other media properties in the
same areas as our stations or in a manner otherwise prohibited by the FCC. All officers and
directors of a licensee and any direct or indirect parent, general partners, limited partners and
limited liability company members who are not properly “insulated” from management activities, and
stockholders who own 5% or more of the outstanding voting stock of a licensee or its parent, either
directly or indirectly, generally will be deemed to have an attributable interest in the licensee.
Certain institutional investors who exert no control or influence over a licensee may own up to 20%
of a licensee’s or its parent’s outstanding voting stock before attribution occurs. Under current
FCC regulations, debt instruments, non-voting stock, minority voting stock interests in
corporations having a single majority stockholder, and properly insulated limited partnership and
limited liability company interests as to which the licensee certifies that the interest holders
are not “materially involved” in the management and operation of the subject media property
generally are not subject to attribution unless such interests implicate the FCC’s “equity/debt
plus” (“EDP”) rule. Under the EDP rule, an aggregate debt and/or equity interest in excess of 33%
of a licensee’s total asset value (equity plus debt) is attributable if the interest holder is
either a major program supplier (providing over 15% of the licensee’s station’s total weekly
broadcast programming hours) or a same-market media owner (including broadcasters, cable operators
and newspapers). To the best of our knowledge at present, none of our officers, directors, or
attributable 5% or greater shareholders holds an interest in another television station, radio
station, or daily newspaper that is inconsistent with the FCC’s ownership rules and policies.

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Developments and Future Actions Regarding Multiple Ownership Rules

     Expansion of our broadcast operations in particular areas and nationwide will continue to be
subject to the FCC’s ownership rules and any further changes the FCC or Congress may adopt. Recent
actions by and pending proceedings before the FCC, Congress and the courts may significantly affect
our business.

     The 1996 Act requires the FCC to review its remaining ownership rules biennially as part of
its regulatory reform obligations (although, under subsequently enacted appropriations legislation,
the FCC is obligated to review the rules every four years rather than biennially). The first two
biennial reviews did not result in any significant changes to the FCC’s media ownership rules,
although the first such review led to the commencement of several separate proceedings concerning
specific rules.

     In its third review, which commenced in September 2002, the FCC undertook a comprehensive
review and reevaluation of all of its media ownership rules, including incorporation of a
previously commenced separate rulemaking on the radio ownership rules. This biennial review
culminated in a decision adopted by the FCC in June 2003, in which the agency made significant
changes to virtually all aspects of the existing media ownership rules.

     With respect to local radio ownership, the FCC’s June 2003 decision left in place the existing
tiered numerical limits on station ownership in a single market. The FCC, however, completely
revised the manner of defining local radio markets, abandoning the existing definition based on
station signal contours in favor of a definition based on “metro” markets as defined by Arbitron.
Under the modified approach, commercial and non-commercial radio stations licensed to communities
within an Arbitron metro market, as well as stations licensed to communities outside the metro
market but considered “home” to that market, are counted as stations in the local radio market for
the purposes of applying the ownership limits. For geographic areas outside defined Arbitron metro
markets, the FCC adopted an interim market definition methodology based on a modified signal
contour overlap approach and initiated a further rulemaking proceeding to determine a permanent
market definition methodology for such areas. The further proceeding is still pending. The FCC
grandfathered existing combinations of owned stations that would not comply with the modified
rules. However, the FCC ruled that such noncompliant combinations could not be sold intact except
to certain “eligible entities,” which the agency defined as entities qualifying as a small business
consistent with Small Business Administration standards.

     In addition, the FCC’s June 2003 decision ruled for the first time that radio JSAs by which
the licensee of one radio station sells more than 15% of the weekly advertising time of another
licensee’s station in the same market (but does not provide programming to that station), would be
considered attributable to the selling party. Furthermore, the FCC stated that where the newly
attributable status of existing JSAs and LMAs resulted in combinations of stations that would not
comply with the modified rules, termination of such JSAs and LMAs would be required within two
years of the modified rules’ effectiveness.

     Numerous parties, including us, appealed the modified ownership rules adopted by the FCC in
June 2003. These appeals were consolidated before the United States Court of Appeals for the Third
Circuit. In September 2003, shortly before the modified rules were scheduled to take effect, that
court issued a stay preventing the rules’ implementation pending the court’s decision on appeal. In
June 2004, the court issued a decision that upheld the modified ownership rules in certain respects
and remanded them to the FCC for further justification in other respects.

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     With respect to the modified radio ownership rules, the court affirmed the FCC’s switch to an
Arbitron-based methodology for defining radio markets, its decision to include noncommercial
stations when counting stations in a market, its limitations on transfer of existing combinations
of stations that would not comply with the modified rules, its decision to make JSAs attributable
to the selling party and its decision to require termination within two years of the rules’
effectiveness of existing JSAs and LMAs that resulted in non-compliance with the modified radio
rules. However, the court determined that the FCC had insufficiently justified its retention of the
existing numerical station caps and remanded the numerical limits to the FCC for further
explanation.

     In its June 2004 decision, the court left in place the stay on the FCC’s implementation of the
modified media ownership rules. However, in September 2004, the court partially lifted its stay on
the modified radio ownership rules, putting into effect the aspects of those rules that establish a
new methodology for defining local radio markets and counting stations within those markets, limit
our ability to transfer intact combinations of stations that do not comply with the new rules, make
JSAs attributable and require us to terminate within two years those of our existing JSAs and LMAs
which, because of their newly attributable status, cause our station combinations in the relevant
markets to be non-compliant with the new radio ownership rules. Moreover, in a market where we own
one or more radio stations, we generally cannot enter into a JSA with another radio station if we
could not acquire that station under the modified rules.

     In June 2006, the FCC commenced its proceeding on remand of the modified media ownership
rules. On December 18, 2007, the FCC adopted rules to promote diversification of broadcast
ownership, including revisions to its EDP attribution rule and the “eligible entity” exception to
the prohibition on the sale of grandfathered noncompliant radio station combinations. The FCC made
no changes to the currently effective local radio ownership rules (as modified by the 2003
decision).

     The FCC’s media ownership rules, including the modifications adopted in December 2007, are
subject to further court appeals, various petitions for reconsideration before the FCC and possible
actions by Congress. In the 2004 Consolidated Appropriations Act, Congress changed the FCC’s
obligation to periodically review the media ownership rules from every two years to every four
years.

     We cannot predict the impact of any of these developments on our business. In particular, we
cannot predict the ultimate outcome of the FCC’s media ownership proceedings or their effects on
our ability to acquire broadcast stations in the future, to complete acquisitions that we have
agreed to make, to continue to own and freely transfer groups of stations that we have already
acquired, or to continue our existing agreements to provide programming to or sell advertising on
stations we do not own. Moreover, we cannot predict the impact of future reviews or any other
agency or legislative initiatives upon the FCC’s broadcast rules. Further, the 1996 Act’s
relaxation of the FCC’s ownership rules has increased the level of competition in many markets in
which our stations are located.

Alien Ownership Restrictions

     The Communications Act restricts the ability of foreign entities or individuals to own or hold
certain interests in broadcast licenses. Foreign governments, representatives of foreign
governments, non-United States citizens, representatives of non-United States citizens and
corporations or partnerships organized under the laws of a foreign nation are barred from holding
broadcast licenses. Non-United States citizens, collectively, may own or vote up to 20% of the
capital stock of a corporate licensee. A broadcast license may not be granted to or held by

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any entity that is controlled, directly or indirectly, by a business entity more than one-fourth of
whose capital stock is owned or voted by non-United States citizens or their representatives, by
foreign governments or their representatives, or by non-United States business entities, if the FCC
finds that the public interest will be served by the refusal or revocation of such license. The FCC
has interpreted this provision of the Communications Act to require an affirmative public interest
finding before a broadcast license may be granted to or held by any such entity, and the FCC has
made such an affirmative finding only in limited circumstances. Since we serve as a holding company
for subsidiaries that serve as licensees for our stations, we are effectively restricted from
having more than one-fourth of our stock owned or voted directly or indirectly by non-United States
citizens or their representatives, foreign governments, representatives of foreign governments, or
foreign business entities.

Other Regulations Affecting Broadcast Stations

     General. The FCC has significantly reduced its past regulation of broadcast stations,
including elimination of formal ascertainment requirements and guidelines concerning amounts of
certain types of programming and commercial matter that may be broadcast. There are, however,
statutes and rules and policies of the FCC and other federal agencies that regulate matters such as
network-affiliate relations, the ability of stations to obtain exclusive rights to air syndicated
programming, satellite systems’ carriage of syndicated and network programming on distant stations,
political advertising practices, obscenity and indecency in broadcast programming, application
procedures and other areas affecting the business or operations of broadcast stations. Moreover,
recent and possible future actions by the FCC in the areas of localism and public interest
obligations may impose additional regulatory requirements on us.

     Indecency. Provisions of federal law regulate the broadcast of obscene, indecent, or
profane material. The FCC has substantially increased its monetary penalties for violations of
these regulations. Legislation enacted in 2006 provides the FCC with authority to impose fines of
up to $325,000 per violation for the broadcast of such material. We cannot predict whether Congress
will consider or adopt further legislation in this area.

     Public Interest Programming. Broadcasters are required to air programming addressing the
needs and interests of their communities of license, and to place “issues/programs lists” in their
public inspection files to provide their communities with information on the level of “public
interest” programming they air. In March 2007, the FCC initiated a proceeding to consider imposing
on radio licensees obligations to report “public interest” programming on a standardized form and
to post this form and certain other contents of the public inspection file on each station’s
website. Moreover, in August 2003, the FCC introduced a “Localism in Broadcasting” initiative that,
among other things, resulted in the creation of an FCC Localism Task Force, localism hearings at
various locations throughout the country and the July 2004 initiation of a proceeding to consider
whether additional FCC rules and procedures are necessary to promote localism in broadcasting. In
December 2007, the FCC adopted a report and proposed rules designed to increase local programming
content and diversity, including renewal application processing guidelines for locally-oriented
programming and a requirement that broadcasters establish advisory boards in the communities where
they own stations.

     Equal Employment Opportunity. The FCC’s equal employment opportunity rules generally require
broadcasters to engage in broad and inclusive recruitment efforts to fill job vacancies, keep a
considerable amount of recruitment data and report much of this data to the FCC and to the public
via stations’ public files and websites. The FCC is still considering whether to apply these rules
to part-time employment positions. Broadcasters are also obligated not to engage in employment
discrimination based on race, color, religion, national origin, or sex.

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     Digital Radio. The FCC has approved a technical standard for the provision of “in band, on
channel” terrestrial digital radio broadcasting by existing radio broadcasters, and has allowed
radio broadcasters to convert to a hybrid mode of digital/analog operation on their existing
frequencies. We and other broadcasters have intensified efforts to roll out terrestrial digital
radio service. In May 2007, the FCC established service, operational and technical rules for
terrestrial digital audio broadcasting and sought public comment on what (if any) limitations
should be placed on subscription services offered by digital audio broadcasters and whether any new
public interest requirements should be applied to terrestrial digital audio broadcast service. We
cannot predict the impact of terrestrial digital audio radio service on our business.

     Low Power FM Radio Service. In January 2000, the FCC created two new classes of
noncommercial low power FM radio stations (“LPFM”). One class, “LP100”, is authorized to operate
with a maximum power of 100 watts and a service radius of about 3.5 miles. The other class, “LP10”,
is authorized to operate with a maximum power of 10 watts and a service radius of about one to two
miles. In establishing the new LPFM service, the FCC said that its goal is to create a class of
radio stations designed “to serve very localized communities or underrepresented groups within
communities.” The FCC has authorized a number of LPFM stations. In December 2000, Congress passed
the Radio Broadcasting Preservation Act of 2000. This legislation requires the FCC to maintain
interference protection requirements between LPFM stations and full-power radio stations on
third-adjacent channels. It also requires the FCC to conduct field tests to determine the impact of
eliminating such requirements. The FCC has commissioned a preliminary report on such impact and on
the basis of that report, has recommended to Congress that such requirements be eliminated. In
addition, in November 2007, the FCC adopted rules that, among other things, enhance LPFM’s
interference protection from subsequently authorized full-service stations. Concurrently, the FCC
solicited public comment on technical rules for possible expansion of LPFM licensing opportunities
and technical and financial assistance to LPFM broadcasters from full-service stations which
propose to create interference to LPFM stations. We cannot predict the number of LPFM stations that
eventually will be authorized to operate or the impact of such stations on our business.

     Finally, Congress and the FCC from time to time consider, and may in the future adopt, new
laws, regulations and policies regarding a wide variety of other matters that could affect,
directly or indirectly, the operation and ownership of our broadcast properties. In addition to the
changes and proposed changes noted above, such matters have included, for example, spectrum use
fees, political advertising rates and potential restrictions on the advertising of certain products
such as beer and wine. Other matters that could affect our broadcast properties include
technological innovations and developments generally affecting competition in the mass
communications industry, such as direct broadcast satellite service, “streaming” of audio and video
programming via the Internet, digital radio technologies, the establishment of a low power FM radio
service and possible telephone company participation in the provision of video programming service.

     The foregoing is a brief summary of certain provisions of the Communications Act, the 1996 Act
and specific regulations and policies of the FCC thereunder. This description does not purport to
be comprehensive and reference should be made to the Communications Act, the 1996 Act, the FCC’s
rules and the public notices and rulings of the FCC for further information concerning the nature
and extent of federal regulation of broadcast stations. Proposals for additional or revised
regulations and requirements are pending before and are being considered by Congress and federal
regulatory agencies from time to time. Also, various of the foregoing matters are now, or may
become, the subject of court litigation, and we cannot predict the outcome of any such litigation
or its impact on our broadcasting business.

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Employees

     As of December 31, 2007, we had approximately 23,900 domestic employees and 5,500
international employees of which approximately 28,500 were in operations and approximately 900 were
in corporate related activities. As of December 31, 2007, approximately 850 of our United States
employees and 220 of our non-United States employees are subject to collective bargaining
agreements in their respective countries. We believe that our relationship with our employees is
good.

Properties

Corporate

     Our corporate headquarters is in San Antonio, Texas, where we own a 55,000 square foot
executive office building and a 123,000 square foot data and administrative service center.

Operations

Americas Outdoor Advertising and International Outdoor Advertising

     The headquarters of our Americas Outdoor Advertising operations is in Phoenix, Arizona and the
headquarters of our International Outdoor Advertising operations is in London, England. The types
of properties required to support each of our outdoor advertising branches include offices,
production facilities and structure sites. An outdoor branch and production facility is generally
located in an industrial or warehouse district.

     In both our Americas Outdoor Advertising and International Outdoor Advertising segments, we
own or have acquired permanent easements for relatively few parcels of real property that serve as
the sites for our outdoor displays. Our remaining outdoor display sites are leased. Our leases
generally range from month-to-month to year-to-year and can be for terms of 10 years or longer, and
many provide for renewal options. There is no significant concentration of displays under any one
lease or subject to negotiation with any one landlord. We believe that an important part of our
management activity is to negotiate suitable lease renewals and extensions.

     As noted above, as of December 31, 2007, we owned more than 1,000 radio stations and owned or
leased over 897,000 outdoor advertising display faces in various markets throughout the world.
Therefore, no one property is material to our overall operations. We believe that our properties
are in good condition and suitable for our operations.

Radio Broadcasting

     Our radio executive operations are located in our corporate headquarters in San Antonio,
Texas. The types of properties required to support each of our radio stations include offices,
studios, transmitter sites and antenna sites. We either own or lease our transmitter and antenna
sites. These leases generally have expiration dates that range from five to 15 years. A radio
station’s studios are generally housed with its offices in downtown or business districts. A radio
station’s transmitter sites and antenna sites are generally located in a manner that provides
maximum market coverage.

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Consolidated

     The studios and offices of our radio stations and outdoor advertising branches are located in
leased or owned facilities. These leases generally have expiration dates that range from one to 40
years. We do not anticipate any difficulties in renewing those leases that expire within the next
several years or in leasing other space, if required. We own substantially all of the equipment
used in our radio broadcasting and outdoor advertising businesses.

Legal Proceedings

     We are currently involved in certain legal proceedings and, as required, have accrued our
estimate of the probable costs for the resolution of these claims. These estimates have been
developed in consultation with counsel and are based upon an analysis of potential results,
assuming a combination of litigation and settlement strategies. It is possible, however, that
future results of operations for any particular period could be materially affected by changes in
our assumptions or the effectiveness of our strategies related to these proceedings.

     On September 9, 2003, the Assistant United States Attorney for the Eastern District of
Missouri caused a Subpoena to Testify before Grand Jury to be issued to us. The subpoena requires
us to produce certain information regarding commercial advertising run by us on behalf of offshore
and/or online (Internet) gambling businesses, including sports bookmaking and casino-style
gambling. On October 5, 2006, we received a subpoena from the Assistant United States Attorney for
the Southern District of New York requiring us to produce certain information regarding
substantially the same matters as covered in the subpoena from the Eastern District of Missouri. We
are cooperating with such requirements.

     On February 7, 2005, we received a subpoena from the State of New York Attorney General’s
office, requesting information on policies and practices regarding record promotion on radio
stations in the state of New York. We are cooperating with this subpoena.

     We are a co-defendant with Live Nation (which was spun off as an independent company in
December 2005) in 22 putative class actions filed by different named plaintiffs in various district
courts throughout the country. These actions generally allege that the defendants monopolized or
attempted to monopolize the market for “live rock concerts” in violation of Section 2 of the
Sherman Act. Plaintiffs claim that they paid higher ticket prices for defendants’ “rock concerts”
as a result of defendants’ conduct. They seek damages in an undetermined amount. On April 17, 2006,
the Judicial Panel for Multidistrict Litigation centralized these class action proceedings in the
Central District of California. On March 2, 2007, plaintiffs filed motions for class certification
in five “template” cases involving five regional markets, Los Angeles, Boston, New York, Chicago
and Denver. Defendants opposed that motion and, on October 22, 2007, the district court issued its
decision certifying the class for each regional market. On November 4, 2007, defendants filed a
petition for permission to appeal the class certification ruling with the Ninth Circuit Court of
Appeals. On November 5, 2007 the District Court issued a stay on all proceedings pending the Ninth
Circuit’s decision on our Petition to Appeal. On February 19, 2008, the Ninth Circuit denied our
Petition to Appeal, and we filed a Motion for Reconsideration of the District Court’s ruling on
class certification which is still pending. In the Master Separation and Distribution Agreement
between us and Live Nation that was entered into in connection with our spin-off of Live Nation in
December 2005, Live Nation agreed, among other things, to assume responsibility for legal actions
existing at the time of, or initiated after, the spin-off in which we are a defendant if such
actions relate in any material respect to the business of Live Nation. Pursuant to the agreement,
Live Nation also agreed to indemnify us with respect to all liabilities assumed by Live Nation,
including those pertaining to the claims discussed above.

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     Plaintiff Grantley Patent Holdings, Ltd. (“Grantley”) sued us and nine of our subsidiaries for
patent infringement in the United States District Court for the Eastern District of Texas in
November 2006. The four patents at issue claim methods and systems for electronically combining a
traffic and billing system and a software yield management system to create an inventory management
system for the broadcast media industry. We contend that the patents are invalid and alternatively,
that our systems do not infringe the patents. The case was tried before a jury beginning April 14,
2008. On April 22, the jury found that the patents at issue were valid and that we infringed the
patents and awarded damages to Grantley in the amount of $66 million. A final judgment has not yet
been entered. We plan to vigorously contest the judgment through post-trial motions, including a
motion for judgment as a matter of law on the issue of non-infringement, willful infringement,
invalidity and damages, or in the alternative, a motion for new trial. If we are not successful at
the trial court level, we plan to appeal to the United States Court of Appeals for the Federal
Circuit on these same issues. For these reasons, we have accrued an amount less than the jury
award. Ultimate resolution of the case could result in material additional expense.

Merger-Related Litigation

     Eight putative class action lawsuits were filed in the District Court of Bexar County, Texas,
in 2006 in connection with the merger. Of the eight, three have been voluntarily dismissed and five
are still pending. The remaining putative class actions, Teitelbaum v. Clear Channel
Communications, Inc., et al., No. 2006CI17492 (filed
November 14, 2006), City of St. Clair Shores
Police and Fire Retirement System v. Clear Channel Communications,
Inc., et. al., No. 2006CI17660
(filed November 16, 2006), Levy Investments, Ltd. v. Clear Channel Communications, Inc., et al.,
No. 2006CI17669 (filed November 16, 2006), DD Equity Partners LLC v. Clear Channel Communications,
Inc., et al., No. 2006CI7914 (filed November 22, 2006) and Pioneer Investments
Kapitalanlagegesellschaft MBH v. L. Lowry Mays, et al. (filed December 7, 2006), are consolidated
into one proceeding and all raise substantially similar allegations on behalf of a purported class
of our shareholders against the defendants for breaches of fiduciary duty in connection with the
approval of the merger. Additionally, the plaintiffs in the Pioneer Investments action filed a
complaint in the United States District Court for the Western District of Texas, San Antonio
Division against us and our officers and directors for violations of Section 14(a)-9 of the
Exchange Act in connection with the proxy statement mailed to our shareholders in February 2007.

     Three other lawsuits filed in connection with the merger are also still pending, Rauch v.
Clear Channel Communications, Inc., et al., Case No. 2006-CI17436 (filed November 14, 2006), Pioneer
Investments Kapitalanlagegesellschaft mbH v. Clear Channel Communications, Inc., et al., (filed
January 30, 2007 in the United States District Court for the Western District of Texas) and Alaska
Laborers Employees Retirement Fund v. Clear Channel Communications, Inc., et. al., Case No.
SA-07-CA-0042 (filed January 11, 2007 in the United States District Court for the Western District
of Texas). These lawsuits raise substantially similar allegations to those found in the pleadings
of the consolidated class actions. On May 23, 2008, plaintiffs in the Rauch action filed a fourth
amended petition against the same defendants, adding allegations of breach of fiduciary duties,
abuse of control, gross mismanagement and waste of corporate assets by the defendants in connection
with our Board of Directors’ decision to approve the revised terms of the Transactions. This
litigation has been consolidated with the five putative class action complaints described above for
limited pre-trial purposes, but is not set for hearing.

     We continue to believe that the allegations contained in each of the pleadings in the
above-referenced actions are without merit and we intend to contest the actions vigorously. We
believe that the approval of the merger by our shareholders will render the claims in all the

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merger-related litigation moot. However, we cannot assure you that the courts will concur with our
position, that we will successfully defend the allegations included in the complaints or that
pending motions to dismiss the lawsuits will be granted. If we are unable to resolve the claims
that are the basis for the lawsuits or to prevail in any related litigation, we may be required to
pay substantial monetary damages for which we may not be adequately insured, which could have a
material adverse effect on our business, financial position and results of operations. Regardless
of whether the merger is consummated or the outcome of the lawsuits, we may incur significant
related expenses and costs that could have an adverse effect on our business and operations.
Furthermore, the cases could involve a substantial diversion of the time of some members of
management. Accordingly, we are unable to estimate the impact of any potential liabilities
associated with the complaints.

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MANAGEMENT

Anticipated Board of Directors and Executive Officers

     Following the consummation of the Transactions, CCM Parent’s Board of Directors will consist
of 12 members. Holders of CCM Parent’s Class A common stock, voting as a separate class, will be
entitled to elect two members of the Board of Directors. However, since the Sponsors and their
affiliates will hold a majority of the outstanding capital stock and voting power of CCM Parent
after the Transactions, the holders of CCM Parent Class A common stock will not have the voting
power to elect the remaining 10 members of CCM Parent’s Board of Directors. Pursuant to an amended
and restated voting agreement (the “Voting Agreement”) entered into among the Fincos, Merger Sub,
CCM Parent, Highfields Capital I LP, a Delaware limited partnership, Highfields Capital II LP, a
Delaware limited partnership, Highfields Capital III L.P., an exempted limited partnership
organized under the laws of the Cayman Islands, B.W.I. (collectively, with Highfields Capital I LP
and Highfields Capital II LP, the “Highfields Funds”), and Highfields Capital Management LP, a
Delaware limited partnership (“Highfields Management”), following the effective time of the
Transactions, one of the members of the Board of Directors who is to be elected by holders of CCM
Parent’s Class A common stock will be selected by Highfields Management, which member will be named
to CCM Parent’s nominating committee and who the parties to the Voting Agreement have agreed will
be Jonathon S. Jacobson, and the other director will be selected by CCM Parent’s nominating
committee after consultation with Highfields Management, who the parties to the Voting Agreement
have agreed will be David Abrams. These directors will serve until CCM Parent’s next stockholders
meeting. In addition, until the Highfields Funds own less than five percent of the outstanding
voting securities of CCM Parent issued as stock consideration, CCM Parent will nominate two
candidates for election by the holders of Class A common stock, of which one candidate (who
initially will be Mr. Jacobson) will be selected by Highfields Management and will serve on CCM
Parent’s nominating committee, and one candidate (who initially will be Mr. Abrams) will be
selected by CCM Parent’s nominating committee after consultation with Highfields Management. CCM
Parent has also agreed to recommend and solicit proxies for the election of such candidates, and,
to the extent authorized by stockholders granting proxies, to vote the securities represented by
all proxies granted by stockholders in favor of such candidates.

	 	 	The following table sets forth information regarding the individuals who are expected to serve
as CCM Parent’s directors and executive officers following consummation of the Transactions.

	 	 	 	 	 	 	 
	Name	 	Age	 	Position
	Mark P. Mays

	 	 	44	 	 	Director and Chief Executive Officer
	Randall T. Mays

	 	 	43	 	 	Director and President
	David Abrams

	 	 	47	 	 	Director
	Steve Barnes

	 	 	48	 	 	Director
	Richard J. Bressler

	 	 	50	 	 	Director
	Charles A. Brizius

	 	 	39	 	 	Director
	John Connaughton

	 	 	42	 	 	Director
	Ed Han

	 	 	33	 	 	Director
	Jonathon S. Jacobson

	 	 	47	 	 	Director
	Ian K. Loring

	 	 	42	 	 	Director
	Scott M. Sperling

	 	 	50	 	 	Director
	Kent R. Weldon

	 	 	41	 	 	Director
	L. Lowry Mays

	 	 	72	 	 	Chairman Emeritus
	Paul J. Meyer

	 	 	65	 	 	Global President and Chief Operating Officer
— Clear Channel Outdoor, Inc.
	John E. Hogan

	 	 	51	 	 	President/Chief Executive Officer — Clear
Channel Radio

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     Mark P. Mays served as Clear Channel’s President and Chief Operating Officer from February
1997 until his appointment as its President and Chief Executive Officer in October 2004. He
relinquished his duties as President in February 2006. Mr. Mark P. Mays has been one of Clear
Channel’s directors since May 1998. Mr. Mark Mays is the son of L. Lowry Mays, Clear Channel’s
Chairman of the Board and the brother of Randall T. Mays, Clear Channel’s President and Chief
Financial Officer.

     Randall T. Mays was appointed as Clear Channel’s Executive Vice President and Chief Financial
Officer in February 1997. He was appointed Clear Channel’s President in February 2006. Mr. Randall
T. Mays is the son of L. Lowry Mays, Clear Channel’s Chairman of the Board and the brother of Mark
P. Mays, Clear Channel’s Chief Executive Officer.

     David Abrams is the managing partner of Abrams Capital, a Boston-based investment firm he
founded in 1998. Abrams Capital manages approximately $3.8 billion in assets across a wide spectrum
of investments. Mr. Abrams serves on the Board of Directors of Crown Castle International, Inc.
(NYSE: CCI) and several private companies and also serves as a Trustee of Berklee College of Music
and Milton Academy. He received a BA from the University of Pennsylvania.

     Steve Barnes has been associated with Bain Capital Partners, LLC since 1988 and has been a
Managing Director since 2000. In addition to working for Bain Capital Partners, LLC, he also held
senior operating roles of several Bain Capital portfolio companies including Chief Executive
Officer of Dade Behring, Inc., President of Executone Business Systems, Inc., and President of
Holson Burnes Group, Inc. Prior to 1988, he held several senior management positions in the Mergers
& Acquisitions Support Group of PricewaterhouseCoopers. Mr. Barnes presently serves on several
boards including Ideal Standard, Sigma Kalon, CRC Health Group, Accellent and Unisource. He is also
active in numerous community activities including being a member of the Board of Director’s of
Make-A-Wish Foundation of Massachusetts, the United Way of Massachusetts Bay, the Trust Board of
Children’s Hospital in Boston, the Syracuse University School of Management Corporate Advisory
Council and the Executive Committee of the Young President’s Organization in New England. He
received a B.S. from Syracuse University and is a Certified Public Accountant.

     Richard
J. Bressler is a Managing Director of Thomas H. Lee Partners, L.P. Prior to joining
Thomas H. Lee Partners, L.P., Mr. Bressler was the Senior Executive Vice President and Chief
Financial Officer of Viacom Inc., with responsibility for managing all strategic, financial,
business development and technology functions. Prior to that, Mr. Bressler served in various
capacities with Time Warner Inc., including as Chairman and Chief Executive Officer of Time Warner
Digital Media. He also served as Executive Vice President and Chief Financial Officer of Time
Warner Inc. Before joining Time Inc., Mr. Bressler was a partner with the accounting firm of Ernst
& Young. Mr. Bressler is currently a director of American Media, Inc., Gartner, Inc., The Nielsen
Company and Warner Music Group.

     Charles
A. Brizius is a Managing Director of Thomas H. Lee Partners, L.P. Prior to joining
Thomas H. Lee Partners, L.P., Mr. Brizius worked in the Corporate Finance Department at Morgan
Stanley & Co. Incorporated. Mr. Brizius has also worked as a securities analyst at The Capital
Group Companies, Inc. and as an accounting intern at Coopers & Lybrand. Mr. Brizius is currently a
director of Ariel Holdings Ltd. and Spectrum Brands, Inc. His prior directorships include Big V
Supermarkets, Inc., Eye Care Centers of America, Inc., Front Line Management Companies, Inc.,
Houghton Mifflin Company, TransWestern Publishing, United Industries Corporation and Warner Music
Group. Mr. Brizius holds a B.B.A., magna cum laude, in Finance and Accounting from Southern
Methodist University and an M.B.A. from the Harvard Graduate

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School of Business Administration. Mr. Brizius presently serves as President of the Board of
Trustees of The Institute of Contemporary Art, Boston, Trustee of the Buckingham Browne & Nichols
School and Board Member of The Steppingstone Foundation — a non-profit organization that develops
programs which prepare urban schoolchildren for educational opportunities that lead to college.

     John Connaughton has been a Managing Director of Bain Capital Partners, LLC since 1997 and a
member of the firm since 1989. He has played a leading role in transactions in the media,
technology and medical industries. Prior to joining Bain Capital, Mr. Connaughton was a consultant
at Bain & Company, Inc., where he advised Fortune 500 companies. Mr. Connaughton currently serves
as a director of Warner Music Group Corp., AMC Theatres, SunGard Data Systems, Hospital Corporation
of America (HCA), Quintiles Transnational Corp., MC Communications (PriMed), Warner Chilcott, CRC
Health Group and The Boston Celtics. He also volunteers for a variety of charitable organizations,
serving as a member of The Berklee College of Music Board of Trustees
and the UVa McIntire
Foundation Board of Trustees. Mr. Connaughton received a B.S. in commerce from the University of
Virginia and an M.B.A. from the Harvard Graduate School of Business Administration.

     Ed Han first joined Bain Capital Partners, LLC in 1998, and is currently a Principal of the
firm. Prior to joining Bain Capital Partners, LLC, Mr. Han was a consultant at McKinsey & Company.
Mr. Han received a B.A. from Harvard College and an M.B.A. from the Harvard Graduate School of
Business Administration.

     Jonathon S. Jacobson founded Highfields Capital Management, a Boston-based investment firm
that currently manages over $11 billion for endowments, foundations and high net worth individuals,
in July 1998. Prior to founding Highfields, he was a senior equity portfolio manager at Harvard
Management Company, Inc. for eight years. At HMC, Mr. Jacobson concurrently managed both a U.S. and
an Emerging Markets equity fund. Prior to that, Mr. Jacobson spent three years in the Equity
Arbitrage Group at Lehman Brothers and two years in investment banking at Merrill Lynch in New
York. Mr. Jacobson received an M.B.A. from the Harvard Business School in 1987 and graduated magna
cum laude with a B.S. in Economics from the Wharton School, University of Pennsylvania in 1983. In
September 2007, he was named to the Asset Managers’ Committee of the President’s Working Group on
Financial Markets, which was formed to foster a dialogue with the Federal Reserve Board and
Department of the Treasury on issues of significance to the investment industry. He is Trustee of
Brandeis University, where he is a member of both the Executive and Investment Committees, and
Gilman School, where he also serves on the investment committee. He also serves on the boards of
the Birthright Israel Foundation and Facing History and Ourselves and is a member of the Board of
Dean’s Advisors at the Harvard Business School.

     Ian K. Loring is a Managing Director at Bain Capital Partners, LLC. Since joining the firm in
1996, Mr. Loring has played a leading role in prominent media, technology and telecommunications
investments such as Warner Music Group, Pro Seiben Sat 1 Media AG, Advertising Directory Solutions,
Cumulus Media Partners, Eschelon Telecom, NXP Technologies and Therma-Wave. Currently, Mr. Loring
sits on the Board of Directors of Warner Music Group and NXP Technologies. He also volunteers for a
variety of non-profit organizations. Prior to joining Bain Capital, Mr. Loring was a Vice President
of Berkshire Partners, with experience in its specialty manufacturing, technology and retail
industries. Previously, Mr. Loring worked in the Corporate Finance department at Drexel Burnham
Lambert. He received an M.B.A. from Harvard Business School and a B.A. from Trinity College.

     Scott M. Sperling is Co-President of Thomas H. Lee Partners, L.P. Mr. Sperling’s current and
prior directorships include Hawkeye Holdings, Thermo Fisher Corp., Warner Music Group,

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Experian Information Solutions, Fisher Scientific, Front Line Management Companies, Inc., Houghton
Mifflin Co., The Learning Company, LiveWire, LLC, PriCellular Corp., ProcureNet, ProSiebenSat.1,
Tibbar, LLC, Wyndham Hotels and several other private companies. Prior to joining Thomas H. Lee
Partners, L.P., Mr. Sperling was Managing Partner of The Aeneas Group, Inc., the private capital
affiliate of Harvard Management Company, for more than ten years. Before that he was a senior
consultant with the Boston Consulting Group. Mr. Sperling is also a director of several charitable
organizations including the Brigham & Women’s / Faulkner Hospital Group, The Citi Center for
Performing Arts and Wang Theater and Harvard Business School’s Rock Center for Entrepreneurship.

     Kent
R. Weldon is a Managing Director of Thomas H. Lee Partners, L.P. Prior to joining Thomas
H. Lee Partners, L.P., Mr. Weldon worked at Morgan Stanley & Co. Incorporated in the Financial
Institutions Group. Mr. Weldon also worked at Wellington Management Company, an institutional money
management firm. Mr. Weldon is currently a director of Michael Foods, Nortek Inc. and Progressive
Moulded Products. His prior directorships include FairPoint Communications, Inc. and Fisher
Scientific. Mr. Weldon holds a B.A., summa cum laude, in Economics and Arts and Letters Program for
Administrators from the University of Notre Dame and an M.B.A. from the Harvard Graduate School of
Business Administration.

     L. Lowry Mays is the founder of Clear Channel and was its Chairman and Chief Executive Officer
from February 1997 to October 2004. Since that time, Mr. L. Lowry Mays has served as Clear
Channel’s Chairman of the Board. He has been one of its directors since Clear Channel’s inception.
Mr. L. Lowry Mays is the father of Mark P. Mays, currently Clear Channel’s Chief Executive Officer,
and Randall T. Mays, currently Clear Channel’s President/Chief Financial Officer.

     Paul J. Meyer has served as the Global President/Chief Operating Officer for Clear Channel
Outdoor Holdings, Inc. (formerly Eller Media) since April 2005. Prior thereto, he was the
President/Chief Executive Officer for Clear Channel Outdoor Holdings, Inc.

     John E. Hogan was appointed Chief Executive Officer of Clear Channel Radio in August 2002.
Prior thereto he was Chief Operating Officer of Clear Channel Radio.

Employment Agreements

     Each of the employment agreements discussed below provides for severance and change-in-control
payments as more fully described under the heading “—Potential Post-Employment Payments” in this
offering memorandum. The employment agreements also restrict the ability of L. Lowry Mays, Mark P.
Mays and Randall T. Mays to engage in business activities that compete with the business of CCM
Parent for a period of two years following certain terminations of their employment.

L. Lowry Mays

     Upon consummation of the Transactions, L. Lowry Mays is expected to be employed by CCM Parent
as its Chairman Emeritus. Mr. L. Lowry Mays’ employment agreement provides for a term of five years
and will be automatically extended for consecutive one-year periods unless terminated by either
party. Mr. L. Lowry Mays will receive an annual salary of $250,000 and benefits and perquisites
consistent with his existing arrangement with Clear Channel. Mr. L.

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Lowry Mays also will be eligible to receive an annual bonus in an amount to be determined by the
Board of Directors of CCM Parent, in its sole discretion, provided, however, that if in any year
CCM Parent achieves at least 80% of the budgeted OIBDAN for the given year, Mr. L. Lowry
Mays’ annual bonus for that year will be no less than $1,000,000. Mr. L. Lowry Mays also will be
bound by customary covenants not to compete and not to solicit employees during the term of his
agreement.

Mark P. Mays

     Upon consummation of the Transactions, Mark P. Mays is expected to be employed by CCM Parent
as its Chief Executive Officer. Mr. Mark P. Mays’ employment agreement provides for a term of five
years and will be automatically extended for consecutive one-year periods unless 12 months prior
notice of non-renewal is provided by the terminating party. Mr. Mark P. Mays will receive an annual
base salary of not less than $895,000 and benefits and perquisites consistent with his existing
arrangement with Clear Channel (including “gross-up” payments for excise taxes that may be payable
by Mr. Mark P. Mays). Mr. Mark P. Mays also will be eligible to receive an annual bonus in an
amount to be determined by the Board of Directors of CCM Parent, in its sole discretion, provided,
however, that if in any year CCM Parent achieves at least 80% of the budgeted OIBDAN for the given
year, Mr. Mark P. Mays’ annual bonus for that year will be no less than $6,625,000. Mr. Mark P.
Mays also will be bound by customary covenants not to compete and not to solicit employees during
the term of his agreement and for two years following termination. Additionally, upon the
consummation of the Transactions, Mr. Mark P. Mays will receive an equity incentive award pursuant
to CCM Parent’s equity incentive plan of options to purchase shares of CCM Parent stock equal to
2.5% of the fully diluted equity of CCM Parent and will be issued restricted shares of CCM Parent
Class A common stock with a value equal to $20 million.

Randall T. Mays

     Upon consummation of the Transactions, Randall T. Mays is expected to be employed by CCM
Parent as its President. Mr. Randall T. Mays’ employment agreement provides for a term of five
years and will be automatically extended for consecutive one-year periods unless 12 months prior
notice of non-renewal is provided by the terminating party. Mr. Randall T. Mays will receive an
annual base salary of not less than $868,333 and benefits and perquisites consistent with his
existing arrangement with Clear Channel (including “gross-up” payments for excise taxes that may be
payable by Mr. Randall T. Mays). Mr. Randall T. Mays also will be eligible to receive an annual
bonus in an amount to be determined by the Board of Directors of CCM Parent, in its sole
discretion, provided, however, that if in any year CCM Parent achieves at least 80% of the budgeted
OIBDAN for the given year, Mr. Randall T. Mays’ annual bonus for that year will be no less than
$6,625,000. Mr. Randall T. Mays also will be bound by customary covenants not to compete and not to
solicit employees during the term of his agreement and for two years following termination.
Additionally, upon the consummation of the Transactions, Mr. Randall T. Mays will receive an equity
incentive award pursuant to CCM Parent’s equity incentive plan of options to purchase shares of CCM
Parent stock equal to 2.5% of the fully diluted equity of CCM Parent and will be issued restricted
shares of CCM Parent Class A common stock with a value equal to $20 million.

     We will indemnify each of L. Lowry Mays, Mark P. Mays and Randall T. Mays from any losses
incurred by them because they were made a party to a proceeding as a result of their being an
officer of CCM Parent. Furthermore, any expenses incurred by them in connection with any such
action shall be paid by us in advance upon request that we pay such expenses, but

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only in the event that they shall have delivered in writing to us (i) an undertaking to reimburse
us for such expenses with respect to which they are not entitled to indemnification, and (ii) an
affirmation of their good faith belief that the standard of conduct necessary for indemnification
by us has been met.

     We define OIBDAN to mean net income adjusted to exclude non-cash compensation expense and the
following: results of discontinued operations; minority interest expense, net of tax; income tax
benefit (expense); other income (expense) — net; merger expenses; equity in earnings of
nonconsolidated affiliates; interest expense; gain on disposition of assets—net; and depreciation
and amortization.

Paul J. Meyer

     Paul J. Meyer’s current employment agreement expires on August 5, 2008 and will automatically
extend one day at a time thereafter, unless terminated by either party. The agreement provides for
Mr. Meyer to be the President and Chief Operating Officer of CCOH for a base salary in the contract
year beginning August 5, 2007, of $650,000, subject to additional annual raises thereafter in
accordance with CCOH’s policies. Mr. Meyer’s current annual base salary is $675,000. Mr. Meyer is
also eligible to receive a performance bonus as decided at the sole discretion of the Board of
Directors and the compensation committee of CCOH.

     Mr. Meyer may terminate his employment at any time upon one year’s written notice. CCOH may
terminate Mr. Meyer’s employment without “Cause” upon one year’s written notice. “Cause” is
narrowly defined in the agreement. If Mr. Meyer is terminated without “Cause,” he is entitled to
receive a lump sum payment of accrued and unpaid base salary and prorated bonus, if any, and any
payments to which he may be entitled under any applicable employee benefit plan. Mr. Meyer is
prohibited by his employment agreement from activities that compete with CCOH for one year after he
leaves CCOH and he is prohibited from soliciting CCOH employees for employment for 12 months after
termination regardless of the reason for termination of employment.

John E. Hogan

     Effective February 1, 2004, Clear Channel Broadcasting, Inc. (“CCB”), a subsidiary of Clear
Channel, entered into an employment agreement with John E. Hogan as President and Chief Executive
Officer, Clear Channel Radio. The initial term of the agreement ended on January 31, 2006; however,
the agreement, by its terms, automatically extends one day at a time until terminated by either
party.

     Mr. Hogan’s current annual base salary is $775,000 and he will be eligible for additional
annual raises commensurate with company policy. No later than March 31 of each calendar year during
the term, Mr. Hogan is eligible to receive a performance bonus. Mr. Hogan is also entitled to
participate in all pension, profit sharing and other retirement plans, all incentive compensation
plans, and all group health, hospitalization and disability or other insurance plans, paid
vacation, sick leave and other employee welfare benefit plans in which other similarly situated
employees may participate.

     Mr. Hogan is prohibited by the agreement from activities that compete with CCB or its
affiliates for one year after he leaves CCB, and he is prohibited from soliciting CCB’s employees
for employment for 12 months after termination regardless of the reason for termination of

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employment. However, after Mr. Hogan’s employment with CCB has terminated, upon receiving written
permission from the Board of Directors of CCB, Mr. Hogan shall be permitted to engage in competing
activities that would otherwise be prohibited by his employment agreement if such activities are
determined in the sole discretion of the Board of Directors of CCB in good faith to be immaterial
to the operations of CCB, or any subsidiary or affiliate thereof, in the location in question. Mr.
Hogan is also prohibited from using CCB’s confidential information at any time following the
termination of his employment in competing, directly or indirectly, with CCB.

     Mr. Hogan is entitled to reimbursement of reasonable attorney’s fees and expenses and full
indemnification from any losses related to any proceeding to which he may be made a party by reason
of his being or having been an officer of CCB or any of its subsidiaries (other than any dispute,
claim, or controversy arising under or relating to his employment agreement).

Potential Post-Employment Payments

Mark P. Mays and Randall T. Mays

     The new employment agreements for each of Mark P. Mays and Randall T. Mays, which will be
effective upon consummation of the Transactions, provide for the following severance and
change-in-control payments in the event that we terminate their employment without “Cause” or if
the executive terminates for “Good Reason.”

     Under each executive agreement, “Cause” is defined as the executive’s (i) willful and
continued failure to perform his duties, following 10 days notice of the misconduct, (ii) willful
misconduct that causes material and demonstrable injury, monetarily or otherwise, to CCM Parent,
the Sponsors or any of their respective affiliates, (iii) conviction of, or plea of nolo contendere
to, a felony or any misdemeanor involving moral turpitude that causes material and demonstrable
injury, monetarily or otherwise, to CCM Parent, the Sponsors or any of their respective affiliates,
(iv) committing any act of fraud, embezzlement, or other act of dishonesty against CCM Parent or
its affiliates, that causes material and demonstrable injury, monetarily or otherwise, to CCM
Parent, the Sponsors or any of their respective affiliates, and (v) breach of any of the
restrictive covenants in the agreement.

     The term “Good Reason” includes, subject to certain exceptions, (i) a reduction in the
executive’s base pay or annual incentive compensation opportunity, (ii) substantial diminution of
the executive’s title, duties and responsibilities, (iii) failure to provide the executive with the
use of a company provided aircraft for personal travel, and (iv) transfer of the executive’s
primary workplace outside the city limits of San Antonio, Texas. Neither an isolated, insubstantial
and inadvertent action taken in good faith and which is remedied by us within 10 days after receipt
of notice thereof given by executive nor the consummation of the Transactions alone will constitute
“Good Reason.”

     If the executive is terminated by us without Cause or the executive resigns for Good Reason,
then the executive will receive (i) a lump-sum cash payment equal to his accrued but unpaid base
salary through the date of termination, a prorated bonus (determined by reference to the
executive’s bonus opportunity for the year in which the termination occurs) and accrued vacation
pay through the date of termination, and (ii) a lump-sum cash payment equal to three times the sum
of the executive’s base salary and bonus (using the bonus paid to executive for the year prior to
the year in which termination occurs).

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     In addition, in the event that the executive’s employment is terminated by us without Cause or
by the executive for Good Reason, we shall maintain in full force and effect, for the continued
benefit of the executive, his spouse and his dependents for a period of three years following the
date of termination, the medical, hospitalization, dental, and life insurance programs in which the
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. However, if the executive, his spouse, or his
dependents cannot continue to participate in our programs providing such benefits, we shall arrange
to provide the 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.
The aggregate value of these continued benefits are capped at $50,000, even if the cap is reached
prior to the end of the three-year period.

     If the executive’s employment is terminated by us for Cause or by the executive other than for
Good Reason, (i) we will pay the executive his base salary, bonus and his accrued vacation pay
through the date of termination, as soon as practicable following the date of termination, (ii) we
will reimburse the executive for reasonable expenses incurred, but not paid prior to such
termination of employment, and (iii) the executive shall be entitled to any other rights,
compensation and/or benefits as may be due to the executive in accordance with the terms and
provisions of any of our agreements, plans, or programs.

     During any period in which the executive fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness, the executive shall continue to receive his full base
salary until his employment is terminated. If, as a result of the executive’s incapacity due to
physical or mental illness, the executive shall have been substantially unable to perform his
duties hereunder for an entire period of six consecutive months, and within 30 days after written
notice of termination is given after such six-month period, the executive shall not have returned
to the substantial performance of his duties on a full-time basis, CCM Parent will have the right
to terminate his employment for disability. In the event the executive’s employment is terminated
for disability, CCM Parent will pay to the executive his base salary, bonus and accrued vacation
pay through the date of termination. If the executive’s employment is terminated by his death, CCM
Parent will pay in a lump sum to the executive’s beneficiary, legal representatives, or estate, as
the case may be, the executive’s base salary, bonus and accrued vacation pay through the date of
his death.

L. Lowry Mays

     The new employment agreement for L. Lowry Mays, which will be effective upon consummation of
the Transactions, provides for the following severance and change-in-control payments in the event
that CCM Parent terminates his employment without “Extraordinary Cause” during the initial
five-year term of the agreement.

     Under Mr. L. Lowry Mays’ agreement, “Extraordinary Cause” is defined as the executive’s (i)
willful misconduct that causes material and demonstrable injury to CCM Parent, and (ii) conviction
of a felony or other crime involving moral turpitude.

     If Mr. L. Lowry Mays is terminated by us without Extraordinary Cause then he will receive
(i) a lump-sum cash payment equal to his accrued but unpaid base salary through the date of
termination, a prorated bonus (determined by reference to the executive’s bonus opportunity for
the year in which the termination occurs) and accrued vacation pay through the date of

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termination, and (ii) a lump-sum cash payment equal to the base salary and bonus to which the
executive would otherwise have been entitled to had he remained employed for the remainder of the
then current term.

Paul J. Meyer

     Either party may terminate Paul J. Meyer’s employment with CCOH for any reason upon one year’s
prior written notice. If Mr. Meyer’s employment is terminated by CCOH for “Cause,” CCOH will,
within 90 days, pay in a lump sum to Mr. Meyer his accrued and unpaid base salary and any payments
to which he may be entitled under any applicable employee benefit plan (according to the terms of
such plans and policies). A termination for “Cause” must be for one or more of the following
reasons: (i) conduct by Mr. Meyer constituting a material act of willful misconduct in connection
with the performance of his duties, including violation of CCOH’s policy on sexual harassment,
misappropriation of funds or property of CCOH, or other willful misconduct as determined in the
sole discretion of CCOH, (ii) continued, willful and deliberate non-performance by Mr. Meyer of his
duties under his employment agreement (other than by reason of Mr. Meyer’s physical or mental
illness, incapacity, or disability) where such non-performance has continued for more than 10 days
following written notice of such non-performance, (iii) Mr. Meyer’s refusal or failure to follow
lawful directives where such refusal or failure has continued for more than 30 days following
written notice of such refusal or failure, (iv) a criminal or civil conviction of Mr. Meyer, a plea
of nolo contendere by Mr. Meyer, or other conduct by Mr. Meyer that, as determined in the sole
discretion of the Board of Directors, has resulted in, or would result in if he were retained in
his position with CCOH, material injury to the reputation of CCOH, including conviction of fraud,
theft, embezzlement, or a crime involving moral turpitude, (v) a breach by Mr. Meyer of any of the
provisions of his employment agreement, or (vi) a violation by Mr. Meyer of CCOH’s employment
policies.

     If Mr. Meyer’s employment with CCOH is terminated by CCOH without Cause, CCOH will, within 90
days after the effective date of the termination, pay in a lump sum to Mr. Meyer (i) his accrued
and unpaid base salary and pro rated bonus, if any, and (ii) any payments to which he may be
entitled under any applicable employee benefit plan (according to the terms of such plans and
policies). Additionally, Mr. Meyer will receive a total of $600,000, paid pro rata over a one-year
period in accordance with CCOH’s standard payroll schedule and practices, as consideration for Mr.
Meyer’s post-termination non-compete and non-solicitation obligations.

     If Mr. Meyer’s employment with CCOH terminates by reason of his death, CCOH will, within 90
days, pay in a lump sum to such person as Mr. Meyer shall designate in a notice filed with CCOH or,
if no such person is designated, to Mr. Meyer’s estate, Mr. Meyer’s accrued and unpaid base salary
and prorated bonus, if any, and any payments to which Mr. Meyer’s spouse, beneficiaries, or estate
may be entitled under any applicable employee benefit plan (according to the terms of such plans
and policies). If Mr. Meyer’s employment with CCOH terminates by reason of his disability (defined
as Mr. Meyer’s incapacity due to physical or mental illness such that Mr. Meyer is unable to
perform his duties under this Agreement on a full-time basis for more than 90 days in any 12-month
period, as determined by CCOH), CCOH shall, within 90 days, pay in a lump sum to Mr. Meyer his
accrued and unpaid base salary and prorated bonus, if any, and any payments to which he may be
entitled under any applicable employee benefit plan (according to the terms of such plans and
policies).

John E. Hogan

     Either party may terminate John E. Hogan’s employment with CCB for any reason upon one year’s
prior written notice. If Mr. Hogan’s employment is terminated by CCB for “Cause,” CCB

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will, within 45 days, pay in a lump sum to Mr. Hogan his accrued and unpaid base salary and any
payments to which he may be entitled under any applicable employee benefit plan (according to the
terms of such plans and policies). A termination for “Cause” must be for one or more of the
following reasons: (i) conduct by Mr. Hogan constituting a material act of willful misconduct in
connection with the performance of his duties, including violation of CCB’s policy on sexual
harassment, misappropriation of funds or property of CCB, or other willful misconduct as determined
in the sole reasonable discretion of CCB, (ii) continued, willful and deliberate non-performance by
Mr. Hogan of his duties under his employment agreement (other than by reason of Mr. Hogan’s
physical or mental illness, incapacity, or disability) where such non-performance has continued for
more than 10 days following written notice of such non-performance, (iii) Mr. Hogan’s refusal or
failure to follow lawful directives where such refusal or failure has continued for more than 30
days following written notice of such refusal or failure, (iv) a criminal or civil conviction of
Mr. Hogan, a plea of nolo contendere by Mr. Hogan, or other conduct by Mr. Hogan that, as
determined in the sole reasonable discretion of the Board of Directors, has resulted in, or would
result in if he were retained in his position with CCB, material injury to the reputation of CCB,
including conviction of fraud, theft, embezzlement, or a crime involving moral turpitude, (v) a
material breach by Mr. Hogan of any of the provisions of his employment agreement, or (vi) a
material violation by Mr. Hogan of CCB’s employment policies.

     If Mr. Hogan’s employment with CCB is terminated by CCB without Cause, CCB will pay Mr. Hogan
his base salary and pro rated bonus, if any, for the remainder of the one-year notice period and
any payments to which he may be entitled under any applicable employee benefit plan (according to
the terms of such plans and policies). In addition, CCB will pay Mr. Hogan $1,600,000 over three
years commencing on the effective date of the termination and in accordance with CCB’s standard
payroll practices as consideration for certain non-compete obligations. If Mr. Hogan’s employment
with CCB is terminated by Mr. Hogan, CCB will (i) pay Mr. Hogan his base salary and pro rated
bonus, if any, for the remainder of the one-year notice period and (ii) pay Mr. Hogan his then
current base salary for a period of one year in consideration for certain non-compete obligations.

     If Mr. Hogan’s employment with CCB terminates by reason of his death, CCB will, within 45
days, pay in a lump sum to such person as Mr. Hogan shall designate in a notice filed with CCB or,
if no such person is designated, to Mr. Hogan’s estate, Mr. Hogan’s accrued and unpaid base salary
and prorated bonus, if any, and any payments to which Mr. Hogan’s spouse, beneficiaries, or estate
may be entitled under any applicable employee benefit plan (according to the terms of such plans
and policies). If Mr. Hogan’s employment with CCB terminates by reason of his disability (defined
as Mr. Hogan’s incapacity due to physical or mental illness such that Mr. Hogan is unable to
perform his duties under this Agreement on a full-time basis for more than 90 days in any 12-month
period, as determined by CCB), CCB shall, within 45 days, pay in a lump sum to Mr. Hogan his
accrued and unpaid base salary and prorated bonus, if any, and any payments to which he may be
entitled under any applicable employee benefit plan (according to the terms of such plans and
policies).

CCM Parent Equity Incentive Plan

     In connection with, and prior to, the consummation of the Transactions, CCM Parent will adopt
a new equity incentive plan, under which participating employees will be eligible to receive
options to acquire stock or other equity interests and/or restricted share interests in CCM Parent.
This new equity incentive plan will permit the grant of options covering 10.7% of the fully diluted
equity of CCM Parent immediately after consummation of the Transactions (with

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exercise prices set at fair market value for shares issuable upon exercise of such options, which
for initial grants we contemplate would be tied to the price paid by the Sponsors for such
securities). It is contemplated by the parties to the Letter Agreement that, at the closing of the
Transactions, a significant majority of the options or other equity securities permitted to be
issued under the new equity incentive plan will be granted. As part of this grant, Messrs. Mark P.
Mays and Randall T. Mays will each receive grants of options equal to 2.5% of the fully diluted
equity of CCM Parent and other officers and employees of Clear Channel will receive grants of
options equal to 4.0% of the fully diluted equity of CCM Parent. It is anticipated that the option
grants contemplated by the Letter Agreement and the shares that they cover would be subject to one
or more stockholder agreements that Merger Sub expects to enter into with Mark P. Mays, Randall T.
Mays, our other officers and employees who receive such grants and certain other parties, including
L. Lowry Mays, CCM Parent, Clear Channel Capital IV, LLC (“CCC IV”) and Clear Channel Capital
V,L.P. (“CCC V”). After this initial grant, the remaining 1.7% of the fully diluted equity subject to
the new equity incentive plan will remain available for future grants to employees. Of the options
or other equity securities to be granted to Messrs. Mark P. Mays and Randall T. Mays under the new
equity incentive plan at the closing of the Transactions, 50% will vest solely based upon continued
employment (with 25% vesting on the third anniversary of the grant date, 25% vesting on the fourth
anniversary of the grant date and 50% vesting on the fifth anniversary of the grant date) and the
remaining 50% will vest based both upon continued employment and upon the achievement of
predetermined performance targets set by CCM Parent’s Board of Directors. Of the option grants to
other employees of Clear Channel, including officers of Clear Channel, 33.34% will vest solely upon
continued employment (with 20% vesting annually over five years) and the remaining 66.66% will vest
both upon continued employment and the achievement of predetermined performance targets. All
options granted at closing will have an exercise price equal to the fair market value at the date
of grant, which we contemplate to be the same price per share paid by the Sponsors in connection
with the Transactions.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

	 	 	After the Transactions, the outstanding capital stock of CCM Parent will be owned as
follows:

	 	•	 	up to 30% of CCM Parent’s outstanding capital stock and voting power (assuming that
there is no issuance of additional equity consideration and excluding any shares of Class
A common stock of CCM Parent held by our management as a result of certain rollover
investments described below) will be held in the form of shares of Class A common stock
issued to former Clear Channel shareholders who elect to receive shares of Class A common
stock in connection with the merger; and
	 
	 	•	 	the remaining shares of outstanding capital stock of CCM Parent (approximately 70%
assuming that there is no issuance of additional equity consideration and that our
shareholders elect to receive the maximum permitted amount of stock consideration in the
merger, subject to reduction on account of equity securities of CCM Parent held by our
management described below) will be held in the form of Class B common stock and Class C
common stock issued to affiliates of the Sponsors as part of the equity financing.

     In connection with the merger agreement, the Fincos and Messrs. Mark P. Mays, Randall T. Mays
and L. Lowry Mays entered into the Letter Agreement, pursuant to which Messrs. Mark P. Mays,
Randall T. Mays and L. Lowry Mays agreed to roll over unrestricted common stock, restricted equity
securities and “in the money” stock options exercisable for common stock of Clear Channel, with an
aggregate value of approximately $45 million, in exchange for equity securities of CCM Parent
(based upon the per share price paid by the Sponsors for shares of CCM Parent in connection with
the merger).

     In connection with the Transactions and pursuant to the Letter Agreement, Messrs. Mark P. Mays
and Randall T. Mays committed to a rollover exchange pursuant to which they will surrender a
portion of the equity securities of Clear Channel they own, with a value of $10 million ($20
million in the aggregate), in exchange for $10 million worth of the equity securities of CCM Parent
($20 million in the aggregate, based upon the per share price paid by the Sponsors for shares of
CCM Parent in connection with the merger). In May 2007, Messrs. Mark P. Mays, Randall T. Mays and
L. Lowry Mays and certain members of our management received grants of restricted equity securities
of Clear Channel. Each of Messrs. Mark P. Mays and Randall T. Mays’ May 2007 equity grants,
individually valued at approximately $2.9 million, will be used to reduce their respective $10
million rollover commitments. The remainder of Messrs. Mark P. Mays and Randall T. Mays’ rollover
commitments will be satisfied through the rollover of a combination of unrestricted common stock of
Clear Channel and “in the money” stock options exercisable for common stock of Clear Channel in
exchange for equity securities of CCM Parent.

     Furthermore, in connection with the Transactions and pursuant to the Letter Agreement, Mr. L.
Lowry Mays committed to a rollover exchange pursuant to which he will surrender a portion of the
equity securities of Clear Channel he owns, with an aggregate value of $25 million, in exchange for
$25 million worth of the equity securities of CCM Parent (based upon the per share price paid by
the Sponsors for shares of CCM Parent in connection with the merger). Mr. L. Lowry Mays’ May 2007
equity grant, valued at approximately $1.4 million, will be used to reduce his $25 million rollover
commitment. The remainder of Mr. L. Lowry Mays’ rollover commitment will be satisfied through the
rollover of a combination of unrestricted common stock of Clear Channel and “in the money” stock
options exercisable for common stock of Clear Channel in exchange for equity securities of CCM
Parent.

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     Pursuant to the Letter Agreement and the escrow agreement, by May 28, 2008, each of Messrs. L.
Lowry Mays, Mark P. Mays and Randall T. Mays deposited into escrow unrestricted shares of Clear
Channel common stock and vested Clear Channel stock options that will be used to satisfy a portion
of the foregoing equity commitments.

     In addition to the foregoing rollover arrangements, upon the consummation of the Transactions
and pursuant to the Letter Agreement, Messrs. Mark P. Mays and Randall T. Mays will each receive a
grant of approximately $20 million worth of shares of Class A common stock of CCM Parent, subject
to certain vesting requirements, pursuant to their new employment arrangements with CCM Parent.
Furthermore, each of Mr. Mark P. Mays and Mr. Randall T. Mays will receive grants of options equal
to 2.5% of the fully diluted equity of CCM Parent upon the consummation of the Transactions.

     The merger agreement contemplates that the Fincos and CCM Parent may agree to permit certain
members of our management to elect that some of their outstanding shares of our common stock,
including shares issuable upon conversion of our outstanding options, and shares of our restricted
stock be converted into shares or options to purchase shares of CCM Parent Class A common stock
following the consummation of the merger. We contemplate that such conversions, if any, would be
based on the fair market value on the date of conversion, which we contemplate to be the per share
price paid by the Sponsors for shares of CCM Parent in connection with the merger, and would also,
in the case of our stock options, preserve the aggregate spread value of the rolled options. As of
the date of this offering memorandum, except for the Letter Agreement and with respect to shares of
restricted stock discussed below, no member of our management nor any of our directors has entered
into any agreement, arrangement, or understanding regarding any such arrangements. However,
unvested options to acquire a maximum of 225,704 shares of Clear Channel common stock that are not
“in the money” on the date of the merger may not, by their terms, be cancelled prior to their
stated expiration date; the Fincos and Merger Sub have agreed to allow these stock options to be
converted into stock options to acquire shares of CCM Parent Class A common stock.

     The Fincos and Merger Sub have informed us that they anticipate converting approximately
625,000 shares of Clear Channel restricted stock held by management and employees pursuant to the
May 2007 equity grants into CCM Parent Class A common stock on a one-for-one basis. Such CCM Parent
Class A common stock will continue to vest ratably on each of the next three anniversaries of the
date of grant in accordance with their terms. The Fincos and Merger Sub have also informed us that
they anticipate offering to certain members of our management and certain of our employees the
opportunity to purchase up to an aggregate of $15 million of equity interests in CCM Parent (based
upon the per share price paid by the Sponsors for shares of CCM Parent in connection with the
merger).

	     Other than with respect to 580,361 shares of our common stock included within Mr. L. Lowry
Mays’ rollover commitment described above, shares of CCM Parent Class A common stock issued
pursuant to the foregoing arrangements will not reduce the shares of CCM Parent Class A common
stock available for issuance as stock consideration.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Management Agreement

     In connection with the Transactions, we expect to become party to a management agreement with
the Sponsors and CCM Parent, pursuant to which the Sponsors will provide management and financial
advisory services. Pursuant to the management agreement, we will pay the Sponsors a transaction fee
of up to $87.5 million at closing. Thereafter we may pay additional management fees to the Sponsors
or their affiliates for such services, although no such management fee has been agreed upon to
date, and any such additional fees will be subject to approval by independent directors as and to
the extent required under arrangements to be entered into pursuant to the Voting Agreement with the
Highfields Funds and Highfields Management, described below.

Stockholders Agreement

     Merger Sub expects, prior to the consummation of the Transactions, to enter into a
stockholders agreement with CCM Parent, certain of our executive officers and directors who are
expected to become stockholders of CCM Parent (including Mark P. Mays, Randall T. Mays and L. Lowry
Mays), CCC IV and CCC V, a newly-formed limited partnership that is jointly controlled by
affiliates of the Sponsors and is expected to hold all of the shares of CCM Parent’s Class C common
stock that will be outstanding upon the consummation of the Transactions. It is anticipated that
the stockholders agreement, among other things, (i) would specify how the parties would vote in
elections to the Board of Directors of CCM Parent, (ii) restrict the transfer of shares subject to
the agreement, (iii) include the ability of CCC IV to compel the parties to sell their shares in a
change-of-control transaction or participate in a recapitalization of CCM Parent, (iv) give the
parties the right to subscribe for their pro rata share of proposed future issuances of equity
securities by CCM Parent or its subsidiaries to the Sponsors or their affiliates, (v) require the
parties to agree to customary lock-up agreements in connection with underwritten public offerings
and (vi) provide the parties with customary demand and
“piggy-back” registration rights. CCM Parent,
CCC IV and CCC V also expect to enter into a separate agreement with Messrs. Mark P. Mays, Randall
T. Mays and L. Lowry Mays that would set forth terms and conditions under which certain of their
shares of CCM Parent common stock would be repurchased by CCM Parent following the termination of
their employment (through the exercise of a “call option” by CCM Parent or a “put option” by
Messrs. Mark P. Mays, Randall T. Mays and L. Lowry Mays, as applicable). Any shares of CCM Parent
common stock that Mark P. Mays, Randall T. Mays, L. Lowry Mays or their estate-planning entities
should acquire pursuant to stock elections would not be subject to the stockholders agreement.

Voting Agreement

     As contemplated by the Voting Agreement entered into with the Highfields Funds and Highfields
Management, the Sponsors, Merger Sub and CCM Parent will enter into an agreement under which CCM
Parent will agree that neither it nor any of its subsidiaries will enter into or effect any
affiliate transaction between CCM Parent or of one of its subsidiaries, on the one hand, and any
Sponsor or any other private investment fund under common control with either Sponsor
(collectively, the “principal investors”), on the other hand, without the prior approval of either
a majority of the independent directors of CCM Parent or a majority of the then-outstanding shares
of Class A common stock of CCM Parent (excluding for purposes of such calculation from both (i) the
votes cast and (ii) the outstanding shares of Class A common stock, all shares held at that time by
any principal investor, any affiliate of a principal investor, or members of management and
directors of CCM Parent whose beneficial ownership information is required to be disclosed in
filings with the SEC pursuant to Item 403 of

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Regulation S-K (the “public shares”)). Such agreement will become effective as of the effective
time of the merger and expire upon the earlier of (i) an underwritten public offering and sale of
CCM Parent’s common stock which results in aggregate proceeds in excess of $250 million to CCM
Parent and after which CCM Parent’s common stock is listed on NASDAQ’s National Market System or
another national securities exchange (a “qualified public offering”) and (ii) the consummation of a
certain transaction resulting in a change of control (as defined in the agreement and summarized
below) of CCM Parent. The following are not deemed to be affiliate transactions for purposes of the
agreement described in this paragraph: (i) any commercial transaction between CCM Parent or any of
its subsidiaries, on the one hand, and any portfolio company in which any principal investor or any
affiliate of a principal investor has a direct or indirect equity interest, on the other, so long
as such transaction was entered into on an arms’-length basis; (ii) any purchase of bank debt or
securities by a principal investor or an affiliate of a principal investor or any transaction
between a principal investor or affiliate of a principal investor on the one hand, and CCM Parent
or one of its subsidiaries, on the other hand, related to the ownership of bank debt or securities,
provided such purchase or transaction is on terms (except with respect to relief from all or part
of any underwriting or placement fee applicable thereto) comparable to those consummated within an
offering made to unaffiliated third parties; (iii) the payment by CCM Parent or one of its
subsidiaries of up to $87.5 million in transaction fees to the principal investors or their
affiliates in connection with the transactions contemplated by the merger agreement; (iv) any
payment of management, transaction, monitoring, or any other fees to the principal investors or
their affiliates pursuant to an arrangement or structure whereby the holders of public shares of
CCM Parent are made whole for the portion of such fees paid by CCM Parent that would otherwise be
proportionate to their share holdings; and (v) any transaction to which a principal investor or an
affiliate thereof is a party in its capacity as a stockholder of CCM Parent that is offered
generally to other stockholders of CCM Parent (including the holders of shares of Class A common
stock of CCM Parent) on comparable or more favorable terms.

     A change of control of CCM Parent will be deemed to have occurred upon the occurrence of any
of the following: (i) any consolidation or merger of CCM Parent with or into any other corporation
or other entity, or any other corporate reorganization or transaction (including the acquisition of
stock of CCM Parent), in which the direct and indirect stockholders of CCM Parent immediately prior
to such consolidation, merger, reorganization, or transaction, own stock either representing less
than 50% of the economic interests in and less than 50% of the voting power of CCM Parent or other
surviving entity immediately after such consolidation, merger, reorganization, or transaction or
that does not have, through the ownership of voting securities, by agreement or otherwise, the
power to elect a majority of the entire Board of Directors of CCM Parent or other surviving entity
immediately after such consolidation, merger, reorganization, or transaction, excluding any bona
fide primary or secondary public offering; (ii) any stock sale or other transaction or series of
related transactions, after giving effect to which in excess of 50% of CCM Parent’s voting power is
owned by any person or entity and its “affiliates” or “associates” (as such terms are defined in
the rules adopted by the SEC under the Exchange Act), other than the principal investors and their
respective affiliates, excluding any bona fide primary or secondary public offering; or (iii) a
sale, lease, or other disposition of all or substantially all of the assets of CCM Parent.

     The agreement described above terminates upon the earliest of the termination of the merger
agreement, a qualified public offering and the consummation of a change of control (as defined
therein). Other than as described in the prior sentence, such agreement may not be terminated,
amended, supplemented, or otherwise modified without the prior written approval of either (i) a
majority of the independent directors of CCM Parent elected by the holders of Class A common stock
of CCM Parent, or (ii) a majority of the then-outstanding public shares.

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Intercompany Notes

     On November 10, 2005, we entered into a cash management arrangement with CCOH whereby we
provide day-to-day cash management services. As part of this arrangement, substantially all of the
cash generated from CCOH’s domestic operations is transferred daily into Clear Channel accounts
and, in return, we fund certain of CCOH’s operations. This arrangement is evidenced by tandem cash
management notes issued by Clear Channel to CCOH and by CCOH to Clear Channel. Each of the cash
management notes is a demand obligation; however, we are not under any contractual commitment to
advance funds to CCOH beyond the amounts outstanding under the note. The consummation of the
Transactions will not permit CCOH to terminate these arrangements and we may continue to use the
cash flows of the domestic operations of CCOH for our own general corporate purposes pursuant to
the terms of the existing cash management and intercompany arrangements between us and CCOH, which
may include making payments on our indebtedness.

     On August 2, 2005, CCOH distributed a note in the original principal amount of $2.5 billion to
us as a dividend. This note matures on August 2, 2010 and may be prepaid in whole or in part at any
time. The note accrues interest at a variable per annum rate equal to our weighted average cost of
debt, calculated on a monthly basis. This note is mandatorily payable upon a change of control of
CCOH and, subject to certain exceptions, all proceeds from new debt issued or equity raised by CCOH
must be used to prepay such note. At March 31, 2008, the interest rate on the $2.5 billion note was
5.8%.

     The $2.5 billion note requires CCOH to comply with various negative covenants, including
restrictions on the following activities: incurring consolidated funded indebtedness (as defined in
the note), excluding intercompany indebtedness, in a principal amount in excess of $400 million at
any one time outstanding; creating liens; making investments; entering into sale and leaseback
transactions (as defined in the note), which when aggregated with consolidated funded indebtedness
secured by liens, will not exceed an amount equal to 10% of CCOH’s total consolidated stockholders’
equity (as defined in the note) as shown on its most recently reported annual audited consolidated
financial statements; disposing of all or substantially all of its assets; entering into mergers
and consolidations; declaring or making dividends or other distributions; repurchasing its equity;
and entering into transactions with its affiliates.

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DESCRIPTION OF OTHER INDEBTEDNESS

Senior Secured Credit Facilities

Overview

     On May 13, 2008, Merger Sub entered into senior secured credit facilities with a syndicate of
institutional lenders and financial institutions. Following the consummation of the merger of
Merger Sub with and into the Company, with the Company continuing as the surviving entity, the
Company will succeed to and assume the obligations of Merger Sub under the senior secured credit
facilities. The following is a summary of the terms of our senior secured credit facilities.

     Our senior secured credit facilities will consist of:

	 	•	 	a $1,425 million term loan A facility, subject to adjustment as described below,
with a maturity of six years;
	 
	 	•	 	a $10,700 million term loan B facility with a maturity of seven years and six months;
	 
	 	•	 	a $706 million term loan C—asset sale facility, subject to reduction as described
below, with a maturity of seven years and six months;
	 
	 	•	 	$1,250 million delayed draw term loan facilities with maturities of seven years and
six months, up to $750 million of which may be drawn on or after the closing date to
purchase or repay our outstanding senior notes due 2010, and the remainder of which will
be available after the closing date to purchase or repay our outstanding 4.25% senior
notes due 2009; and
	 
	 	•	 	a $2,000 million revolving credit facility with a maturity of six years, including
a letter of credit sub-facility and a swingline loan sub-facility.

     The aggregate amount of the term loan A facility will be the sum of $1,115 million plus the
excess of $750 million over the borrowing base availability under our receivables based credit
facility on the closing of the Transactions. The aggregate amount of our receivables based credit
facility will correspondingly be reduced by the excess of $750 million over the borrowing base
availability on the closing of the Transactions. Assuming that the borrowing base availability
under the receivables based credit facility is $440 million, the term loan A facility would be
$1,425 million and the aggregate receivables based credit facility (without regard to borrowing
base limitations) would be $690 million. However, our actual borrowing base availability may be
greater or less than this amount.

     To the extent specified assets are sold after March 27, 2008 and prior to the closing of the
Transactions, actual borrowings under the term loan C—asset sale facility will be reduced by the
net cash proceeds received therefrom. Proceeds from the sale of specified assets after the closing
of the Transactions will be applied to prepay our term loan C—asset sale facility (and thereafter
to prepay any remaining term loan facilities) without right of reinvestment under our senior
secured credit facilities. In addition, if the net proceeds of any other asset sales are not
reinvested, but instead applied to prepay the senior secured credit facilities, such proceeds would
first be applied to our term loan C—asset sale facility and thereafter pro rata to the remaining
term loan facilities.

     After the consummation of the Transactions, we may raise incremental term loans or incremental
commitments under the revolving credit facility of up to (a) $1.5 billion, plus (b) the excess, if
any, of (x) 0.65 times pro forma consolidated adjusted EBITDA (as calculated in the manner provided
in the senior secured credit facilities documentation), over (y) $1.5 billion, plus

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(c) the aggregate amount of principal payments made in respect of the term loans under the senior
secured credit facilities (other than mandatory prepayments with net cash proceeds of certain asset
sales). Availability of such incremental term loans or revolving credit commitments is subject,
among other things, to the absence of any default, pro forma compliance with the financial covenant
and the receipt of commitments by existing or additional financial institutions.

     All borrowings under our senior secured credit facilities following the closing of the
Transactions are subject to the satisfaction of customary conditions, including the absence of any
default and the accuracy of representations and warranties.

     Proceeds of our term loans and borrowings under our revolving credit facility on the closing
date of the Transactions will, together with other sources of funds described under “Offering
Memorandum Summary—Sources and Uses,” be used to finance the Transactions. Proceeds of the
revolving credit facility, swingline loans and letters of credit will also be available following
the closing of the Transactions to provide financing for working capital and general corporate
purposes.

     After giving effect to the Transactions, we will be the primary borrower under the senior
secured credit facilities, except that certain of our domestic restricted subsidiaries may be
co-borrowers under a portion of the term loan facilities. We will also have the ability to
designate one or more of our foreign restricted subsidiaries in certain jurisdictions as borrowers
under the revolving credit facility, subject to certain conditions and sublimits. Consistent with
our international cash management practices, at or promptly after the consummation of the
Transactions, we expect one of our foreign subsidiaries to borrow $80 million under the revolving
credit facility’s sublimit for foreign based subsidiary borrowings to refinance our existing
foreign subsidiary intercompany borrowings.

Interest Rate and Fees

     Borrowings under our senior secured credit facilities will bear interest at a rate equal to an
applicable margin plus, at our option, either (i) a base rate determined by reference to the higher
of (A) the prime lending rate publicly announced by the administrative agent and (B) the federal
funds effective rate from time to time plus 0.50%, or (ii) a Eurodollar rate determined by
reference to the costs of funds for deposits for the interest period relevant to such borrowing
adjusted for certain additional costs.

     The applicable margin percentages applicable to our term loan facilities and the revolving
credit facility will initially be the following percentages per annum:

	 	•	 	with respect to loans under the term loan A facility and the revolving credit
facility, (i) 2.40%, in the case of base rate loans and (ii) 3.40%, in the case of
Eurodollar loans; and
	 
	 	•	 	with respect to loans under the term loan B facility, term loan C—asset sale
facility and delayed draw term loan facilities, (i) 2.65%, in the case of base rate loans
and (ii) 3.65%, in the case of Eurodollar loans.

Beginning with the date of delivery of financial statements for the first full fiscal quarter
completed after the closing of the Transactions, the applicable margin percentages will be
subject to adjustments based upon our leverage ratio.

     We are required to pay each revolving credit lender a commitment fee in respect of any unused
commitments under the revolving credit facility, which initially will be 0.50% per annum

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until the date of delivery of financial statements for the first full fiscal quarter completed
after the closing of the Transactions and thereafter subject to adjustment based on our leverage
ratio. We are also required to pay each delayed draw term facility lender a commitment fee in
respect of any undrawn commitments under the delayed draw term facilities, which initially will be
1.825% per annum until the delayed draw term facilities are fully drawn or commitments thereunder
terminated.

Prepayments

     Our senior secured credit facilities require us to prepay outstanding term loans, subject to
certain exceptions, with:

	 	•	 	50% (which percentage will be reduced to 25% and to 0% based upon our leverage
ratio) of our annual excess cash flow (as calculated in accordance with the senior
secured credit facilities), less any voluntary prepayments of term loans and revolving
credit loans (to the extent accompanied by a permanent reduction of the commitment) and
subject to customary credits;
	 
	 	•	 	100% of the net cash proceeds of sales or other dispositions (including
casualty and condemnation events) of specified assets being marketed for sale,
subject to certain exceptions;
	 
	 	•	 	100% (which percentage will be reduced to 75% and 50% based upon our leverage
ratio) of the net cash proceeds of sales or other dispositions by us or our wholly-owned
restricted subsidiaries (including casualty and condemnation events) of assets other than
specified assets being marketed for sale, subject to reinvestment rights and certain
other exceptions; and
	 
	 	•	 	100% of the net cash proceeds of any incurrence of certain debt, other than
debt permitted under our senior secured credit facilities.

	     The foregoing prepayments with the net cash proceeds of certain incurrences of debt and annual
excess cash flow will be applied (i) first to the term loans other than the term loan C—asset sale
facility loans (on a pro rata basis) and (ii) second to the term loan C—asset sale facility loans,
in each case to the remaining installments thereof in direct order of maturity. The foregoing
prepayments with the net cash proceeds of the sale of assets (including casualty and condemnation
events) will be applied (i) first to the term loan C—asset sale facility loans and (ii) second to
the other term loans (on a pro rata basis), in each case to the remaining installments thereof in
direct order of maturity.

     We may voluntarily repay outstanding loans under our senior secured credit facilities at any
time without premium or penalty, other than customary “breakage” costs with respect to Eurodollar
loans.

Amortization of Term Loans

     We are required to repay the loans under our term loan facilities as follows:

	 	•	 	the term loan A facility will amortize in quarterly installments commencing on the
first interest payment date after the second anniversary of the closing date in annual
amounts equal to 5% of the original funded principal amount of such facility in years
three and four, 10% thereafter, with the balance being payable on the final maturity date
of such term loans; and
	 
	 	•	 	the term loan B facility, term loan C—asset sale facility and delayed draw term
loan facilities will amortize in quarterly installments on the first interest payment
date after

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	 	 	 	the third anniversary of the closing date, in annual amounts equal to 2.5% of the original
funded principal amount of such facilities in years four and five and 1% thereafter, with
the balance being payable on the final maturity date of such term loans.

Collateral and Guarantees

     
Our senior secured credit facilities will be guaranteed by our immediate parent company and
each of our existing and future material wholly-owned domestic restricted subsidiaries, subject to
certain exceptions.

     All obligations under our senior secured credit facilities, and the guarantees of those
obligations, will be secured, subject to permitted liens and other exceptions, by:

	 	•	 	a first-priority lien on the capital stock of the Company;
	 
	 	•	 	100% of the capital stock of any future material wholly-owned domestic license
subsidiary that is not a “Restricted Subsidiary” under the indenture governing our
Existing Notes;
	 
	 	•	 	certain specified assets of the Company and the guarantors that do not
constitute “principal property” (as defined in the indenture governing our Existing
Notes), including certain specified assets being marketed for sale;
	 
	 	•	 	certain specified assets of the Company and the guarantors that constitute
“principal property” (as defined in the indenture governing our Existing Notes) securing
obligations under the senior secured credit facilities up to the maximum amount permitted
to be secured by such assets without requiring equal and ratable security under the
indenture governing our Existing Notes; and
	 
	 	•	 	a second-priority lien on the accounts receivable and related assets securing
our receivables based credit facility.

     The obligations of any foreign subsidiaries of the Company that are borrowers under the
revolving credit facility will also be guaranteed by certain of their material wholly-owned
restricted subsidiaries, and secured by substantially all assets of all such borrowers and
guarantors, subject to permitted liens and other exceptions.

Conditions and Termination

     Availability under our senior secured credit facilities is subject to the following
closing conditions:

	 	•	 	the receipt of executed counterparts of the definitive credit agreement by Clear
Channel Capital I, LLC, the Company and each subsidiary co-borrower;
	 
	 	•	 	the consummation of the merger in accordance with the merger agreement;
	 
	 	•	 	the absence of amendments or waivers to certain provisions of the merger agreement
in a manner materially adverse to the lenders without their consent; and
	 
	 	•	 	the receipt of equity contributions (including the value of all equity of CCM
Parent issued to our existing shareholders and management in connection with the
Transactions) in an amount determined in accordance with the senior secured credit
facilities, but in any event not less than $3 billion.

     The lenders may terminate their commitments under the senior secured credit facilities if the
foregoing conditions are not satisfied by 11:59 p.m., New York City time, on the earliest of (i)
the 20th business day following the receipt of the Requisite Shareholder Approval (as defined

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in the merger agreement), (ii) the 20th business day following the failure to obtain the Requisite
Shareholder Approval at a duly held Shareholders’ Meeting (as defined in the merger agreement)
after giving effect to all adjournments and postponements thereof, (iii) five business days
following the termination of the merger agreement or (iv) December 31, 2008 (the “Termination
Date”); provided, that if (A) the Requisite Shareholder Approval is obtained and (B) any regulatory
approval required in connection with the consummation of the merger has not been obtained (or has
lapsed and not been renewed) or any waiting period under applicable antitrust laws has not expired
(or has restarted and such new period has not expired), then the Termination Date will
automatically be extended until the 20th business day following receipt of all such approvals (or
renewals), but in no event later than March 31, 2009. If as of the Termination Date there is a
dispute among any of the parties to the escrow agreement, dated as of May 13, 2008 (the “escrow
agreement”), with respect to the disposition of any escrow funds (as defined in the escrow
agreement), Merger Sub may, by written notice to the administrative agent, extend the Termination
Date until the fifth business day after the final resolution of such dispute by a court of
competent jurisdiction or mutual resolution by the parties to such dispute; provided, that the
Termination Date with respect to any lender will occur on the date such lender withdraws its
portion of the escrow funds pursuant to the escrow agreement.

Certain Covenants and Events of Default

     Our senior secured credit facilities require us to comply on a quarterly basis with a maximum
consolidated senior secured net debt to adjusted EBITDA (as calculated in accordance with the
senior secured credit facilities) ratio. This financial covenant will become more restrictive over
time. In addition, our senior secured credit facilities include negative covenants that, subject to
significant exceptions, limit our ability and the ability of our restricted subsidiaries to, among
other things:

	 	•	 	incur additional indebtedness;
	 
	 	•	 	create liens on assets;
	 
	 	•	 	engage in mergers, consolidations, liquidations and dissolutions;
	 
	 	•	 	sell assets;
	 
	 	•	 	pay dividends and distributions or repurchase our capital stock;
	 
	 	•	 	make investments, loans, or advances;
	 
	 	•	 	prepay certain junior indebtedness;
	 
	 	•	 	engage in certain transactions with affiliates;
	 
	 	•	 	amend material agreements governing certain junior indebtedness; and
	 
	 	•	 	change our lines of business.

     Our senior secured credit facilities include certain customary representations and warranties,
affirmative covenants and events of default, including payment defaults, breach of representations
and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of
bankruptcy, certain events under ERISA, material judgments, the invalidity of material provisions
of the senior secured credit facilities documentation, the failure of collateral under the security
documents for our senior secured credit facilities, the failure of our senior secured credit
facilities to be senior debt under the subordination provisions of certain of our subordinated debt
and a change of control. If an event of default occurs, the lenders under our senior secured credit
facilities will be entitled to take various actions, including the acceleration of all amounts due
under our senior secured credit facilities and all actions permitted to be taken by a secured
creditor.

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Receivables Based Credit Facility

Overview

     On May 13, 2008, Merger Sub entered into a receivables based credit facility with a syndicate
of institutional lenders and financial institutions. Following the consummation of the merger of
Merger Sub with and into the Company, with the Company continuing as the surviving entity, the
Company will succeed to and assume the obligations of Merger Sub under the secured credit
facilities. The following is a summary of terms of our receivables based credit facility.

     Our receivables based credit facility provides revolving credit commitments in an amount equal
to the initial borrowing on the closing date plus $250 million, up to a maximum of $1,000 million,
subject to a borrowing base. The borrowing base at any time will equal 85% of our and certain of
our subsidiaries’ eligible accounts receivable. Our receivables based credit facility will include
a letter of credit sub-facility and a swingline loan sub-facility. The maturity of our receivables
based credit facility is six years. Assuming a borrowing base of $440 million at closing, total
commitments under the receivables based credit facility will be $690 million. Actual borrowing base
availability may be greater or less than $440 million.

     In addition, we may request increases to our receivables based credit facility in an aggregate
amount not exceeding $750 million. Availability of such increases to our receivables based credit
facility is subject to, among other things, the absence of any default and the receipt of
commitments by existing or additional financial institutions.

     All borrowings under our receivables based credit facility following the closing of the
Transactions are subject to the absence of any default, the accuracy of representations and
warranties and compliance with the borrowing base. In addition, borrowings under our receivables
based credit facility following the closing date will be subject to compliance with a minimum fixed
charge coverage ratio of 1.0:1.0 if excess availability under the receivables based credit facility
is less than $50 million, or if aggregate excess availability under the receivables based credit
facility and revolving credit facility is less than 10% of the borrowing base.

     Proceeds of the borrowings under our receivables based credit facility on the closing date of
the Transactions will, together with other sources of funds described under “Offering Memorandum
Summary—Sources and Uses,” be used to finance the Transactions. Proceeds of our receivables based
credit facility, swingline loans and letters of credit will also be available following the closing
of the Transactions to provide financing for working capital and general corporate purposes.

     After giving effect to the Transactions, we and certain subsidiary borrowers will be the
borrowers under the receivables based credit facility. We will have the ability to designate one or
more of our restricted subsidiaries as borrowers under our receivables based credit facility. The
receivables based credit facility loans and letters of credit will be available in United States
dollars.

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Interest Rate and Fees

     Borrowings under our receivables based credit facility will bear interest at a rate equal to
an applicable margin plus, at our option, either (i) a base rate determined by reference to the
higher of (A) the prime lending rate publicly announced by the administrative agent and (B) the
federal funds effective rate from time to time plus 0.50%, or (ii) a Eurodollar rate determined by
reference to the costs of funds for deposits for the interest period relevant to such borrowing
adjusted for certain additional costs.

     The applicable margin percentage applicable to our receivables based credit facility will
initially be (i) 1.40%, in the case of base rate loans and (ii) 2.40%, in the case of Eurodollar
loans. Beginning with the date of delivery of financial statements for the first full fiscal
quarter completed after the closing of the Transactions, the applicable margin percentage will be
subject to adjustments based upon our leverage ratio.

     We will be required to pay each lender a commitment fee in respect of any unused commitments
under our receivables based credit facility, which initially will be 0.375% per annum until the
date of delivery of financial statements for the first full fiscal quarter completed after the
closing of the Transactions and thereafter subject to adjustment based on our leverage ratio.

Prepayments

     If at any time the sum of the outstanding amounts under our receivables based credit
facility (including the letter of credit outstanding amounts and swingline loans thereunder)
exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitments under our
receivables based credit facility, we will be required to repay outstanding loans and cash
collateralize letters of credit in an aggregate amount equal to such excess.

     We may voluntarily repay outstanding loans under our receivables based credit facility at
any time without premium or penalty, other than customary “breakage” costs with respect to
Eurodollar loans.

Collateral and Guarantees

     Our receivables based credit facility will be guaranteed by, subject to certain exceptions,
the guarantors of our senior secured credit facilities. All obligations under our receivables based
credit facility, and the guarantees of those obligations, will be secured by a perfected
first-priority security interest in all of our and all of the guarantors’ accounts receivable and
related assets and proceeds thereof, subject to permitted liens and certain exceptions.

     Our receivables based credit facility includes negative covenants, representations,
warranties, events of default, conditions precedent and termination provisions substantially
similar to those governing our senior secured credit facilities.

Existing Indebtedness

     We anticipate that $4,275 million aggregate principal amount of our existing senior notes will
remain outstanding following the closing of the Transactions. The aggregate principal amount of our
existing senior notes to remain outstanding assumes the repurchase of $750 million of our
outstanding senior notes due 2010. Our existing senior notes bear interest at fixed

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rates ranging from 4.25% to 7.65%, have maturities through 2027 and contain provisions, including
limitations on certain liens and sale and leaseback transactions, customary for investment grade
debt securities. We also anticipate that $119 million aggregate principal amount of our subsidiary
indebtedness will remain outstanding following the closing of the Transactions. The aggregate
principal amount of subsidiary indebtedness to remain outstanding assumes the repurchase of $645
million aggregate principal amount of AMFM Operating Inc.’s outstanding 8.0% senior notes due 2008.
Approximately $4 million principal amount of such subsidiary indebtedness is an obligation of the
guarantors of our new senior secured credit facilities and receivables based credit facility. All
financial and other covenants related to substantially all of such indebtedness are being
eliminated in connection with the tender offer related to such indebtedness.

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DESCRIPTION OF THE NOTES

General

     Certain terms used in this description are defined under the subheading “Certain Definitions.”
In this description, (i) the term “Issuer” refers to BT Triple Crown Merger Co., Inc. (the “merger
sub”) and, following the merger (the “merger”) of the merger sub with and into Clear Channel
Communications, Inc. (“Clear Channel”), to only Clear Channel as the surviving corporation in the
merger and not to any of its Subsidiaries, and (ii) the terms “we,” “our” and “us” each refer to
the Issuer, its successors and their respective consolidated Subsidiaries, assuming completion of
the merger.

     The Issuer will issue $2,310,000,000 of notes, consisting of $980,000,000 aggregate principal
amount of 10.75% senior cash pay notes due 2016 (the “Senior Cash Pay Notes”) and $1,330,000,000
aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016 (together with any PIK
Notes (as defined under “Principal, Maturity and Interest”) issued in respect thereof, the “Senior
Toggle Notes” and, together with the Senior Cash Pay Notes, the “Notes”). The Issuer will issue the
Notes under an indenture to be dated as of the Issue Date (the “Indenture”) among the Issuer, Law
Debenture Trust Company of New York, as trustee (the “Trustee”), and Deutsche Bank Trust Company
Americas, as paying agent (the “Paying Agent”), registrar and transfer agent. The Notes will be
issued in private transactions that are not subject to the registration requirements of the
Securities Act. The terms of the Indenture include those stated therein and will include those made
part thereof by reference to the Trust Indenture Act. The Senior Cash Pay Notes and the Senior
Toggle Notes will each be issued as a separate class, but, except as otherwise provided below, will
be treated as a single class for all purposes of the Indenture.

     The following description is only a summary of the material provisions of the Indenture and
does not purport to be complete and is qualified in its entirety by reference to the provisions of
that agreement, including the definitions therein of certain terms used below. We urge you to read
the Indenture because that agreement, not this description, defines your rights as Holders of the
Notes.

Brief Description of Notes

	 	The Notes:
	 
	 	•	 	will be unsecured senior obligations of the Issuer;
	 
	 	•	 	will be pari passu in right of payment with all existing and future
unsubordinated Indebtedness (including the Senior Credit Facilities and the Existing
Senior Notes);
	 
	 	•	 	will be effectively subordinated to all existing and future Secured Indebtedness of
the Issuer to the extent of the value of the assets securing such Indebtedness (including
the Senior Credit Facilities);
	 
	 	•	 	will be senior in right of payment to all Subordinated Indebtedness of the Issuer;
	 
	 	•	 	will be initially guaranteed by Holdings and each of the Issuer’s Restricted
Subsidiaries that guarantee the General Credit Facilities (i) on an unsecured senior
subordinated basis with respect to such Guarantor’s guarantee under Designated Senior
Indebtedness and (ii) on a senior unsecured basis with respect to all of the applicable
Guarantor’s existing and future unsecured senior debt other than such Guarantor’s
guarantee under Designated Senior Indebtedness; and

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	 	•	 	will be subject to registration with the SEC pursuant to the Registration
Rights Agreement.

Guarantees

     The Guarantors, as primary obligors and not merely as sureties, will initially jointly and
severally irrevocably and unconditionally guarantee, on an unsecured senior subordinated basis
solely with respect to any Designated Senior Indebtedness, and on an unsecured senior basis in all
other instances, the performance and full and punctual payment when due, whether at maturity, by
acceleration or otherwise, of all obligations of the Issuer under the Indenture and the Notes,
whether for payment of principal of or interest on the Notes, expenses, indemnification or
otherwise, on the terms set forth in the Indenture by executing the Indenture or a supplemental
indenture.

     Holdings and each Restricted Subsidiary that is a Domestic Subsidiary that guarantees the
General Credit Facilities will initially guarantee the Notes, subject to release as provided below
and in the ABL Facility. Each Guarantor’s Guarantees of the Notes will be a general unsecured
obligation of such Guarantor, will be subordinated to such Guarantor’s guarantee under any
Designated Senior Indebtedness, will be pari passu in right of payment with all other existing and
future unsubordinated Indebtedness of such Guarantor, and will be effectively subordinated to all
secured Indebtedness of each such entity to the extent of the value of the assets securing such
Indebtedness and will be senior in right of payment to all existing and future Subordinated
Indebtedness of such Guarantor. The Notes will be structurally subordinated to Indebtedness and
other liabilities of Subsidiaries of the Issuer that do not guarantee the Notes.

     Not all of the Issuer’s Subsidiaries will guarantee the Notes. In the event of a bankruptcy,
liquidation or reorganization of any of these non-guarantor Subsidiaries, the non-guarantor
Subsidiaries will pay the holders of their debt and their trade creditors before they will be able
to distribute or contribute, as the case may be, any of their assets to a Guarantor. None of the
Issuer’s Foreign Subsidiaries, non-Wholly-Owned Subsidiaries, special purpose Subsidiaries,
Securitization Subsidiaries, any Receivables Subsidiary or any other Subsidiary that does not
guarantee the General Credit Facilities will guarantee the Notes. On a pro forma basis after giving
effect to the Transactions, the non-guarantor Subsidiaries would have accounted for approximately
$3.4 billion, or 49%, of our total net revenue, approximately $1.1 billion, or 46%, of our EBITDA
(as such term is described and used in “Offering Memorandum Summary”) and approximately $983
million, or 43%, of our Adjusted EBITDA (as such term is described and used in “Offering Memorandum
Summary”), in each case, for the last twelve months ended March 31, 2008, and approximately $12.7
billion, or 44%, of our total assets as of March 31, 2008. On a historical basis without giving pro
forma effect to the Transactions, the non-guarantor Subsidiaries accounted for approximately 38% of
our total assets as of March 31, 2008. The difference between the historical percentage and the pro
forma percentage of total assets principally relates to the creation of significant goodwill and
intangibles in connection with the application of purchase accounting for the Transactions. On a
pro forma basis after giving effect to the Transactions, as of March 31, 2008, the non-guarantor
Subsidiaries would have had $5.3 billion of total balance sheet liabilities (including trade
payables) to which the Notes would have been structurally subordinated.

     The obligations of each Restricted Guarantor under its Guarantee will be limited as
necessary to prevent such Guarantee from constituting a fraudulent conveyance under
applicable law.

     Any Guarantor that makes a payment under its Guarantee will be entitled upon payment in full
of all guaranteed obligations under the Indenture to a contribution from each other

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Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on
the respective net assets of all the Guarantors at the time of such payment determined in
accordance with GAAP.

     If a Guarantee was rendered voidable, it could be subordinated by a court to all other
indebtedness (including guarantees and other contingent liabilities) of the Guarantor, and,
depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be
reduced to zero.

     Each Guarantee by a Guarantor shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon:

     (1)(a) any sale, exchange or transfer (by merger or otherwise) of (i) the Capital Stock
of such Guarantor (including any sale, exchange or transfer), after which the applicable
Guarantor is no longer a Restricted Subsidiary or (ii) all or substantially all the assets of
such Guarantor which sale, exchange or transfer is made in a manner in compliance with the
applicable provisions of the Indenture;

     (b) the release or discharge of the guarantee by such Guarantor of the General
Credit Facilities or the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee;

     (c) the designation of any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary; or

     (d) the Issuer exercising its legal defeasance option or covenant defeasance option as
described under “Legal Defeasance and Covenant Defeasance” or the Issuer’s obligations
under the Indenture being discharged in a manner not in violation of the terms of the
Indenture; and

     (2) such Guarantor delivering to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for in the Indenture relating to
such transaction have been complied with.

Ranking

     The payment of the principal of, premium, if any, and interest on the Notes by the Issuer will
rank pari passu in right of payment to all unsubordinated Indebtedness of the Issuer, including the
obligations of the Issuer under the Senior Credit Facilities.

     The payment of any Guarantee of the Notes will be subordinated to obligations of such
Guarantor under its Designated Senior Indebtedness and will rank pari passu in right of
payment to all other unsubordinated indebtedness of the relevant Guarantor.

     Each Guarantor’s obligations under its Guarantees of the Notes are subordinated to the
obligations of that Guarantor under its Designated Senior Indebtedness. As such, the rights of
Holders to receive payment pursuant to such Guarantee will be subordinated in right of payment to
the rights of the holders of such Guarantor’s Designated Senior Indebtedness.

     Although the Indenture will contain limitations on the amount of additional Indebtedness that
the Guarantors may incur, under certain circumstances the amount of such Indebtedness

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could be substantial and, in any case, such Indebtedness may be Designated Senior Indebtedness. See
“Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock.”

     No Guarantor is permitted to make any payment or distribution of any kind or character with
respect to its Obligations under its Guarantee of the Notes if either of the following occurs (a
“Payment Default”):

     (1) any Obligation on any Designated Senior Indebtedness of such Guarantor is not paid in
full in cash when due; or

     (2) any other default on Designated Senior Indebtedness of such Guarantor occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms;

unless, in either case, the Payment Default has been cured or waived and any such acceleration has
been rescinded or such Designated Senior Indebtedness has been paid in full in cash. Regardless of
the foregoing, each Guarantor is permitted to make a payment or distribution under its Guarantee of
the Notes if the Issuer and the Trustee receive written notice approving such payment from the
Representatives of all Designated Senior Indebtedness with respect to which the Payment Default has
occurred and is continuing.

     During the continuance of any default (other than a Payment Default) (a “Non-Payment Default”)
with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, no Guarantor is permitted to make
any payment or distribution of any kind or character with respect to its Obligations under its
Guarantee of the Notes for a period (a “ Payment Blockage Period”) commencing upon the receipt by
the Trustee (with a copy to the Issuer) of written notice (a “Blockage Notice”) of such Non-Payment
Default from the Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter. The Payment Blockage Period will
end earlier if such Payment Blockage Period is terminated:

     (1) by written notice to the Trustee, the relevant Guarantor and the Issuer from the
Person or Persons who gave such Blockage Notice;

     (2) because the default giving rise to such Blockage Notice is cured, waived or
otherwise no longer continuing; or

     (3) because such Designated Senior Indebtedness has been discharged or repaid in full in
cash.

     Notwithstanding the provisions described above (but subject to the subordination provisions of
the immediately succeeding paragraph), unless the holders of such Designated Senior Indebtedness or
the Representatives of such Designated Senior Indebtedness have accelerated the maturity of such
Designated Senior Indebtedness or a Payment Default has occurred and is continuing, each Guarantor
is permitted to make any payment or distribution of any kind or character with respect to its
Obligations under its Guarantee of the Notes after the end of such Payment Blockage Period. The
Guarantees shall not be subject to more than one Payment Blockage Period in any consecutive 360-day
period, irrespective of the number of Non-Payment Defaults with respect to Designated Senior
Indebtedness during such period.

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However, in no event may the total number of days during which any Payment Blockage Period or
Periods on the Guarantees are in effect exceed 179 days in the aggregate during any consecutive
360-day period, and there must be at least 181 days during any consecutive 360-day period during
which no Payment Blockage Period is in effect. Notwithstanding the foregoing, however, no
Non-Payment Default that existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to any Designated Senior Indebtedness and that was the basis for the
initiation of such Payment Blockage Period will be, or be made, the basis for a subsequent Payment
Blockage Period unless such default has been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any breach of any financial
covenants during the period after the date of delivery of such initial Blockage Notice, that, in
either case, would give rise to a Non-Payment Default pursuant to any provisions under which a
Non-Payment Default previously existed or was continuing shall constitute a new Non-Payment Default
for this purpose).

     In connection with the Guarantees, in the event of any payment or distribution of the assets
of a Guarantor upon a total or partial liquidation or dissolution or reorganization of or similar
proceeding relating to such Guarantor or its property:

     (1) the holders of Designated Senior Indebtedness of such Guarantor will be entitled to
receive payment in full in cash of such Designated Senior Indebtedness before the Holders of
the Notes are entitled to receive any payment or distribution of any kind or character with
respect to any Obligations on, or related to, such Guarantor’s Guarantee of the Notes; and

     (2) until the Designated Senior Indebtedness of such Guarantor is paid in full in cash,
any payment or distribution to which Holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of such Designated Senior
Indebtedness as their interests may appear.

     If a distribution is made to Holders of the Notes that, due to the subordination provisions,
should not have been made to them, such Holders of the Notes are required to hold it in trust for
the holders of Designated Senior Indebtedness of the applicable Guarantor and pay it over to them
as their interests may appear.

     The subordination and payment blockage provisions described above will not prevent a Default
from occurring under the Indenture upon the failure of the Issuer to pay cash interest or principal
(including any accretion) with respect to the Notes when due by their terms. If payment of the
Notes is accelerated because of an Event of Default and a demand for payment is made on any
Guarantor pursuant to its Guarantee, the Guarantors must promptly notify the holders of Designated
Senior Indebtedness or the Representative of such Designated Senior Indebtedness of the
acceleration, provided that any failure to give such notice shall have no effect whatsoever on the
subordination provisions described herein. So long as any Designated Senior Indebtedness under the
Senior Credit Facilities remains outstanding and the relevant Guarantor is a guarantor thereof, a
Blockage Notice may be given only by the respective Representatives thereunder unless otherwise
agreed to in writing by the requisite lenders named therein. If any Designated Senior Indebtedness
of a Guarantor is outstanding, such Guarantor may not make any payment or distribution under its
Guarantee of the Notes until five Business Days after the Representatives of all the issuers of
such Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may make
any payment or distribution under its Guarantee of the Notes only if the Indenture otherwise
permits payment at that time.

     A Holder by its acceptance of Notes agrees to be bound by the provisions described in this
section and authorizes and expressly directs the Trustee, on its behalf, to take such action as

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may be necessary or appropriate to effectuate the subordination provided for in the Indenture and
appoints the Trustee its attorney-in-fact for such purpose.

     By reason of the subordination provisions contained in the Indenture, in the event of a
liquidation or insolvency proceeding, creditors of the Guarantor who are holders of Designated
Senior Indebtedness of such Guarantor may recover more, ratably, than the Holders of the Notes, and
creditors who are not holders of Designated Senior Indebtedness may recover less, ratably, than
holders of Designated Senior Indebtedness and may recover more, ratably, than the Holders of the
Notes.

     The terms of the subordination provisions described above will not apply to payments from
money or the proceeds of government securities held in trust by the Trustee for the payment of
principal (including any accretion) of and interest on the Notes pursuant to the provisions
described under “Legal Defeasance and Covenant Defeasance” or “Satisfaction and Discharge,” if the
foregoing subordination provisions were not violated at the time the applicable amounts were
deposited in trust pursuant to such provisions and the respective deposit in the trust was
otherwise made in accordance with such provisions.

     The Notes will be effectively subordinated to all of the existing and future Secured
Indebtedness of the Issuer and each Guarantor to the extent of the value of the assets securing
such Indebtedness.

     Although the Indenture will contain limitations on the amount of additional Indebtedness that
the Issuer and the Guarantors may incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be unsubordinated
Indebtedness. See “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock.”

Paying Agent and Registrar for the Notes

     The Issuer will maintain one or more Paying Agents for each series of Notes. The
initial Paying Agent for each series of Notes will be Deutsche Bank Trust Company Americas.

     The Issuer will also maintain a registrar in respect of each series of Notes, initially
Deutsche Bank Trust Company Americas. If the Issuer fails to appoint a registrar the Trustee will
act as such. The registrar for each series of Notes will maintain a register reflecting ownership
of that series of Notes outstanding from time to time and will make payments on and facilitate
transfer of those Notes on behalf of the Issuer.

     The Issuer may change the Paying Agents or the registrars without prior notice to the Holders.
The Issuer, any Restricted Subsidiary or any Subsidiaries of a Restricted Subsidiary may act as a
Paying Agent or registrar.

Transfer and Exchange

     A Holder may transfer or exchange Notes in accordance with the Indenture. Any registrar or the
Trustee may require a Holder to furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to pay all taxes due on transfer. The
Issuer is not required to transfer or exchange any Note selected for redemption. Also, the Issuer
is not required to transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.

Principal, Maturity and Interest

     The Issuer will issue $2,310,000,000 of Notes, consisting of $980,000,000 in aggregate
principal amount of Senior Cash Pay Notes and $1,330,000,000 in aggregate principal amount of

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Senior Toggle Notes. The Notes will mature on August 1, 2016. Subject to compliance with the
covenant described below under the caption “Certain Covenants — Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” the Issuer may issue
additional Notes from time to time after this offering under the Indenture (“Additional Notes”). In
addition, in connection with the payment of PIK Interest or Partial PIK Interest in respect of the
Senior Toggle Notes, the Issuer is entitled to, without the consent of the Holders, increase the
outstanding principal amount of the Senior Toggle Notes or issue additional Senior Toggle Notes
(the “PIK Notes”) under the Indenture on the same terms and conditions as the Senior Toggle Notes
offered hereby (in each case, a “PIK Payment”). The Notes offered by the Issuer and any Additional
Notes and PIK Notes subsequently issued under the Indenture will be treated as a single class for
all purposes under the Indenture, including waivers, amendments, redemptions and offers to
purchase. Unless the context requires otherwise, references to “Notes” for all purposes of the
Indenture and this “Description of the Notes” include any Additional Notes and any PIK Notes that
are actually issued and references to “principal amount” of the Notes include any increase in the
principal amount of the outstanding Notes as a result of a PIK Payment.

     Interest will accrue on the Notes from the Issue Date, or from the most recent date to which
interest has been paid or provided for. Interest will be payable semiannually using a 360-day year
comprised of twelve 30-day months to Holders of record at the close of business on the January 15
or July 15 immediately preceding the interest payment date, on February 1 and August 1 of each
year, commencing February 1, 2009. If a payment date is not on a Business Day at the place of
payment, payment may be made at the place on the next succeeding Business Day and no interest will
accrue for the intervening period.

     Interest on the Senior Toggle Notes will be paid in cash on the first interest payment date.
For any other interest payment period, the Issuer may, at its option, elect to pay interest on
the Senior Toggle Notes:

	 	•	 	entirely in cash (“Cash Interest”);
	 
	 	•	 	entirely by increasing the principal amount of the outstanding Senior Toggle Notes
or by issuing PIK Notes (“PIK Interest”); or
	 
	 	•	 	on 50% of the outstanding principal amount of the Senior Toggle Notes in cash and
on 50% of the principal amount by increasing the principal amount of the outstanding
Senior Toggle Notes or by issuing PIK Notes (“Partial PIK Interest”).

     The Issuer must elect the form of interest payment with respect to each interest period by
delivering a notice to the Trustee and the Paying Agent no later than 10 business days prior to the
beginning of such interest period. The Trustee or the Paying Agent shall promptly deliver a
corresponding notice to the Holders. In the absence of such an election for any interest period,
interest on the Senior Toggle Notes shall be payable according to the election for the previous
interest period. Notwithstanding anything to the contrary, the payment of accrued interest in
connection with any redemption of Notes as described under “Optional Redemption” or “Repurchase at
the Option of Holders” shall be made solely in cash.

     Cash Interest on the Senior Toggle Notes will accrue at a rate of 11.00% per annum and be
payable in cash. PIK Interest on the Senior Toggle Notes will accrue at a rate of 11.75% per annum
and be payable (x) with respect to Senior Toggle Notes represented by one or more global notes
registered in the name of, or held by, The Depository Trust Company (“DTC”) or its nominee on the
relevant record date, by increasing the principal amount of any outstanding global Senior Toggle
Notes by an amount equal to the amount of PIK Interest or Partial PIK

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Interest, as applicable, for the applicable interest period (rounded up to the nearest whole
dollar) (or, if necessary, pursuant to the requirements of the depositary or otherwise, to
authenticate new global notes executed by the Issuer with such increased principal amounts) and (y)
with respect to Senior Toggle Notes represented by certificated notes, by issuing PIK Notes in
certificated form in an aggregate principal amount equal to the amount of PIK Interest or Partial
PIK Interest, as applicable, for the applicable period (rounded up to the nearest whole dollar),
and the Trustee will, at the request of the Issuer, authenticate and deliver such PIK Notes in
certificated form for original issuance to the Holders on the relevant record date, as shown by the
records of the registrar of Holders. In the event that the Issuer elects to pay Partial PIK
Interest for any interest period, each Holder will be entitled to receive Cash Interest in respect
of 50% of the principal amount of the Senior Toggle Notes held by such Holder on the relevant
record date and Partial PIK Interest in respect of 50% of the principal amount of the Senior Toggle
Notes held by such Holder on the relevant record date. Following an increase in the principal
amount of the outstanding global Senior Toggle Notes as a result of a PIK Payment or Partial PIK
Payment, the global Senior Toggle Notes will bear interest on such increased principal amount from
and after the date of such PIK Payment or Partial PIK Payment. Any PIK Notes issued in certificated
form will be dated as of the applicable interest payment date and will bear interest from and after
such date. All Senior Toggle Notes issued pursuant to a PIK Payment will mature on August 1, 2016
and will be governed by, and subject to the terms, provisions and conditions of, the Indenture and
shall have the same rights and benefits as the Senior Toggle Notes issued on the Issue Date. Any
certificated PIK Notes will be issued with the description PIK on the face of such PIK Note.

     Interest on the Senior Cash Pay Notes will accrue at a rate of 10.75% per annum and be
payable in cash.

     Special Interest may accrue on the Notes in certain circumstances pursuant to the Registration
Rights Agreement for the Notes. Any Special Interest on the Notes will be payable in the same form
elected by the Issuer for payment of interest for the applicable interest payment period. All
references to the Indenture, in any context, to any interest or other amount payable on or with
respect to the Notes shall be deemed to include any Special Interest pursuant to the Registration
Rights Agreement for the Notes.

     Principal of, premium, if any, and interest on the Notes will be payable at the office or
agency of the Issuer maintained for such purpose or, at the option of the Issuer, payment of Cash
Interest may be made by check mailed to the Holders of the Notes at their respective addresses set
forth in the register of Holders; provided that all payments of principal, premium, if any, and
Cash Interest with respect to the Notes represented by one or more global notes registered in the
name of or held by DTC or its nominee will be made by wire transfer of immediately available funds
to the accounts specified by the Holder or Holders thereof. Until otherwise designated by the
Issuer, the Issuer’s office or agency will be the office of the Paying Agent maintained for such
purpose.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

     On August 1, 2015 (the “Special Redemption Date”), the Issuer will be required to
redeem for cash a portion (the “Special Redemption Amount”) of Senior Toggle Notes equal to the
product of (x) $30.0 million and (y) the lesser of (i) one and (ii) a fraction the numerator of
which is the aggregate principal amount outstanding on the Special Redemption Date of the Senior
Toggle Notes for United States federal income tax purposes and the denominator of which is
$1,330,000,000, as determined by the Issuer in good faith and rounded to the nearest $2,000 (such
redemption, the “Special Redemption”). The redemption price for each portion of a

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Senior Toggle Note so redeemed pursuant to the Special Redemption will equal 100% of the
principal amount of such portion plus any accrued and unpaid interest thereon to the Special
Redemption Date.

     On the first interest payment date following the fifth anniversary of the “issue date” as
defined in Treasury Regulation Section 1.1273-2(a)(2) of each series of Notes (i.e., the Senior
Cash Pay Notes and Senior Toggle Notes), and on each interest payment date thereafter, the Issuer
shall redeem a portion of the principal amount of each then outstanding Note in such series in an
amount equal to the AHYDO Catch-Up Payment for such interest payment date with respect to such
Note. The “AHYDO Catch-Up Payment” for a particular interest payment date with respect to each Note
in a series means the minimum principal prepayment sufficient to ensure that as of the close of
such interest payment date, the aggregate amount which would be includible in gross income with
respect to such Note before the close of such interest payment date (as described in Section
163(i)(2)(A) of the Code) does not exceed the sum (described in Section 163(i)(2)(B) of the Code)
of (i) the aggregate amount of interest to be paid on such Note (including for this purpose any
AHYDO Catch-Up Payments) before the close of such interest payment date plus (ii) the product of
the issue price of such Note as defined in Section 1273(b) of the Code (i.e., the first price at
which a substantial amount of the Notes in such series is sold, disregarding for this purpose sales
to bond houses, brokers or similar persons acting in the capacity of underwriters, placement agents
or wholesalers) and its yield to maturity (within the meaning of Section 163(i)(2)(B) of the Code),
with the result that such Note is not treated as having “significant original issue discount”
within the meaning of Section 163(i)(1)(C) of the Code; provided, however, for avoidance of doubt,
that if the yield to maturity of such Note is less than the amount described in Section
163(i)(1)(B) of the Code, the AHYDO Catch-Up Payment shall be zero for each interest payment date
with respect to such Note. It is intended that no Senior Cash Pay Note and that no Senior Toggle
Note will be an “applicable high yield discount obligation” (an “AHYDO”) within the meaning of
Section 163(i)(1) of the Code, and this provision will be interpreted consistently with such
intent. The computations and determinations required in connection with any AHYDO Catch-Up Payment
will be made by the Issuer in its good faith reasonable discretion and will be binding upon the
Holders absent manifest error.

     The Issuer is not required to make any sinking fund payments with respect to the Notes.
However, under certain circumstances, the Issuer may be required to offer to purchase Notes as
described under the caption “Repurchase at the Option of Holders.” We may at any time and from time
to time purchase Notes in the open market or otherwise.

Optional Redemption Senior

Cash Pay Notes

     At any time prior to August 1, 2012, the Senior Cash Pay Notes may be redeemed or purchased
(by the Issuer or any other Person), in whole or in part, upon notice as described under “Selection
and Notice,” at a redemption price equal to 100% of the principal amount of Senior Cash Pay Notes
redeemed plus the Applicable Premium as of the date of redemption (the “Redemption Date”), and,
without duplication, accrued and unpaid interest to the Redemption Date, subject to the rights of
Holders of Senior Cash Pay Notes on the relevant record date to receive interest due on the
relevant interest payment date. The Issuer may provide in such notice that payment of the
redemption price and performance of the Issuer’s obligations with respect to such redemption or
purchase may be performed by another Person.

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     On and after August 1, 2012, the Senior Cash Pay Notes may be redeemed or purchased (by
the Issuer or any other Person), at the Issuer’s option, in whole or in part, upon notice as
described under “Selection and Notice,” at any time and from time to time at the redemption prices
set forth below. The Issuer may provide in such notice that the payment of the redemption price and
the performance of the Issuer’s obligations with respect to such redemption may be performed by
another Person. The Senior Cash Pay Notes will be redeemable at the redemption prices (expressed as
percentages of principal amount of the Senior Cash Pay Notes to be redeemed) set forth below plus
accrued and unpaid interest thereon to the applicable Redemption Date, subject to the right of
Holders of record of Senior Cash Pay Notes on the relevant record date to receive interest due on
the relevant interest payment date, if redeemed during the twelve-month period beginning on August
1 of each of the years indicated below:

	 	 	 	 	 
	Year	 	Percentage
	2012
	 	 	105.375	%
	2013
	 	 	102.688	%
	2014 and thereafter
	 	 	100.000	%

     In addition, until August 1, 2011, the Issuer may, at its option, on one or more
occasions, redeem up to 40% of the then outstanding aggregate principal amount of Senior Cash Pay
Notes at a redemption price equal to 110.750% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon to the applicable Redemption Date, subject to the right of
Holders of record on the relevant record date to receive interest due on the relevant interest
payment date, with the net cash proceeds of one or more Equity Offerings to the extent such net
cash proceeds are received by or contributed to the Issuer; provided that at least 50% of the sum
of the aggregate principal amount of Senior Cash Pay Notes originally issued under the Indenture
and any Additional Notes that are Senior Cash Pay Notes issued under the Indenture after the Issue
Date remains outstanding immediately after the occurrence of each such redemption; provided further
that each such redemption occurs within 180 days of the date of closing of each such Equity
Offering.

     The Issuer may provide in such notice that payment of the redemption price and performance of
the Issuer’s obligations with respect thereto may be performed by another Person. Notice of any
redemption upon any Equity Offering may be given prior to the completion of the related Equity
Offering, and any such redemption or notice may, at the Issuer’s discretion, be subject to one or
more conditions precedent, including, but not limited to, completion of the related Equity
Offering.

     The Trustee or the Paying Agent shall select the Notes to be purchased in the manner
described under “Selection and Notice.”

Senior Toggle Notes

     At
any time prior to August 1, 2012, the Senior Toggle Notes may be redeemed or purchased (by
the Issuer or any other Person), in whole or in part, upon notice as described under “Selection and
Notice,” at a redemption price equal to 100% of the principal amount of Senior Toggle Notes
redeemed plus the Applicable Premium as of the date of redemption (the “Redemption Date”), and,
without duplication, accrued and unpaid interest to the Redemption Date, subject to the rights of
Holders of Senior Toggle Notes on the relevant record date to receive interest due on the relevant
interest payment date. The Issuer may provide in such notice that payment of the redemption price
and performance of the Issuer’s obligations with respect to such redemption or purchase may be
performed by another Person.

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     On and after August 1, 2012, the Senior Toggle Notes may be redeemed or purchased (by the
Issuer or any other Person), at the Issuer’s option, in whole or in part, upon notice as described
under “Selection and Notice,” at any time and from time to time at the redemption prices set forth
below. The Issuer may provide in such notice that the payment of the redemption price and the
performance of the Issuer’s obligations with respect to such redemption may be performed by another
Person. The Senior Toggle Notes will be redeemable at the redemption prices (expressed as
percentages of principal amount of the Senior Toggle Notes to be redeemed) set forth below plus
accrued and unpaid interest thereon to the applicable Redemption Date, subject to the right of
Holders of record of Senior Toggle Notes on the relevant record date to receive interest due on the
relevant interest payment date, if redeemed during the twelve-month period beginning on August 1 of
each of the years indicated below:

	 	 	 	 	 
	Year	 	Percentage
	2012
	 	 	105.500	%
	2013
	 	 	102.750	%
	2014 and thereafter
	 	 	100.000	%

     In addition, until August 1, 2011, the Issuer may, at its option, on one or more occasions, redeem up to
40% of the then outstanding aggregate principal amount of Senior Toggle Notes (and any PIK Notes issued
in respect thereof) at a redemption price equal to 111.000% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon to the applicable Redemption Date, subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings to the
extent such net cash proceeds are received by or contributed to the Issuer; provided that at least 50% of the sum
of the aggregate principal amount of Senior Toggle Notes originally issued under the Indenture and any Additional
Notes that are Senior Toggle Notes issued under the Indenture after the Issue Date (but excluding PIK Notes)
remains outstanding immediately after the occurrence of each such redemption; provided further that each such
redemption occurs within 180 days of the date of closing of each such Equity Offering.

     The Issuer may provide in such notice that payment of the redemption price and performance of the Issuer’s obligations with
respect thereto may be performed by another Person. Notice of any redemption upon any Equity Offering may be given
prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Issuer’s discretion, be
subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
The Trustee or the Paying Agent shall select the Notes to be purchased in the manner described under “Selection and Notice.”

Repurchase at the Option of Holders

Change of Control

     The Notes will provide that if a Change of Control occurs, unless the Issuer has previously or concurrently mailed a redemption
notice with respect to all the outstanding Notes as described under “Optional Redemption,” the Issuer will make an offer to purchase
all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”)
equal to 101.0% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject to the
right of Holders

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of the Notes of record on the relevant record date to receive interest due on the relevant
interest payment date. Within 30 days following any Change of Control, the Issuer will send notice
of such Change of Control Offer by first-class mail, with a copy to the Trustee, to each Holder of
Notes to the address of such Holder appearing in the security register with a copy to the Trustee,
or otherwise in accordance with the procedures of DTC, with the following information:

     (1) that a Change of Control Offer is being made pursuant to the covenant entitled
“Repurchase at the Option of Holders — Change of Control,” and that all Notes properly
tendered pursuant to such Change of Control Offer will be accepted for payment by the
Issuer;

     (2) the purchase price and the purchase date, which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the “ Change of Control Payment Date”);

     (3) that any Note not properly tendered will remain outstanding and continue to accrue
interest;

     (4) that unless the Issuer defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;

     (5) that Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender such Notes, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the
notice at the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;

     (6) that Holders will be entitled to withdraw their tendered Notes and their election to
require the Issuer to purchase such Notes, provided that the Paying Agent receives, not later
than the close of business on the fifth Business Day preceding the Change of Control Payment
Date, a telegram, facsimile transmission or letter setting forth the name of the Holder of the
Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is
withdrawing its tendered Notes and its election to have such Notes purchased;

     (7) that the Holders whose Notes are being repurchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to a minimum of $2,000 or an integral multiple
of $1,000 in principal amount; provided, however, that if PIK Notes are issued or PIK Interest
or Partial PIK Interest is paid, the principal amount of such unpurchased portion may equal a
minimum of $1.00 or an integral multiple of $1.00;

     (8) if such notice is mailed prior to the occurrence of a Change of Control, stating that
the Change of Control Offer is conditional on the occurrence of such Change of Control; and

     (9) the other instructions, as determined by the Issuer, consistent with the covenant
described hereunder, that a Holder must follow.

     The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of Notes by the Issuer pursuant to a Change of

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Control Offer. To the extent that the provisions of any securities laws or regulations conflict
with the provisions of the Indenture, the Issuer will comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations described in the Indenture
by virtue thereof.

     On the Change of Control Payment Date, the Issuer will, to the extent permitted by law,

     (1) accept for payment all Notes or portions thereof properly tendered pursuant to the
Change of Control Offer,

     (2) deposit with the Paying Agent an amount equal to the aggregate Change of Control
Payment in respect of all Notes or portions thereof so tendered, and

     (3) deliver, or cause to be delivered, to the Trustee for cancellation (and delivery to
the Paying Agent) the Notes so accepted together with an Officer’s Certificate to the Trustee
stating that such Notes or portions thereof have been tendered to and purchased by the Issuer.

     The Senior Credit Facilities will, and future credit agreements or other agreements to which
the Issuer becomes a party may, provide that certain change of control events with respect to the
Issuer would constitute a default thereunder (including a Change of Control under the Indenture).
If we experience a change of control that triggers a default under our Senior Credit Facilities, we
could seek a waiver of such default or seek to refinance our Senior Credit Facilities. In the event
we do not obtain such a waiver or refinance the Senior Credit Facilities, such default could result
in amounts outstanding under our Senior Credit Facilities being declared due and payable and cause
a Receivables Facility to be wound down.

     Our ability to pay cash to the Holders of Notes following the occurrence of a Change of
Control may be limited by our then-existing financial resources. Therefore, sufficient funds may
not be available when necessary to make any required repurchases.

     The Change of Control purchase feature of the Notes may in certain circumstances make more
difficult or discourage a sale or takeover of us and, thus, the removal of incumbent management.
The Change of Control purchase feature is a result of negotiations between the Initial Purchasers
and us. After the Issue Date, we have no present intention to engage in a transaction involving a
Change of Control, although it is possible that we could decide to do so in the future. Subject to
the limitations discussed below, we could, in the future, enter into certain transactions,
including acquisitions, dispositions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings.
Restrictions on our ability to incur additional Indebtedness are contained in the covenants
described under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock” and “Certain Covenants — Liens.” Such restrictions in the
Indenture can be waived only with the consent of the Holders of a majority in principal amount of
the Notes then outstanding. Except for the limitations contained in such covenants, however, the
Indenture will not contain any covenants or provisions that may afford Holders of the Notes
protection in the event of a highly leveraged transaction.

     We will not be required to make a Change of Control Offer following a Change of Control if a
third party makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer
made by us and purchases all Notes validly tendered and not withdrawn under such

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Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of Control Offer
may be made in advance of a Change of Control, conditional upon such Change of Control, if a
definitive agreement is in place for the Change of Control at the time of making of the Change of
Control Offer.

     The definition of “Change of Control” includes a disposition of all or substantially all of
the assets of the Issuer and its Restricted Subsidiaries to any Person. Although there is a limited
body of case law interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve a disposition of “all or
substantially all” of the assets of the Issuer and its Restricted Subsidiaries. As a result, it may
be unclear as to whether a Change of Control has occurred and whether a Holder of Notes may require
the Issuer to make an offer to repurchase the Notes as described above.

     Except as described in clause (11) of the second paragraph under “Amendment, Supplement and
Waiver,” the provisions in the Indenture relative to the Issuer’s obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or modified at any time with
the written consent of the Holders of a majority in principal amount of the then outstanding Notes
under the Indenture.

Asset Sales

	 	 	The Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an
Asset Sale, unless:

     (1) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value (as determined in good
faith by the Issuer) of the assets sold or otherwise disposed of; and

     (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration
therefor received by the Issuer or such Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents; provided that the amount of:

     (a) any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most
recent balance sheet or in the footnotes thereto) of the Issuer or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the Notes or
that are owed to the Issuer or a Restricted Subsidiary, that are assumed by the transferee
of any such assets and for which the Issuer and all of its Restricted Subsidiaries have
been validly released by all creditors in writing,

     (b) any securities, notes or other obligations or assets received by the Issuer or
such Restricted Subsidiary from such transferee that are converted by the Issuer or such
Restricted Subsidiary into cash (to the extent of the cash received) within 180 days
following the closing of such Asset Sale, and

     (c) any Designated Non-cash Consideration received by the Issuer or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken together with
all other Designated Non-cash Consideration received pursuant to this clause (c) that is at
that time outstanding, not to exceed $300.0 million at the time of the receipt of such
Designated Non-cash Consideration, with the fair market value of each item of Designated
Non-cash Consideration being measured at the time received and without giving effect to
subsequent changes in value

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 shall be deemed to be cash for purposes of this provision and for no other purpose.

     Within 18 months after the receipt of any Net Proceeds of any Asset Sale by the Issuer or any
Restricted Subsidiary, the Issuer or such Restricted Subsidiary, at its option, may apply the Net
Proceeds from such Asset Sale,

     (1) to permanently reduce:

     (a) Obligations under the Senior Credit Facilities and to correspondingly reduce
commitments with respect thereto;

     (b) Obligations under Pari Passu Indebtedness (as defined below) that is secured by a
Lien, which Lien is permitted by the Indenture, and to correspondingly reduce commitments
with respect thereto;

     (c) Obligations under (i) Notes (to the extent such purchases are at or above 100% of
the principal amount thereof) or (ii) any other Pari Passu Indebtedness of the Issuer or a
Restricted Guarantor (and to correspondingly reduce commitments with respect thereto);
provided that the Issuer shall equally and ratably reduce Obligations under the Notes as
provided under “Optional Redemption,” through open-market purchases (to the extent such
purchases are at or above 100% of the principal amount thereof) or by making an offer (in
accordance with the procedures set forth below for an Asset Sale Offer) to all Holders of
Notes to purchase a pro rata amount of Notes at 100% of the principal amount thereof, plus
accrued but unpaid interest; or

     (d) Indebtedness of a Restricted Subsidiary that is not a Guarantor, other than
Indebtedness owed to the Issuer or another Restricted Subsidiary; or

     (2) to (a) make an Investment in any one or more businesses, provided that such Investment
in any business is in the form of the acquisition of Capital Stock and results in the Issuer or
Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary, (b) acquire properties, (c) make
capital expenditures or (d) acquire other assets that, in the case of each of clauses (a), (b),
(c) and (d) are either (x) used or useful in a Similar Business or (y) replace the businesses,
properties and/or assets that are the subject of such Asset Sale;

     provided that, in the case of clause (2) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such commitment so long as the Issuer or
such other Restricted Subsidiary enters into such commitment with the good faith expectation that
such Net Proceeds will be applied to satisfy such commitment within the later of 18 months after
receipt of such Net Proceeds and 180 days following such commitment; provided that if such
commitment is cancelled or terminated after the later of such 18 month or 180 day period for any
reason before such Net Proceeds are applied, then such Net Proceeds shall constitute Excess
Proceeds.

     Any Net Proceeds from any Asset Sale described in the preceding paragraph that are not
invested or applied as provided and within the time period set forth in the preceding paragraph
will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds with
respect to the Notes exceeds $100.0 million, the Issuer shall make an offer to all Holders of the
Notes and, if required by the terms of any Indebtedness that is pari passu in right of payment with
such Notes (“Pari Passu Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset
Sale Offer”), to purchase the maximum aggregate principal amount of

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such Notes and the maximum aggregate principal amount (or accreted value, if less) of such Pari
Passu Indebtedness that is a minimum of $2,000 or an integral multiple of $1,000 thereof, or if PIK
Notes are issued or PIK Interest or Partial PIK Interest is paid, a minimum of $1.00 and an
integral multiple of $1.00, (in each case in aggregate principal amount) that may be purchased out
of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount
thereof (or accreted value, if applicable) plus accrued and unpaid interest to the date fixed for
the closing of such offer, in accordance with the procedures set forth in the Indenture. The Issuer
will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after
the date that Excess Proceeds exceed $100.0 million by mailing the notice required pursuant to the
terms of the Indenture, with a copy to the Trustee or otherwise in accordance with the procedures
of DTC. The Issuer, in its sole discretion, may satisfy the foregoing obligations with respect to
any Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds
prior to the expiration of the relevant 18 month period (or such longer period provided above) or
with respect to Excess Proceeds of $100.0 million or less.

     To the extent that the aggregate principal amount of Notes and the aggregate principal amount
(or accreted value, if applicable) of such Pari Passu Indebtedness tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds with respect to the Notes, the Issuer may use any
remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained
in the Indenture. If the aggregate principal amount of Notes and the aggregate principal amount (or
accreted value, if applicable) of the Pari Passu Indebtedness surrendered in an Asset Sale Offer
exceeds the amount of Excess Proceeds with respect to the Notes, the Trustee or the Paying Agent
shall select the Notes and the Issuer or the agent for such Pari Passu Indebtedness will select
such other Pari Passu Indebtedness to be purchased on a pro rata basis based on the principal
amount of the Notes and the aggregate principal amount (or accreted value, if applicable) of such
Pari Passu Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.

     Pending the final application of any Net Proceeds pursuant to this covenant, the holder of
such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under
a revolving credit facility, including under any Senior Credit Facility, or otherwise invest such
Net Proceeds in any manner not prohibited by the Indenture.

     The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
the Indenture, the Issuer will comply with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations described in the Indenture by virtue thereof.

     Except as described in clause (11) of the second paragraph under “Amendment, Supplement and
Waiver,” the provisions under the Indenture relative to the Issuer’s obligation to make an offer to
repurchase the Notes as a result of an Asset Sale may be waived or modified with the written
consent of the Holders of a majority in principal amount of the then outstanding Notes.

Selection and Notice

     If the Issuer is redeeming less than all of a series of Notes at any time, the Trustee
or the Paying Agent will select the Notes of such series to be redeemed (a) if such Notes are
listed on any national securities exchange, in compliance with the requirements of the principal
national

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securities exchange on which such Notes are listed or (b) on a pro rata basis to the extent
practicable, or, if the pro rata basis is not practicable for any reason by lot or by such
other method as the Trustee or the Paying Agent shall deem appropriate.

     Notices of purchase or redemption shall be mailed by first-class mail, postage prepaid, at
least 30 but not more than 60 days before the purchase or redemption date to (x) each Holder of
Notes to be redeemed at such Holder’s registered address, (y) to the Trustee to forward to each
Holder of Notes to be redeemed at such Holder’s registered address, or (z) otherwise in accordance
with the procedures of DTC, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the Notes or a
satisfaction and discharge of the Indenture. If any Note is to be purchased or redeemed in part
only, any notice of purchase or redemption that relates to such Note shall state the portion of the
principal amount thereof that has been or is to be purchased or redeemed.

     The Issuer will issue a new Note in a principal amount equal to the unredeemed portion of the
original Note in the name of the Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.

Certain Covenants

     Set forth below are summaries of certain covenants that will be contained in the Indenture.

Limitation on Restricted Payments

     The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

     (1) declare or pay any dividend or make any distribution or any payment having the effect
thereof on account of the Issuer’s or any Restricted Subsidiary’s Equity Interests (in such
Person’s capacity as holder of such Equity Interests), including any dividend or distribution
payable in connection with any merger or consolidation other than:

     (a) dividends or distributions payable solely in Equity Interests (other
than Disqualified Stock) of the Issuer; or

     (b) dividends or distributions by a Restricted Subsidiary so long as, in the case of
any dividend or distribution payable on or in respect of any class or series of securities
issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary of the Issuer, the
Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its Equity Interests in such class or series of securities;

     (2) purchase, redeem, defease or otherwise acquire or retire for value any Equity
Interests of the Issuer or any direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;

     (3) make any principal payment on, or redeem, repurchase, defease or otherwise
acquire or retire for value in each case, prior to any scheduled repayment, sinking fund
payment or maturity, any Subordinated Indebtedness other than:

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     (a) Indebtedness permitted under clause (8) of the covenant described under
“— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock”; or

     (b) the purchase, repurchase or other acquisition of Subordinated Indebtedness of the
Issuer or any Restricted Subsidiary purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one year of
the date of purchase, repurchase or acquisition; or

     (4) make any Restricted Investment

     (all such payments and other actions set forth in clauses (1) through (4) above being
collectively referred to as “Restricted Payments”), unless, at the time of such Restricted
Payment:

     (1) no Default shall have occurred and be continuing or would occur as a consequence
thereof;

     (2) immediately after giving effect to such transaction on a pro forma basis, the Issuer
could incur $1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio test
set forth in the first paragraph of the covenant described under “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; and

     (3) such Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Issuer and its Restricted Subsidiaries after the Issue Date (including
Restricted Payments permitted by clauses (1), (2) (with respect to the payment of dividends on
Refunding Capital Stock (as defined below) pursuant to clause (c) thereof only), (6)(c) and (8)
of the next succeeding paragraph, but excluding all other Restricted Payments permitted by the
next succeeding paragraph), is less than the sum of (without duplication):

     (a) 50% of the Consolidated Net Income of the Issuer for the period (taken as one
accounting period) beginning on the first day of the fiscal quarter commencing after the
Issue Date to the end of the Issuer’s most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment, or, in the case
such Consolidated Net Income for such period is a deficit, minus 100% of such deficit; plus

     (b) 100% of the aggregate net proceeds (including cash and the fair market value, as
determined in good faith by the Issuer, of marketable securities or other property)
received by the Issuer or a Restricted Subsidiary since immediately after the Issue Date
(other than net cash proceeds to the extent such net cash proceeds have been used to incur
Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of
the second paragraph of “— Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”) from the issue or sale of:

     (i)(A) Equity Interests of the Issuer, including Treasury Capital Stock (as
defined below), but excluding cash proceeds and the fair market value, as determined
in good faith by the Issuer, of marketable securities or other property received from
the sale of:

     (x) Equity Interests to members of management, directors or consultants of the Issuer,
its Restricted Subsidiaries and any direct or indirect parent company

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of the Issuer, after the Issue Date to the extent such amounts have been applied to
Restricted Payments made in accordance with clause (4) of the next succeeding paragraph;
and

     (y) Designated Preferred Stock; and

     (B) to the extent such proceeds or other property are actually contributed to the capital
of the Issuer or any Restricted Subsidiary, Equity Interests of the Issuer’s direct or indirect
parent companies (excluding contributions of the proceeds from the sale of Designated Preferred
Stock of such companies or contributions to the extent such amounts have been applied to
Restricted Payments made in accordance with clause (4) of the next succeeding paragraph); or

     (ii) debt of the Issuer or any Restricted Subsidiary that has been converted into or
exchanged for such Equity Interests of the Issuer or a direct or indirect parent company of the
Issuer;

provided, however, that this clause (b) shall not include the proceeds from
(W) Refunding Capital Stock (as defined below), (X) Equity Interests or convertible debt
securities sold to the Issuer or a Restricted Subsidiary, as the case may be,
(Y) Disqualified Stock or debt securities that have been converted into Disqualified
Stock or (Z) Excluded Contributions; plus

     (c) 100% of the aggregate amount of net proceeds (including cash and the fair market value, as
determined in good faith by the Issuer, of marketable securities or other property) contributed to
the capital of the Issuer following the Issue Date (other than (i) net cash proceeds to the extent
such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or
Preferred Stock pursuant to clause (12)(a) of the second paragraph of “— Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”, (ii) by a Restricted
Subsidiary and (iii) from any Excluded Contributions); plus

     (d) 100% of the aggregate amount of proceeds (including cash and the fair market value, as
determined in good faith by the Issuer, of marketable securities or other property) received by the
Issuer or a Restricted Subsidiary by means of:

     (i) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of
Restricted Investments made by the Issuer or its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from the Issuer or its Restricted Subsidiaries and
repayments of loans or advances, and releases of guarantees, which constitute Restricted
Investments by the Issuer or its Restricted Subsidiaries, in each case with respect to
Restricted Investments made after the Issue Date; or

     (ii) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary)
of the stock of an Unrestricted Subsidiary or a dividend or distribution from an Unrestricted
Subsidiary after the Issue Date; plus

     (e) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary
after the Issue Date, the fair market value of the Investment in such Unrestricted Subsidiary, as
determined by the Issuer in good faith or if such fair market value may exceed $100.0 million, in
writing by an Independent Financial Advisor, at the time of the redesignation of such Unrestricted
Subsidiary as a Restricted Subsidiary, other than to the extent such Investment constituted a
Permitted Investment.

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     The foregoing provisions will not prohibit:

     (1) the payment of any dividend within 60 days after the date of declaration thereof, if at
the date of declaration such payment would have complied with the provisions of the Indenture;

     (2)(a) the redemption, repurchase, retirement or other acquisition of any (i) Equity Interests
(“Treasury Capital Stock”) or Subordinated Indebtedness of the Issuer or any Restricted Subsidiary
or (ii) Equity Interests of any direct or indirect parent company of the Issuer, in the case of
each of clause (i) and (ii), in exchange for, or out of the proceeds of the substantially
concurrent sale or issuance (other than to the Issuer or a Restricted
Subsidiary) of, Equity
Interests of the Issuer, or any direct or indirect parent company of the Issuer to the extent
contributed to the capital of the Issuer or any Restricted Subsidiary (in each case, other than any
Disqualified Stock) (“Refunding Capital Stock”), (b) the declaration and payment of dividends on
the Treasury Capital Stock out of the proceeds of the substantially concurrent sale (other than to
the Issuer or a Restricted Subsidiary) of the Refunding Capital Stock, and (c) if immediately prior
to the retirement of Treasury Capital Stock, the declaration and payment of dividends thereon was
permitted under clause (6)(a) or (b) of this paragraph, the declaration and payment of dividends on
the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to
redeem, repurchase, retire or otherwise acquire any Equity Interests of any direct or indirect
parent company of the Issuer) in an aggregate amount per year no greater than the aggregate amount
of dividends per annum that were declarable and payable on such Treasury Capital Stock immediately
prior to such retirement;

     (3) the redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness
of the Issuer or a Restricted Subsidiary made by exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Issuer or a Restricted Subsidiary, as the
case may be, which is incurred in compliance with “— Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock” so long as:

     (a) the principal amount (or accreted value, if applicable) of such new Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus any accrued and
unpaid interest on, the Subordinated Indebtedness being so redeemed, repurchased, exchanged,
acquired or retired for value, plus the amount of any premium required to be paid under the
terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased,
exchanged, acquired or retired and any fees and expenses incurred in connection with such
redemption, repurchase, exchange, acquisition or retirement and the issuance of such new
Indebtedness;

     (b) such new Indebtedness is subordinated to the Notes or the applicable Guarantee at
least to the same extent as such Subordinated Indebtedness so purchased, exchanged,
redeemed, repurchased, exchanged, acquired or retired for value;

     (c) such new Indebtedness has a final scheduled maturity date equal to or later than the
final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased,
exchanged, acquired or retired; and

     (d) such new Indebtedness has a Weighted Average Life to Maturity equal to or greater
than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired;

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     (4) a Restricted Payment to pay for the repurchase, retirement or other acquisition for value
of Equity Interests (other than Disqualified Stock) of the Issuer or any of its direct or indirect
parent companies held by any future, present or former employee, director, officer or consultant of
the Issuer, any of its Subsidiaries or any of its direct or indirect parent companies pursuant to
any management equity plan or stock option plan or any other management or employee benefit plan or
agreement (including, for the avoidance of doubt, any principal and interest payable on any notes
issued by the Issuer or any direct or indirect parent company of the Issuer in connection with any
such repurchase, retirement or acquisition), or any stock subscription or shareholder agreement,
including any Equity Interest rolled over by management of the Issuer or any direct or indirect
parent company of the Issuer in connection with the Transactions; provided, however, that the
aggregate Restricted Payments made under this clause (4) do not exceed in any calendar year
$50.0 million with unused amounts in any calendar year being carried over to succeeding calendar
years subject to a maximum of $75.0 million in any calendar year; provided further that such amount
in any calendar year may be increased by an amount not to exceed:

     (a) the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of
the Issuer and, to the extent contributed to the capital of the Issuer, Equity Interests of any
of the direct or indirect parent companies of the Issuer, in each case to employees, directors,
officers or consultants of the Issuer, any of its Subsidiaries or any of its direct or indirect
parent companies that occurs after the Issue Date (other than Equity Interests the proceeds of
which are used to fund the Transactions), to the extent the cash proceeds from the sale of such
Equity Interests have not otherwise been applied to the payment of Restricted Payments by
virtue of clause (3) of the preceding paragraph; plus

     (b) the cash proceeds of key man life insurance policies received by the Issuer (or by any
direct or indirect parent company to the extent actually contributed in cash to the Issuer) or
any of its Restricted Subsidiaries after the Issue Date; less

     (c) the amount of any Restricted Payments previously made with the cash proceeds described
in clauses (a) and (b) of this clause (4);

and provided further that cancellation of Indebtedness owing to the Issuer or any Restricted
Subsidiary from employees, directors, officers or consultants of the Issuer, any of its
Subsidiaries or its direct or indirect parent companies in connection with a repurchase of
Equity Interests of the Issuer or any of the Issuer’s direct or indirect parent companies will
not be deemed to constitute a Restricted Payment for purposes of this covenant or any other
provision of the Indenture;

     (5) the declaration and payment of dividends to holders of any class or series of Disqualified
Stock of the Issuer or any of its Restricted Subsidiaries issued in accordance with the covenant
described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock”;

     (6)(a) the declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by the Issuer or any of its
Restricted Subsidiaries after the Issue Date, provided that the amount of dividends paid pursuant
to this clause (a) shall not exceed the aggregate amount of cash actually received by the Issuer or
a Restricted Subsidiary from the issuance of such Designated Preferred Stock;

     (b) a Restricted Payment to a direct or indirect parent company of the Issuer, the
proceeds of which will be used to fund the payment of dividends to holders of any class

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or series of Designated Preferred Stock (other than Disqualified Stock) of such parent
corporation issued after the Issue Date, provided that the amount of Restricted Payments paid
pursuant to this clause (b) shall not exceed the aggregate amount of cash actually contributed
to the capital of the Issuer from the sale of such Designated Preferred Stock; or

     (c) the declaration and payment of dividends on Refunding Capital Stock that is Preferred
Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this
paragraph;

provided, however, that, in the case of each of (a), (b) and (c) of this clause (6), for the
most recently ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of issuance of such Designated Preferred Stock or the
declaration of such dividends on Refunding Capital Stock that is Preferred Stock, after giving
effect to such issuance or declaration on a pro forma basis, the Issuer could incur $1.00 of
additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in the
covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;

     (7) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants
if such Equity Interests represent a portion of the exercise price of such options or warrants;

     (8) the declaration and payment of dividends on the Issuer’s common stock (or a Restricted
Payment to any direct or indirect parent entity to fund a payment of dividends on such entity’s
common stock), following the first public Equity Offering of such common stock after the Issue
Date, of up to 6% per annum of the net cash proceeds received by (or, in the case of a Restricted
Payment to a direct or indirect parent entity, contributed to the capital of) the Issuer in or from
any such public Equity Offering;

     (9) Restricted Payments that are made with Excluded Contributions;

     (10) other Restricted Payments in an aggregate amount taken together with all other Restricted
Payments made pursuant to this clause (10) not to exceed $400.0 million;

     (11) distributions or payments of Receivables Fees and Securitization Fees;

     (12) any Restricted Payment used to fund or effect the Transactions and the fees and expenses
related thereto or owed to Affiliates, in each case to the extent permitted by the covenant
described under “—Transactions with Affiliates”, and any payments to holders of Equity Interests of
the Issuer (immediately prior to giving effect to the Transactions) in connection with, or as a
result of, their exercise of appraisal rights and the settlement of any claims or actions (whether
actual, contingent or potential) with respect thereto;

     (13) the repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to the provisions similar to those described under the captions
“Repurchase at the Option of Holders — Change of Control” and “Repurchase at the Option of Holders
— Asset Sales”; provided that all Notes tendered by Holders in connection with a Change of Control
Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired for value;

     (14) the declaration and payment of dividends or the payment of other distributions by the
Issuer or a Restricted Subsidiary to, or the making of loans or advances to, any of the

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Issuer’s direct or indirect parent companies in amounts required for any direct or indirect parent
companies to pay, in each case without duplication,

     (a) franchise taxes and other fees, taxes and expenses required to maintain their legal
existence;

     (b) federal, foreign, state and local income or franchise and similar taxes; provided
that, in each fiscal year, the amount of such payments shall not exceed the amount that the
Issuer and its Restricted Subsidiaries would be required to pay in respect of federal, foreign,
state and local income or franchise taxes if such entities were corporations paying taxes
separately from any parent entity at the highest combined applicable federal, foreign, state,
local or franchise tax rate for such fiscal year (and to the extent of any amounts actually
received in cash from its Unrestricted Subsidiaries, in amounts required to pay such taxes to
the extent attributable to the income of such Unrestricted Subsidiaries);

     (c) customary salary, bonus and other benefits payable to directors, officers and
employees of any direct or indirect parent company of the Issuer to the extent such salaries,
bonuses and other benefits are attributable to the ownership or operation of the Issuer and its
Restricted Subsidiaries;

     (d) general operating and overhead costs and expenses of any direct or indirect parent
company of the Issuer to the extent such costs and expenses are attributable to the ownership
or operation of the Issuer and its Restricted Subsidiaries;

     (e) amounts payable to the Investors pursuant to the Sponsor Management Agreement;

     (f) fees and expenses other than to Affiliates of the Issuer related to (i) any equity or
debt offering of such parent entity (whether or not successful) and (ii) any Investment
otherwise permitted under this covenant (whether or not successful);

     (g) cash payments in lieu of issuing fractional shares in connection with the exercise of
warrants, options or other securities convertible into or exchangeable for Equity Interests of
the Issuer or any direct or indirect parent of the Issuer; and

     (h) to finance Investments otherwise permitted to be made pursuant to this covenant;
provided that (A) such Restricted Payment shall be made substantially concurrently with the
closing of such Investment; (B) such direct or indirect parent company shall, immediately
following the closing thereof, cause (1) all property acquired (whether assets or Equity
Interests) to be contributed to the capital of the Issuer or one of its Restricted Subsidiaries
or (2) the merger of the Person formed or acquired into the Issuer or one of its Restricted
Subsidiaries (to the extent not prohibited by the covenant “— Merger, Consolidation or Sale of
All or Substantially All Assets” below) in order to consummate such Investment; (C) such direct
or indirect parent company and its Affiliates (other than the Issuer or a Restricted
Subsidiary) receives no consideration or other payment in connection with such transaction
except to the extent the Issuer or a Restricted Subsidiary could have given such consideration
or made such payment in compliance with the Indenture; (D) any property received by the Issuer
shall not increase amounts available for Restricted Payments pursuant to clause (3) of the
preceding paragraph; and (E) such Investment shall be deemed to be made by the Issuer or a
Restricted Subsidiary by another provision of this covenant (other than pursuant to clause (10)
hereof) or pursuant to the definition of “Permitted Investments” (other than clause (9)
thereof);

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     (15) the distribution, by dividend or otherwise, of shares of Capital Stock of, or
Indebtedness owed to the Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries;

     (16) payments or distributions to dissenting stockholders pursuant to applicable law,
pursuant to or in connection with a consolidation, merger or transfer of all or substantially
all of the assets of the Issuer and its Restricted Subsidiaries, taken as a whole, that
complies with the covenant described under “— Merger, Consolidation or Sale of All or
Substantially All Assets”; provided that as a result of such consolidation, merger or transfer
of assets, the Issuer shall make a Change of Control Offer and that all Notes tendered by
Holders in connection with such Change of Control Offer have been repurchased, redeemed or
acquired for value;

     (17) any Restricted Payments relating to a Securitization Subsidiary that, in the good
faith determination of the Issuer, are necessary or advisable to effect any Qualified
Securitization Financing; and

     (18) purchase Equity Interests of CCO not owned by the Issuer or its Restricted
Subsidiaries (whether by tender offer, open market purchase, merger or otherwise);

     provided, however, that at the time of, and after giving effect to, any Restricted Payment
permitted under clauses (10), (15) and (17), no Default shall have occurred and be continuing or
would occur as a consequence thereof.

     As of the Issue Date, all of the Subsidiaries of the Issuer will be Restricted Subsidiaries.
The Issuer will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the second to last sentence of the definition of “Unrestricted Subsidiary.” For
purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding
Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the
Subsidiary so designated will be deemed to be Investments in an amount determined as set forth in
the last sentence of the definition of “Investments.” Such designation will be permitted only if a
Restricted Payment in such amount would be permitted at such time pursuant to this covenant or
pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of
the restrictive covenants set forth in the Indenture.

     Notwithstanding the foregoing provisions of this covenant, the Issuer will not, and will not
permit any of its Restricted Subsidiaries to, pay any cash dividend or make any cash distribution
on, or in respect of, the Issuer’s Capital Stock or purchase for cash or otherwise acquire for cash
any Capital Stock of the Issuer or any direct or indirect parent of the Issuer for the purpose of
paying any cash dividend or making any cash distribution to, or acquiring Capital Stock of any
direct or indirect parent of the Issuer for cash from, the Investors, or guarantee any Indebtedness
of any Affiliate of the Issuer for the purpose of paying such dividend, making such distribution or
so acquiring such Capital Stock to or from the Issuer, in each case by means of utilization of the
cumulative Restricted Payment credit provided by the first paragraph of this covenant, or the
exceptions provided by clauses (1) or (10) of the second paragraph of this covenant or clause (12)
of the definition of “Permitted Investments,” unless the most recent interest payment made by the
Issuer was a Cash Interest payment and the Issuer has not made a PIK Election with respect to the
next interest payment due and, in each case, such payment is otherwise in compliance with this
covenant.

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Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an
"incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and the Issuer and
the Restricted Guarantors will not issue any shares of Disqualified Stock and will not permit any
Restricted Subsidiary that is not a Guarantor to issue any shares of Disqualified Stock or
Preferred Stock; provided, however, that the Issuer and the Restricted Guarantors may incur
Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any
Restricted Subsidiary that is not a Guarantor may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred Stock, if the
Consolidated Leverage Ratio at the time such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued would have been no greater than 7.5 to 1.0
determined on a pro forma basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock
had been issued, as the case may be, and the application of proceeds therefrom had occurred at the
beginning of the most recently ended four fiscal quarters for which internal financial statements
are available; provided, however, that Restricted Subsidiaries that are not Guarantors may not
incur Indebtedness or issue Disqualified Stock or Preferred Stock if, after giving pro forma effect
to such incurrence or issuance (including a pro forma application of the net proceeds therefrom),
more than an aggregate of $750.0 million of Indebtedness or Disqualified Stock or Preferred Stock
of Restricted Subsidiaries that are not Guarantors is outstanding pursuant to this paragraph at
such time.

     The foregoing limitations will not apply to:

     (1) the incurrence of Indebtedness under Credit Facilities by the Issuer or any of its
Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’
acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a
principal amount equal to the face amount thereof), up to an aggregate principal amount of
$16,770,638,000 outstanding at any one time, less the aggregate amount of proceeds received
from the sale of any Securitization Assets made since the Issue Date;

     (2) the incurrence by the Issuer and any Restricted Guarantor of Indebtedness represented
by the Notes (including any PIK Notes and any Guarantee, but excluding any Additional Notes);

     (3) the incurrence by the Issuer and any Restricted Guarantor of Indebtedness represented
by the Exchange Notes and related guarantees of the Exchange Notes to be issued in exchange for
the Notes (including any PIK Notes but excluding any Additional Notes) and Guarantees pursuant
to the Registration Rights Agreement;

     (4) Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Issue
Date (other than Indebtedness described in clauses (1) and (2));

     (5) Indebtedness (including Capitalized Lease Obligations) incurred or Disqualified Stock
and Preferred Stock issued by the Issuer or any of its Restricted Subsidiaries, to finance the
purchase, lease or improvement of property (real or personal) or equipment that is used or
useful in a Similar Business, whether through the direct purchase of assets or the Equity
Interests of any Person owning such assets in an aggregate principal amount, together with any
Refinancing Indebtedness in respect thereof and all other Indebtedness

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incurred and Disqualified Stock and/or Preferred Stock issued and outstanding under this clause
(5), not to exceed $150.0 million at any time outstanding; so long as such Indebtedness exists at
the date of such purchase, lease or improvement, or is created within 270 days thereafter;

     (6) Indebtedness incurred by the Issuer or any Restricted Subsidiary constituting
reimbursement obligations with respect to bankers’ acceptances and letters of credit issued in the
ordinary course of business, including letters of credit in respect of workers’ compensation
claims, or other Indebtedness with respect to reimbursement type obligations regarding workers’
compensation claims; provided, however, that upon the drawing of such bankers’ acceptances and
letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30
days following such drawing or incurrence;

     (7) Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary providing
for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or
assumed in connection with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business,
assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that such
Indebtedness is not reflected on the balance sheet (other than by application of FIN 45 or in
respect of acquired contingencies and contingent consideration recorded under FAS 141(R)) of the
Issuer or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on
such balance sheet for purposes of this clause (7));

     (8) Indebtedness of the Issuer to a Restricted Subsidiary or a Restricted Subsidiary to the
Issuer or another Restricted Subsidiary; provided that any such Indebtedness (other than pursuant
to the CCU Mirror Note) owing by the Issuer or a Guarantor to a Restricted Subsidiary that is not a
Guarantor is expressly subordinated in right of payment to the Notes or the Guarantee of the Notes,
as the case may be; provided further that any subsequent issuance or transfer of any Capital Stock
or any other event which results in any Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of any such Indebtedness (except to the Issuer or another
Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be
deemed, in each case, to be an incurrence of such Indebtedness not permitted by this clause (8);

     (9) shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another
Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the
Issuer or a Restricted Subsidiary or pursuant to any pledge of such Preferred Stock constituting a
Permitted Lien) shall be deemed in each case to be an issuance of such shares of Preferred Stock
not permitted by this clause (9);

     (10) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes)
for the purpose of limiting interest rate risk with respect to any Indebtedness permitted to be
incurred pursuant to this covenant, exchange rate risk or commodity pricing risk;

     (11) obligations in respect of self-insurance, customs, stay, performance, bid, appeal and
surety bonds and completion guarantees and other obligations of a like nature provided by the
Issuer or any of its Restricted Subsidiaries in the ordinary course of business;

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     (12) (a) Indebtedness or Disqualified Stock of the Issuer or any Restricted Guarantor and
Indebtedness, Disqualified Stock or Preferred Stock of any Restricted Subsidiary that is not
a Guarantor in an aggregate principal amount or liquidation preference equal to 200.0% of the net
cash proceeds received by the Issuer and its Restricted Subsidiaries since immediately after the
Issue Date from the issue or sale of Equity Interests of the Issuer or cash contributed to the
capital of the Issuer (in each case, other than proceeds of Disqualified Stock or sales of Equity
Interests to, or contributions received from, the Issuer or any of its Subsidiaries) as determined
in accordance with clauses (3)(b) and (3)(c) of the first paragraph of the covenant described under
“— Limitation on Restricted Payments” to the extent such net cash proceeds or cash have not been
applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments
or exchanges pursuant to the second paragraph of the covenant described under “— Limitation on
Restricted Payments” or to make Permitted Investments (other than Permitted Investments specified
in clauses (1), (2) and (3) of the definition thereof); provided, however, that any amounts in
excess of 100.0% shall be Subordinated Indebtedness of the Issuer or any Restricted Subsidiary that
has a Stated Maturity that is no earlier than 90 days after the Stated Maturity of the Notes or
Disqualified Stock or Preferred Stock of any Restricted Subsidiary that has a Stated Maturity that
is no earlier than 90 days after the Stated Maturity of the Notes, and (b) Indebtedness or
Disqualified Stock of the Issuer or a Restricted Guarantor not otherwise permitted hereunder, and
Indebtedness, Disqualified Stock or Preferred Stock of any Restricted Subsidiary that is not a
Guarantor not otherwise permitted hereunder in an aggregate principal amount or liquidation
preference, which when aggregated with the principal amount and liquidation preference of all other
Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this
clause (12)(b), does not at any one time outstanding exceed $1,000.0 million (it being understood
that any Indebtedness incurred or Disqualified Stock or Preferred Stock issued pursuant to this
clause (12)(b) shall cease to be deemed incurred or outstanding for purposes of this clause (12)(b)
but shall be deemed incurred for the purposes of the first paragraph of this covenant from and
after the first date on which the Issuer or such Restricted Subsidiary could have incurred such
Indebtedness or issued such Disqualified Stock or Preferred Stock under the first paragraph of this
covenant without reliance on this clause (12)(b));

     (13) the incurrence by the Issuer or any Restricted Subsidiary of Indebtedness or issuance by
the Issuer or any Restricted Subsidiary of Disqualified Stock or Preferred Stock which serves to
extend, replace, refund, refinance, renew or defease:

     (a) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued as permitted
under the first paragraph of this covenant and clauses (2), (3), (4),
(5), (12)(a) and (14)
below, or

     (b) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued to so
extend, replace, refund, refinance, renew or defease the Indebtedness, Disqualified Stock or
Preferred Stock described in clause (a) above,

including, in each case, additional Indebtedness, Disqualified Stock or Preferred Stock incurred to
pay premiums (including tender premiums), defeasance costs and fees and expenses in connection
therewith (collectively, the “Refinancing Indebtedness”) prior to its respective maturity;
provided, however, that such Refinancing Indebtedness:

     (A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is
incurred which is not less than the remaining Weighted Average Life to

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Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being extended,
replaced, refunded, refinanced, renewed or defeased (except by virtue of prepayment of such
Indebtedness),

     (B) to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances,
renews or defeases (i) Indebtedness subordinated or pari passu to the Notes or any Guarantee
thereof, such Refinancing Indebtedness is subordinated or pari passu to the Notes or the
Guarantee at least to the same extent as the Indebtedness being extended, replaced, refunded,
refinanced, renewed or defeased or (ii) Disqualified Stock or Preferred Stock, such Refinancing
Indebtedness must be Disqualified Stock or Preferred Stock, respectively, and

     (C) shall not include:

     (i) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary
that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred
Stock Indebtedness, Disqualified Stock or Preferred Stock of the Issuer;

     (ii) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary
that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred
Stock of the Issuer or a Restricted Guarantor; or

     (iii) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a
Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock
of an Unrestricted Subsidiary;

and provided further that subclauses (A) and (B) of this clause (13) will not apply to any
extension, replacement, refunding, refinancing, renewal or defeasance of any Indebtedness under
a Credit Facility;

     (14) Indebtedness, Disqualified Stock or Preferred Stock of (x) the Issuer or a Restricted
Subsidiary incurred or issued to finance an acquisition or (y) Persons that are acquired by the
Issuer or any Restricted Subsidiary or merged into the Issuer or a Restricted Subsidiary in
accordance with the terms of the Indenture; provided that after giving effect to such acquisition
or merger, either:

     (i) the Issuer would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Leverage Ratio test set forth in the first paragraph of this
covenant, or

     (ii) the Consolidated Leverage Ratio is less than the Consolidated Leverage
Ratio immediately prior to such acquisition or merger;

     (15) Indebtedness arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within five Business Days of its
incurrence;

     (16) Indebtedness of the Issuer or any of its Restricted Subsidiaries supported by a letter of
credit issued pursuant to any Credit Facility, in a principal amount not in excess of the stated
amount of such letter of credit;

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     (17)(a) any guarantee by the Issuer or a Restricted Subsidiary of Indebtedness or
other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness
incurred by such Restricted Subsidiary is permitted under the terms of the Indenture, or

     (b) any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer; provided
that such Restricted Subsidiary shall comply with the covenant described below under
“Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”;

     (18) Indebtedness of Foreign Subsidiaries of the Issuer in an amount not to exceed at any
one time outstanding and together with any other Indebtedness incurred under this clause (18)
$250.0 million (it being understood that any Indebtedness incurred pursuant to this clause (18)
shall cease to be deemed incurred or outstanding for purposes of this clause (18) but shall be
deemed incurred for the purposes of the first paragraph of this covenant from and after the
first date on which such Foreign Subsidiary could have incurred such Indebtedness under the
first paragraph of this covenant without reliance on this clause (18));

     (19) Indebtedness consisting of Indebtedness issued by the Issuer or any of its Restricted
Subsidiaries to future, current or former officers, directors, employees and consultants
thereof or any direct or indirect parent thereof, their respective estates, heirs, family
members, spouses or former spouses, in each case to finance the purchase or redemption of
Equity Interests of the Issuer, a Restricted Subsidiary or any of their respective direct or
indirect parent companies to the extent described in clause (4) of the second paragraph of the
covenant described under “— Limitation on Restricted Payments”;

     (20) cash management obligations and Indebtedness in respect of netting services,
employee credit card programs and similar arrangements in connection with cash management
and deposit accounts; and

     (21) customer deposits and advance payments received in the ordinary course of
business from customers for goods purchased in the ordinary course of business.

     For purposes of determining compliance with this covenant:

     (1) in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or
any portion thereof) meets the criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through
(21) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuer, in its sole discretion, may classify or reclassify such item of Indebtedness,
Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to
include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one
of the above clauses or under the first paragraph of this covenant; provided that all
Indebtedness outstanding under the Credit Facilities on the Issue Date will be treated as
incurred on the Issue Date under clause (1) of the preceding paragraph; and

     (2) at the time of incurrence or any reclassification thereafter, the Issuer will be
entitled to divide and classify an item of Indebtedness in more than one of the types of
Indebtedness described in the first and second paragraphs above.

     Accrual of interest or dividends, the accretion of accreted value, the accretion or
amortization of original issue discount and the payment of interest or dividends in the form of
additional Indebtedness, Disqualified Stock or Preferred Stock, as applicable, will not be deemed
to be an incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for
purposes of this covenant.

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     For purposes of determining compliance with any U.S. dollar-denominated restriction on the
incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated
in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on
the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case
of revolving credit debt; provided that if such Indebtedness is incurred to refinance other
Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable
U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange
rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness
does not (i) exceed the principal amount of such Indebtedness being refinanced plus (ii) the
aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing.

     The principal amount of any Indebtedness incurred to refinance other Indebtedness, if
incurred in a different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such respective
Indebtedness is denominated that is in effect on the date of such refinancing. The principal
amount of any non-interest bearing Indebtedness or other discount security constituting
Indebtedness at any date shall be the principal amount thereof that would be shown on a
balance sheet of the Issuer dated such date prepared in accordance with GAAP.

     The Issuer will not, and will not permit any Restricted Guarantor to, directly or indirectly,
incur any Indebtedness (including Acquired Indebtedness) that is contractually subordinated or
junior in right of payment to any Indebtedness of the Issuer or such Restricted Guarantor (other
than Indebtedness constituting Designated Senior Indebtedness), as the case may be, unless such
Indebtedness is expressly subordinated in right of payment to the Notes or such Restricted
Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is subordinated to
other Indebtedness of the Issuer or such Restricted Guarantor, as the case may be. The Indenture
will not treat (1) unsecured Indebtedness as subordinated or junior to Secured Indebtedness merely
because it is unsecured or (2) unsubordinated Indebtedness as subordinated or junior to any other
unsubordinated Indebtedness merely because it has a junior priority with respect to the same
collateral.

Limitation on Modification of Existing Senior Notes

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to, amend
any of the Existing Senior Notes or the Existing Senior Notes Indenture, or any supplemental
indenture in respect thereof, to create, incur or assume any Lien that secures any of the Existing
Senior Notes other than to the extent permitted by the Senior Credit Facilities as in effect on the
Issue Date.

Limitation on Layering

     The Issuer will not permit any Restricted Guarantor to, directly or indirectly, incur
any Indebtedness that is subordinate in right of payment to any Designated Senior Indebtedness of
such Restricted Guarantor, as the case may be, unless such Indebtedness is either:

     (1) equal in right of payment with the such Restricted Guarantor’s Guarantee of the
Notes; or

     (2) expressly subordinated in right of payment to such Restricted Guarantor’s
Guarantee of the Notes.

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     The Indenture will not treat (1) unsecured Indebtedness as subordinated or junior to
Secured Indebtedness merely because it is unsecured or (2) unsubordinated Indebtedness as
subordinated or junior to any other unsubordinated Indebtedness merely because it has a junior
priority with respect to the same collateral.

Liens

     The Issuer will not, and will not permit any Restricted Guarantor to, directly or indirectly,
create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures Obligations
under any Indebtedness or any related guarantee, on any asset or property of the Issuer or any
Restricted Guarantor, or any income or profits therefrom, or assign or convey any right to receive
income therefrom, unless:

     (1) in the case of Liens securing Subordinated Indebtedness, the Notes and related
Guarantees are secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens; or

     (2) in all other cases, the Notes or the Guarantees are equally and ratably secured.

     The foregoing shall not apply to (a) Liens securing the Notes (including PIK Notes) and the
related Guarantees or the Exchange Notes (including PIK Notes issued in respect thereof) and
related guarantees, (b) Liens securing Obligations under any Indebtedness and related guarantees
under Credit Facilities, including any letter of credit facility relating thereto, that was
permitted by the terms of the Indenture to be incurred pursuant to clause (1) of the second
paragraph under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock” and (c) Liens incurred to secure Obligations in respect of any other Indebtedness
permitted to be incurred pursuant to the covenant described above under “—Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided that, with
respect to Liens securing Obligations permitted under this subclause (c), at the time of incurrence
and after giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be no greater
than 6.75 to 1.0.

     Any Lien created for the benefit of the Holders of the Notes pursuant to this covenant shall
be deemed automatically and unconditionally released and discharged upon the release and discharge
of the applicable Lien described in clauses (1) and (2) above.

Merger, Consolidation or Sale of All or Substantially All Assets

     The Issuer may not consolidate or merge with or into or wind up into (whether or not the
Issuer is the surviving corporation), and may not sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the properties or assets of the Issuer and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions, to any Person
unless:

     (1) the Issuer is the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Issuer) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made is organized
or existing under the laws of the United States, any state thereof, the District of Columbia,
or any territory thereof (the Issuer or such Person, as the case may be, being herein called
the “Successor Company”); provided that in the case where the Successor Company is not a
corporation, a co-obligor of the Notes is a corporation;

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     (2) the Successor Company, if other than the Issuer, expressly assumes all the obligations
of the Issuer under the Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;

     (3) immediately after such transaction, no Default exists;

     (4) immediately after giving pro forma effect to such transaction and any related
financing transactions, as if such transactions had occurred at the beginning of the applicable
four-quarter period, (a) the Successor Company would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in the first
paragraph of the covenant described under “—Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock,” or (b) the Consolidated Leverage Ratio for
the Successor Company and its Restricted Subsidiaries would be equal to or less than such
Consolidated Leverage Ratio immediately prior to such transaction;

     (5) each Restricted Guarantor, unless it is the other party to the transactions described
above, in which case clause (1)(b) of the second succeeding paragraph shall apply, shall have
by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations
under the Indenture and the Notes; and

     (6) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture.

     The Successor Company will succeed to, and be substituted for the Issuer under the Indenture
and the Notes, as applicable. Notwithstanding the foregoing, clauses (2), (3), (4), (5) and (6)
above shall not apply to the Transactions (including the merger). Notwithstanding the foregoing
clauses (3) and (4),

     (1) the Issuer or any Restricted Subsidiary may consolidate with or merge into or transfer
all or part of its properties and assets to the Issuer or a Restricted Guarantor; and

     (2) the Issuer may merge with an Affiliate of the Issuer solely for the purpose of
reorganizing the Issuer in the United States, any state thereof, the District of Columbia or
any territory thereof so long as the amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.

     Subject to certain limitations described in the Indenture governing release of a Guarantee
upon the sale, disposition or transfer of a guarantor, no Restricted Guarantor will, and the Issuer
will not permit any Restricted Guarantor to, consolidate or merge with or into or wind up into
(whether or not the Issuer or such Restricted Guarantor is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties
or assets, in one or more related transactions, to any Person unless:

     (1)(a) such Restricted Guarantor is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than such Restricted Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition will have been
made is organized or existing under the laws of the jurisdiction of organization of such
Restricted Guarantor, as the case may be, or the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof (such Restricted Guarantor or such Person,
as the case may be, being herein called the “Successor Person”);

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     (b) the Successor Person, if other than such Restricted Guarantor, expressly assumes
all the obligations of such Restricted Guarantor under the Indenture and such Restricted
Guarantor’s related Guarantee pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;

     (c) immediately after such transaction, no Default exists; and

     (d) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with the Indenture; or

     (2) the transaction complies with clauses (1) and (2) of the first paragraph of the
covenant described under “Repurchase at the Option of Holders—Asset Sales.”

     In the case of clause (1) above, the Successor Person will succeed to, and be substituted
for, such Restricted Guarantor under the Indenture and such Restricted Guarantor’s Guarantee.
Notwithstanding the foregoing, any Restricted Guarantor may (1) merge or consolidate with or
into or wind up into or transfer all or part of its properties and assets to another Restricted
Guarantor or the Issuer, (2) merge with an Affiliate of the Issuer solely for the purpose of
reincorporating the Guarantor in the United States, any state thereof, the District of Columbia
or any territory thereof or (3) convert into (which may be effected by merger with a Restricted
Subsidiary that has substantially no assets and liabilities) a corporation, partnership,
limited partnership, limited liability corporation or trust organized or existing under the
laws of the jurisdiction of organization of such Restricted Guarantor (which may be effected by
merger so long as the survivor thereof is a Restricted Guarantor).

Transactions with Affiliates

     The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of their properties or assets to,
or purchase any property or assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of
the Issuer (each of the foregoing, an “Affiliate Transaction”) involving aggregate payments or
consideration in excess of $20.0 million, unless:

     (1) such Affiliate Transaction is on terms that are not materially less favorable to the
Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on
an arm’s-length basis; and

     (2) the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate payments or consideration in excess of
$40.0 million, a resolution adopted by the majority of the board of directors of the Issuer
approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that
such Affiliate Transaction complies with clause (1) above.

The foregoing provisions will not apply to the following:

     (1) transactions between or among the Issuer or any of its Restricted Subsidiaries;

     (2) Restricted Payments permitted by the provisions of the Indenture described above under
the covenant “—Limitation on Restricted Payments” and Investments constituting Permitted
Investments;

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     (3) the payment of management, consulting, monitoring, transaction, advisory and
termination fees and related expenses and indemnities, directly or indirectly, to the
Investors, in each case pursuant to the Sponsor Management Agreement;

     (4) the payment of reasonable and customary fees and compensation consistent with past
practice or industry practices paid to, and indemnities provided on behalf of, employees, officers,
directors or consultants of the Issuer, any of its direct or indirect parent companies or any of
its Restricted Subsidiaries;

     (5) transactions in which the Issuer or any of its Restricted Subsidiaries, as the case may
be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such
transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or
stating that the terms are not materially less favorable to the Issuer or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or
such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

     (6) any agreement as in effect as of the Issue Date (other than the Sponsor Management
Agreement), or any amendment thereto (so long as any such amendment is not disadvantageous in any
material respect in the good faith judgment of the board of directors of the Issuer to the Holders
when taken as a whole as compared to the applicable agreement as in effect on the Issue Date);

     (7) the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries
of its obligations under the terms of, any stockholders agreement, principal investors agreement
(including any registration rights agreement or purchase agreement related thereto) to which it is
a party as of the Issue Date and any similar agreements which it may enter into thereafter;
provided, however, that the existence of, or the performance by the Issuer or any of its Restricted
Subsidiaries of obligations under any future amendment to any such existing agreement or under any
similar agreement entered into after the Issue Date shall only be permitted by this clause (7) to
the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous
in any material respect in the good faith judgment of the board of directors of the Issuer to the
Holders when taken as a whole;

     (8) the Transactions and the payment of all fees and expenses related to the
Transactions, including Transaction Expenses;

     (9) transactions with customers, clients, suppliers, contractors, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary course of business and
otherwise in compliance with the terms of the Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the board of directors of the Issuer or
the senior management thereof, or are on terms at least as favorable as would reasonably have been
obtained at such time from an unaffiliated party;

     (10) the issuance of Equity Interests (other than Disqualified Stock) by the Issuer or a
Restricted Subsidiary;

     (11) sales of accounts receivable, or participations therein, or Securitization Assets or
related assets in connection with any Receivables Facility or any Qualified Securitization
Financing;

     (12) payments by the Issuer or any of its Restricted Subsidiaries to any of the Investors made
for any financial advisory, financing, underwriting or placement services or in respect

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of other investment banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the board of
directors of the Issuer in good faith or as otherwise permitted by the Indenture;

     (13) payments or loans (or cancellation of loans) to employees or consultants of the
Issuer, any of its direct or indirect parent companies or any of its Restricted Subsidiaries
and employment agreements, severance arrangements, stock option plans and other similar
arrangements with such employees or consultants which, in each case, are approved by a majority
of the board of directors of the Issuer in good faith; and

     (14) Investments by the Investors in debt securities of the Issuer or any of its
Restricted Subsidiaries so long as (i) the investment is being offered generally to other
investors on the same or more favorable terms and (ii) the investment constitutes less than
5.0% of the proposed or outstanding issue amount of such class of securities.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

     The Issuer will not, and will not permit any of its Restricted Subsidiaries that are not
Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to:

     (1)(a) pay dividends or make any other distributions to the Issuer or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or

     (b) pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

     (2) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

     (3) sell, lease or transfer any of its properties or assets to the Issuer or any of
its Restricted Subsidiaries,

except (in each case) for such encumbrances or restrictions existing under or by reason of:

     (a) contractual encumbrances or restrictions in effect on the Issue Date, including
without limitation, pursuant to the Existing Senior Notes;

     (b)(x) the Senior Credit Facilities and the related documentation, (y) the Indenture,
the Notes and the Guarantees and (z) the Exchange Notes and the related indenture and
guarantees;

     (c) purchase money obligations for property acquired in the ordinary course of
business and Capital Lease Obligations that impose restrictions of the nature discussed in
clause (3) above on the property so acquired;

     (d) applicable law or any applicable rule, regulation or order;

     (e) any agreement or other instrument of a Person acquired by or merged, consolidated
or amalgamated with or into the Issuer or any Restricted Subsidiary thereof in existence at
the time of such acquisition, merger, consolidation or amalgamation (but, in any such case,
not created in contemplation thereof), which encumbrance or restriction is not applicable
to any Person, or the properties or assets

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of any Person, other than the Person so acquired and its Subsidiaries, or the property or
assets of the Person so acquired and its Subsidiaries or the property or assets so assumed;

     (f) contracts for the sale of assets, including customary restrictions with respect to
a Subsidiary of (i) the Issuer or (ii) a Restricted Subsidiary, pursuant to an agreement
that has been entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary that impose restrictions on the assets to be
sold;

     (g) Secured Indebtedness otherwise permitted to be incurred pursuant to the covenants
described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock and Preferred Stock” and “—Liens” that limit the right of the debtor to dispose of
the assets securing such Indebtedness;

     (h) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business;

     (i) other Indebtedness, Disqualified Stock or Preferred Stock of Foreign Subsidiaries
permitted to be incurred subsequent to the Issue Date pursuant to the provisions of the
covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;

     (j) customary provisions in any joint venture agreement or other similar agreement
relating solely to such joint venture;

     (k) customary provisions contained in any lease, sublease, license, sublicense or
similar agreement, including with respect to intellectual property, and other agreements,
in each case, entered into in the ordinary course of business;

     (l) any encumbrances or restrictions created in connection with any Receivables
Facility or Qualified Securitization Financing that, in the good faith determination of the
Issuer, are necessary or advisable to effect such Receivables Facility or Qualified
Securitization Financing; and

     (m) any encumbrances or restrictions of the type referred to in clauses (1), (2) and
(3) above imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (a) through (I) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Issuer, no more restrictive with
respect to such encumbrance and other restrictions taken as a whole than those prior to
such amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.

Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

     The Issuer will not permit any Restricted Subsidiary that is a Wholly-Owned Subsidiary of the
Issuer (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee other
capital markets debt securities), other than a Guarantor, a Foreign Subsidiary or a Securitization
Subsidiary, to guarantee the payment of any Indebtedness of the Issuer or any Restricted Guarantor
unless:

     (1) such Restricted Subsidiary within 30 days executes and delivers a supplemental
indenture to the Indenture providing for a Guarantee by such Restricted Subsidiary, except that
with respect to a guarantee of Indebtedness of the Issuer or any Restricted Guarantor, if

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such Indebtedness is by its express terms subordinated in right of payment to the Notes or a
related Guarantee, any such guarantee by such Restricted Subsidiary with respect to such
Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the
same extent as such Indebtedness is subordinated to the Notes or such Restricted Guarantor’s
related Guarantee; and

     (2) such Restricted Subsidiary shall within 30 days deliver to the Trustee an Opinion of
Counsel reasonably satisfactory to the Trustee;

provided, that this covenant shall not be applicable to (i) any guarantee of any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred
in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (ii)
guarantees of any Qualified Securitization Financing by any Restricted Subsidiary. The Issuer may
elect, in its sole discretion, to cause any Subsidiary that is not otherwise required to be a
Restricted Guarantor to become a Restricted Guarantor, in which case such Subsidiary shall not be
required to comply with the 30 day periods described above.

Reports and Other Information

     Notwithstanding that the Issuer may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided
for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC,
the Indenture will require the Issuer to file with the SEC from and after the Issue Date no later
than 15 days after the periods set forth below,

     (1) within 90 days (or any other time period then in effect under the rules and
regulations of the Exchange Act with respect to the filing of a Form 10-K by a non-accelerated
filer) after the end of each fiscal year, annual reports on Form 10-K, or any successor or
comparable form, containing the information required to be contained therein, or required in
such successor or comparable form;

     (2) within 45 days after the end of each of the first three fiscal quarters of each fiscal
year, reports on Form 10-Q containing all quarterly information that would be required to be
contained in Form 10-Q, or any successor or comparable form;

     (3) promptly from time to time after the occurrence of an event required to be therein
reported, such other reports on 

Form 8-K, or any successor or comparable form; and

     (4) any other information, documents and other reports which the Issuer would be required
to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

in each case, in a manner that complies in all material respects with the requirements specified in
such form; provided that the Issuer shall not be so obligated to file such reports with the SEC if
the SEC does not permit such filing, in which event the Issuer will make available such information
to prospective purchasers of Notes, in addition to providing such information to the Trustee and
the Holders of the Notes, in each case within 5 days after the time the Issuer would have been
required to file such information with the SEC as required pursuant to the first sentence of this
paragraph. To the extent any such information is not furnished within the time periods specified
above and such information is subsequently furnished (including upon becoming publicly available,
by filing such information with the SEC), the Issuer will be deemed to have satisfied its
obligations with respect thereto at such time and any Default with respect

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thereto shall be deemed to have been cured; provided, that such cure shall not otherwise affect the
rights of the Holders under “Events of Default and Remedies” if Holders of at least 25% in
principal amount of the then total outstanding Notes have declared the principal, premium, if any,
interest and any other monetary obligations on all the then outstanding Notes to be due and payable
immediately and such declaration shall not have been rescinded or cancelled prior to such cure. In
addition, to the extent not satisfied by the foregoing, the Issuer will agree that, for so long as
any Notes are outstanding, it will furnish to Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.

     In the event that any direct or indirect parent company of the Issuer becomes a guarantor of
the Notes, the Indenture will permit the Issuer to satisfy its obligations in this covenant with
respect to financial information relating to the Issuer by furnishing financial information
relating to such parent; provided that the same is accompanied by consolidating information that
explains in reasonable detail the differences between the information relating to such parent, on
the one hand, and the information relating to the Issuer and its Restricted Subsidiaries on a
standalone basis, on the other hand.

     Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the
commencement of the exchange offer or the effectiveness of the shelf registration statement by the
filing with the SEC of the exchange offer registration statement or shelf registration statement in
accordance with the terms of the Registration Rights Agreement, and any amendments thereto, with
such financial information that satisfies Regulation S-X of the Securities Act.

Events of Default and Remedies

     The Indenture will provide that each of the following is an Event of Default:

     (1) default in payment when due and payable, upon redemption, acceleration or
otherwise, of principal of, or premium, if any, on the Notes;

     (2) default for 30 days or more in the payment when due of interest on or with respect to
the Notes;

     (3) failure by the Issuer or any Guarantor for 60 days after receipt of written
notice given by the Trustee or the Holders of not less than 25% in principal amount of the
then outstanding Notes (with a copy to the Trustee) to comply with any of its obligations,
covenants or agreements (other than a default referred to in clauses (1) and (2) above)
contained in the Indenture or the Notes;

     (4) default under any mortgage, indenture or instrument under which there is issued or by
which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of
its Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or any of its
Restricted Subsidiaries, other than Indebtedness owed to the Issuer or a Restricted Subsidiary,
whether such Indebtedness or guarantee now exists or is created after the issuance of the
Notes, if both:

     (a) such default either results from the failure to pay any principal of such
Indebtedness at its stated final maturity (after giving effect to any applicable grace
periods) or relates to an obligation other than the obligation to pay principal of any
such Indebtedness at its stated final maturity and results in the holder or holders of

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such Indebtedness causing such Indebtedness to become due prior to its stated
maturity; and

     (b) the principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the maturity of which
has been so accelerated, aggregate $100.0 million or more at any one time outstanding;

     (5) failure by the Issuer or any Significant Party to pay final non-appealable judgments
aggregating in excess of $100.0 million, which final judgments remain unpaid, undischarged and
unstayed for a period of more than 90 days after such judgments become final, and in the event
such judgment is covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed;

     (6) certain events of bankruptcy or insolvency with respect to the Issuer or any
Significant Party;

     (7) failure of any Person required by the terms of the Indenture to be a Guarantor as of
the Issue Date to execute a supplemental indenture to the Indenture within five (5) Business
Days following the Issue Date; or

     (8) the Guarantee of any Significant Party shall for any reason cease to be in full force
and effect or be declared null and void or any responsible officer of any Guarantor that is a
Significant Party, as the case may be, denies in writing that it has any further liability
under its Guarantee or gives written notice to such effect, other than by reason of the
termination of the Indenture or the release of any such Guarantee in accordance with the
Indenture.

     If any Event of Default (other than of a type specified in clause (6) above with respect to
the Issuer) occurs and is continuing under the Indenture, the Trustee or the Holders of at least
25% in principal amount of the then total outstanding Notes may declare the principal, premium, if
any, interest and any other monetary obligations on all the then outstanding Notes to be due and
payable immediately.

     Upon the effectiveness of such declaration, such principal and interest will be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising
under clause (6) of the first paragraph of this section with respect to the Issuer, all outstanding
Notes will become due and payable without further action or notice. The Indenture will provide that
the Trustee may withhold from the Holders notice of any continuing Default, except a Default
relating to the payment of principal, premium, if any, or interest, if it determines that
withholding notice is in their interest. In addition, the Trustee shall have no obligation to
accelerate the Notes if in the best judgment of the Trustee acceleration is not in the best
interest of the Holders of the Notes.

     The Indenture will provide that the Holders of a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes
waive any existing Default and its consequences under the Indenture (except a continuing Default in
the payment of interest on, premium, if any, or the principal of any Note held by a non-consenting
Holder) and rescind any acceleration with respect to the Notes and its consequences (except if such
rescission would conflict with any judgment of a court of competent jurisdiction). In the event of
any Event of Default specified in clause (4) above, such Event of Default and all consequences
thereof (excluding any resulting payment default, other than as a result of acceleration of the
Notes) shall be annulled, waived and rescinded,

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automatically and without any action by the Trustee or the Holders, if within 20 days after such
Event of Default arose:

     (1) the Indebtedness or guarantee that is the basis for such Event of Default has been
discharged; or

     (2) holders thereof have rescinded or waived the acceleration, notice or action (as the
case may be) giving rise to such Event of Default; or

     (3) the default that is the basis for such Event of Default has been cured.

     Subject to the provisions of the Indenture relating to the duties of the Trustee thereunder,
in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or direction of any of the
Holders of the Notes unless the Holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder of a Note may pursue any remedy with
respect to the Indenture or the Notes unless:

     (1) such Holder has previously given the Trustee notice that an Event of Default is
continuing;

     (2) Holders of at least 25% in principal amount of the total outstanding Notes have
requested the Trustee to pursue the remedy;

     (3) Holders of the Notes have offered the Trustee reasonable security or indemnity
against any loss, liability or expense;

     (4) the Trustee has not complied with such request within 60 days after the receipt
thereof and the offer of security or indemnity; and

     (5) Holders of a majority in principal amount of the total outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day period.

     Subject to certain restrictions, under the Indenture the Holders of a majority in principal
amount of the then total outstanding Notes are given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that
conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder of a Note or that would involve the Trustee in personal liability.

     The Issuer is required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Issuer is required, within five Business Days after becoming aware of
any Default, to deliver to the Trustee a statement specifying such Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

     No past, present or future director, officer, employee, incorporator, member, partner or
stockholder of the Issuer or any Guarantor or any of their direct or indirect parent companies
shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the
Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such

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obligations or their creation. Each Holder by accepting Notes waives and releases all such
liability. The waiver and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy.

Legal Defeasance and Covenant Defeasance

     The obligations of the Issuer and the Guarantors under the Indenture will terminate (other
than certain obligations) and will be released upon payment in full of all of the Notes. The Issuer
may, at its option and at any time, elect to have all of its obligations discharged with respect to
the Notes and have each Guarantor’s obligations discharged with respect to its Guarantee (“Legal
Defeasance”) and cure all then existing Events of Default except for:

     (1) the rights of Holders of Notes to receive payments in respect of the principal of,
premium, if any, and interest on the Notes when such payments are due solely out of the trust
created pursuant to the Indenture;

     (2) the Issuer’s obligations with respect to Notes concerning issuing temporary Notes,
registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security payments held in trust;

     (3) the rights, powers, trusts, duties and immunities of the Trustee, and the
Issuer’s obligations in connection therewith; and

     (4) the Legal Defeasance provisions of the Indenture.

     In addition, the Issuer may, at its option and at any time, elect to have its obligations and
those of each Guarantor released with respect to substantially all of the restrictive covenants in
the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations
shall not constitute a Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including bankruptcy, receivership, rehabilitation and insolvency events
pertaining to the Issuer) described under “Events of Default and Remedies” will no longer
constitute an Event of Default with respect to the Notes.

     In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:

     (1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal amount of, premium, if any, and interest
due on the Notes on the stated maturity date or on the redemption date, as the case may be, of
such principal amount, premium, if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a particular redemption date;

     (2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,

     (a) the Issuer has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or

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     (b) since the issuance of the Notes, there has been a change in the applicable U.S.
federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm
that, subject to customary assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result
of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such Legal Defeasance had
not occurred;

     (3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be
subject to such tax on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;

     (4) no Default (other than that resulting from borrowing funds to be applied to make such
deposit and any similar and simultaneous deposit relating to such other Indebtedness, and in
each case, the granting of Liens in connection therewith) shall have occurred and be continuing
on the date of such deposit;

     (5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under any Senior Credit Facility or any other material agreement or
instrument governing Indebtedness (other than the Indenture) to which, the Issuer or any
Restricted Guarantor is a party or by which the Issuer or any Restricted Guarantor is bound
(other than that resulting from any borrowing of funds to be applied to make the deposit
required to effect such Legal Defeasance or Covenant Defeasance and any similar and
simultaneous deposit relating to other Indebtedness, and, in each case, the granting of Liens
in connection therewith);

     (6) the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that
the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or
defrauding any creditors of the Issuer or any Restricted Guarantor or others; and

     (7) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions)
each stating that all conditions precedent provided for or relating to the Legal Defeasance or
the Covenant Defeasance, as the case may be, have been complied with.

Satisfaction and Discharge

     The Indenture will be discharged and will cease to be of further effect as to all Notes, when
either:

     (1) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed
Notes which have been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for cancellation; or

     (2)(a) all Notes not theretofore delivered to the Trustee for cancellation have become due
and payable by reason of the making of a notice of redemption or otherwise, will become due and
payable within one year or are to be called for redemption and redeemed

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within one year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Issuer, and the Issuer or any
Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Holders of the Notes cash in U.S. dollars, Government
Securities, or a combination thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and discharge the entire indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if
any, and accrued interest to the date of maturity or redemption thereof, as the case may be;

     (b) no Default (other than that resulting from borrowing funds to be applied to make
such deposit or any similar and simultaneous deposit relating to other Indebtedness and in
each case, the granting of Liens in connection therewith) with respect to the Indenture or
the Notes shall have occurred and be continuing on the date of such deposit or shall occur
as a result of such deposit and such deposit will not result in a breach or violation of,
or constitute a default under any Senior Credit Facility or any other material agreement or
instrument governing Indebtedness (other than the Indenture) to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is bound (other than resulting
from any borrowing of funds to be applied to make such deposit and any similar and
simultaneous deposit relating to other Indebtedness and, in each case, the granting of
Liens in connection therewith);

     (c) the Issuer has paid or caused to be paid all sums payable by it under the
Indenture; and

     (d) the Issuer has delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at maturity or the redemption date, as the
case may be.

     In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Amendment, Supplement and Waiver

     Except as provided in the next two succeeding paragraphs, the Indenture, any Guarantee and the
Notes may be amended or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding, other than Notes beneficially owned by the Issuer
or any of its Affiliates, including consents obtained in connection with a purchase of, or tender
offer or exchange offer for Notes, and any existing Default or Event of Default or compliance with
any provision of the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes, other than Notes beneficially owned by
the Issuer or any of its Affiliates (including consents obtained in connection with a purchase of
or tender offer or exchange offer for the Notes); provided that if any amendment, waiver or other
modification would only affect the Senior Cash Pay Notes or the Senior Toggle Notes, only the
consent of the holders of at least a majority in principal amount of the then outstanding Senior
Cash Pay Notes or Senior Toggle Notes (and not the consent of at least a majority in principal
amount of all of the then outstanding Notes), as the case may be, shall be required.

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     The Indenture will provide that, without the consent of each affected Holder of Notes, an
amendment or waiver may not, with respect to any Notes held by a non-consenting Holder:

     (1) reduce the principal amount of such Notes whose Holders must consent to an
amendment, supplement or waiver;

     (2) reduce the principal amount of or change the fixed final maturity of any such Note or
alter or waive the provisions with respect to the redemption of such Notes (other than
provisions relating to the covenants described above under “Repurchase at the Option of
Holders”);

     (3) reduce the rate of or change the time for payment of interest on any Note;

     (4) waive a Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration) or in respect of a covenant or provision contained in the Indenture or
any Guarantee which cannot be amended or modified without the consent of all affected Holders;

     (5) make any Note payable in money other than that stated therein;

     (6) make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders to receive payments of principal of or premium, if any, or
interest on the Notes;

     (7) make any change in these amendment and waiver provisions;

     (8) impair the right of any Holder to receive payment of principal of, or interest on such
Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such Holder’s Notes;

     (9) make any change to the ranking of the Notes that would adversely affect the
Holders; or

     (10) except as expressly permitted by the Indenture, modify the Guarantees of any
Significant Party in any manner adverse to the Holders of the Notes; or

     (11) after the Issuer’s obligation to purchase Notes arises thereunder, amend, change or
modify in any respect materially adverse to the Holders of the Notes the obligations of the
Issuer to make and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate an Asset Sale Offer with respect to any Asset Sale that has been
consummated or, after such Change or Control has occurred or such Asset Sale has been
consummated, modify any of the provisions or definitions with respect thereto in a manner that
is materially adverse to the Holders of the Notes.

     Notwithstanding the foregoing, the Issuer and the Trustee may amend or supplement the
Indenture and the Notes and the Issuer, the Trustee and the Guarantors may amend or supplement any
Guarantee issued under the Indenture, in each case, without the consent of any Holder;

     (1) to cure any ambiguity, omission, mistake, defect or inconsistency;

     (2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

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     (3) to comply with the covenant relating to mergers, consolidations and sales of assets;

     (4) to provide for the assumption of the Issuer’s or any Guarantor’s obligations to the
Holders;

     (5) to make any change that would provide any additional rights or benefits to the Holders
or that does not adversely affect the legal rights under the Indenture of any such Holder;

     (6) to add covenants for the benefit of the Holders or to surrender any right or power
conferred upon the Issuer or any Guarantor;

     (7) to comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act;

     (8) to evidence and provide for the acceptance and appointment under the Indenture of a
successor Trustee thereunder pursuant to the requirements thereof;

     (9) to add a Guarantor under the Indenture;

     (10) to conform the text of the Indenture or the Guarantees or the Notes issued thereunder
to any provision of this “Description of the Notes” to the extent that such provision in this
“Description of the Notes” was intended to be a verbatim recitation of a provision of the
Indenture, Guarantee or Notes;

     (11) to provide for the issuance of Exchange Notes or private exchange notes, which are
identical to Exchange Notes except that they are not freely transferable; or

     (12) to make any amendment to the provisions of the Indenture relating to the transfer and
legending of Notes as permitted by the Indenture, including, without limitation to facilitate
the issuance and administration of the Notes; provided, however, that
(i) compliance with the Indenture as so amended would not result in Notes being transferred in
violation of the Securities Act or any applicable securities law and (ii) such amendment does
not materially and adversely affect the rights of Holders to transfer Notes.

     However, no amendment to, or waiver of, the subordination provisions of the Indenture with
respect to the Guarantees (or the component definitions used therein), if adverse to the interests
of the holders of the Designated Senior Indebtedness of the Guarantors, may be made without the
consent of the holders of a majority of such Designated Senior Indebtedness (or their
Representative). In addition, no amendment or supplement to the Indenture or the Notes that
modifies or waives the specific rights or obligations of the Paying Agent, registrar or transfer
agent may be made without the consent of such agent (it being understood that the Trustee’s
execution of any such amendment or supplement will constitute such consent if the Trustee is then
also acting as such agent).

     The consent of the Holders is not necessary under the Indenture to approve the particular form
of any proposed amendment. It is sufficient if such consent approves the substance of the proposed
amendment.

Notices

     Notices given by publication will be deemed given on the first date on which publication is
made and notices given by first-class mail, postage prepaid, will be deemed given five calendar
days after mailing.

Concerning the Trustee

     The Indenture will contain certain limitations on the rights of the Trustee thereunder, should
it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on

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certain property received in respect of any such claim as security or otherwise. The Trustee will
be permitted to engage in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

     The Indenture will provide that the Holders of a majority in principal amount of the
outstanding Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The
Indenture will provide that in case an Event of Default shall occur (which shall not be cured), the
Trustee will be required, in the exercise of its power, to use the degree of care of a prudent
person in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the request of any Holder
of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory
to it against any loss, liability or expense.

Governing Law

     The Indenture, the Notes and any Guarantee will be governed by and construed in
accordance with the laws of the State of New York.

Certain Definitions

     Set forth below are certain defined terms used in the Indenture. For purposes of the
Indenture, unless otherwise specifically indicated, the term “consolidated” with respect to any
Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such
consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate
of such Person.

     “ABL Facility” means the asset-based revolving Credit Facility provided under the Credit
Agreement to be entered into as of the Issue Date by and among the Issuer, the co-borrowers party
thereto, the guarantors party thereto, the lenders party thereto in their capacities as lenders
thereunder and Citibank, N.A., as Administrative Agent, including any notes, mortgages, guarantees,
collateral documents, instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, renewals, restatements, refundings or
refinancings thereof and any one or more notes, indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that extend, replace, refund,
refinance, renew or defease any part of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or refinancing facility or indenture that
increases the amount that may be borrowed thereunder or alters the maturity of the loans thereunder
or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the
same or other agent, lender or group of lenders or investors.

     “Acquired Indebtedness” means, with respect to any specified Person,

     (1) Indebtedness of any other Person existing at the time such other Person is merged,
consolidated or amalgamated with or into or became a Restricted Subsidiary of such specified
Person, including Indebtedness incurred in connection with, or in contemplation of, such other
Person merging, consolidating or amalgamating with or into or becoming a Restricted Subsidiary
of such specified Person, and

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     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.

     “Applicable Premium” means, with respect to any Note on any Redemption Date, the greater
of:

     (a) 1.0% of the principal amount of such Note on such Redemption Date; and

     (b) the excess, if any, of (i) the present value at such Redemption Date of (A) the
redemption price of such Note at August 1, 2012 (such redemption price being set forth in
the table appearing above under “Optional Redemption”), plus (B) all required remaining
interest payments (calculated based on the cash interest rate) due on such Note through
August 1, 2012 (excluding accrued but unpaid interest to the Redemption Date), computed
using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis
points; over (ii) the principal amount of such Note on such Redemption Date.

     “Asset Sale” means:

     (1) the sale, conveyance, transfer or other disposition, whether in a single transaction
or a series of related transactions, of property or assets (including by way of a Sale and
Lease-Back Transaction) of the Issuer or any of its Restricted Subsidiaries (each referred to
in this definition as a “disposition”); or

     (2) the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a
single transaction or a series of related transactions;

     in each case, other than:

     (a) any disposition of Cash Equivalents or Investment Grade Securities or obsolete or
worn out property or assets in the ordinary course of business or any disposition of
inventory or goods (or other assets) held for sale or no longer used in the ordinary course
of business;

     (b) the disposition of all or substantially all of the assets of the Issuer in a
manner permitted pursuant to the provisions described above under “Certain
Covenants—Merger, Consolidation or Sale of All or Substantially All Assets” or any
disposition that constitutes a Change of Control pursuant to the Indenture;

     (c) the making of any Restricted Payment that is permitted to be made, and is made,
under the covenant described above under “Certain Covenants—Limitation on Restricted
Payments” or the making of any Permitted Investment;

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     (d) any disposition of property or assets or issuance or sale of Equity Interests of any
Restricted Subsidiary in any transaction or series of related transactions with an aggregate
fair market value of less than $50.0 million;

     (e) any disposition of property or assets or issuance of securities by a Restricted
Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another Restricted
Subsidiary;

     (f) to the extent allowable under Section 1031 of the Code, any exchange of like property
or assets (excluding any boot thereon) for use in a Similar Business;

     (g) the sale, lease, assignment, sub-lease, license or sub-license of any real or
personal property in the ordinary course of business;

     (h) any issuance or sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary;

     (i) foreclosures, condemnation, expropriation or any similar action with respect to assets
or the granting of Liens not prohibited by the Indenture;

     (j) sales of accounts receivable, or participations therein, or Securitization Assets or
related assets in connection with any Receivables Facility or any Qualified Securitization
Financing;

     (k) any financing transaction with respect to property built or acquired by the Issuer or
any Restricted Subsidiary after the Issue Date, including Sale and Lease-Back Transactions and
asset securitizations permitted by the Indenture;

     (l) sales of accounts receivable in connection with the collection or compromise thereof;

     (m) the abandonment of intellectual property rights in the ordinary course of
business, which in the reasonable good faith determination of the Issuer are not material
to the conduct of the business of the Issuer and its Restricted Subsidiaries taken as a
whole;

     (n) voluntary terminations of Hedging Obligations;

     (o) the licensing or sub-licensing of intellectual property or other general intangibles
in the ordinary course of business, other than the licensing of intellectual property on a
long-term basis;

     (p) any surrender or waiver of contract rights or the settlement, release or surrender of
contract rights or other litigation claims in the ordinary course of business;

     (q) the unwinding of any Hedging Obligations; or

     (r) the issuance of directors’ qualifying shares and shares issued to foreign
nationals as required by applicable law.

     “Business Day” means each day which is not a Legal Holiday.

     “Capital Stock” means:

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     (1) in the case of a corporation, corporate stock or shares in the capital of such
corporation;

     (2) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital stock;

     (3) in the case of a partnership or limited liability company, partnership or membership
interests (whether general or limited); and

     (4) any other interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of assets of, the issuing Person
but excluding from all of the foregoing any debt securities convertible into Capital
Stock, whether or not such debt securities include any right of participation with Capital
Stock.

     “Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the
amount of the liability in respect of a capital lease that would at such time be required to be
capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto)
prepared in accordance with GAAP.

     “Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities) by a Person and its Restricted Subsidiaries during
such period in respect of purchased software or internally developed software and software
enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized
costs on the consolidated balance sheet of such Person and its Restricted Subsidiaries.

     “Cash Equivalents” means:

     (1) United States dollars;

     (2)(a) Canadian dollars, pounds sterling, euro, or any national currency of any
participating member state of the EMU; or

     (b) in the case of the Issuer or a Restricted Subsidiary, such local currencies held by it
from time to time in the ordinary course of business;

     (3) securities issued or directly and fully and unconditionally guaranteed or insured by
the U.S. government or any agency or instrumentality thereof the securities of which are
unconditionally guaranteed as a full faith and credit obligation of such government with
maturities of 24 months or less from the date of acquisition;

     (4) certificates of deposit, time deposits and eurodollar time deposits with maturities of
one year or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any commercial bank having
capital and surplus of not less than $500.0 million in the case of U.S. banks and $100.0
million (or the U.S. dollar equivalent as of the date of determination) in the case of non-U.S.
banks;

     (5) repurchase obligations for underlying securities of the types described in clauses (3)
and (4) entered into with any financial institution meeting the qualifications specified in
clause (4) above;

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     (6) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case
maturing within 24 months after the date of creation thereof;

     (7) marketable short-term money market and similar securities having a rating of at least
P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P
shall be rating such obligations, an equivalent rating from another Rating Agency) and in each
case maturing within 24 months after the date of creation thereof;

     (8) readily marketable direct obligations issued by any state, commonwealth or territory
of the United States or any political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from
the date of acquisition;

     (9) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher
from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date
of acquisition;

     (10) Investments with average maturities of 12 months or less from the date of acquisition
in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the
equivalent thereof) or better by Moody’s; and

     (11) investment funds investing at least 95% of their assets in securities of the
types described in clauses (1) through (10) above.

     Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in
currencies other than those set forth in clauses (1) and (2) above, provided that such amounts are
converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any
event within ten Business Days following the receipt of such amounts.

     “Cash Interest” has the meaning set forth under “Principal, Maturity and Interest.”

     “CCO” means Clear Channel Outdoor Holdings, Inc., a Delaware corporation.

     “CCU Mirror Note” means the Revolving Promissory Note dated as of November 10, 2005 between
the Issuer, as maker, and CCO, as payee.

     “Change of Control” means the occurrence of any of the following after the Issue Date (and
excluding, for the avoidance of doubt, the Transactions):

     (1) the sale, lease or transfer, in one or a series of related transactions (other than by
merger, consolidation or amalgamation), of all or substantially all of the assets of the Issuer
and its Restricted Subsidiaries, taken as a whole, to any Person other than a Permitted Holder;
or

     (2) the Issuer becomes aware of (by way of a report or any other filing pursuant to
Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by
(A) any Person (other than any Permitted Holder) or (B) Persons (other than any Permitted
Holder) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act, or any successor provision), including any such group acting for the
purpose of acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination or purchase of

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“beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of more than 50% of the total voting power of the Voting Stock of the
Issuer or any of its direct or indirect parent companies.

     “Code” means the Internal Revenue Code of 1986, as amended, or any successor thereto.

     “Consolidated Depreciation and Amortization Expense” means, with respect to any Person, for
any period, the total amount of depreciation and amortization expense, including the amortization
of deferred financing fees, debt issuance costs, commissions, fees and expenses and Capitalized
Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and
losses related to pensions and other post-employment benefits, of such Person and its Restricted
Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with
GAAP.

     “Consolidated Indebtedness” means, as of any date of determination, the sum, without
duplication, of (1) the total amount of Indebtedness of the Issuer and its Restricted Subsidiaries
set forth on the Issuer’s consolidated balance sheet (excluding any letters of credit except to the
extent of unreimbursed amounts drawn thereunder), plus (2) the greater of the aggregate liquidation
value and maximum fixed repurchase price without regard to any change of control or redemption
premiums of all Disqualified Stock of the Issuer and the Restricted Guarantors and all Preferred
Stock of its Restricted Subsidiaries that are not Guarantors, in each case, determined on a
consolidated basis in accordance with GAAP.

     “Consolidated Interest Expense” means, with respect to any Person for any period, without
duplication, the sum of:

     (1) consolidated interest expense of such Person and its Restricted Subsidiaries for such
period, to the extent such expense was deducted (and not added back) in computing
Consolidated Net Income (including (a) amortization of original issue discount resulting
from the issuance of Indebtedness at less than par, (b) all commissions, discounts and
other fees and charges owed with respect to letters of credit or bankers acceptances, (c)
non-cash interest expense (but excluding any non-cash interest expense attributable to the
movement in the mark to market valuation of Hedging Obligations or other derivative
instruments pursuant to GAAP), (d) the interest component of Capitalized Lease
Obligations, and (e) net payments, if any made (less net payments, if any, received),
pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding
(t) any expense resulting from the discounting of any Indebtedness in connection with the
application of recapitalization accounting or purchase accounting, as the case may be, in
connection with the Transactions or any acquisition, (u) penalties and interest relating
to taxes, (v) any Special Interest, any “special interest” with respect to other securities
and any liquidated damages for failure to timely comply with registration rights obligations,
(w) amortization of deferred financing fees, debt issuance costs, discounted liabilities,
commissions, fees and expenses, (x) any expensing of bridge, commitment and other financing
fees, (y) commissions, discounts, yield and other fees and charges (including any interest
expense) related to any Receivables Facility or Qualified Securitization Financing and (z) any
accretion of accrued interest on discounted liabilities); plus

     (2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued; less

     (3) interest income of such Person and its Restricted Subsidiaries for such period.

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     For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by the Issuer to be the rate of interest implicit
in such Capitalized Lease Obligation in accordance with GAAP.

     “Consolidated Leverage Ratio” means, as of the date of determination, the ratio of (a) the
Consolidated Indebtedness of the Issuer and its Restricted Subsidiaries on such date, to (b) EBITDA
of the Issuer and its Restricted Subsidiaries for the most recently ended four fiscal quarters
ending immediately prior to such date for which internal financial statements are available.

     In the event that the Issuer or any Restricted Subsidiary (i) incurs, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes) or (ii) issues or
redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for
which the Consolidated Leverage Ratio is being calculated but prior to or simultaneously with the
event for which the calculation of the Consolidated Leverage Ratio is made (the “Consolidated
Leverage Ratio Calculation Date”), then the Consolidated Leverage Ratio shall be calculated giving
pro forma effect to such incurrence, redemption, retirement or extinguishment of Indebtedness, or
such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred
at the beginning of the applicable four-quarter period.

     For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Leverage Ratio Calculation Date, and other operational changes that the Issuer or any
of its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Leverage Ratio Calculation Date shall be calculated on a pro forma basis as set forth
below assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations,
consolidations, discontinued operations and other operational changes had occurred on the first day
of the four-quarter reference period. If since the beginning of such period any Person that
subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall have made any Investment,
acquisition, disposition, merger, amalgamation, consolidation, discontinued operation (other than
the Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date))
or operational change, in each case with respect to an operating unit of a business, that would
have required adjustment pursuant to this definition, then the Consolidated Leverage Ratio shall be
calculated giving pro forma effect thereto in the manner set forth below for such period as if such
Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational
change had occurred at the beginning of the applicable four-quarter period.

     For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the Transactions) and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Issuer (and may include, for the
avoidance of doubt, cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions) which is being
given pro forma effect that have been or are expected to be realized); provided,

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that actions to realize such cost savings and operating expense reductions are taken within 12
months after the date of such Investment, acquisition, amalgamation, merger or consolidation.

     For the purposes of this definition, any amount in a currency other than U.S. dollars will be
converted to U.S. dollars based on the average exchange rate for such currency for the most recent
twelve month period immediately prior to the date of determination determined in a manner
consistent with that used in calculating EBITDA for the applicable period.

     “Consolidated Net Income” means, with respect to any Person for any period, the aggregate of
the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated
basis, and otherwise determined in accordance with GAAP; provided, however, that, without
duplication,

     (1) any net after-tax effect of extraordinary, non-recurring or unusual gains or losses
(less all fees and expenses related thereto) or expenses and Transaction Expenses incurred
within 180 days of the Issue Date shall be excluded,

     (2) the cumulative effect of a change in accounting principles during such period shall be
excluded,

     (3) any net after-tax effect of income (loss) from disposed or discontinued operations
(other than the Specified Assets (as defined in the Senior Credit Facilities as in effect on
the Issue Date) to the extent included in discontinued operations prior to consummation of the
disposition thereof) and any net after-tax gains or losses on disposal of disposed, abandoned
or discontinued operations shall be excluded,

     (4) any net after-tax effect of gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course of business, as
determined in good faith by the Issuer, shall be excluded,

     (5) the Net Income for such period of any Person that is not a Subsidiary, or is an
Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be
excluded; provided that Consolidated Net Income of such Person shall be increased by the amount
of dividends or distributions or other payments that are actually paid in cash or Cash
Equivalents (or to the extent converted into cash or Cash Equivalents) to such Person or a
Subsidiary thereof that is the Issuer or a Restricted Subsidiary in respect of such period,

     (6) solely for the purpose of determining the amount available for Restricted Payments
under clause (3)(a) of the first paragraph of “Certain Covenants—Limitation on Restricted
Payments,” the Net Income for such period of any Restricted Subsidiary (other than any
Guarantor) shall be excluded to the extent the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of its Net Income is not at the date of
determination permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally waived, provided that
Consolidated Net Income of the Issuer will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the extent converted into cash) to
the Issuer or a Restricted Subsidiary thereof in respect of such period, to the extent not
already included therein,

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     (7) effects of purchase accounting adjustments (including the effects of such adjustments
pushed down to such Person and such Subsidiaries) in component amounts required or permitted by
GAAP, resulting from the application of purchase accounting in relation to the Transactions or
any consummated acquisition or the amortization or write-off of any amounts thereof, net of
taxes, shall be excluded,

     (8) any net after-tax effect of income (loss) from the early extinguishment or conversion
of (a) Indebtedness, (b) Hedging Obligations or (c) other derivative instruments shall be
excluded;

     (9) any impairment charge or asset write-off or write-down, including impairment charges
or asset write-offs or write-downs related to intangible assets, long-lived assets, investments
in debt and equity securities or as a result of a change in law or regulation, in each case,
pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be
excluded;

     (10) any non-cash compensation charge or expense, including any such charge or expense
arising from the grant of stock appreciation or similar rights, stock options, restricted stock
or other rights or equity incentive programs, and any cash charges associated with the
rollover, acceleration, or payout of Equity Interests by management of the Issuer or any of its
direct or indirect parent companies in connection with the Transactions, shall be excluded;

     (11) accruals and reserves that are established or adjusted within twelve months after the
Issue Date that are so required to be established as a result of the Transactions in accordance
with GAAP, or changes as a result of adoption or modification of accounting policies, shall be
excluded; and

     (12) to the extent covered by insurance and actually reimbursed, or, so long as the Issuer
has made a determination that there exists reasonable evidence that such amount will in fact be
reimbursed by the insurer and only to the extent that such amount is (a) not denied by the
applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the
date of such evidence with a deduction for any amount so added back to the extent not so
reimbursed within 365 days, expenses with respect to liability or casualty events or business
interruption shall be excluded.

Notwithstanding the foregoing, for the purpose of the covenant described under “Certain
Covenants—Limitation on Restricted Payments” only (other than clause (3)(d) thereof), there shall
be excluded from Consolidated Net Income any income arising from any sale or other disposition of
Restricted Investments made by the Issuer and its Restricted Subsidiaries, any repurchases and
redemptions of Restricted Investments from the Issuer and its Restricted Subsidiaries, any
repayments of loans and advances which constitute Restricted Investments by the Issuer or any of
its Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such
amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause
(3)(d) thereof.

     “Consolidated Secured Debt Ratio” means, as of the date of determination, the ratio of (a) the
Consolidated Indebtedness of the Issuer and its Restricted Subsidiaries on such date that is
secured by Liens to (b) EBITDA of the Issuer and its Restricted Subsidiaries for the most recently
ended four fiscal quarters ending immediately prior to such date for which internal financial
statements are available.

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     In the event that the Issuer or any Restricted Subsidiary (i) incurs, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes) or (ii) issues or
redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for
which the Consolidated Secured Debt Ratio is being calculated but prior to or simultaneously with
the event for which the calculation of the Consolidated Secured Debt Ratio is made (the
“Consolidated Secured Debt Ratio Calculation Date”), then the Consolidated Secured Debt Ratio shall
be calculated giving pro forma effect to such incurrence, redemption, retirement or extinguishment
of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the
same had occurred at the beginning of the applicable four-quarter period.

     For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Secured Debt Ratio Calculation Date, and other operational changes that the Issuer or
any of its Restricted Subsidiaries has determined to make and/or made during the four-quarter
reference period or subsequent to such reference period and on or prior to or simultaneously with
the Consolidated Secured Debt Ratio Calculation Date shall be calculated on a pro forma basis as
set forth below assuming that all such Investments, acquisitions, dispositions, mergers,
amalgamations, consolidations, discontinued operations and other operational changes had occurred
on the first day of the four-quarter reference period. If since the beginning of such period any
Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or
any of its Restricted Subsidiaries since the beginning of such period shall have made any
Investment, acquisition, disposition, merger, amalgamation, consolidation, discontinued operation
(other than the Specified Assets (as defined in the Senior Credit Facilities as in effect on the
Issue Date)) or operational change, in each case with respect to an operating unit of a business,
that would have required adjustment pursuant to this definition, then the Consolidated Secured Debt
Ratio shall be calculated giving pro forma effect thereto in the manner set forth below for such
period as if such Investment, acquisition, disposition, merger, consolidation, discontinued
operation or operational change had occurred at the beginning of the applicable four-quarter
period.

     For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the Transactions) and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Issuer (and may include, for the
avoidance of doubt, cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions) which is being
given pro forma effect that have been or are expected to be realized); provided, that actions to
realize such cost savings and operating expense reductions are taken within 12 months after the
date of such Investment, acquisition, amalgamation, merger or consolidation.

     “Contingent Obligations” means, with respect to any Person, any obligation of such Person
guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness
(“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly
or indirectly, including, without limitation, any obligation of such Person, whether or not
contingent,

     (1) to purchase any such primary obligation or any property constituting direct or
indirect security therefor,

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     (2) to advance or supply funds

     (a) for the purchase or payment of any such primary obligation, or

     (b) to maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, or

     (3) to purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation against loss in respect thereof.

     “Credit Facilities” means, with respect to the Issuer or any of its Restricted Subsidiaries,
one or more debt facilities, including the Senior Credit Facilities, or other financing
arrangements (including, without limitation, commercial paper facilities or indentures) providing
for revolving credit loans, term loans, letters of credit or other long-term indebtedness,
including any notes, mortgages, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments, supplements, modifications, extensions,
renewals, restatements or refundings thereof and any notes, indentures or credit facilities or
commercial paper facilities that replace, refund or refinance any part of the loans, notes, other
credit facilities or commitments thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount permitted to be borrowed thereunder or
alters the maturity thereof (provided that such increase in borrowings is permitted under “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock”) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and
whether by the same or any other agent, lender or group of lenders.

     “Default” means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.

     “Designated Non-cash Consideration” means the fair market value of non-cash consideration
received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale that is so
designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting forth
the basis of such valuation, executed by the principal financial officer of the Issuer, less the
amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection
on such Designated Non-cash Consideration.

     “Designated Preferred Stock” means Preferred Stock of the Issuer, a Restricted Subsidiary or
any direct or indirect parent corporation of the Issuer (in each case other than Disqualified
Stock) that is issued for cash (other than to the Issuer or a Restricted Subsidiary or an employee
stock ownership plan or trust established by the Issuer or its Subsidiaries) and is so designated
as Designated Preferred Stock, pursuant to an Officer’s Certificate executed by the principal
financial officer of the Issuer, on the issuance date thereof, the cash proceeds of which are
excluded from the calculation set forth in clause (3) of the first paragraph of the “Certain
Covenants—Limitation on Restricted Payments” covenant.

     “Designated Senior Indebtedness” means:

     (1) all Indebtedness of any Guarantor under its guarantee of (i) the Senior Credit
Facilities permitted to be incurred pursuant to clause (1) of the second paragraph under
“Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock” plus (ii) the amount of Indebtedness permitted to be incurred

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pursuant to clause (12)(b) of the second paragraph under “Certain Covenants—Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” plus (iii)
the amount of additional Indebtedness permitted to be incurred by such Guarantor under “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock” that is also permitted to be and is secured by a Lien pursuant to (A) the
Consolidated Secured Debt Ratio test set forth in clause (c) of the second paragraph under
“Certain Covenants—Liens” or (B) clause (20) of the definition of Permitted Liens (in each case
plus interest accruing on or after the filing of any petition in bankruptcy or similar
proceeding or for reorganization of the Guarantor (at the rate provided for in the
documentation with respect thereto, regardless of whether or not a claim for post-filing
interest is allowed in such proceedings)), and any and all other fees, expense reimbursement
obligations, indemnification amounts, penalties, and other amounts (whether existing on the
Issue Date or thereafter created or incurred) and all obligations of the Guarantor to reimburse
any bank or other Person in respect of amounts paid under letters of credit, acceptances or
other similar instruments;

     (2) all Hedging Obligations (and guarantees thereof) owing to a Lender (as defined in the
Senior Credit Facilities) or any Affiliate of such Lender (or any Person that was a Lender or
an Affiliate of such Lender at the time the applicable agreement giving rise to such Hedging
Obligation was entered into); and

     (3) all Obligations with respect to the items listed in the preceding clauses (1) and (2);
provided, however, that Designated Senior Indebtedness shall not include:

     (a) any obligation of such Person to the Issuer or any of its Subsidiaries;

     (b) any liability for federal, state, local or other taxes owed or owing by such
Person;

     (c) any accounts payable or other liability to trade creditors arising in the
ordinary course of business; provided that obligations incurred pursuant to the Credit
Facilities shall not be excluded pursuant to this clause (c);

     (d) any Indebtedness or other Obligation of such Person which is subordinate or junior
in any respect to any other Indebtedness or other Obligation of such Person; or

     (e) that portion of any Indebtedness which at the time of incurrence is incurred in
violation of the Indenture.

     “Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person
which, by its terms, or by the terms of any security into which it is convertible or for which it
is putable or exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable (other than solely as a result of a change of control or asset sale) pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other
than solely as a result of a change of control or asset sale), in whole or in part, in each case
prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes
are no longer outstanding; provided, however, that if such Capital Stock is issued to any plan for
the benefit of employees of the Issuer or its Subsidiaries or by any such plan to such employees,
such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be
repurchased in order to satisfy applicable statutory or regulatory obligations; provided further
that any Capital Stock held by any future, current or former employee, director, officer, manager
or consultant (or their respective Immediate Family Members), of the Issuer, any of its
Subsidiaries, any of its direct or indirect parent companies or any other entity in which the

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Issuer or a Restricted Subsidiary has an Investment, in each case pursuant to any stock
subscription or shareholders’ agreement, management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any distributor equity plan or agreement shall
not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer
or its Subsidiaries.

     “Domestic Subsidiary” means any Subsidiary of the Issuer that is organized or existing under
the laws of the United States, any state thereof, the District of Columbia, or any territory
thereof.

     “EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such
Person and its Restricted Subsidiaries for such period

     (1) increased (without duplication) by:

     (a) provision for taxes based on income or profits or capital, including, without
limitation, federal, state, franchise and similar taxes, foreign withholding taxes and
foreign unreimbursed value added taxes of such Person and such Subsidiaries paid or accrued
during such period, including penalties and interest related to such taxes or arising from
any tax examinations, to the extent the same were deducted (and not added back) in
computing Consolidated Net Income; provided that the aggregate amount of unreimbursed value
added taxes to be added back for any four consecutive quarter period shall not exceed $2.0
million; plus

     (b) Fixed Charges of such Person and such Subsidiaries for such period (including (x)
net losses on Hedging Obligations or other derivative instruments entered into for the
purpose of hedging interest rate risk, (y) fees payable in respect of letters of credit and
(z) costs of surety bonds in connection with financing activities, in each case, to the
extent included in Fixed Charges) to the extent the same was deducted (and not added back)
in calculating such Consolidated Net Income; plus

     (c) Consolidated Depreciation and Amortization Expense of such Person and such
Subsidiaries for such period to the extent the same were deducted (and not added back) in
computing Consolidated Net Income; plus

     (d) any fees, expenses or charges related to any Equity Offering, Investment,
acquisition, Asset Sale, disposition, recapitalization, the incurrence, repayment or
refinancing of Indebtedness permitted to be incurred by the Indenture (including any such
transaction consummated prior to the Issue Date and any such transaction undertaken but not
completed, and any charges or non-recurring merger costs incurred during such period as a
result of any such transaction, in each case whether or not successful (including, for the
avoidance of doubt, the effects of expensing all transaction related expenses in accordance
with FAS 141(R) and gains or losses associated with FIN 45)), or the offering, amendment or
modification of any debt instrument, including (i) the offering, any amendment or other
modification of the Notes, Exchange Notes or the Senior Credit Facilities and any amendment
or modification of the Existing Senior Notes and (ii) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any Receivables
Facility, and, in each case, deducted (and not added back) in computing Consolidated Net
Income; plus

     (e)(x) Transaction Expenses to the extent deducted (and not added back) in computing
Consolidated Net Income, (y) the amount of any severance, relocation costs,

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curtailments or modifications to pension and post-retirement employee benefit plans and (z) any
restructuring charge or reserve deducted (and not added back) in such period in computing
Consolidated Net Income, including any restructuring costs incurred in connection with acquisitions
after the Issue Date, costs related to the closure and/or consolidation of facilities, retention
charges, systems establishment costs, conversion costs and excess pension charges and consulting
fees incurred in connection with any of the foregoing; provided, that the aggregate amount added
back pursuant to subclause (z) of this clause (e) shall not exceed 10% of the LTM Cost Base in any
four consecutive four quarter period; plus

     (f) any other non-cash charges, including any (i) write-offs or write-downs, (ii) equity-based
awards compensation expense, (iii) losses on sales, disposals or abandonment of, or any impairment
charges or asset write-off related to, intangible assets, long-lived assets and investments in debt
and equity securities, (iv) all losses from investments recorded using the equity method and (v)
other non-cash charges, non-cash expenses or non-cash losses reducing Consolidated Net Income for
such period (provided that if any such non-cash charges represent an accrual or reserve for
potential cash items in any future period, the cash payment in respect thereof in such future
period shall be subtracted from EBITDA in such future period to the extent paid, and excluding
amortization of a prepaid cash item that was paid in a prior period); plus

     (g) the amount of any minority interest expense consisting of Subsidiary income attributable
to minority equity interests of third parties in any non-Wholly-Owned Subsidiary deducted (and not
added back) in such period in calculating Consolidated Net Income; plus

     (h) the amount of loss on sale of receivables and related assets to the Receivables
Subsidiary in connection with a Receivables Facility deducted (and not added back) in computing
Consolidated Net Income; plus

     (i) the amount of cost savings projected by the Issuer in good faith to be realized as a
result of specified actions taken during such period or expected to be taken (calculated on a pro
forma basis as though such cost savings had been realized on the first day of such period), net of
the amount of actual benefits realized during such period from such actions, provided that (A) such
amounts are reasonably identifiable and factually supportable, (B) such actions are taken,
committed to be taken or expected to be taken within 18 months after the Issue Date, (C) no cost
savings shall be added pursuant to this clause (i) to the extent duplicative of any expenses or
charges that are otherwise added back in computing EBITDA with respect to such period and (D) the
aggregate amount of cost savings added pursuant to this clause (i) shall not exceed $100,000,000
for any period consisting of four consecutive quarters; plus

     (j) to the extent no Default or Event of Default has occurred and is continuing, the amount of
management, monitoring, consulting, transaction and advisory fees and related expenses paid or
accrued in such period to the Investors to the extent otherwise permitted under “Certain
Covenants—Transactions with Affiliates” deducted (and not added back) in computing Consolidated Net
Income; plus

     (k) any costs or expense deducted (and not added back) in computing Consolidated Net Income by
such Person or any such Subsidiary pursuant to any management equity plan or stock option plan or
any other management or employee benefit plan or agreement or any stock subscription or shareholder
agreement, to the extent that such

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cost or expenses are funded with cash proceeds contributed to the capital of the Issuer or
a Restricted Guarantor or net cash proceeds of an issuance of Equity Interest of the Issuer
or a Restricted Guarantor (other than Disqualified Stock) solely to the extent that such
net cash proceeds are excluded from the calculation set forth in clause (3) of the first
paragraph under “Certain Covenants—Limitation on Restricted Payments”;

     (2) decreased by (without duplication) (a) any non-cash gains increasing Consolidated
Net Income of such Person and such Subsidiaries for such period, excluding any non-cash
gains to the extent they represent the reversal of an accrual or reserve for a potential
cash item that reduced EBITDA in any prior period and (b) the minority interest income
consisting of subsidiary losses attributable to minority equity interests of third parties
in any non-Wholly Owned Subsidiary to the extent such minority interest income is included
in Consolidated Net Income; and

     (3) increased or decreased by (without duplication):

     (a) any net gain or loss resulting in such period from Hedging Obligations and the
application of Statement of Financial Accounting Standards No. 133 and International
Accounting Standards No. 39 and their respective related pronouncements and
interpretations; plus or minus, as applicable, and

     (b) any net gain or loss resulting in such period from currency translation gains or
losses related to currency remeasurements of indebtedness (including any net loss or gain
resulting from hedge agreements for currency exchange risk).

     “EMU” means economic and monetary union as contemplated in the Treaty on European Union.

     “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock, but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock.

     “Equity Offering” means any public or private sale of common stock or Preferred Stock of the
Issuer or of a direct or indirect parent of the Issuer (excluding Disqualified Stock), other than:

     (1) public offerings with respect to any such Person’s common stock registered on Form
S-8;

     (2) issuances to the Issuer or any Subsidiary of the Issuer; and

     (3) any such public or private sale that constitutes an Excluded Contribution.

     “euro” means the single currency of participating member states of the EMU.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     “Exchange Notes” means new notes of the Issuer issued in exchange for the Notes
pursuant to, or as contemplated by, the Registration Rights Agreement.

     “Excluded Contribution” means net cash proceeds, marketable securities or Qualified
Proceeds received by or contributed to the Issuer from,

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     (1) contributions to its common equity capital, and

     (2) the sale (other than to a Subsidiary of the Issuer or to any management equity plan
or stock option plan or any other management or employee benefit plan or agreement of
the Issuer) of Capital Stock (other than Disqualified Stock and Designated Preferred
Stock)
of the Issuer,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate on the date
such capital contributions are made or the date such Equity Interests are sold, as the case may be,
which are excluded from the calculation set forth in clauses (3)(b) and 3(c) of the first paragraph
under “Certain Covenants—Limitation on Restricted Payments.”

     “Existing Senior Notes” means the Issuer’s 4.625% Senior Notes Due 2008, 6.625% Senior Notes
Due 2008, 4.25% Senior Notes Due 2009, 4.5% Senior Notes Due 2010, 6.25% Senior Notes Due 2011,
4.4% Senior Notes Due 2011, 5.0% Senior Notes Due 2012, 5.75% Senior Notes Due 2013, 5.5% Senior
Notes Due 2014, 4.9% Senior Notes Due 2015, 5.5% Senior Notes Due 2016, 6.875% Senior Debentures
Due 2018 and 7.25% Debentures Due 2027.

     “Existing
Senior Notes Indenture” means the Senior Indenture dated as of October 1, 1997
between the Issuer and The Bank of New York, as trustee, as the same may have been amended or
supplemented as of the Issue Date.

     “Fixed Charges” means, with respect to any Person for any period, the sum, without
duplication, of:

     (1) Consolidated Interest Expense of such Person and Restricted Subsidiaries for such
period; plus

     (2) all cash dividends or other distributions paid to any Person other than such Person
or any such Subsidiary (excluding items eliminated in consolidation) on any series of
Preferred Stock of the Issuer or a Restricted Subsidiary during such period; plus

     (3) all cash dividends or other distributions paid to any Person other than such Person
or any such Subsidiary (excluding items eliminated in consolidation) on any series of
Disqualified Stock of the Issuer or a Restricted Subsidiary during such period.

     “Foreign Subsidiary” means any Subsidiary that is not organized or existing under the laws of
the United States, any state thereof, the District of Columbia, or any territory thereof, and any
Restricted Subsidiary of such Foreign Subsidiary.

     “GAAP” means generally accepted accounting principles in the United States which are in effect
on the Issue Date.

     “General Credit Facilities” means the term and revolving credit facilities under the Credit
Agreement to be entered into as of the Issue Date by and among the Issuer, the subsidiary
guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and
Citibank, N.A., as Administrative Agent, including any notes, mortgages, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof
and any one or more notes, indentures or credit facilities or commercial paper facilities with
banks or other institutional lenders or investors that extend, replace, refund, refinance, renew or
defease any part of the loans, notes, other credit facilities or commitments

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thereunder, including any such replacement, refunding or refinancing facility or indenture that
increases the amount that may be borrowed thereunder or alters the maturity of the loans thereunder
or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the
same or other agent, lender or group of lenders or investors.

     “Government Securities” means securities that are:

     (1) direct obligations of the United States of America for the timely payment of which
its full faith and credit is pledged; or

     (2) obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States
of
America,

which, in either case, are not callable or redeemable at the option of the issuers thereof, and
shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the Government
Securities or the specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.

     “guarantee” means a guarantee (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or indirect, in any manner (including
letters of credit and reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.

     “Guarantee” means the guarantee by any Guarantor of the Issuer’s Obligations under the
Indenture and the Notes.

     “Guaranteed Leverage Ratio” means, as of the date of determination, the ratio of (a)
Designated Senior Indebtedness of the Guarantors, to (b) EBITDA of the Issuer and its
Restricted Subsidiaries for the most recently ended four fiscal quarters ending immediately
prior to such date for which internal financial statements are available.

     In the event that any Guarantor (i) incurs, redeems, retires or extinguishes any Indebtedness
(other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary
course of business for working capital purposes) or (ii) issues or redeems Disqualified Stock or
Preferred Stock subsequent to the commencement of the period for which the Guaranteed Leverage
Ratio is being calculated but prior to or simultaneously with the event for which the calculation
of the Guaranteed Leverage Ratio is made (the “Guaranteed Leverage Ratio Calculation Date”), then
the Guaranteed Leverage Ratio shall be calculated giving pro forma effect to such incurrence,
redemption, retirement or extinguishment of Indebtedness, or such issuance or redemption of
Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the
applicable four-quarter period.

     For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as

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determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Guaranteed Leverage Ratio Calculation Date, and other operational changes that the Issuer or any of
its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Guaranteed Leverage Ratio Calculation Date shall be calculated on a pro forma basis as set forth
below assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations,
consolidations, discontinued operations and other operational changes had occurred on the first day
of the four-quarter reference period. If since the beginning of such period any Person that
subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall have made any Investment,
acquisition, disposition, merger, amalgamation, consolidation, discontinued operation (other than
the Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date))
or operational change, in each case with respect to an operating unit of a business, that would
have required adjustment pursuant to this definition, then the Guaranteed Leverage Ratio shall be
calculated giving pro forma effect thereto in the manner set forth below for such period as if such
Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational
change had occurred at the beginning of the applicable four-quarter period.

     For purposes of this definition, whenever pro forma effect is to be given to an Investment,
acquisition, disposition, amalgamation, merger or consolidation (including the Transactions) and
the amount of income or earnings relating thereto, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Issuer (and may include, for the
avoidance of doubt, cost savings and operating expense reductions resulting from such Investment,
acquisition, amalgamation, merger or consolidation (including the Transactions) which is being
given pro forma effect that have been or are expected to be realized); provided, that actions to
realize such cost savings and operating expense reductions are taken within 12 months after the
date of such Investment, acquisition, amalgamation, merger or consolidation.

     “Guarantor” means, each Person that Guarantees the Notes in accordance with the terms of the
Indenture.

     “Hedging Obligations” means, with respect to any Person, the obligations of such Person under
any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement,
commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing for the transfer or mitigation of
interest rate or currency risks either generally or under specific contingencies.

     “Holder” means the Person in whose name a Note is registered on the registrar’s books.

     
“Holdings” means Clear Channel Capital I, LLC.

     “Immediate Family Member” means with respect to any individual, such individual’s child,
stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former
spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and
daughter-in-law (including adoptive relationships) and any trust, partnership or other bona fide
estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any
private foundation or fund that is controlled by any of the foregoing individuals or any
donor-advised fund of which any such individual is the donor.

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     “Indebtedness” means, with respect to any Person, without duplication:

     (1) any indebtedness (including principal and premium) of such Person, whether or not
contingent:

     (a) in respect of borrowed money;

     (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit
or bankers’ acceptances (or, without duplication, reimbursement agreements in respect
thereof);

     (c) representing the balance deferred and unpaid of the purchase price of any
property (including Capitalized Lease Obligations), except (i) any such balance that
constitutes an obligation in respect of a commercial letter of credit, a trade payable
or
similar obligation to a trade creditor, in each case accrued in the ordinary course of
business, (ii) liabilities accrued in the ordinary course of business and (iii) any
earn-out
obligations until such obligation becomes a liability on the balance sheet of such
Person in accordance with GAAP; or

     (d) representing any Hedging Obligations;

if and to the extent that any of the foregoing Indebtedness (other than letters of credit
(other than commercial letters of credit) and Hedging Obligations) would appear as a
liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in
accordance with GAAP;

     (2) to the extent not otherwise included, any obligation by such Person to be liable for,
or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to
in
clause (1) of a third Person (whether or not such items would appear upon the balance
sheet of such obligor or guarantor), other than by endorsement of negotiable instruments
for collection in the ordinary course of business; and

     (3) to the extent not otherwise included, the obligations of the type referred to in
clause
(1) of a third Person secured by a Lien on any asset owned by such first Person, whether
or
not such Indebtedness is assumed by such first Person;

provided, however, that notwithstanding the foregoing, Indebtedness shall be deemed not to
include (a) Contingent Obligations incurred in the ordinary course of business and
(b) obligations under or in respect of Receivables Facilities or any Qualified Securitization
Financing.

     “Independent Financial Advisor” means an accounting, appraisal, investment banking firm or
consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in
the good faith judgment of the Issuer, qualified to perform the task for which it has been engaged.

     “Initial Purchasers” means Deutsche Bank Securities Inc., Morgan Stanley & Co.
Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich
Capital Markets, Inc. and Wachovia Capital Markets, LLC.

     “Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

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     “Investment Grade Securities” means:

     (1) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than Cash Equivalents);

     (2) debt securities or debt instruments with an Investment Grade Rating, but excluding
any debt securities or instruments constituting loans or advances among the Issuer and the
Subsidiaries of the Issuer;

     (3) investments in any fund that invests exclusively in investments of the type described
in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending
investment or distribution; and

     (4) corresponding instruments in countries other than the United States customarily
utilized for high quality investments.

     “Investments” means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees), advances or capital
contributions (excluding accounts receivable, trade credit, advances to customers and commission,
travel and similar advances to directors, officers, employees and consultants, in each case made in
the ordinary course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any other Person and investments that
are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person
in the same manner as the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property. For purposes of the definition of
“Unrestricted Subsidiary” and the covenant described under “Certain Covenants—Limitation on
Restricted Payments”:

     (1) “Investments” shall include the portion (proportionate to the Issuer’s direct or
indirect equity interest in such Subsidiary) of the fair market value of the net assets of
a
Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
Restricted
Subsidiary, the Issuer or applicable Restricted Subsidiary shall be deemed to continue to
have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive)
equal to:

     (a) the Issuer’s direct or indirect “Investment” in such Subsidiary at the time
of
such redesignation; less

     (b) the portion (proportionate to the Issuer’s direct or indirect equity interest in
such Subsidiary) of the fair market value of the net assets of such Subsidiary at the
time
of such redesignation; and

     (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its
fair market value at the time of such transfer, in each case as determined in good faith
by
the Issuer.

     “Investors” means Thomas H. Lee Partners L.P. and Bain Capital LLC, each of their respective
Affiliates and any investment funds advised or managed by any of the foregoing, but not including,
however, any portfolio companies of any of the foregoing.

     “Issue Date” means the date that the Transactions are consummated.

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     “Issuer” has the meaning set forth in the first paragraph under “General.”

     “Legal Holiday” means a Saturday, a Sunday or a day on which commercial banking
institutions are not required to be open in the State of New York.

     “Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge,
hypothecation, charge, security interest, preference, priority or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in the nature thereof,
any option or other agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.

     “LTM Cost Base” means, for any consecutive four quarter period, the sum of (a) direct
operating expenses, (b) selling, general and administrative expenses and (c) corporate expenses, in
each case excluding depreciation and amortization, of the Issuer and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency
business.

     “Net Income” means, with respect to any Person, the net income (loss) of such Person and its
Subsidiaries that are Restricted Subsidiaries, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends.

     “Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its
Restricted Subsidiaries in respect of any Asset Sale, including any cash received upon the sale or
other disposition of any Designated Non-cash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash
Consideration, including legal, accounting and investment banking fees, payments made in order to
obtain a necessary consent or required by applicable law, and brokerage and sales commissions, any
relocation expenses incurred as a result thereof, other fees and expenses, including title and
recordation expenses, taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of principal, premium, if any, and interest on unsubordinated Indebtedness
required (other than required by clause (1) of the second paragraph of “Repurchase at the Option of
Holders—Asset Sales”) to be paid as a result of such transaction and any deduction of appropriate
amounts to be provided by the Issuer or any of its Restricted Subsidiaries as a reserve in
accordance with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Issuer or any of its Restricted Subsidiaries after such sale or
other disposition thereof, including pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification obligations associated
with such transaction, and in the case of any Asset Sale by a Restricted Subsidiary that is not a
Wholly-Owned Subsidiary, a portion of the aggregate cash proceeds equal to the portion of the
outstanding Equity Interests of such non-Wholly-Owned Subsidiary owned by Persons other than the
Issuer and any other Restricted Subsidiary (to the extent such proceeds are committed to be
distributed to such Persons).

     “Obligations” means any principal (including any accretion), interest (including any interest
accruing on or subsequent to the filing of a petition in bankruptcy, reorganization or similar
proceeding at the rate provided for in the documentation with respect thereto, whether or not

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such interest is an allowed claim under applicable state, federal or foreign law), premium,
penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect
to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of
payment of such principal (including any accretion), interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities, payable under the documentation governing any
Indebtedness.

     “Officer” means the Chairman of the Board, the Chief Executive Officer, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary
of the Issuer.

     “Officer’s Certificate” means a certificate signed on behalf of the Issuer by an Officer of
the Issuer, who must be the principal executive officer, the principal financial officer, the
treasurer or the principal accounting officer of the Issuer, that meets the requirements set forth
in the Indenture.

     “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable
to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee.

     “Partial PIK Interest” has the meaning set forth under “Principal, Maturity and Interest.”

     “Permitted Asset Swap” means the substantially concurrent purchase and sale or exchange of
Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents
between the Issuer or any of its Restricted Subsidiaries and another Person.

     “Permitted Holder” means any of the Investors and members of management of the Issuer (or its
direct parent or CC Media Holdings, Inc.) who are holders of Equity Interests of the Issuer (or any
of its direct or indirect parent companies) on the Issue Date and any group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any
of the foregoing are members; provided that (x) in the case of such group and without giving effect
to the existence of such group or any other group, such Investors and members of management,
collectively, have beneficial ownership of more than 50% of the total voting power of the Voting
Stock of the Issuer or any of its direct or indirect parent companies and (y) for purposes of this
definition, the amount of Equity Interests held by members of management who qualify as “Permitted
Holders” shall never exceed the amount of Equity Interests held by such members of management on
the Issue Date. Any person or group whose acquisition of beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act, or any successor provision) constitutes a Change of Control
in respect of which a Change of Control Offer is made in accordance with the requirements of the
covenant described under “Repurchase at the Option of Holders—Change of Control” (or would result
in a Change of Control Offer in the absence of the waiver of such requirement by Holders in
accordance with the covenant described under “Repurchase at the Option of Holders—Change of
Control”) will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

     “Permitted Investments” means:

     (1) any Investment in the Issuer or any of its Restricted Subsidiaries;

     (2) any Investment in cash and Cash Equivalents or Investment Grade Securities;

     (3) any Investment by the Issuer or any of its Restricted Subsidiaries in a Person that is
engaged in a Similar Business if as a result of such Investment:

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     (a) such Person becomes a Restricted Subsidiary; or

     (b) such Person, in one transaction or a series of related transactions, is
amalgamated, merged or consolidated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Issuer or a
Restricted
Subsidiary,

and, in each case, any Investment held by such Person; provided that such Investment was not
acquired by such Person in contemplation of such acquisition, merger, consolidation or transfer;

     (4) any Investment in securities or other assets not constituting Cash Equivalents or
Investment Grade Securities and received in connection with an Asset Sale made pursuant
to the first paragraph “Repurchase at the Option of Holders—Asset Sales” or any other
disposition of assets not constituting an Asset Sale;

     (5) any Investment existing on the Issue Date or made pursuant to a binding
commitment in effect on the Issue Date or an Investment consisting of any extension,
modification or renewal of any such Investment or binding commitment existing on the
Issue Date; provided that the amount of any such Investment may be increased (x) as
required by the terms of such Investment or binding commitment as in existence on the
Issue Date (including as a result of the accrual or accretion of interest or original issue
discount or the issuance of pay-in-kind securities) or (y) as otherwise permitted under the
Indenture;

     (6) any Investment acquired by the Issuer or any of its Restricted Subsidiaries:

     (a) in exchange for any other Investment, accounts receivable or notes receivable
held by the Issuer or any such Restricted Subsidiary in connection with or as a result of
a bankruptcy workout, reorganization or recapitalization of the issuer of such other
Investment, accounts receivable or notes receivable; or

     (b) as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect to any
secured Investment in default;

     (7) Hedging Obligations permitted under clause (10) of the covenant described in
“Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock and Preferred Stock”;

     (8) any Investment the payment for which consists of Equity Interests (exclusive of
Disqualified Stock) of the Issuer or any of its direct or indirect parent companies; provided,
however, that such Equity Interests will not increase the amount available for Restricted
Payments under clause (3) of the first paragraph under the covenant described under
“Certain Covenants—Limitation on Restricted Payments”;

     (9) Indebtedness (including any guarantee thereof) permitted under the covenant
described in “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;

     (10) any transaction to the extent it constitutes an Investment that is permitted and
made in accordance with the provisions of the second paragraph of the covenant described
under “Certain Covenants—Transactions with Affiliates” (except transactions described in
clauses (2), (5) and (9) of such paragraph);

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     (11) any Investment consisting of a purchase or other acquisition of inventory, supplies,
material or equipment;

     (12) additional Investments having an aggregate fair market value, taken together with
all other Investments made pursuant to this clause (12) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of
such sale do not consist of cash or marketable securities), not to exceed the greater of
$600.0 million and 2.00% of Total Assets (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent changes in
value);

     (13) Investments relating to a Receivables Subsidiary that, in the good faith
determination of the Issuer, are necessary or advisable to effect any Receivables Facility;

     (14) advances to, or guarantees of Indebtedness of, employees, directors, officers and
consultants not in excess of $20.0 million outstanding at any one time, in the aggregate;

     (15) loans and advances to officers, directors and employees consistent with industry
practice or past practice, as well as for moving expenses and other similar expenses
incurred in the ordinary course of business or consistent with past practice or to fund such
Person’s purchase of Equity Interests of the Issuer or any direct or indirect parent company
thereof;

     (16) Investments in the ordinary course of business consisting of endorsements for
collection or deposit;

     (17) Investments by the Issuer or any of its Restricted Subsidiaries in any other Person
pursuant to a “local marketing agreement” or similar arrangement relating to a station
owned or licensed by such Person;

     (18) any performance guarantee and Contingent Obligations in the ordinary course of
business and the creation of liens on the assets of the Issuer or any Restricted Subsidiary in
compliance with the covenant described under “Certain Covenants — Liens”;

     (19) any purchase or repurchase of the Notes; and

     (20) any Investment in a Similar Business having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (20) that are at that time
outstanding, not to exceed $200.0 million (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent changes in
value).

“Permitted Liens” means, with respect to any Person:

     (1) pledges, deposits or security by such Person under workmen’s compensation laws,
unemployment insurance, employers’ health tax and other social security laws or similar legislation
(including in respect of deductibles, self insured retention amounts and premiums and adjustments
thereto) or good faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety
or appeal bonds to which such Person is a party, or deposits as security for contested taxes or
import duties or for the payment of rent, in each case incurred in the ordinary course of business;

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     (2) Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s,
repairmen’s and mechanics’ Liens, in each case for sums not yet overdue for a period of
more than 30 days or being contested in good faith by appropriate actions or other Liens
arising out of judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review if adequate
reserves with respect thereto are maintained on the books of such Person in accordance
with GAAP;

     (3) Liens for taxes, assessments or other governmental charges not yet overdue for a
period of more than 30 days or subject to penalties for nonpayment or which are being
contested in good faith by appropriate actions diligently pursued, if adequate reserves with
respect thereto are maintained on the books of such Person in accordance with GAAP, or
for property taxes on property that the Issuer or any Subsidiary thereof has determined to
abandon if the sole recourse for such tax, assessment, charge, levy or claim is to such
property;

     (4) Liens in favor of issuers of performance, surety, bid, indemnity, warranty, release,
appeal or similar bonds or with respect to other regulatory requirements or letters of credit
or bankers’ acceptances issued, and completion guarantees provided for, in each case,
issued pursuant to the request of and for the account of such Person in the ordinary course
of its business or consistent with past practice prior to the Issue Date;

     (5) minor survey exceptions, minor encumbrances, ground leases, easements or
reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers,
electric
lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and
other similar purposes, or zoning, building codes or other restrictions (including minor
defects and irregularities in title and similar encumbrances) as to the use of real properties
or Liens incidental to the conduct of the business of such Person or to the ownership of its
properties which were not incurred in connection with Indebtedness and which do not in
the aggregate materially impair their use in the operation of the business of such Person;

     (6) Liens securing obligations under Indebtedness permitted to be incurred pursuant to
clause (5), (12)(b) or (18) of the second paragraph of the covenant described under “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; provided that Liens securing obligations under Indebtedness
permitted to be incurred pursuant to clause (18) extend only to the assets or Equity Interests
of Foreign Subsidiaries;

     (7) Liens existing on the Issue Date;

     (8) Liens existing on property or shares of stock or other assets of a Person at the time
such Person becomes a Subsidiary; provided, however, that such Liens are not created or
incurred in connection with, or in contemplation of, such other Person becoming such a
Subsidiary; provided, further, however, that such Liens may not extend to any other
property or other assets owned by the Issuer or any of its Restricted Subsidiaries;

     (9) Liens existing on property or other assets at the time the Issuer or a Restricted
Subsidiary acquired the property or such other assets, including any acquisition by means
of an amalgamation, merger or consolidation with or into the Issuer or any of its Restricted
Subsidiaries; provided, however, that such Liens are not created or incurred in connection
with, or in contemplation of, such acquisition, amalgamation, merger or consolidation;
provided further that the Liens may not extend to any other property owned by the Issuer or
any of its Restricted Subsidiaries;

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     (10) Liens securing obligations under Indebtedness or other obligations of the Issuer or
a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary permitted to be
incurred in accordance with the covenant described under “Certain Covenants—Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

     (11) Liens securing Hedging Obligations permitted to be incurred under the Indenture;

     (12) Liens on specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances or letters of credit
issued or created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

     (13) leases, subleases, licenses or sublicenses granted to others in the ordinary course
of business which do not materially interfere with the ordinary conduct of the business of
the Issuer or any of its Restricted Subsidiaries and do not secure any Indebtedness;

     (14) Liens arising from Uniform Commercial Code (or equivalent statutes) financing
statement filings regarding operating leases, consignments or accounts entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of business;

     (15) Liens in favor of the Issuer or any Guarantor;

     (16) Liens on equipment of the Issuer or any of its Restricted Subsidiaries granted in the
ordinary course of business;

     (17) Liens on (x) accounts receivable and related assets incurred in connection with a
Receivables Facility, and (y) any Securitization Assets and related assets incurred in
connection with a Qualified Securitization Financing;

     (18) Liens to secure any refinancing, refunding, extension, renewal or replacement (or
successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7),
(8), and (9); provided that (a) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property), and (b) the
obligations under Indebtedness secured by such Lien at such time is not increased to any
amount greater than the sum of (i) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (6), (7), (8), and (9) at the
time the original Lien became a Permitted Lien under the Indenture, and (ii) an amount
necessary to pay any fees and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement;

     (19) deposits made or other security provided in the ordinary course of business to
secure liability to insurance carriers;

     (20) other Liens securing Indebtedness or other obligations which do not exceed $50.0
million in the aggregate at any one time outstanding

     (21) Liens securing judgments for the payment of money not constituting an Event of
Default under clause (5) under “Events of Default and Remedies” so long as such Liens are
adequately bonded and any appropriate legal proceedings that may have been duly
initiated for the review of such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired;

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     (22) Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods in the
ordinary course of business;

     (23) Liens (i) of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to commodity trading
accounts or other commodity brokerage accounts incurred in the ordinary course of
business, and (iii) in favor of banking institutions arising as a matter of law
encumbering
deposits (including the right of set-off) and which are within the general parameters
customary in the banking industry;

     (24) Liens deemed to exist in connection with Investments in repurchase agreements
permitted under the Indenture; provided that such Liens do not extend to any assets other
than those that are the subject of such repurchase agreement;

     (25) Liens encumbering reasonable customary initial deposits and margin deposits and
similar Liens attaching to commodity trading accounts or other brokerage accounts incurred
in the ordinary course of business and not for speculative purposes;

     (26) Liens that are contractual rights of set-off (i) relating to the establishment of
depository relations with banks not given in connection with the issuance of Indebtedness,
(ii) relating to pooled deposit or sweep accounts of the Issuer or any of its Restricted
Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business of the Issuer and its Restricted Subsidiaries or (iii)
relating to
purchase orders and other agreements entered into with customers of the Issuer or any of
its Restricted Subsidiaries in the ordinary course of business;

     (27) Liens securing the Existing Senior Notes to the extent permitted by the Senior
Credit Facilities as in effect on the Issue Date;

     (28) Liens securing obligations owed by the Issuer or any Restricted Subsidiary to any
lender under any Senior Credit Facility or any Affiliate of such a lender in respect of
any
overdraft and related liabilities arising from treasury, depository and cash management
services or any automated clearing house transfers of funds;

     (29) the rights reserved or vested in any Person by the terms of any lease, license,
franchise, grant or permit held by the Issuer or any Restricted Subsidiary thereof or by a
statutory provision, to terminate any such lease, license, franchise, grant or permit, or
to
require annual or periodic payments as a condition to the continuance thereof;

     (30) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale or purchase of goods entered into by the Issuer or any
Restricted
Subsidiary in the ordinary course of business;

     (31) Liens solely on any cash earnest money deposits made by the Issuer or any of its
Restricted Subsidiaries in connection with any letter of intent or purchase agreement
permitted; and

     (32) security given to a public utility or any municipality or governmental authority
when required by such utility or authority in connection with the operations of that
Person
in the ordinary course of business.

     For purposes of this definition, the term “Indebtedness” shall be deemed to include interest
on and the costs in respect of such Indebtedness.

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     “Person” means any individual, corporation, limited liability company, partnership, joint
venture, association, joint stock company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other entity.

     “Preferred Stock” means any Equity Interest with preferential rights of payment of
dividends or upon liquidation, dissolution, or winding up.

     “Qualified Proceeds” means assets that are used or useful in, or Capital Stock of any Person
engaged in, a Similar Business; provided that the fair market value of any such assets or Capital
Stock shall be determined by the Issuer in good faith.

     “Qualified Securitization Financing” means any transaction or series of transactions that may
be entered into by Holdings, the Issuer or any of its Restricted Subsidiaries pursuant to which
such Person may sell, convey or otherwise transfer to (A) one or more Securitization Subsidiaries
or (B) any other Person (in the case of a transfer by a Securitization Subsidiary), or may grant a
security interest in, any Securitization Assets of CCO or any of its Subsidiaries (other than any
assets that have been transferred or contributed to CCO or its Subsidiaries by the Issuer or any
other Restricted Subsidiary of the Issuer) that are customarily granted in connection with asset
securitization transactions similar to the Qualified Securitization Financing entered into of a
Securitization Subsidiary that meets the following conditions: (a) the board of directors of the
Issuer shall have determined in good faith that such Qualified Securitization Financing (including
the terms, covenants, termination events and other provisions) is in the aggregate economically
fair and reasonable to the Issuer and the Securitization Subsidiary, (b) all sales, transfers
and/or contributions of Securitization Assets and related assets to the Securitization Subsidiary
are made at fair market value, (c) the financing terms, covenants, termination events and other
provisions thereof, including any Standard Securitization Undertakings, shall be market terms (as
determined in good faith by the Issuer), (d) after giving pro forma effect to such Qualified
Securitization Financing, (x) the Consolidated Leverage Ratio of the Issuer would be (A) less than
8.0 to 1.0 and (B) lower than the Consolidated Leverage Ratio of the Issuer immediately prior to
giving pro forma effect to such Qualified Securitization Financing and (y) the Guaranteed Leverage
Ratio of the Issuer would be (A) less than 6.5 to 1.0 and (B) lower than the Guaranteed Leverage
Ratio of the Issuer immediately prior to giving pro forma effect to such Qualified Securitization
Financing, (e) the proceeds from such sale will be used by the Issuer to permanently reduce
Obligations under the Senior Credit Facilities and to correspondingly reduce commitments with
respect thereto and (f) the Trustee shall have received an Officer’s Certificate of the Issuer
certifying that all of the requirements of clauses (a) through (e) have been satisfied.

     “Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating
on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as
the case may be, selected by the Issuer which shall be substituted for Moody’s or S&P or both, as
the case may be.

     “Receivables Facility” means any of one or more receivables financing facilities as amended,
supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations
of which are non-recourse (except for customary representations, warranties, covenants and
indemnities made in connection with such facilities) to the Issuer or any of its Restricted
Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries sells their accounts receivable to either (a) a Person that is not a
Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its accounts receivable to
a Person that is not a Restricted Subsidiary.

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     “Receivables Fees” means distributions or payments made directly or by means of discounts with
respect to any accounts receivable or participation interest therein issued or sold in connection
with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any
Receivables Facility.

     “Receivables Subsidiary” means any Subsidiary formed for the purpose of, and that solely
engages only in one or more Receivables Facilities and other activities reasonably related thereto.

     “Registration Rights Agreement” means the Registration Rights Agreement with respect to the
Notes, dated the Issue Date, among the Issuer, the Guarantors and the Initial Purchasers and any
similar registration rights agreements with respect to any Additional Notes.

     “Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in
a Similar Business, provided that any assets received by the Issuer or a Restricted Subsidiary in
exchange for assets transferred by the Issuer or a Restricted Subsidiary shall not be deemed to be
Related Business Assets if they consist of securities of a Person, unless upon receipt of the
securities of such Person, such Person would become a Restricted Subsidiary.

     “Representative” means any trustee, agent or representative (if any) for an issue of
Designated Senior Indebtedness of a Guarantor.

     “Restricted
Guarantor” means a Guarantor that is a Restricted
Subsidiary.

     “Restricted
Investment’ means an Investment other than a Permitted Investment.

     “Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of the Issuer
(including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided, however,
that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary,
such Subsidiary shall be included in the definition of “Restricted Subsidiary.”

     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any
successor to its rating agency business.

     “Sale and Lease-Back Transaction” means any arrangement providing for the leasing by the
Issuer or any of its Restricted Subsidiaries of any real or tangible personal property, which
property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.

     “SEC” means the U.S. Securities and Exchange Commission.

     “Secured Indebtedness” means any Indebtedness of the Issuer or any of its Restricted
Subsidiaries secured by a Lien.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     “Securitization Assets” means any properties, assets and revenue streams associated with the
Americas Outdoor Advertising segment of the Issuer and its Subsidiaries, and any other assets
related thereto, subject to a Qualified Securitization Financing and the proceeds thereof.

     “Securitization Fees” means distributions or payments made directly or by means of discounts
with respect to any participation interest issued or sold in connection with, and other fees paid
to a Person that is not a Securitization Subsidiary in connection with, any Qualified
Securitization Financing.

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     “Securitization Subsidiary” means a Restricted Subsidiary or direct Wholly-Owned Subsidiary of
Holdings (other than the Issuer) to which the Issuer or any of its Restricted Subsidiaries sells,
conveys or otherwise transfers Securitization Assets and related assets that engages in no
activities other than in connection with the ownership and financing of Securitization Assets, all
proceeds thereof and all rights (contingent and other), collateral and other assets relating
thereto, and any business or activities incidental or related to such business, and which is
designated by the board of directors of the Issuer or such other Person as provided below as a
Securitization Subsidiary and (a) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (i) is guaranteed by Holdings, the Issuer or any other
Subsidiary of Holdings, other than another Securitization Subsidiary (excluding guarantees of
obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings), (ii) is recourse to or obligates Holdings, the Issuer or any other
Subsidiary of the Issuer, other than another Securitization Subsidiary, in any way other than
pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of
Holdings, the Issuer or any other Subsidiary of the Issuer, other than another Securitization
Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings, (b) with which none of Holdings, the Issuer
or any other Subsidiary of the Issuer, other than another Securitization Subsidiary, has any
material contract, agreement, arrangement or understanding other than on terms which the Issuer
reasonably believes to be no less favorable to Holdings, the Issuer or such Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of the Issuer and (c) to
which none of Holdings, the Issuer or any other Subsidiary of the Issuer, other than another
Securitization Subsidiary, has any obligation to maintain or preserve such entity’s financial
condition or cause such entity to achieve certain levels of operating results.

     “Senior Credit Facilities” means (i) any ABL Facility and (ii) the General Credit Facilities.

     “Significant Party” means any Guarantor or Restricted Subsidiary that would be a
“significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such regulation is in effect on the Issue Date.

     “Similar Business” means any business conducted or proposed to be conducted by the Issuer and
its Subsidiaries on the Issue Date or any business that is similar, reasonably related, incidental
or ancillary thereto.

     “Special Interest” means all additional interest then owing pursuant to the Registration
Rights Agreement.

     “Sponsor Management Agreement” means the management agreement between certain management
companies associated with the Investors and the Issuer and/or any direct or indirect parent
company, in substantially the form delivered to the Initial Purchasers prior to the Issue Date and
as amended, supplemented, amended and restated, replaced or otherwise modified from time to time;
provided, however, that the terms of any such amendment, supplement, amendment and restatement or
replacement agreement are not, taken as a whole, less favorable to the holders of the Notes in any
material respect than the original agreement in effect on the Issue Date.

     “Standard Securitization Undertakings” means representations, warranties, covenants and
indemnities entered into by Holdings (or any direct or indirect parent company of Holdings) or any
of its Subsidiaries that the Issuer has determined in good faith to be customary in a
securitization financing.

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     “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which the payment of interest or principal was scheduled to be
paid in the original documentation governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

     “Subordinated Indebtedness” means:

     (1) any Indebtedness of the Issuer which is by its terms subordinated in right of
payment to the Notes; and

     (2) any Indebtedness of any Guarantor which is by its terms subordinated in right of
payment to the Guarantee of such entity of the Notes.

     “Subsidiary” means, with respect to any Person, a corporation, partnership, joint venture,
limited liability company or other business entity (excluding, for the avoidance of doubt,
charitable foundations) of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body (other than securities
or interests having such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.

     “Total Assets” means total assets of the Issuer and its Restricted Subsidiaries on a
consolidated basis prepared in accordance with GAAP, shown on the most recent balance sheet of the
Issuer and its Restricted Subsidiaries as may be expressly stated.

     “Transaction Expenses” means any fees or expenses incurred or paid by the Issuer or any of its
Subsidiaries in connection with the Transactions.

     “Transactions” means the “Transactions” as defined in the Senior Credit Facilities as in
effect on the Issue Date.

     “Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption
Date of United States Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available
at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to August 1, 2012; provided, however, that if the period from the
Redemption Date to August 1, 2012 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one year will be used.

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§
77aaa-77bbbb).

     “Unrestricted
Subsidiary” means:

     (1) any Subsidiary of the Issuer which at the time of determination is an Unrestricted
Subsidiary (as designated by the Issuer, as provided below); and

     (2) any Subsidiary of an Unrestricted Subsidiary.

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     The Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or
holds any Lien on, any property of, the Issuer or any Restricted Subsidiary of the Issuer (other
than solely any Unrestricted Subsidiary of the Subsidiary to be so designated); provided that

     (1) any Unrestricted Subsidiary must be an entity of which the Equity Interests entitled
to cast at least a majority of the votes that may be cast by all Equity Interests having
ordinary voting power for the election of directors or Persons performing a similar
function
are owned, directly or indirectly, by the Issuer;

     (2) such designation complies with the covenants described under “Certain
Covenants—Limitation on Restricted Payments”; and

     (3) each of:

     (a) the Subsidiary to be so designated; and

     (b) its Subsidiaries

     has not at the time of designation, and does not thereafter, incur any Indebtedness
pursuant to which the lender has recourse to any of the assets of the Issuer or any
Restricted Subsidiary.

     The Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that, immediately after giving effect to such designation, no Default shall have
occurred and be continuing and either:

     (1) the Issuer could incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test described in the first paragraph under “Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock”; or

     (2) the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries would
be equal to or less than such ratio immediately prior to such designation, in each case on
a
pro forma basis taking into account such designation.

     Any such designation by the Issuer shall be notified by the Issuer to the Trustee by promptly
filing with the Trustee a copy of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an Officer’s Certificate certifying that
such designation complied with the foregoing provisions.

     “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at
the time entitled to vote in the election of the board of directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified
Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:

     (1) the sum of the products of the number of years from the date of determination to the
date of each successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the
amount of such payment; by

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     (2) the sum of all such payments.

     “Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the
outstanding Equity Interests of which (other than directors’ qualifying shares and shares issued to
foreign nationals as required under applicable law) shall at the time be owned by such Person or by
one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned
Subsidiaries of such Person.

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EXCHANGE OFFER; REGISTRATION RIGHTS

     We, the guarantors and the initial purchasers have agreed to use commercially
reasonable efforts to enter into a registration rights agreement (the “registration rights
agreement”) within five business days following the original issue date of the notes (“issue date”)
pursuant to which we and the guarantors agree that we will use our commercially reasonable efforts
to, at our expense, for the benefit of the holders of the notes (the “holders”), (i) file a
registration statement on an appropriate registration form (the “exchange offer registration
statement”) with respect to a registered offer to exchange the notes for exchange notes of the
Company, guaranteed on a senior basis by the guarantors (except that the guarantees of the exchange
notes shall be subordinated to the guarantees of the obligations under our senior secured credit
facilities and our receivables based credit facility), which exchange notes will have terms
substantially identical in all material respects to the notes (except that the exchange notes will
not contain terms with respect to transfer restrictions) and which will evidence the same
continuing indebtedness and (ii) cause the exchange offer registration statement to be declared
effective under the Securities Act and consummate the exchange offer within 300 calendar days of
the original issue date of the notes. Upon the exchange offer registration statement being declared
effective, we will offer the exchange notes (and the related guarantees) in exchange for surrender
of the notes. We will keep the exchange offer open for at least 20 business days (or longer if
required by applicable law) after the date that notice of the exchange offer is mailed to holders
of the notes. For each of the notes surrendered to us pursuant to the exchange offer, the holder
who surrendered such note will receive an exchange note having a principal amount equal to that of
the surrendered note. Interest on each exchange note will accrue (i) from the later of (A) the last
interest payment date on which interest was paid on the note surrendered in exchange therefor, or
(B) if the note is surrendered for exchange on a date in a period which includes the record date
for an interest payment date to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment date, or (ii) if no interest has been paid
on such note, from the issue date.

     Under existing interpretations of the SEC contained in several no-action letters to third
parties, and subject to the immediately following sentence, we believe that the exchange notes and
the related guarantees would generally be freely transferable by holders thereof (other than our
affiliates) after the exchange offer without further registration under the Securities Act (subject
to certain representations required to be made by each holder of notes, as set forth below);
provided, however, that each holder that wishes to exchange its notes for exchange notes will be
required to make certain representations, including representations that (i) any exchange notes to
be received by it will be acquired in the ordinary course of its business, (ii) it has no
arrangement or understanding with any person to participate in the distribution (within the meaning
of the Securities Act) of the exchange notes, (iii) it is not an “affiliate” (as defined in Rule
405 promulgated under the Securities Act) of ours or, if it is such an affiliate, it will comply
with the registration and prospectus delivery requirements of the Securities Act, to the extent
applicable, (iv) if such holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of exchange notes, (v) if such holder is a broker-dealer (a
“participating broker-dealer”) that will receive exchange notes for its own account in exchange for
notes that were acquired as a result of market making or other trading activities, that it will
deliver a prospectus in connection with any resale of such exchange notes and (vi) it is not acting
on behalf of any person who could not truthfully make the foregoing representations. Any purchaser
of notes who is an “affiliate” of us or any guarantor and any purchaser of notes who intends to
participate in the exchange offer for the purpose of distributing the exchange notes (i) will not
be able to rely on the interpretation of the staff of the SEC, (ii) will not be able to tender its
notes in the exchange offer and (iii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any

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sale or transfer of the notes unless such sale or transfer is made pursuant to an exemption from
such requirements. In addition, in connection with any resales of exchange notes, any
broker-dealer, which we refer to as a participating broker-dealer, that acquired the notes for its
own account as a result of market making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect to the exchange
notes (other than a resale of an unsold allotment from this offering) with the prospectus contained
in the exchange offer registration statement. We will agree to make available, during the period
required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use
by participating broker-dealers and other persons, if any, with similar prospectus delivery
requirements for use in connection with any resale of exchange notes. A participating broker-dealer
or any other person that delivers such a prospectus to purchasers in connection with such resales
will be subject to certain of the civil liability provisions under the Securities Act and will be
bound by the provisions of the registration rights agreement.

     If (i) because of any change in law or in currently prevailing interpretations of the staff of
the SEC, we are not permitted to effect an exchange offer, (ii) the exchange offer is not
consummated within 300 calendar days of the issue date, (iii) in certain circumstances, certain
holders of unregistered exchange notes so request, or (iv) in the case of any holder that
participates in the exchange offer, such holder does not receive exchange notes on the date of the
exchange that may be sold without restriction under state and federal securities laws (other than
due solely to the status of such holder as an affiliate of ours or within the meaning of the
Securities Act), then in each case, we will (A) promptly deliver to the holders and the Trustee
written notice thereof and (B) at our sole expense, (1) as promptly as practicable, file a shelf
registration statement covering resales of the notes (the “shelf registration statement”) and (2)
use our commercially reasonable efforts to keep effective the shelf registration statement until
the earlier of one year after the issue date or such time as all of the applicable notes covered by
the shelf registration statement have either been sold in the manner set forth and as contemplated
in the shelf registration statement or become eligible for resale pursuant to Rule 144 under the
Securities Act without volume restrictions. We will, in the event that a shelf registration
statement is filed, provide to each holder copies of the prospectus that is a part of the shelf
registration statement, notify each such holder when the shelf registration statement for the notes
has become effective and take certain other actions as are required to permit unrestricted resales
of the notes. A holder that sells notes pursuant to the shelf registration statement will be
required to be named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales, and will be bound by the provisions of the
registration rights agreement that are applicable to such a holder (including certain
indemnification rights and obligations). In addition, each holder will be required to deliver
information to be used in connection with the shelf registration statement and to provide comments
on the shelf registration statement within the time periods set forth in the registration rights
agreement to have their notes included in the shelf registration statement and to benefit from the
provisions regarding liquidated damages described in the following paragraph.

     If (i) we have not exchanged exchange notes for all notes validly tendered in accordance with
the terms of the exchange offer on or prior to the 300th calendar day after the original issue date
of the notes nor had a shelf registration statement declared effective on or prior to such date,
(ii) we are required to file a shelf registration statement and such shelf registration statement
is not declared effective on or prior to the 300th calendar day after the date such filing was
required, or (iii) if applicable, a shelf registration statement covering resales of the notes

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has been declared effective and such shelf registration statement ceases to be effective at any
time prior to the first anniversary of the issue date (other than after such time as all notes have
been disposed of thereunder and subject to any exceptions in the registration rights agreement) (we
refer to each of (i), (ii) and (iii) as registration defaults), then additional interest (the
“additional interest”) shall accrue on the principal amount of the applicable notes at a rate of
0.25% per annum (which rate will be increased by an additional 0.25% per annum for each subsequent
90-day period that such registration default continues, provided that the rate at which such
additional interest accrues may in no event exceed 0.50% per annum) commencing on (A) the 301st
calendar day after the original issue date of the notes, in the case of (i) above, (B) the 301st
calendar day after such shelf registration statement filing was required, in the case of (ii)
above, or (C) the day such shelf registration statement ceases to be effective, in the case of
(iii) above; provided, however, that upon the exchange of exchange notes for all notes tendered (in
the case of clause (i) above), upon effectiveness of the shelf registration statement in the case
of clause (i) or (ii) above, or upon the effectiveness of a shelf registration statement that had
ceased to remain effective (in the case of clause (iii) above), additional interest on such notes
as a result of such clause, as the case may be, shall cease to accrue.

     Any amounts of additional interest due pursuant to clause (i), (ii), or (iii) above will
be payable in the same manner and on the same original interest payment dates as the notes.

     This summary of certain provisions of the registration rights agreement does not purport to be
complete and is subject to, and is qualified in its entirety by, the complete provisions of the
registration rights agreement, a copy of which we will make available to holders of notes upon
request.

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NOTICE TO INVESTORS

     Because the following restrictions will apply unless we complete the exchange offer for the
notes or otherwise cause registration statements with respect to the resale of the notes to be
declared effective under the Securities Act, purchasers are advised to consult legal counsel prior
to making any offer, resale, pledge or transfer of any of the notes. See “Description of the
Notes.”

     None of the notes has been registered under the Securities Act and they may not be offered or
sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act. Accordingly, the notes are being offered and sold only (A) to “qualified
institutional buyers” (as defined in Rule 144A promulgated under the Securities Act (“Rule 144A”))
(“QIBs”) in compliance with Rule 144A and (B) outside the United States to persons other than U.S.
persons (“non-U.S. purchasers”, which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for non-U.S. beneficial owners (other than an
estate or trust)) in reliance upon Regulation S under the Securities Act (“Regulation S”). As used
herein, the terms “United States” and “U.S. person” have the meanings given to them in Regulation
S.

	 	 	Each purchaser of notes will be deemed to have represented and agreed as follows:

     1. It is purchasing the notes for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is either (A) a QIB, and
is aware that the sale to it is being made in reliance on Rule 144A or (B) a non-U.S. purchaser
that is outside the United States (or a non-U.S. purchaser that is a dealer or other fiduciary
as referred to above).

     2. It acknowledges that the notes have not been registered under the Securities Act and
may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. persons except as set forth below.

     3. It shall not resell or otherwise transfer any of such notes within one year after the
original issuance of the notes except (A) to us or any of our subsidiaries, (B) inside the
United States to a QIB in a transaction complying with Rule 144A, (C) inside the United States
to institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) (an “accredited investor”), that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee a signed
letter containing certain representations and agreements relating to the restrictions on
transfer of the notes (the form of which letter can be obtained from such Trustee), (D) outside
the United States in compliance with Rule 904 under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if available), (F)
in accordance with another exemption from the registration requirements of the Securities Act
(and based upon an opinion of counsel if we so request), or (G) pursuant to an effective
registration statement under the Securities Act.

     4. It agrees that it will give to each person to whom it transfers the notes notice of any
restrictions on transfer of such notes.

     5. It acknowledges that prior to any proposed transfer of notes in certificated form or of
beneficial interests in a note in global form (a “global note”) (in each case other than
pursuant to an effective registration statement) the holder of notes or the holder of

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beneficial interests in a global note, as the case may be, may be required to provide
certifications and other documentation relating to the manner of such transfer and submit such
certifications and other documentation as provided in the indenture.

     6. It understands that all of the notes will bear a legend substantially to the following
effect unless otherwise agreed by us and the holder thereof;

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT (AN “ACCREDITED INVESTOR”)), (2) AGREES THAT IT WILL NOT WITHIN
ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S.
PERSON” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

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     7. It shall not sell or otherwise transfer such notes to, and each purchaser represents
and covenants that it is not (directly or indirectly) acquiring the notes for or on behalf of,
and will not (directly or indirectly) transfer the notes to, any pension or welfare plan (as
defined in Section 3 of the Employee Retirement Income Security Act of 1974 (“ERISA”)), except
that such a purchase for or on behalf of a pension or welfare plan shall be permitted:

     I. to the extent such purchase is made by or on behalf of a bank collective investment
fund maintained by the purchaser in which, at any time while the notes are held by the
purchaser, no plan (together with any other plans maintained by the same employer or employee
organization) has an interest in excess of 10% of the total assets in such collective
investment fund and the conditions of Section III of Prohibited Transaction Class Exemption
91-38 issued by the Department of Labor are satisfied;

     II. to the extent such purchase is made by or on behalf of an insurance company pooled
separate account maintained by the purchaser in which, at any time while the notes are held by
the purchaser, no plan (together with any other plans maintained by the same employer or
employee organization) has an interest in excess of 10% of the total of all assets in such
pooled separate account and the conditions of Section III of Prohibited Transaction Class
Exemption 90-1 issued by the Department of Labor are satisfied;

     III. to the extent such purchase is made by or on behalf of an insurance company general
account maintained by the purchaser in which, at any time while the notes are held by the
purchaser, the conditions of Prohibited Transaction Class Exemption 95-60 issued by the
Department of Labor are satisfied;

     IV. to the extent such purchase is made on behalf of a plan by (i) an investment adviser
registered under the Investment Advisers Act of 1940 that had as of the last day of its most
recent fiscal year total assets under its management and control in excess of $85,000,000 and
stockholders’ or partners’ equity in excess of $1,000,000, as shown in its most recent balance
sheet prepared in accordance with GAAP, (ii) a bank as defined in Section 202(a)(2) of the
Investment Advisers Act of 1940 with equity capital in excess of $1,000,000 as of the last day
of its most recent fiscal year, (iii) an insurance company which is qualified under the laws of
more than one state to manage, acquire or dispose of any assets of a plan, which insurance
company has, as of the last day of its most recent fiscal year, net worth in excess of
$1,000,000 and which is subject to supervision and examination by a state authority having
supervision over insurance companies, or (iv) a savings and loan association, the accounts of
which are insured by the Federal Deposit Insurance Corporation, that has made application for
and been granted trust powers to manage, acquire or dispose of assets of a plan by a State or
Federal authority having supervision over savings and loan associations, which savings and loan
association has, as of the last day of its most recent fiscal year, equity capital or net worth
in excess of $1,000,000 and, in any case, such investment adviser, bank, insurance company or
savings and loan is otherwise a qualified professional asset manager, as such term is used in
Prohibited Transaction Exception 84-14 issued by the Department of Labor, and the assets of
such plan when combined with the assets of other plans established or maintained by the same
employer (or affiliate thereof) or employee organization and managed by such investment
adviser, bank, insurance company or savings and loan do not represent more than 20% of the
total client assets managed by such investment adviser, bank, insurance company or savings and
loan and the conditions of Section I of such exemption are otherwise satisfied;

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     V. to the extent such plan is a governmental plan (as defined in Section 3 of ERISA) which
is not subject to the provisions of Title I of ERISA or Section 4975 of the Code or any similar
law; or

     VI. to the extent the purchase is made by or on behalf of an investment fund managed by an
“in-house asset manager” (the “INHAM”) (as defined in Part IV of Prohibited Transaction Class
Exemption 96-23 issued by the Department of Labor), plans maintained by affiliates of the INHAM
and/or the INHAM have aggregate assets in excess of $250 million, and the conditions of Part I
of Prohibited Transaction Class Exemption 96-23 are otherwise satisfied.

     8. It acknowledges that the Trustee will not be required to accept for registration of
transfer any notes acquired by it, except upon presentation of evidence satisfactory to us and the
Trustee that the restrictions set forth herein have been complied with.

     9. It acknowledges that we, the initial purchasers and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements and agrees that if any of
the acknowledgments, representations or agreements deemed to have been made by its purchase of the
notes are no longer accurate, it shall promptly notify us and the initial purchasers. If it is
acquiring the notes as a fiduciary or agent for one or more investor accounts, it represents that
it has sole investment discretion with respect to each such account and it has full power to make
the foregoing acknowledgments, representations and agreements on behalf of each account.

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BOOK-ENTRY; DELIVERY AND FORM

     The certificates representing the notes will be issued in fully registered form without
interest coupons.

     Notes sold in reliance on Rule 144A will initially be represented by permanent global notes in
fully registered form without interest coupons (each a “Restricted Global Note”) and will be
deposited with the Trustee as a custodian for The Depository Trust Company (“DTC”) and registered
in the name of a nominee of such depositary.

     Notes sold in offshore transactions in reliance on Regulation S under the Securities Act will
initially be represented by temporary global notes in fully registered form without interest
coupons (each a “Temporary Regulation S Global Note”) and will be deposited with the Trustee as
custodian for DTC, as depositary, and registered in the name of a nominee of such depositary. Each
Temporary Regulation S Global Note will be exchangeable for a single permanent global note after
the expiration of the “distribution compliance period” (as defined in Regulation S) and the
certification required by Regulation S. Prior to such time, a beneficial interest in the Temporary
Regulation S Global Note may be transferred to a person who takes delivery in the form of an
interest in the Restricted Global Note only upon receipt by the Trustee of a written certification
from the transferor to the effect that such transfer is being made to a person whom the transferor
reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A. Beneficial
interests in a Restricted Global Note may be transferred to a person who takes delivery in the form
of an interest in a Regulation S Global Note whether before, on, or after such time, only upon
receipt by the Trustee of a written certification to the effect that such transfer is being made in
accordance with Regulation S.

     Any beneficial interest in a Regulation S Global Note or a Restricted Global Note that is
transferred to a person who takes delivery in the form of an interest in a Restricted Global Note
or a Regulation S Global Note, respectively, will, upon transfer, cease to be an interest in the
type of global note previously held and become an interest in the other type of global note and,
accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures
applicable to beneficial interests in such other type of global note for as long as it remains such
an interest.

     The global notes (and any notes issued in exchange therefor) will be subject to certain
restrictions on transfer set forth therein and in the indenture and will bear the legend regarding
such restrictions set forth under the heading “Notice to Investors” herein. Subject to such
restrictions, QIBs or non-U.S. purchasers may elect to take physical delivery of their certificates
(each a “certificated security”) instead of holding their interests through the global notes (and
which are then ineligible to trade through DTC) (collectively referred to herein as the “non-global
purchasers”). Upon the transfer to a QIB of any certificated security initially issued to a
non-global purchaser, such certificated security will, unless the transferee requests otherwise or
the global notes have previously been exchanged in whole for certificated securities, be exchanged
for an interest in the global notes. For a description of the restrictions on transfer of
certificated securities and any interest in the global notes, see “Notice to Investors.”

The Global Notes

     We expect that pursuant to procedures established by DTC (i) upon the issuance of the global
notes, DTC or its custodian will credit, on its internal system, the principal amount at maturity
of the individual beneficial interests represented by such global notes to the respective accounts
of persons who have accounts with such depositary and (ii) ownership of beneficial

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interests in the global notes will be shown on, and the transfer of such ownership will be effected
only through, records maintained by DTC or its nominee (with respect to interests of participants
(as defined below)) and the records of participants (with respect to interests of persons other
than participants). Such accounts initially will be designated by or on behalf of the initial
purchasers and ownership of beneficial interests in the global notes will be limited to persons who
have accounts with DTC (“participants”) or persons who hold interests through participants. Holders
may hold their interests in the global notes directly through DTC if they are participants in such
system, or indirectly through organizations which are participants in such system.

     So long as DTC, or its nominee, is the registered owner or holder of the notes, DTC or such
nominee, as the case may be, will be considered the sole owner or holder of the notes represented
by such global notes for all purposes under the indenture. No beneficial owner of an interest in
the global notes will be able to transfer that interest except in accordance with DTC’s procedures,
in addition to those provided for under the indenture with respect to the notes.

     Payments of the principal of, premium (if any) and interest (including additional interest)
on, the global notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of us, the Trustee, or any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account of beneficial
ownership interests in the global notes or for maintaining, supervising, or reviewing any records
relating to such beneficial ownership interest.

     We expect that DTC or its nominee, upon receipt of any payment of principal of, premium (if
any) and interest (including additional interest) on the global notes, will credit participants’
accounts with payments in amounts proportionate to their respective beneficial interests in the
principal amount of the global notes as shown on the records of DTC or its nominee. We also expect
that payments by participants to owners of beneficial interests in the global notes held through
such participants will be governed by standing instructions and customary practice, as is now the
case with securities held for the accounts of customers registered in the names of nominees for
such customers. Such payments will be the responsibility of such participants.

     Transfers between participants in DTC will be effected in the ordinary way through DTC’s
same-day funds system in accordance with DTC rules and will be settled in same day funds. If a
holder requires physical delivery of a certificated security for any reason, including to sell
notes to persons in states which require physical delivery of the notes, or to pledge such
securities, such holder must transfer its interest in a global note in accordance with the normal
procedures of DTC and with the procedures set forth in the indenture.

     DTC has advised us that it will take any action permitted to be taken by a holder of notes
(including the presentation of notes for exchange as described below) only at the direction of one
or more participants to whose account the DTC interests in the global notes are credited and only
in respect of such portion of the aggregate principal amount of notes as to which such participant
or participants has or have given such direction. However, if there is an event of default under
the indenture, DTC will exchange the global notes for certificated securities, which it will
distribute to its participants and which will be legended as set forth under the heading “Notice to
Investors.”

     DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within
the meaning of the Uniform Commercial Code and a “Clearing Agency” registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to

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hold securities for its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing corporations and
certain other organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly (“indirect participants”).

     Although DTC has agreed to the foregoing procedures in order to facilitate transfers of
interests in the global note among participants of DTC, it is under no obligation to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor the Trustee will
have any responsibility for the performance by DTC, its participants, or indirect participants of
their respective obligations under the rules and procedures governing their operations.

Certificated Securities

     Certificated securities shall be issued in exchange for beneficial interests in the global
notes (i) after the occurrence and during the continuation of a default, or (ii) if DTC is at any
time unwilling or unable to continue as a depositary for the global notes or has ceased to be a
clearing agency registered under the Exchange Act, and in either case, a successor depositary is
not appointed by us within 120 days.

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PRIVATE PLACEMENT

     Subject to the terms and conditions set forth in the purchase agreement, Merger Sub has agreed
to sell to the initial purchasers, and the initial purchasers have agreed, severally, to purchase
from Merger Sub, all of the notes. The notes will be sold by the initial purchasers from time to
time in negotiated transactions or otherwise at varying pricings to be determined at the time of
sale.

     The initial purchasers have agreed to resell the notes (a) to QIBs in reliance on Rule 144A
and (b) outside the United States in compliance with Regulation S under the Securities Act. See
“Notice to Investors.”

     The purchase agreement provides that, upon the consummation of the merger, we and the
guarantors will indemnify the initial purchasers against certain liabilities, including liabilities
under the Securities Act, and will contribute to payments that the initial purchasers may be
required to make in respect thereof.

     In relation to each Member State of the European Economic Area that has implemented the
Prospectus Directive (each, a “Relevant Member State”), each initial purchaser has represented and
agreed that, with effect from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the “Relevant Implementation Date”), it has not made and
will not make an offer of notes to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the notes that has been approved by the competent
authority in that Relevant Member State or, where appropriate, approved in another Relevant Member
State and notified to the competent authority in that Relevant Member State, all in accordance with
the Prospectus Directive, except that it may, with effect from and including the Relevant
Implementation Date, make an offer of notes to the public in that Relevant Member State at any
time:

	 	•	 	to legal entities which are authorized or regulated to operate in the financial
markets or, if not so authorized or regulated, whose corporate purpose is solely to invest
in securities;
	 
	 	•	 	to any legal entity which has two or more of (i) an average of at least 250 employees
during the last financial year; (ii) a total balance sheet of more than €43,000,000 and
(iii) an annual net turnover of more than €50,000,000, as shown in its last annual or
consolidated accounts; or
	 
	 	•	 	in any other circumstances which do not require the publication by us of a prospectus
pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the
expression an “offer of notes to the public” in relation to any notes in any Relevant
Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the notes to be offered so as to enable an
investor to decide to purchase or subscribe the notes, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member State and
the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.

     Each initial purchaser has represented and agreed that:

	 	•	 	it has only communicated or caused to be communicated, and will only communicate or
cause to be communicated, an invitation or inducement to engage in investment

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	 	 	 	activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000
(“FSMA”)) received by it in connection with the issue or sale of the notes in circumstances in
which Section 21(1) of the FSMA does not apply to us; and
	 
	 	•	 	it has complied and will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to the notes in, from, or otherwise involving
the United Kingdom.

     Prior to the offering, there has been no active market for the notes. The notes are expected
to be eligible for trading in The PORTALSM Market. The initial purchasers have advised
us that they presently intend to make a market in the notes as permitted by applicable laws and
regulations. The initial purchasers are not obligated, however, to make a market in the notes and
any such market making may be discontinued at any time at the sole discretion of the initial
purchasers. Accordingly, no assurance can be given as to the liquidity of, or trading markets for,
the notes.

     In connection with the offering, certain persons participating in the offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of the notes. Specifically,
the initial purchasers may bid for and purchase notes in the open market to stabilize the price of
the notes. The initial purchasers may also overallot the offering, creating a syndicate short
position, and may bid for and purchase notes in the open market to cover the syndicate short
position. In addition, the initial purchasers may bid for and purchase notes in market making
transactions and impose penalty bids. These activities may stabilize or maintain the respective
market price of the notes above market levels that may otherwise prevail. The initial purchasers
are not required to engage in these activities, and may end these activities at any time.

     Certain of the initial purchasers or their respective affiliates from time to time have
provided in the past, currently provide and may provide in the future investment banking,
commercial lending and financial advisory services to us and our affiliates in the ordinary course
of business. Currently, certain affiliates of the initial purchasers are dealer managers to our and
AMFM Operating Inc.’s tender offers and are counterparties with respect to certain derivative
arrangements. Affiliates of the initial purchasers will provide paying agent and registrar services
and are agents and/or lenders under our senior secured credit facilities and our receivables based
credit facility.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     To ensure compliance with requirements imposed by the Internal Revenue Service, you are hereby
notified that any discussion of tax matters set forth in this preliminary offering memorandum
supplement was written in connection with the promotion or marketing of the transactions or matters
addressed herein and was not intended or written to be used, and cannot be used by any prospective
investor, for the purpose of avoiding tax-related penalties under federal, state, or local tax law.
Each prospective investor should seek advice based on its particular circumstances from an
independent tax advisor.

     The following is a summary of certain United States federal income tax consequences relevant
to the purchase, ownership and disposition of notes as of the date hereof. Except where noted, this
summary deals only with notes that are held as capital assets within the meaning of Section 1221 of
the Code and does not address the United States federal income tax consequences applicable to you
if you are subject to special treatment under the United States federal income tax laws, including
if you are:

	 	•	 	a dealer in securities or currencies;
	 
	 	•	 	a financial institution;
	 
	 	•	 	a regulated investment company;
	 
	 	•	 	a real estate investment trust;
	 
	 	•	 	a tax-exempt organization;
	 
	 	•	 	an insurance company;
	 
	 	•	 	a person holding the notes as part of a hedging, integrated, conversion, or
constructive sale transaction or a straddle;
	 
	 	•	 	a trader in securities that has elected the mark-to-market method of accounting for
your securities;
	 
	 	•	 	a person liable for alternative minimum tax;
	 
	 	•	 	a pass-through entity or a person who is an investor in a pass-through entity that
holds the notes;
	 
	 	•	 	a former United States citizen or long-term resident subject to taxation as an
expatriate under Section 877 of the Code; or
	 
	 	•	 	a United States Holder (as defined below) whose “functional currency” is not the
United States dollar.

     The discussion below does not address all aspects of United States federal income taxation
that may be relevant to you in light of your particular investment or other circumstances. In
addition, this summary does not discuss any state, local, or foreign income or other tax laws. The
discussion below is based upon the provisions of the Code, and Treasury regulations, rulings and
judicial decisions in effect as of the date hereof. Those authorities may be changed,

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perhaps retroactively, so as to result in United States federal income tax consequences different
from those discussed below. We have not sought and will not seek any rulings from the IRS with
respect to the matters discussed herein. There can be no assurances that the IRS would not take a
different position concerning the tax consequences of the purchase, ownership, or disposition
(including an exchange) of the notes or that any such position would not be sustained.

     Under the terms of the notes, we may be obligated to pay holders amounts in excess of stated
interest and principal on the notes upon a change of control or upon a registration default. The
obligation to make such payments may implicate the provisions of the Treasury regulations relating
to “contingent payment debt instruments.” Under applicable Treasury regulations, the possibility of
such excess amounts being paid will not cause the notes to be treated as contingent payment debt
instruments if there is only a remote chance that these contingencies will occur or if such
contingencies are considered to be “incidental.” Although the matter is not free from doubt, we
intend to take the position that these contingencies are remote and/or incidental and, therefore,
should not cause the notes to be treated as contingent payment debt instruments. Our determination
that these contingencies are remote and/or incidental will be binding on a holder unless you
explicitly disclose your contrary position to the IRS in the manner required by applicable United
States Treasury regulations. Our determination, however, is not binding on the IRS, and should the
IRS successfully challenge this determination, you would be required to accrue interest income on
the notes at a rate higher than the stated interest rate on the notes and other tax consequences of
ownership and disposition of the notes could be materially and adversely different from those
described herein. In the event a contingency occurs, it could affect the amount, character and
timing of the income recognized by you. If we pay additional interest on the notes pursuant to the
registration rights provisions or a premium pursuant to the change of control provisions, you will
be required to recognize such amounts as income. The remainder of this discussion assumes that the
notes will not be treated as contingent payment debt instruments.

     If a partnership (or an entity or arrangement classified as a partnership for United States
federal income tax purposes) holds notes, the tax treatment of a partner in the partnership
generally will depend upon the status of the partner and the activities of the partnership. If you
are a partnership or a partner of a partnership holding notes, you should consult your tax
advisors.

     PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF
THE TAX CONSEQUENCES DISCUSSED BELOW TO THEIR PARTICULAR SITUATIONS AS WELL AS THE APPLICATION OF
ANY STATE, LOCAL, FOREIGN, OR OTHER TAX LAWS, INCLUDING GIFT AND ESTATE TAX LAWS.

United States Holders

     The following is a summary of certain United States federal tax consequences that will apply
to you if you are a United States Holder of notes.

     As used in this section, “United States Holder” means a beneficial owner of a note that is for
United States federal income tax purposes:

	 	•	 	an individual citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or who meets the
“substantial presence” test under Section 7701(b) of the Code;

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	 	•	 	a corporation (or any other entity treated as a corporation for United States federal
income tax purposes) created or organized in or under the laws of the United States, any
state thereof or the District of Columbia;
	 
	 	•	 	an estate the income of which is subject to United States federal income taxation
regardless of its source; or
	 
	 	•	 	a trust if it (1) is subject to the primary supervision of a court within the United
States and one or more United States persons (within the meaning of the Code) have the
authority to control all substantial decisions of the trust or (2) has a valid election in
effect under applicable United States Treasury regulations to be treated as a United
States person.

Senior Cash Pay Notes

     Original Issue Discount. A senior cash pay note is issued with OID in an amount equal to any
excess of its “stated redemption price at maturity” (the sum of all payments to be made on the
senior cash pay note other than “qualified stated interest”) over its “issue price.” If that excess
is less than
1/4 of 1% of the senior cash pay note’s “stated redemption price
at maturity” multiplied by the number of complete years from its issue date to its maturity, the
senior cash pay note is treated under a de minimis rule as having zero OID. You generally must
include OID in gross income in advance of the receipt of cash attributable to that income.

     Because all of the stated interest on a senior cash pay note is “qualified stated interest,”
the “stated redemption price at maturity” of a senior cash pay note is its stated principal amount,
and any OID on a senior cash pay note is solely attributable to any excess of its stated principal
amount over its “issue price.” The “issue price” of each senior cash pay note is the first price at
which a substantial amount of the senior cash pay notes in the issue that included such senior cash
pay note was sold (other than to an underwriter, placement agent, or wholesaler). We will not be
able to determine the issue price and the amount of any OID on any senior cash pay notes until
after the acquisition of the Company.

     If you are an initial purchaser of a senior cash pay note, the amount of OID that you are
required to include in income generally will equal the sum of the “daily portions” of OID with
respect to the senior cash pay note for each day during the taxable year or portion of the taxable
year in which you held such senior cash pay note. The daily portion is determined by allocating to
each day in an “accrual period” the pro rata portion of the OID allocable to that accrual period.
The “accrual period” for the senior cash pay note may be of any length and may vary in length over
the term of the senior cash pay note, provided that each accrual period is not longer than one year
and that each scheduled payment of interest or principal occurs on the first or final day of an
accrual period.

     The amount of OID allocable to any accrual period other than the final accrual period is an
amount equal to the product of the senior cash pay note’s adjusted issue price at the beginning of
such accrual period and its yield to maturity (determined on the basis of compounding at the close
of each accrual period and properly adjusted for the length of the accrual period) reduced by any
qualified stated interest allocable to such accrual period. OID allocable to a final accrual period
is the excess of the amount payable at maturity and the adjusted issue price at the beginning of
the final accrual period reduced any qualified stated interest allocable to such final accrual
period. The yield to maturity of a senior cash pay note is the discount rate that causes the
present value of all payments on the senior cash pay note as of its original issue date to equal
the issue price of such senior cash pay note.

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     The “adjusted issue price” of a senior cash pay note at the beginning of any accrual period is
equal to its issue price increased by the accrued OID for each prior accrual period and reduced by
any cash payments made on such senior cash pay note on or before the first day of the accrual
period that were not qualified stated interest. We are required to provide information returns
stating the amount of OID accrued on senior cash pay notes held of record by persons other than
corporations and other holders exempt from information reporting.

     The rules regarding OID are complex and the rules described above may not apply in all cases.
Accordingly, you should consult your own tax advisors regarding their application.

     Market Discount. If a United States Holder purchases a senior cash pay note at a cost that
is less than its adjusted issue price, the amount of such difference is treated as a “market
discount” for federal income tax purposes, unless such difference is less than a specified de
minimis amount.

     Under the market discount rules of the Code, a United States Holder is required to treat any
payments of principal on a senior cash pay note, and any gain on the sale, exchange, retirement or
other taxable disposition of a senior cash pay note, as ordinary income to the extent of the
accrued market discount that has not previously been included in income. In general, the amount of
market discount that has accrued is determined on a ratable basis. A United States Holder may,
however, make an election to determine the amount of accrued market discount on an constant yield
basis.

     A United States Holder that purchases a senior cash pay note with market discount may not be
allowed to deduct immediately a portion of the interest expense on any indebtedness incurred or
continued to purchase or to carry the senior cash pay note. A United States Holder may elect to
include market discount in income currently as it accrues, in which case the interest deferral rule
set forth in the preceding sentence will not apply. This election will apply to all debt
instruments acquired by the United States Holder on or after the first day of the first taxable
year to which the election applies and is irrevocable without the consent of the IRS.

     Acquisition Premium. If a United States Holder purchases a senior cash pay note at an
“acquisition premium,” the amount of the OID that the United States Holder includes in gross income
in each taxable period is reduced by an allocable portion of the acquisition premium. A senior cash
pay note will be purchased at an acquisition premium if its adjusted tax basis, immediately after
its purchase is (i) less than or equal to the stated principal amount of the senior cash pay note
and (ii) greater than the senior cash pay note’s adjusted issue price.

Sale or Other Taxable Disposition of the Senior Cash Pay Notes

     Upon the sale, exchange (other than for exchange notes pursuant to the exchange offer or in a
tax-free transaction), redemption, retirement, or other taxable disposition of each of your senior
cash pay notes, you will recognize gain or loss equal to the difference between the amount received
by you (other than amounts representing accrued and unpaid stated interest, if any) and your
adjusted tax basis in the senior cash pay note. Your tax basis will, in general, be your cost for
the senior cash pay note, increased by OID previously included in income (as adjusted by any
acquisition premium) and the amount of market discount, if any, previously included in income in
respect of the senior cash pay note and reduced by any cash payments (other than stated interest)
on the senior cash pay note. Subject to the market discount rules discussed above, such gain or
loss generally will be capital gain or loss. Capital gains of individuals derived in respect of
capital assets held for more than one year generally are eligible for reduced rates of taxation.
The deductibility of capital losses is subject to limitations. The tax

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treatment of the receipt of any make-whole premium upon certain optional redemptions of the senior
cash pay notes is unclear and United States Holders are urged to consult their tax advisors
regarding the tax treatment of any such payment.

     Any AHYDO Catch-Up Payments that you receive in redemption of a portion of the principal
amount of a senior cash pay note will be treated in their entirety as tax-free payments of a
portion of the then-accrued OID on such senior cash pay note.

Senior Toggle Notes

     Treatment of PIK Senior Toggle Notes. Because we have the option to pay PIK Interest on the
senior toggle notes in lieu of paying cash interest in any interest payment period after the
initial interest payment, and because the senior toggle notes may be issued at a discount to their
stated principal amount, we will treat the senior toggle notes as issued with OID, as described
below. The issuance of PIK notes generally is not treated as a payment of interest. Instead, the
senior toggle notes and any PIK senior toggle notes issued in respect of PIK Interest thereon are
treated as a single debt instrument under the OID rules.

     Original Issue Discount. A senior toggle note is issued with OID in an amount equal to the
excess of its “stated redemption price at maturity” (the sum of all payments to be made on the
senior toggle note other than “qualified stated interest”) over its “issue price.” You generally
must include OID in gross income in advance of the receipt of cash attributable to that income. The
“issue price” of each senior toggle note is the first price at which a substantial amount of the
senior toggle notes in the issue that included such senior toggle note was sold (other than to an
underwriter, placement agent, or wholesaler). The term “qualified stated interest” means stated
interest that is unconditionally payable in cash or in property (other than debt instruments of the
issuer) at least annually at a single fixed rate or, subject to certain conditions, based on one or
more interest indices. Because we have the option in any interest payment period after the initial
interest payment period to make interest payments in PIK Interest instead of paying cash, none of
the stated interest payments on the senior toggle notes is qualified stated interest.

     If you are an initial purchaser of a senior toggle note, the amount of OID that you are
required to include in income generally will equal the sum of the “daily portions” of OID with
respect to the senior toggle note for each day during the taxable year or portion of the taxable
year in which you held such senior toggle note. The daily portion is determined by allocating to
each day in an “accrual period” the pro rata portion of the OID allocable to that accrual period.
The “accrual period” for the senior toggle note may be of any length and may vary in length over
the term of the senior toggle note, provided that each accrual period is not longer than one year
and that each scheduled payment of interest or principal occurs on the first or final day of an
accrual period.

     The amount of OID allocable to any accrual period other than the final accrual period is an
amount equal to the product of the senior toggle note’s adjusted issue price at the beginning of
such accrual period and its yield to maturity (determined on the basis of compounding at the close
of each accrual period and properly adjusted for the length of the accrual period). OID allocable
to a final accrual period is the difference between the amount payable at maturity and the adjusted
issue price at the beginning of the final accrual period. The yield to maturity of a senior toggle
note is the discount rate that causes the present value of all payments on the senior toggle note
as of its original issue date to equal the issue price of such senior toggle note. For purposes of
determining the yield to maturity, we will be assumed to pay interest in cash unless the exercise
of our option to pay PIK Interest would decrease the yield on the senior

257

 

toggle notes. If the senior toggle notes are issued at a significant enough discount to their
stated principal amount, the yield will decrease if we exercise our option to pay PIK Interest, and
we will calculate the yield to maturity of the senior toggle notes on the assumption that we will
exercise such option. We will not be able to determine the issue price, yield to maturity or amount
of OID with respect to the senior toggle notes until after the acquisition of the Company.

     The “adjusted issue price” of a senior toggle note at the beginning of any accrual period is
equal to its issue price increased by the accrued OID for each prior accrual period and reduced by
any cash payments made on such senior toggle note on or before the first day of the accrual period.
We are required to provide information returns stating the amount of OID accrued on senior toggle
notes held of record by persons other than corporations and other holders exempt from information
reporting.

     If we are assumed to pay interest in cash on the senior toggle notes and do in fact pay such
cash interest, you will not be required to adjust your OID inclusions. Each payment made in cash
under a senior toggle note will be treated first as a payment of any accrued OID that has not been
allocated to prior payments and second as a payment of principal. You generally will not be
required to include separately in income cash payments received on the senior toggle notes to the
extent such payments constitute payments of previously accrued OID or payments of principal.

     If we are assumed to pay cash interest on the senior toggle notes and, for an interest payment
period, we exercise our option to pay interest in the form of PIK Interest, your OID calculation
for future periods will be adjusted by treating the senior toggle note as if it had been retired
and then reissued for an amount equal to its adjusted issue price on the date preceding the last
date of such interest payment period, and re-calculating the yield to maturity of the reissued note
by treating the amount of such PIK Interest (and of any prior PIK Interest) as a payment that will
be made on the maturity date on such senior toggle note.

     If we are assumed to pay PIK Interest on the senior toggle notes and do in fact pay such PIK
Interest, you will not be required to adjust your OID inclusions. If we are assumed to pay PIK
Interest and, for an interest payment period, we pay cash interest, such cash payment would be
treated as a prepayment of OID.

     The rules regarding OID are complex and the rules described above may not apply in all cases.
Accordingly, you should consult your own tax advisors regarding their application.

     Market Discount. If a United States Holder purchases a senior toggle note at a cost that is
less than its adjusted issue price, the amount of such difference is treated as a “market discount”
for federal income tax purposes, unless such difference is less than a specified de minimis amount.

     Under the market discount rules of the Code, a United States Holder is required to treat any
payments of principal on a senior toggle note, and any gain on the sale, exchange, retirement or
other taxable disposition of a senior toggle note, as ordinary income to the extent of the accrued
market discount that has not previously been included in income. In general, the amount of market
discount that has accrued is determined on a ratable basis. A United States Holder may, however,
make an election to determine the amount of accrued market discount on an constant yield basis.

     A United States Holder that purchases a senior toggle note with market discount may not be
allowed to deduct immediately a portion of the interest expense on any indebtedness

258

 

incurred or continued to purchase or to carry the senior toggle note. A United States Holder may
elect to include market discount in income currently as it accrues, in which case the interest
deferral rule set forth in the preceding sentence will not apply. This election will apply to all
debt instruments acquired by the United States Holder on or after the first day of the first
taxable year to which the election applies and is irrevocable without the consent of the IRS.

     Acquisition Premium. If a United States Holder purchases a senior toggle note at an
“acquisition premium,” the amount of the OID that the United States Holder includes in gross income
in each taxable period is reduced by an allocable portion of the acquisition premium. A senior
toggle note will be purchased at an acquisition premium if its adjusted tax basis, immediately
after its purchase is (i) less than or equal to the sum of all amounts payable on the senior toggle
note after the purchase date (including stated interest) and (ii) greater than the senior cash pay
note’s adjusted issue price.

Sale or Other Taxable Disposition of the Senior Toggle Notes

     Upon the sale, exchange (other than for exchange notes pursuant to the exchange offer or in a
tax-free transaction), redemption, retirement, or other taxable disposition of each of your senior
toggle notes:

	 	•	 	You generally will recognize gain or loss equal to the difference between the sum of
the cash and the fair market value of any property you receive in exchange and your
adjusted tax basis in the senior toggle note (or the PIK senior toggle note).
	 
	 	•	 	In general, your adjusted tax basis in a senior toggle note is your cost of the
senior toggle note, increased by OID previously included in income (as adjusted by any
acquisition premium) and the amount of market discount, if any, previously included in
income in respect of the senior toggle note and decreased by any cash payments previously
received by such holder on the senior toggle note.
	 
	 	•	 	Subject to the market discount rules discussed above, your gain or loss generally
will be a capital gain or loss and will be a long-term capital gain or loss if at the time
of the disposition you have held the senior toggle note for more than one year. Otherwise,
your gain or loss generally will be a short-term gain or loss. For some non-corporate
taxpayers (including individuals) long-term capital gains are eligible for reduced rates
of taxation. The deductibility of capital losses is subject to limitations.

     Although not free from doubt, your adjusted tax basis in the senior toggle note should be
allocated between the original senior toggle note and any PIK senior toggle notes received in
respect of PIK Interest thereon in proportion to their relative principal amounts. Your holding
period in any PIK senior toggle note received in respect of PIK Interest would likely be identical
to your holding period for the original senior toggle note with respect to which the PIK senior
toggle note was received.

     Any AHYDO Catch-Up Payments that you receive in redemption of a portion of the principal
amount of a senior toggle note and payments you receive upon a Special Redemption of a portion of a
senior toggle note will be treated in their entirety as tax-free payments of a portion of the
then-accrued OID on such senior toggle note.

Exchange Offer

     The exchange of notes for identical debt securities registered under the Securities Act will
not constitute a taxable exchange. As a result, (1) you should not recognize a taxable gain or

259

 

loss as a result of exchanging your notes, (2) the holding period of the notes received should
include the holding period of the notes exchanged therefor and (3) the adjusted tax basis of the
notes received should be the same as the adjusted tax basis of the notes exchanged therefor
immediately before such exchange.

Non-United States Holders

     The following is a summary of certain United States federal tax consequences that will apply
to you if you are a “Non-United States Holder” of notes. As used in this section, “Non-United
States Holder” means a beneficial owner of a note, other than a partnership (or an entity or
arrangement classified as a partnership for United States federal income tax purposes), who is not
a United States Holder (as defined under “— United States Holders” above).

     Special rules may apply to you if you are subject to special treatment under the Code,
including, but not limited to if you are a “controlled foreign corporation” or a “passive foreign
investment company.” If you are such a Non-United States Holder, you should consult your own tax
advisors to determine the United States federal, state, local and other tax consequences that may
be relevant to you.

United States Federal Withholding Tax

     United States federal withholding tax will not apply to any payment of interest (including
OID) on the notes under the “portfolio interest” rule, provided that:

	 	•	 	interest (including OID) paid on the notes is not effectively connected with your
conduct of a trade or business in the United States;
	 
	 	•	 	you do not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock entitled to vote;
	 
	 	•	 	you are not a controlled foreign corporation for United States federal income tax
purposes that is related to us (actually or constructively) through stock ownership;
	 
	 	•	 	you are not a bank receiving interest (including OID) on a note on an extension of
credit made pursuant to a loan arrangement entered into in the ordinary course of your
trade or business; and
	 
	 	•	 	either (1) you provide your name and address on an IRS Form W-8BEN (or other
applicable form), and certify, under penalties of perjury, that you are not a United
States person (within the meaning of the Code), or (2) you hold your notes through certain
financial intermediaries and you or the financial intermediaries satisfy the certification
requirements of applicable United States Treasury regulations. Special rules apply to
Non-United States Holders that are pass-through entities rather than corporations or
individuals.

     If you do not satisfy the requirements of the “portfolio interest” exception described above,
payments of interest (including OID) to you will be subject to a 30% United States federal
withholding tax unless you provide us or our paying agent, as the case may be, with a properly
executed (1) IRS Form W-8BEN (or other applicable form) claiming an exemption from or reduction in
withholding under an applicable income tax treaty, or (2) IRS Form W-8ECI (or other applicable
form) stating that interest (including OID) paid on the note is not subject to withholding tax
because it is effectively connected with your conduct of a trade or business in the United States
(as discussed below under “United States Federal Income Tax”). United States federal withholding
tax generally will not apply to any payment of principal.

260

 

     You should consult your taxation advisor regarding the certification requirements for
Non-United States Holders.

United States Trade or Business

     If you are engaged in a trade or business in the United States and your investment in the
notes is effectively connected with the conduct of that trade or business (and, if required by an
applicable income tax treaty, is attributable to a United States permanent establishment maintained
by you), you will be subject to United States federal income tax on interest (including OID) on a
net income basis at regular graduated rates (although you will be exempt from United States federal
withholding tax on interest (including OID), provided the certification requirements on IRS Form
W-8ECI (or a successor form) as discussed above in “— United States Federal Withholding Tax” are
satisfied) in the same manner as if you were a United States person. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower rate under
an applicable income tax treaty) of such interest (including OID), subject to adjustments.

Sale or Other Taxable Disposition of the Notes

     Subject to the discussion below concerning backup withholding, any gain realized on the
disposition of a note generally will not be subject to United States federal income tax unless:

	 	•	 	the gain is effectively connected with your conduct of a trade or business in the
United States (and, if required by an applicable income tax treaty, is attributable to a
United States permanent establishment) in which case you will be subject to United States
federal income tax as described in the preceding paragraph; or
	 
	 	•	 	you are an individual who is present in the United States for 183 days or more in the
taxable year of such disposition, and certain other conditions are met (in which case,
except as otherwise provided by an applicable income tax treaty, the gain generally will
be subject to a flat 30% United States federal income tax).

     The exchange of notes for exchange notes pursuant to the exchange offer will not constitute a
taxable exchange.

United States Federal Estate Tax

     A note held or beneficially owned by an individual who, for United States federal estate tax
purposes, is not a citizen or resident of the United States at the time of death will not be
includable in the individual’s gross estate for United States federal estate tax purposes, provided
that (1) such holder or beneficial owner did not at the time of death actually or constructively
own 10% or more of the consolidated voting power of all classes of our stock entitled to vote and
(2) at the time of death, payments with respect to such note would not have been effectively
connected with the conduct by such holder of a trade or business in the United States. In addition,
under the terms of an applicable estate tax treaty, the United States federal estate tax may not
apply with respect to a note.

Information Reporting and Backup Withholding

United States Holders

     A United States Holder may be subject to a backup withholding tax upon the receipt of interest
(including OID) and principal payments on the notes offered hereby or upon the receipt of proceeds
upon the sale or other disposition of such notes. Certain holders (including, among

261

 

others, corporations and certain tax-exempt organizations) generally are not subject to backup
withholding. A United States Holder will be subject to this backup withholding tax if such holder
is not otherwise exempt and such holder:

	 	•	 	fails to furnish its taxpayer identification number (“TIN”), which, for an
individual, is ordinarily his or her social security number;
	 
	 	•	 	furnishes an incorrect TIN;
	 
	 	•	 	is notified by the IRS that it has failed to properly report payments of interest
(including OID) or dividends; or
	 
	 	•	 	fails to certify, under penalties of perjury, that it has furnished a correct TIN and
that the IRS has not notified the United States Holder that it is subject to backup
withholding.

     United States Holders should consult their personal tax advisor regarding their qualification
for an exemption from backup withholding and the procedures for obtaining such an exemption, if
applicable. The backup withholding tax is not an additional tax and taxpayers may use amounts
withheld as a credit against their United States federal income tax.

Non-United States Holders

     Information reporting also will generally apply to payments of interest (including OID) made
to you and the amount of tax, if any, withheld with respect to such payments. Copies of the
information returns reporting such interest (including OID) payments and any withholding may be
made available to the tax authorities in the country in which you reside under the provisions of an
applicable income tax treaty or agreement.

     In general, backup withholding will not apply to interest (including OID) payments to you
provided that we do not have actual knowledge or reason to know that you are a United States person
(within the meaning of the Code) and we have received the required certification that you are a
Non—United States Holder described above in the fifth bullet point under “—Non-United States
Holders—United States Federal Withholding Tax.”

     Information reporting and, depending on the circumstances, backup withholding will apply to
the proceeds of a sale or other disposition of our notes (including a redemption or retirement)
within the United States or conducted through a broker or other United States financial
intermediaries, unless you certify under penalties of perjury that you are a Non-United States
Holder (and the payor does not have actual knowledge or reason to know that you are a United States
person (within the meaning of the Code)) or you otherwise establish an exemption. Information
reporting (but generally not backup withholding) may apply if you use the foreign office of a
broker that has certain connections to the United States.

     We suggest that you consult your tax advisors concerning the application of information
reporting and backup withholding rules.

262

 

CERTAIN CONSIDERATIONS FOR PLAN INVESTORS

     The following is a summary of certain considerations associated with the purchase of the notes (and
exchange notes) by employee benefit plans within the meaning of Title I of ERISA, including (i)
private United States-based retirement and welfare plans, (ii) plans described in Section 4975 of
the Code, including an individual retirement arrangement under Section 408 of the Code, (iii) plans
(such as a governmental, church, or non-United States plan) not subject to Title I of ERISA but
subject to provisions under applicable federal, state, local, non-United States, or other laws or
regulations that are similar to the provisions of Title I of ERISA or Section 4975 of the Code
(“Similar Laws”), and (iv) any entity of which the underlying assets are considered to include
“plan assets” of such plans, accounts and arrangements under United States Department of Labor
regulations or Section 3(42) of ERISA, as enacted by Section 611 (f) of the Pension Protection Act
of 2006 (each, a “Plan Investor”). This summary considers certain issues raised by ERISA and the
Code as they apply to those Plan Investors subject to those statutes and does not purport to be
complete, and no assurance can be given that future legislation, court decisions, administrative
regulations, rulings, or administrative pronouncements will not significantly modify the provisions
summarized herein. Any such changes may be retroactive and may thereby apply to transactions
entered into prior to the date of enactment or release. Note in particular the representation to be
made by Plan Investors as described below in connection with the purchase of the notes.

General Fiduciary Matters

     ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan Investor subject
to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”), and prohibit certain
transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties.
Under ERISA and the Code, any person who exercises any discretionary authority or control over the
administration of such an ERISA Plan or the management or disposition of the assets of such an
ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan,
is generally considered to be a fiduciary of the ERISA Plan.

     In considering an investment in the notes (and exchange notes) with assets of an ERISA Plan, a
fiduciary should consider, among other matters:

	 	•	 	whether the acquisition and holding of the notes (and exchange notes) is in accordance with
the documents and instruments governing such ERISA Plan; and
	 
	 	•	 	whether the acquisition and holding of the notes (and exchange notes) is solely in the
interest of ERISA Plan participants and beneficiaries and otherwise consistent with the fiduciary’s
responsibilities and in compliance with the applicable requirements of ERISA or the Code,
including, in particular, any diversification, prudence and liquidity requirements.

     Any insurance company proposing to invest assets of its general account in the notes (and exchange
notes) should consider the extent that such investment would be subject to the requirements of
ERISA in light of the United States Supreme Court’s decision in John Hancock Mutual Life Insurance
Co. v. Harris Trust and Savings Bank and under any subsequent legislation or other guidance that
has or may become available relating to that decision, including the enactment of Section 401(c) of
ERISA by the Small Business Job Protection Act of 1996 and the regulations promulgated thereunder.

     Under United States Department of Labor regulation Section 2510.3-101 (the “Plan Asset
Regulation”), guidance is provided as to when assets of an underlying investment will be deemed to
be assets of an investing Plan Investor. Additional rules have recently been

263

 

enacted under Section 611 (f) of the Pension Protection Act of 2006, which was signed into law on
August 17, 2006. In general (subject to certain exceptions), where a Plan Investor holds an “equity
interest” in an entity, the assets of the entity are deemed to be plan assets of the Plan Investor.
“Equity interest” is defined as “any interest in an entity other than an instrument that is treated
as indebtedness under applicable local law and which has no substantial equity features.” While no
assurances can be given, it is intended that the notes (and exchange notes) should not be treated
as an “equity interest” for purposes of the Plan Asset Regulations.

Prohibited Transaction Issues

     Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified
transactions, “prohibited transactions,” involving plan assets with persons or entities who are
“parties in interest,” within the meaning of ERISA, or “disqualified persons” within the meaning of
Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified
person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other
penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan
that engaged in such non-exempt prohibited transaction may be subject to penalties and liabilities
under ERISA and the Code, including an obligation to correct the transaction.

     The acquisition and/or holding of the notes and exchange notes by an ERISA Plan with respect to
which we (the obligor with respect to the notes and exchange notes) or the initial purchasers or
their affiliates may be a party in interest or a disqualified person, may give rise to a prohibited
transaction. Consequently, before investing in the notes (and exchange notes), any person who is
acquiring such securities for, or on behalf of, an ERISA Plan should determine that either a
statutory or an administrative exemption from the prohibited transaction rules is applicable to
such investment in the notes (and exchange notes), or that such acquisition and holding of such
securities will not result in a non-exempt prohibited transaction.

     The statutory or administrative exemptions from the prohibited transaction rules under ERISA and
the Code which may be available to an ERISA Plan investing in the notes and exchange notes include,
without limitation, the following:

	 	•	 	Prohibited Transaction Class Exemption (“PTCE”) 90-1, regarding investments by insurance
company pooled separate accounts;
	 
	 	•	 	PTCE 91-38, regarding investments by bank collective investment funds;
	 
	 	•	 	PTCE 84-14, regarding transactions effected by qualified professional asset managers;
	 
	 	•	 	PTCE 96-23, regarding transactions effected by in-house asset managers; and
	 
	 	•	 	PTCE 95-60, regarding investments by insurance company general accounts.

     Governmental plans, non-United States plans and certain church plans, while not subject to the
prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be
subject to Similar Laws which may affect their investment in the notes (and exchange notes). Any
fiduciary of such a governmental, non-United States, or church plan considering an investment in
the notes (and exchange notes) should consult with its counsel before purchasing notes and exchange
notes to consider the applicable fiduciary standards and to determine the need for, and the
availability, if necessary, of any exemptive relief under such Similar Laws.

264

 

     Because of the foregoing, the notes and exchange notes should not be purchased or held by any
person investing plan assets of any Plan Investor unless such purchase, holding and, if
applicable, conversion will not constitute a non-exempt prohibited transaction under ERISA and the
Code or a violation under any applicable Similar Laws.

Representation

     Accordingly, each purchaser and subsequent transferee of the notes (and exchange notes) will
represent and warrant that either (i) no portion of the assets used by such purchaser or transferee
to acquire and hold the notes (or the exchange notes) constitutes assets of any Plan Investor or
(ii) the purchase and holding of the notes (and the exchange of notes for exchange notes) by such
purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws.

     The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the
complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt
prohibited transactions, it is particularly important that fiduciaries, or other persons
considering purchasing the notes (and holding the notes or exchange notes) on behalf of, or with
the assets of, any Plan Investor, consult with their counsel regarding the potential applicability
of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption
would be applicable to the purchase and holding of the notes.

265

 

LEGAL MATTERS

     The validity of the notes will be passed upon for us by Ropes & Gray LLP, Boston, Massachusetts.
The validity of the notes will be passed upon for the initial purchasers by Cahill Gordon & Reindel
llp, New York, New York.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     The consolidated balance sheets of Clear Channel Communications, Inc. and subsidiaries as of
December 31, 2007 and 2006, and the related consolidated statements of operations, changes in
shareholders’ equity, and cash flows for each of the three years in the period ended December 31,
2007, included in this offering memorandum, have been audited by Ernst & Young LLP, independent
registered public accounting firm, as stated in their report appearing herein.

AVAILABLE INFORMATION

     Immediately following the offering, we will not be subject to periodic reporting and other
informational requirements of the Exchange Act. Under the terms of the indenture governing the
notes, we will agree that for so long as any of the notes remain outstanding, we will furnish to
the trustee and the holders of the notes the information specified therein. In addition, for so
long as any of the notes remain outstanding, we will agree to make available to the holders of the
notes and to securities analysts and prospective investors that certify that they are qualified
institutional buyers, upon their request the information required to be delivered by Rule
144A(d)(4) under the Securities Act.

     Following the offering, we intend to use commercially reasonable efforts to offer the holders of
the notes offered hereby the right to exchange such notes for exchange notes with terms
substantially identical in all material respects to the notes offered hereby, except that the
exchange notes will not contain terms with respect to transfer restrictions. See “Exchange Offer;
Registration Rights.”

266

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	 	 	 	 	 
	 	 	Page
	Audited Consolidated Financial Statements of Clear Channel Communications, Inc.
	 	 	 	 
	Report of Independent Registered Public Accounting Firm
	 	 	F-2	 
	Consolidated Balance Sheets as of December 31, 2007 and 2006
	 	 	F-3	 
	Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005
	 	 	F-5	 
	Consolidated Statements of Changes in Shareholders’ Equity as of December 31, 2007, 2006, 2005 and 2004
	 	 	F-6	 
	Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005
	 	 	F-7	 
	Notes to Consolidated Financial Statements
	 	 	F-9	 
	 
	 	 	 	 
	Unaudited Consolidated Financial Statements of Clear Channel Communications, Inc.
	 	 	 	 
	Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007
	 	 	F-49	 
	Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007
	 	 	F-51	 
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007
	 	 	F-52	 
	Notes to Consolidated Financial Statements
	 	 	F-53	 

F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Clear Channel Communications, Inc.

     We have audited the accompanying consolidated balance sheets of Clear Channel Communications, Inc.
and subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated
statements of operations, shareholders’ equity, and cash flows for each of the three years in the
period ended December 31, 2007. Our audits also include the financial statement schedule listed in
the index as Item 15(a)2. These financial statements and schedule are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Clear Channel Communications, Inc. and
subsidiaries at December 31, 2007 and 2006, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31, 2007, in conformity
with U.S. generally accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

     As discussed in Note K to the consolidated financial statements, in 2007 the Company changed
its method of accounting for income taxes.

     As discussed in Note A to the consolidated financial statements, in 2006 the Company changed its
method of accounting for stock-based compensation.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company’s internal control over financial reporting as of December 31,
2007, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 14,
2008, except for internal control over financial reporting related to Notes B, Q and R of the 2007
consolidated financial statements as to which the date is May 22, 2008, expressed an unqualified
opinion thereon.

/s/ ERNST & YOUNG LLP

San Antonio, Texas

February 14, 2008,

except for Notes B, Q and R, as to which the date is

May 22, 2008

F-2

 

CONSOLIDATED BALANCE SHEETS

	 	 	 	 	 	 	 	 	 
	 	 	December 31,	 	 	December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	ASSETS
	 	 	 	 	 	 	 	 
	CURRENT ASSETS
	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	145,148	 	 	$	116,000	 
	Accounts receivable, net of allowance of $59,169 in 2007 and
$56,068 in 2006
	 	 	1,693,218	 	 	 	1,619,858	 
	Prepaid expenses
	 	 	116,902	 	 	 	122,000	 
	Other current assets 
	 	 	243,248	 	 	 	244,103	 
	Income taxes receivable
	 	 	—	 	 	 	7,392	 
	Current assets from discontinued operations
	 	 	96,067	 	 	 	96,377	 
	 
	 	 	 	 	 	 
	Total Current Assets
	 	 	2,294,583	 	 	 	2,205,730	 
	 
	 	 	 	 	 	 	 	 
	PROPERTY, PLANT AND EQUIPMENT
	 	 	 	 	 	 	 	 
	Land, buildings and improvements 
	 	 	840,832	 	 	 	789,639	 
	Structures 
	 	 	3,901,941	 	 	 	3,601,653	 
	Towers, transmitters and studio equipment
	 	 	600,315	 	 	 	626,682	 
	Furniture and other equipment
	 	 	527,714	 	 	 	530,560	 
	Construction in progress 
	 	 	119,260	 	 	 	90,767	 
	 
	 	 	 	 	 	 
	 
	 	 	5,990,062	 	 	 	5,639,301	 
	Less accumulated depreciation
	 	 	2,939,698	 	 	 	2,631,973	 
	 
	 	 	 	 	 	 
	 
	 	 	3,050,364	 	 	 	3,007,328	 
	Property, plant and equipment from discontinued operations,
net
	 	 	164,724	 	 	 	228,882	 
	 
	 	 	 	 	 	 	 	 
	INTANGIBLE ASSETS
	 	 	 	 	 	 	 	 
	Definite-lived intangibles, net
	 	 	485,870	 	 	 	522,493	 
	Indefinite-lived
intangibles—licenses
	 	 	4,201,617	 	 	 	4,211,685	 
	Indefinite-lived intangibles—permits
	 	 	251,988	 	 	 	260,950	 
	Goodwill 
	 	 	7,210,116	 	 	 	7,234,235	 
	 
	 	 	 	 	 	 	 	 
	Intangible assets from discontinued operations, net
	 	 	219,722	 	 	 	376,964	 
	 
	 	 	 	 	 	 	 	 
	OTHER ASSETS
	 	 	 	 	 	 	 	 
	Notes receivable
	 	 	12,388	 	 	 	6,318	 
	Investments in, and advances to, nonconsolidated affiliates
	 	 	346,387	 	 	 	311,258	 
	Other assets 
	 	 	303,791	 	 	 	249,524	 
	Other investments
	 	 	237,598	 	 	 	244,980	 
	Other assets from discontinued operations 
	 	 	26,380	 	 	 	26,108	 
	 
	 	 	 	 	 	 
	Total Assets 
	 	$	18,805,528	 	 	$	18,886,455	 
	 
	 	 	 	 	 	 

See Notes to Consolidated Financial Statements

F-3

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY

	 	 	 	 	 	 	 	 	 
	 	 	December 31,	 	 	December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands, except share data)	 
	CURRENT LIABILITIES
	 	 	 	 	 	 	 	 
	Accounts payable
	 	$	165,533	 	 	$	151,577	 
	Accrued expenses 
	 	 	912,665	 	 	 	884,479	 
	Accrued interest
	 	 	98,601	 	 	 	112,049	 
	Accrued income taxes
	 	 	79,973	 	 	 	—	 
	Current portion of long-term debt
	 	 	1,360,199	 	 	 	336,375	 
	Deferred income
	 	 	158,893	 	 	 	134,287	 
	Current liabilities from discontinued operations 
	 	 	37,413	 	 	 	45,079	 
	 
	 	 	 	 	 	 
	Total Current Liabilities
	 	 	2,813,277	 	 	 	1,663,846	 
	 
	 	 	 	 	 	 	 	 
	Long-term debt
	 	 	5,214,988	 	 	 	7,326,700	 
	Other long-term obligations
	 	 	127,384	 	 	 	68,509	 
	Deferred income taxes 
	 	 	793,850	 	 	 	729,804	 
	Other long-term liabilities
	 	 	567,848	 	 	 	673,954	 
	Long-term liabilities from discontinued operations
	 	 	54,330	 	 	 	31,910	 
	 
	 	 	 	 	 	 	 	 
	Minority interest
	 	 	436,360	 	 	 	349,391	 
	Commitments and contingent liabilities (Note 1)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SHAREHOLDERS’ EQUITY
	 	 	 	 	 	 	 	 
	Preferred Stock—Class A, par value $1.00 per share, authorized
2,000,000 shares, no shares issued and outstanding
	 	 	—	 	 	 	—	 
	Preferred Stock—Class B, par value $1.00 per share, authorized
8,000,000 shares, no shares issued and outstanding
	 	 	—	 	 	 	—	 
	Common Stock, par value $.10 per share, authorized 1,500,000,000
shares, issued 498,075,417 and 493,982,851 shares in 2007 and 2006,
respectively
	 	 	49,808	 	 	 	49,399	 
	Additional paid-in capital 
	 	 	26,858,079	 	 	 	26,745,687	 
	Retained deficit
	 	 	(18,489,143	)	 	 	(19,054,365	)
	Accumulated other comprehensive income
	 	 	383,698	 	 	 	304,975	 
	Cost of shares (157,744 in 2007 and 114,449 in 2006) held in treasury
	 	 	(4,951	)	 	 	(3,355	)
	 
	 	 	 	 	 	 
	Total Shareholders’ Equity
	 	 	8,797,491	 	 	 	8,042,341	 
	 
	 	 	 	 	 	 
	Total Liabilities and Shareholders’ Equity
	 	$	18,805,528	 	 	$	18,886,455	 
	 
	 	 	 	 	 	 

See Notes to Consolidated Financial Statements

F-4

 

CONSOLIDATED STATEMENTS OF OPERATIONS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	(In thousands, except per share data)	 
	Revenue 
	 	$	6,921,202	 	 	$	6,567,790	 	 	$	6,126,553	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses (includes share-based payments of $16,975,
$16,142 and $212 in 2007, 2006 and 2005, respectively and excludes
depreciation and amortization) 
	 	 	2,733,004	 	 	 	2,532,444	 	 	 	2,351,614	 
	Selling, general and administrative expenses (includes share-based
payments of $14,884, $16,762 and $0 in 2007, 2006 and 2005,
respectively and excludes depreciation and amortization)
	 	 	1,761,939	 	 	 	1,708,957	 	 	 	1,651,195	 
	Depreciation and amortization 
	 	 	566,627	 	 	 	600,294	 	 	 	593,477	 
	Corporate expenses (includes share-based payments of $12,192, $9,126
and $5,869 in 2007, 2006 and 2005, respectively and excludes
depreciation and amortization) 
	 	 	181,504	 	 	 	196,319	 	 	 	167,088	 
	Merger expenses
	 	 	6,762	 	 	 	7,633	 	 	 	—	 
	Gain on disposition of assets—net 
	 	 	14,113	 	 	 	71,571	 	 	 	49,656	 
	 
	 	 	 	 	 	 	 	 	 
	Operating income
	 	 	1,685,479	 	 	 	1,593,714	 	 	 	1,412,835	 
	Interest expense 
	 	 	451,870	 	 	 	484,063	 	 	 	443,442	 
	Gain (loss) on marketable securities
	 	 	6,742	 	 	 	2,306	 	 	 	(702	)
	Equity in earnings of nonconsolidated affiliates
	 	 	35,176	 	 	 	37,845	 	 	 	38,338	 
	Other income (expense)—net
	 	 	5,326	 	 	 	(8,593	)	 	 	11,016	 
	 
	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest and discontinued operations
	 	 	1,280,853	 	 	 	1,141,209	 	 	 	1,018,045	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Income tax expense:
	 	 	 	 	 	 	 	 	 	 	 	 
	Current 
	 	 	252,910	 	 	 	278,663	 	 	 	33,765	 
	Deferred 
	 	 	188,238	 	 	 	191,780	 	 	 	369,282	 
	 
	 	 	 	 	 	 	 	 	 
	Income tax expense
	 	 	441,148	 	 	 	470,443	 	 	 	403,047	 
	Minority interest expense, net of tax 
	 	 	47,031	 	 	 	31,927	 	 	 	17,847	 
	 
	 	 	 	 	 	 	 	 	 
	Income before discontinued operations
	 	 	792,674	 	 	 	638,839	 	 	 	597,151	 
	Income from discontinued operations, net 
	 	 	145,833	 	 	 	52,678	 	 	 	338,511	 
	 
	 	 	 	 	 	 	 	 	 
	Net income 
	 	$	938,507	 	 	$	691,517	 	 	$	935,662	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Other comprehensive income, net of tax:
	 	 	 	 	 	 	 	 	 	 	 	 
	Foreign currency translation adjustments 
	 	 	88,823	 	 	 	92,810	 	 	 	28,643	 
	Unrealized gain (loss) on securities and derivatives:
	 	 	 	 	 	 	 	 	 	 	 	 
	Unrealized holding gain (loss) on marketable securities 
	 	 	(8,412	)	 	 	(60,516	)	 	 	(48,492	)
	Unrealized holding gain (loss) on cash flow derivatives 
	 	 	(1,688	)	 	 	76,132	 	 	 	56,634	 
	 
	 	 	 	 	 	 	 	 	 
	Comprehensive income
	 	$	1,017,230	 	 	$	799,943	 	 	$	972,447	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net income per common share:
	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations—Basic
	 	$	1.60	 	 	$	1.27	 	 	$	1.09	 
	Discontinued operations—Basic 
	 	 	.30	 	 	 	.11	 	 	 	.62	 
	 
	 	 	 	 	 	 	 	 	 
	Net income—Basic 
	 	$	1.90	 	 	$	1.38	 	 	$	1.71	 
	 
	 	 	 	 	 	 	 	 	 
	Weighted
average common shares—basic 
	 	 	494,347	 	 	 	500,786	 	 	 	545,848	 
	Income before discontinued operations—Diluted
	 	$	1.60	 	 	$	1.27	 	 	$	1.09	 
	Discontinued operations—Diluted
	 	 	.29	 	 	 	.11	 	 	 	.62	 
	 
	 	 	 	 	 	 	 	 	 
	Net income —Diluted 
	 	$	1.89	 	 	$	1.38	 	 	$	1.71	 
	 
	 	 	 	 	 	 	 	 	 
	Weighted average common shares—diluted
	 	 	495,784	 	 	 	501,639	 	 	 	547,151	 
	Dividends declared per share
	 	$	.75	 	 	$	.75	 	 	$	.69	 

See Notes to Consolidated Financial Statements

F-5

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Other	 	 	 	 	 	 	 	 	 	 	 
	 	 	Shares	 	 	 	Common	 	 	Additional	 	 	Retained	 	 	Comprehensive	 	 	 	 	 	 	Treasury	 	 	 	 
	 	 	Issued	 	 	 	Stock	 	 	Paid-in Capital	 	 	(Deficit)	 	 	Income (Loss)	 	 	Other	 	 	Stock	 	 	Total	 
	 	 	 	 	 	 	 	(In thousands, except share data)	 
	Balances at December 31, 2004
	 	 	567,572,736	 	 	 	$	56,757	 	 	$	29,183,595	 	 	$	(19,933,777	)	 	$	194,590	 	 	$	(213	)	 	$	(12,874	)	 	$	9,488,078	 
	Net income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	935,662	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	935,662	 
	Dividends declared
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(373,296	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(373,296	)
	Spin-off of Live Nation
	 	 	 	 	 	 	 	 	 	 	 	(687,206	)	 	 	 	 	 	 	(29,447	)	 	 	 	 	 	 	 	 	 	 	(716,653	)
	Gain on sale of subsidiary common stock 
	 	 	 	 	 	 	 	 	 	 	 	479,699	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	479,699	 
	Purchase of common shares
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,070,204	)	 	 	(1,070,204	)
	Treasury shares retired and cancelled
	 	 	(32,800,471	)	 	 	 	(3,280	)	 	 	(1,067,175	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,070,455	 	 	 	—	 
	Exercise of stock options and other
	 	 	3,515,498	 	 	 	 	352	 	 	 	31,012	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8,558	 	 	 	39,922	 
	Amortization and adjustment of deferred
compensation
	 	 	 	 	 	 	 	 	 	 	 	5,800	 	 	 	 	 	 	 	 	 	 	 	213	 	 	 	456	 	 	 	6,469	 
	Currency translation adjustment
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	28,643	 	 	 	 	 	 	 	 	 	 	 	28,643	 
	Unrealized gains (losses) on cash flow
derivatives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	56,634	 	 	 	 	 	 	 	 	 	 	 	56,634	 
	Unrealized gains (losses) on investments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(48,492	)	 	 	 	 	 	 	 	 	 	 	(48,492	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balances at December 31, 2005
	 	 	538,287,763	 	 	 	 	53,829	 	 	 	27,945,725	 	 	 	(19,371,411	)	 	 	201,928	 	 	 	—	 	 	 	(3,609	)	 	 	8,826,462	 
	Net income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	691,517	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	691,517	 
	Dividends declared
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(374,471	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(374,471	)
	Subsidiary common stock issued for a
business acquisition
	 	 	 	 	 	 	 	 	 	 	 	67,873	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	67,873	 
	Purchase of common shares
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,371,462	)	 	 	(1,371,462	)
	Treasury shares retired and cancelled
	 	 	(46,729,900	)	 	 	 	(4,673	)	 	 	(1,367,032	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,371,705	 	 	 	—	 
	Exercise of stock options and other
	 	 	2,424,988	 	 	 	 	243	 	 	 	60,139	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	11	 	 	 	60,393	 
	Amortization and adjustment of deferred
compensation
	 	 	 	 	 	 	 	 	 	 	 	38,982	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	38,982	 
	Currency translation adjustment
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	87,431	 	 	 	 	 	 	 	 	 	 	 	87,431	 
	Unrealized gains (losses) on cash flow
derivatives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	76,132	 	 	 	 	 	 	 	 	 	 	 	76,132	 
	Unrealized gains (losses) on investments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(60,516	)	 	 	 	 	 	 	 	 	 	 	(           60,516	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balances at December 31, 2006
	 	 	493,982,851	 	 	 	 	49,399	 	 	 	26,745,687	 	 	 	(19,054,365	)	 	 	304,975	 	 	 	—	 	 	 	(3,355	)	 	 	8,042,341	 
	Cumulative effect of FIN 48 adoption
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(152	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(152	)
	Net income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	938,507	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	938,507	 
	Dividends declared
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(373,133	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(373,133	)
	Exercise of stock options and other
	 	 	4,092,566	 	 	 	 	409	 	 	 	74,827	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,596	)	 	 	73,640	 
	Amortization and adjustment of deferred
compensation
	 	 	 	 	 	 	 	 	 	 	 	37,565	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	37,565	 
	Currency translation adjustment
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	88,823	 	 	 	 	 	 	 	 	 	 	 	88,823	 
	Unrealized gains (losses) on cash flow
derivatives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,688	)	 	 	 	 	 	 	 	 	 	 	(1,688	)
	Unrealized gains (losses) on investments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(8,412	)	 	 	 	 	 	 	 	 	 	 	(8,412	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balances at December 31, 2007
	 	 	498,075,417	 	 	 	$	49,808	 	 	$	26,858,079	 	 	$	(18,489,143	)	 	$	383,698	 	 	$	—	 	 	$	(4,951	)	 	$	8,797,491	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

See Notes to Consolidated Financial Statements

F-6

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	(In thousands)	 
	CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Net income 
	 	$	938,507	 	 	$	691,517	 	 	$	935,662	 
	Less: Income from discontinued operations, net
	 	 	145,833	 	 	 	52,678	 	 	 	338,511	 
	 
	 	 	 	 	 	 	 	 	 
	Net income from continuing operations 
	 	 	792,674	 	 	 	638,839	 	 	 	597,151	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciling Items:
	 	 	 	 	 	 	 	 	 	 	 	 
	Depreciation 
	 	 	461,598	 	 	 	449,624	 	 	 	439,645	 
	Amortization of intangibles
	 	 	105,029	 	 	 	150,670	 	 	 	153,832	 
	Deferred taxes
	 	 	188,238	 	 	 	191,780	 	 	 	369,282	 
	Provision for doubtful accounts
	 	 	38,615	 	 	 	34,627	 	 	 	34,260	 
	Amortization of deferred financing charges, bond
premiums and accretion of note discounts, net 
	 	 	7,739	 	 	 	3,462	 	 	 	2,042	 
	Share-based compensation 
	 	 	44,051	 	 	 	42,030	 	 	 	6,081	 
	(Gain) loss on sale of operating and fixed assets
	 	 	(14,113	)	 	 	(71,571	)	 	 	(49,656	)
	(Gain) loss on forward exchange contract
	 	 	3,953	 	 	 	18,161	 	 	 	18,194	 
	(Gain) loss on trading securities 
	 	 	(10,696	)	 	 	(20,467	)	 	 	(17,492	)
	Equity in earnings of nonconsolidated affiliates
	 	 	(35,176	)	 	 	(37,845	)	 	 	(38,338	)
	Minority interest, net of tax
	 	 	47,031	 	 	 	31,927	 	 	 	17,847	 
	Increase (decrease) other, net 
	 	 	(91	)	 	 	9,027	 	 	 	(14,530	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Changes in operating assets and liabilities, net of
effects of acquisitions and dispositions:
	 	 	 	 	 	 	 	 	 	 	 	 
	Decrease (increase) in accounts receivable
	 	 	(111,152	)	 	 	(190,191	)	 	 	(22,179	)
	Decrease (increase) in prepaid expenses
	 	 	5,098	 	 	 	(23,797	)	 	 	15,013	 
	Decrease (increase) in other current assets
	 	 	694	 	 	 	(2,238	)	 	 	42,131	 
	Increase (decrease) in accounts payable, accrued
expenses and other liabilities
	 	 	27,027	 	 	 	86,887	 	 	 	(42,334	)
	Federal income tax refund 
	 	 	—	 	 	 	390,438	 	 	 	—	 
	Increase (decrease) in accrued interest
	 	 	(13,429	)	 	 	14,567	 	 	 	3,411	 
	Increase (decrease) in deferred income 
	 	 	26,013	 	 	 	6,486	 	 	 	(18,518	)
	Increase (decrease) in accrued income taxes 
	 	 	13,325	 	 	 	25,641	 	 	 	(191,962	)
	 
	 	 	 	 	 	 	 	 	 
	Net cash provided by operating activities 
	 	 	1,576,428	 	 	 	1,748,057	 	 	 	1,303,880	 

See Notes to Consolidated Financial Statements

F-7

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	(In thousands)	 
	CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Decrease (increase) in notes receivable, net
	 	 	(6,069	)	 	 	1,163	 	 	 	755	 
	Decrease (increase) in investments in, and advances to
nonconsolidated affiliates—net 
	 	 	20,868	 	 	 	20,445	 	 	 	15,343	 
	Cross currency settlement of interest
	 	 	(1,214	)	 	 	1,607	 	 	 	734	 
	Purchase of other investments
	 	 	(726	)	 	 	(520	)	 	 	(900	)
	Proceeds from sale of other investments
	 	 	2,409	 	 	 	—	 	 	 	370	 
	Purchases of property, plant and equipment 
	 	 	(363,309	)	 	 	(336,739	)	 	 	(302,655	)
	Proceeds from disposal of assets 
	 	 	26,177	 	 	 	99,682	 	 	 	102,001	 
	Acquisition of operating assets 
	 	 	(122,110	)	 	 	(341,206	)	 	 	(150,819	)
	Decrease (increase) in other—net
	 	 	(38,703	)	 	 	(51,443	)	 	 	(14,625	)
	 
	 	 	 	 	 	 	 	 	 
	Net cash used in investing activities
	 	 	(482,677	)	 	 	(607,011	)	 	 	(349,796	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Draws on credit facilities
	 	 	886,910	 	 	 	3,383,667	 	 	 	1,934,000	 
	Payments on credit facilities
	 	 	(1,705,014	)	 	 	(2,700,004	)	 	 	(1,986,045	)
	Proceeds from long-term debt
	 	 	22,483	 	 	 	783,997	 	 	 	—	 
	Payments on long-term debt 
	 	 	(343,041	)	 	 	(866,352	)	 	 	(236,703	)
	Payment to terminate forward exchange contract
	 	 	—	 	 	 	(83,132	)	 	 	—	 
	Proceeds from exercise of stock options, stock purchase
plan and common stock warrants
	 	 	80,017	 	 	 	57,452	 	 	 	40,239	 
	Dividends paid 
	 	 	(372,369	)	 	 	(382,776	)	 	 	(343,321	)
	Proceeds from initial public offering
	 	 	—	 	 	 	—	 	 	 	600,642	 
	Payments for purchase of common shares
	 	 	—	 	 	 	(1,371,462	)	 	 	(1,070,204	)
	 
	 	 	 	 	 	 	 	 	 
	Net cash used in financing activities
	 	 	(1,431,014	)	 	 	(1,178,610	)	 	 	(1,061,392	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CASH FLOWS PROVIDED BY (USED IN)
DISCONTINUED OPERATIONS:
	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash provided by operating activities 
	 	 	33,832	 	 	 	99,265	 	 	 	115,267	 
	Net cash provided by (used in) investing activities 
	 	 	332,579	 	 	 	(30,038	)	 	 	(198,149	)
	Net cash provided by financing activities 
	 	 	—	 	 	 	—	 	 	 	240,000	 
	 
	 	 	 	 	 	 	 	 	 
	Net cash provided by discontinued operations
	 	 	366,411	 	 	 	69,227	 	 	 	157,118	 
	Net increase in cash and cash equivalents
	 	 	29,148	 	 	 	31,663	 	 	 	49,810	 
	Cash and cash equivalents at beginning of year
	 	 	116,000	 	 	 	84,337	 	 	 	34,527	 
	 
	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents at end of year 
	 	$	145,148	 	 	$	116,000	 	 	$	84,337	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SUPPLEMENTAL DISCLOSURE:
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash paid during the year for:
	 	 	 	 	 	 	 	 	 	 	 	 
	Interest 
	 	$	462,181	 	 	$	461,398	 	 	$	430,382	 
	Income taxes
	 	 	299,415	 	 	 	—	 	 	 	193,723	 

See Notes to Consolidated Financial Statements

F-8

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

     Clear Channel Communications, Inc., (the “Company”) incorporated in Texas in 1974, is a diversified
media company with three principal business segments: radio broadcasting, Americas outdoor
advertising and international outdoor advertising. The Company’s radio broadcasting segment owns,
programs and sells airtime generating revenue from the sale of national and local advertising. The
Company’s Americas and international outdoor advertising segments own or operate advertising
display faces domestically and internationally.

Merger

     The Company’s shareholders approved the adoption of the Merger Agreement, as amended, with a group
led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC on September 25, 2007. The
transaction remains subject to customary closing conditions.

     Under the terms of the Merger Agreement, as amended, the Company’s shareholders will receive $39.20
in cash for each share they own plus additional per share consideration, if any, as the closing of
the merger will occur after December 31, 2007. For a description of the computation of any
additional per share consideration and the circumstances under which it is payable, please refer to
the joint proxy statement/prospectus dated August 21, 2007, filed with the Securities & Exchange
Commission (the “Proxy Statement”). As an alternative to receiving the $39.20 per share cash
consideration, the Company’s unaffiliated shareholders were offered the opportunity on a purely
voluntary basis to exchange some or all of their shares of Clear Channel common stock on a
one-for-one basis for shares of Class A common stock in CC Media Holdings, Inc., the new
corporation formed by the private equity group to acquire the Company (subject to aggregate and
individual caps), plus the additional per share consideration, if any.

     Holders of shares of the Company’s common stock (including shares issuable upon conversion of
outstanding options) in excess of the aggregate cap provided in the Merger Agreement, as amended,
elected to receive the stock consideration. As a result, unaffiliated shareholders of the Company
will own an aggregate of 30.6 million shares of CC Media Holdings Inc. Class A common stock upon
consummation of the merger.

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company and its subsidiaries.
Significant intercompany accounts have been eliminated in consolidation. Investments in
nonconsolidated affiliates are accounted for using the equity method of accounting.

Cash and Cash Equivalents

     Cash and cash equivalents include all highly liquid investments with an original maturity of three
months or less.

F-9

 

 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Allowance for Doubtful Accounts

     The Company evaluates the collectibility of its accounts receivable based on a combination of
factors. In circumstances where it is aware of a specific customer’s inability to meet its
financial obligations, it records a specific reserve to reduce the amounts recorded to what it
believes will be collected. For all other customers, it recognizes reserves for bad debt based on
historical experience of bad debts as a percent of revenue for each business unit, adjusted for
relative improvements or deteriorations in the agings and changes in current economic conditions.
The Company believes its concentration of credit risk is limited due to the large number and the
geographic diversification of its customers.

Land Leases and Other Structure Licenses

     Most of the Company’s outdoor advertising structures are located on leased land. Americas outdoor
land rents are typically paid in advance for periods ranging from one to twelve months.
International outdoor land rents are paid both in advance and in arrears, for periods ranging from
one to twelve months. Most international street furniture display faces are operated through
contracts with the municipalities for up to 20 years. The street furniture contracts often include
a percent of revenue to be paid along with a base rent payment. Prepaid land leases are recorded as
an asset and expensed ratably over the related rental term and license and rent payments in arrears
are recorded as an accrued liability.

Purchase Accounting

     The Company accounts for its business acquisitions under the purchase method of accounting. The
total cost of acquisitions is allocated to the underlying identifiable net assets, based on their
respective estimated fair values. The excess of the purchase price over the estimated fair values
of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired
and liabilities assumed requires management’s judgment and often involves the use of significant
estimates and assumptions, including assumptions with respect to future cash inflows and outflows,
discount rates, asset lives and market multiples, among other items. In addition, reserves have
been established on the Company’s balance sheet related to acquired liabilities and qualifying
restructuring costs and contingencies based on assumptions made at the time of acquisition. The
Company evaluates these reserves on a regular basis to determine the adequacies of the amounts.
Various acquisition agreements may include contingent purchase consideration based on performance
requirements of the investee. The Company accrues these payments under the guidance in Emerging
Issues Task Force issue 95-8: Accounting for Contingent Consideration Paid to the Shareholders of
an Acquired Enterprise in a Purchase Business Combination, after the contingencies have been
resolved.

Property, Plant and Equipment

     Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line
method at rates that, in the opinion of management, are adequate to allocate the cost of such
assets over their estimated useful lives, which are as follows:

Buildings and improvements—10 to 39 years

Structures—5 to 40 years

F-10

 

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Towers, transmitters and studio equipment—7 to 20 years

Furniture and other equipment—3 to 20 years

Leasehold improvements—shorter of economic life or lease term assuming

                                        renewal
periods, if appropriate

     For assets associated with a lease or contract, the assets are depreciated at the shorter of the
economic life or the lease or contract term, assuming renewal periods, if appropriate. Expenditures
for maintenance and repairs are charged to operations as incurred, whereas expenditures for renewal
and betterments are capitalized.

     The Company tests for possible impairment of property, plant, and equipment whenever events or
changes in circumstances, such as a reduction in operating cash flow or a dramatic change in the
manner for which the asset is intended to be used indicate that the carrying amount of the asset
may not be recoverable. If indicators exist, the Company compares the estimated undiscounted future
cash flows related to the asset to the carrying value of the asset. If the carrying value is
greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded
in depreciation and amortization expense in the statement of operations for amounts necessary to
reduce the carrying value of the asset to fair value. The impairment loss calculations require
management to apply judgment in estimating future cash flows and the discount rates that reflects
the risk inherent in future cash flows.

Intangible Assets

     The Company classifies intangible assets as definite-lived, indefinite-lived or goodwill.
Definite-lived intangibles include primarily transit and street furniture contracts, talent, and
representation contracts, all of which are amortized over the respective lives of the agreements,
typically four to fifteen years, or over the period of time the assets are expected to contribute
directly or indirectly to the Company’s future cash flows. The Company periodically reviews the
appropriateness of the amortization periods related to its definite-lived assets. These assets are
stated at cost. Indefinite-lived intangibles include broadcast FCC licenses and billboard permits.
The excess cost over fair value of net assets acquired is classified as goodwill. The
indefinite-lived intangibles and goodwill are not subject to amortization, but are tested for
impairment at least annually.

     The Company tests for possible impairment of definite-lived intangible assets whenever events or
changes in circumstances, such as a reduction in operating cash flow or a dramatic change in the
manner for which the asset is intended to be used indicate that the carrying amount of the asset
may not be recoverable. If indicators exist, the Company compares the undiscounted cash flows
related to the asset to the carrying value of the asset. If the carrying value is greater than the
undiscounted cash flow amount, an impairment charge is recorded in amortization expense in the
statement of operations for amounts necessary to reduce the carrying value of the asset to fair
value.

     The Company performs its annual impairment test for its FCC licenses and permits using a direct
valuation technique as prescribed by the Emerging Issues Task Force (“EITF”) Topic D-108, Use of
the Residual Method to Value Acquired Assets Other Than Goodwill (“D-108”). Certain assumptions are
used under the Company’s direct valuation technique, including market revenue growth rates, market
share, profit margin, duration and profile of the build-up period, estimated start-up cost and
losses incurred during the build-up period, the risk adjusted

F-11

 

  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

discount rate and terminal values. The Company utilizes Mesirow Financial Consulting LLC, a third
party valuation firm, to assist the Company in the development of these assumptions and the
Company’s determination of the fair value of its FCC licenses and permits. Impairment charges are
recorded in amortization expense in the statement of operations.

     At least annually, the Company performs its impairment test for each reporting unit’s goodwill
using a discounted cash flow model to determine if the carrying value of the reporting unit,
including goodwill, is less than the fair value of the reporting unit. The Company identified its
reporting units under the guidance in Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets (“Statement 142”) and EITF D-101, Clarification of Reporting Unit
Guidance in Paragraph 30 of FASB Statement No. 142. The Company’s reporting units for radio
broadcasting and Americas outdoor advertising are the reportable segments. The Company determined
that each country in its International outdoor segment constitutes a reporting unit and therefore
tests goodwill for impairment at the country level. Certain assumptions are used in determining the
fair value, including assumptions about future cash flows, discount rates, and terminal values. If
the fair value of the Company’s reporting unit is less than the carrying value of the reporting
unit, the Company reduces the carrying amount of goodwill. Impairment charges are recorded in
amortization expense on the statement of operations.

Other Investments

     Other investments are composed primarily of equity securities. These securities are classified as
available-for-sale or trading and are carried at fair value based on quoted market prices.
Securities are carried at historical value when quoted market prices are unavailable. The net
unrealized gains or losses on the available-for-sale securities, net of tax, are reported as a
separate component of shareholders’ equity. The net unrealized gains or losses on the trading
securities are reported in the statement of operations. In addition, the Company holds investments
that do not have quoted market prices. The Company periodically reviews the value of
available-for-sale, trading and non-marketable securities and records impairment charges in the
statement of operations for any decline in value that is determined to be other-than-temporary. The
average cost method is used to compute the realized gains and losses on sales of equity securities.

Nonconsolidated Affiliates

     In general, investments in which the Company owns 20 percent to 50 percent of the common stock or
otherwise exercises significant influence over the investee are accounted for under the equity
method. The Company does not recognize gains or losses upon the issuance of securities by any of
its equity method investees. The Company reviews the value of equity method investments and records
impairment charges in the statement of operations for any decline in value that is determined to be
other-than-temporary.

Financial Instruments

     Due to their short maturity, the carrying amounts of accounts and notes receivable, accounts
payable, accrued liabilities, and short-term borrowings approximated their fair values at December
31, 2007 and 2006.

F-12

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Income Taxes

     The Company accounts for income taxes using the liability method. Under this method,
deferred tax assets and liabilities are determined based on differences between financial reporting
bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected
to apply to taxable income in the periods in which the deferred tax asset or liability is expected
to be realized or settled. Deferred tax assets are reduced by valuation allowances if the Company
believes it is more likely than not that some portion or all of the asset will not be realized. As
all earnings from the Company’s foreign operations are permanently reinvested and not distributed,
the Company’s income tax provision does not include additional U.S. taxes on foreign operations. It
is not practical to determine the amount of federal income taxes, if any, that might become due in
the event that the earnings were distributed.

Revenue Recognition

     Radio broadcasting revenue is recognized as advertisements or programs are broadcast and is
generally billed monthly. Outdoor advertising contracts typically cover periods of up to three
years and are generally billed monthly. Revenue for outdoor advertising space rental is recognized
ratably over the term of the contract. Advertising revenue is reported net of agency commissions.
Agency commissions are calculated based on a stated percentage applied to gross billing revenue for
the Company’s broadcasting and outdoor operations. Payments received in advance of being earned are
recorded as deferred income.

     Barter transactions represent the exchange of airtime or display space for merchandise or
services. These transactions are generally recorded at the fair market value of the airtime or
display space or the fair value of the merchandise or services received. Revenue is recognized on
barter and trade transactions when the advertisements are broadcasted or displayed. Expenses are
recorded ratably over a period that estimates when the merchandise or service received is utilized
or the event occurs. Barter and trade revenues from continuing operations for the years ended
December 31, 2007, 2006 and 2005, were approximately $70.7 million, $77.8 million and $75.1
million, respectively, and are included in total revenue. Barter and trade expenses from continuing
operations for the years ended December 31, 2007, 2006 and 2005, were approximately $70.4 million,
$75.6 million and $70.6 million, respectively, and are included in selling, general and
administrative expenses.

Share-Based Payments

     Prior to January 1, 2006, the Company accounted for share-based payments under the recognition
and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB
25”) and related Interpretations, as permitted by Statement of Financial Accounting Standards No.
123, Accounting for Stock Based Compensation (“Statement 123”). Under that method, when options
were granted with a strike price equal to or greater than market price on date of issuance, there
was no impact on earnings either on the date of grant or thereafter, absent certain modifications
to the options. The Company adopted Financial Accounting Standard No. 123 (R), Share-Based Payment
(“Statement 123(R)”), on January 1, 2006 using the modified-prospective-transition method. Under
the fair value recognition provisions of this statement, stock based compensation cost is measured
at the grant date based on the fair value of the award and is recognized as expense on a
straight-line basis over

F-13

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the vesting period. Determining the fair value of share-based awards at the grant date
requires assumptions and judgments about expected volatility and forfeiture rates, among other
factors. If actual results differ significantly from these estimates, the Company’s results of
operations could be materially impacted.

Derivative Instruments and Hedging Activities

     Financial Accounting Standard No. 133, Accounting for Derivative Instruments and
Hedging Activities, (“Statement 133”), requires the Company to recognize all of its derivative
instruments as either assets or liabilities in the consolidated balance sheet at fair value. The
accounting for changes in the fair value of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship, and further, on the type of hedging
relationship. For derivative instruments that are designated and qualify as hedging instruments,
the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair
value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. The Company
formally documents all relationships between hedging instruments and hedged items, as well as its
risk management objectives and strategies for undertaking various hedge transactions. The Company
formally assesses, both at inception and at least quarterly thereafter, whether the derivatives
that are used in hedging transactions are highly effective in offsetting changes in either the fair
value or cash flows of the hedged item. If a derivative ceases to be a highly effective hedge, the
Company discontinues hedge accounting. The Company accounts for its derivative instruments that are
not designated as hedges at fair value, with changes in fair value recorded in earnings. The
Company does not enter into derivative instruments for speculation or trading purposes.

Foreign Currency

     Results of operations for foreign subsidiaries and foreign equity investees are
translated into U.S. dollars using the average exchange rates during the year. The assets and
liabilities of those subsidiaries and investees, other than those of operations in highly
inflationary countries, are translated into U.S. dollars using the exchange rates at the balance
sheet date. The related translation adjustments are recorded in a separate component of
shareholders’ equity, “Accumulated other comprehensive income”. Foreign currency transaction gains
and losses, as well as gains and losses from translation of financial statements of subsidiaries
and investees in highly inflationary countries, are included in operations.

Advertising Expense

     The Company records advertising expense as it is incurred. Advertising expenses from
continuing operations of $138.5 million, $130.4 million and $155.2 million were recorded during the
years ended December 31, 2007, 2006 and 2005, respectively as a component of selling, general and
administrative expenses.

Use of Estimates

     The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates, judgments,
and assumptions that affect the amounts reported in the consolidated financial statements
and

F-14

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

accompanying notes including, but not limited to, legal, tax and insurance accruals. The Company
bases its estimates on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from those estimates.

Certain Reclassifications

     The Company has reclassified certain selling, general and administrative expenses to direct
operating expenses in 2006 and 2005 to conform to current year presentation. The historical
financial statements and footnote disclosures have been revised to exclude amounts related to the
Company’s television business, certain radio stations and Live Nation as discussed below.

New Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement No. 157,
Fair Value Measurements (“Statement 157”). Statement 157 defines fair value, establishes a
framework for measuring fair value and expands disclosure requirements for fair value measurements.
Statement 157 applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value. Statement 157 does not expand the use of fair value in any new
circumstances. Companies will need to apply the recognition and disclosure provisions of Statement
157 for financial assets and financial liabilities and for nonfinancial assets and nonfinancial
liabilities that are remeasured at least annually effective January 1, 2008. The effective date in
Statement 157 is delayed for one year for certain nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). Excluded from the scope of Statement 157 are certain leasing
transactions accounted for under FASB Statement No. 13, Accounting for Leases. The exclusion does
not apply to fair value measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of Statement 157. The
Company is currently evaluating the impact of adopting FAS 157 on our financial position or results
of operations.

     Statement of Financial Accounting Standards No. 141(R), Business Combinations (“Statement 141
(R)”), was issued in December 2007. Statement 141 (R) requires that upon initially obtaining
control, an acquirer will recognize 100% of the fair values of acquired assets, including goodwill,
and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100%
of its target. Additionally, contingent consideration arrangements will be fair valued at the
acquisition date and included on that basis in the purchase price consideration and transaction
costs will be expensed as incurred. Statement 141 (R) also modifies the recognition for
preacquisition contingencies, such as environmental or legal issues, restructuring plans and
acquired research and development value in purchase accounting. Statement 141(R) amends Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes, to require the acquirer to
recognize changes in the amount of its deferred tax benefits that are recognizable because of a
business combination either in income from continuing operations in the period of the combination
or directly in contributed capital, depending on the circumstances. Statement 141 (R) is effective
for fiscal years beginning after December 15, 2008. Adoption is prospective and early adoption is
not permitted. The Company expects to adopt Statement 141 (R) on January 1, 2009. Statement 141R’s
impact on accounting for business combinations is dependent upon acquisitions at that time.

F-15

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     Statement of Financial Accounting Standards No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115
(“Statement 159”), was issued in February 2007. Statement 159 permits entities to choose to measure
many financial instruments and certain other items at fair value that are not currently required to
be measured at fair value. Statement 159 also establishes presentation and disclosure requirements
designed to facilitate comparisons between entities that choose different measurement attributes
for similar types of assets and liabilities. Statement 159 does not affect any existing accounting
literature that requires certain assets and liabilities to be carried at fair value. Statement 159
does not eliminate disclosure requirements included in other accounting standards, including
requirements for disclosures about fair value measurements included in Statements No. 157, Fair
Value Measurements, and No. 107, Disclosures about Fair Value of Financial Instruments. Statement
159 is effective as of the beginning of an entity’s first fiscal year that begins after November
15, 2007. The Company will adopt Statement 159 on January 1, 2008 and does not anticipate adoption
to materially impact our financial position or results of operations.

     Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated
Financial Statements—an amendment of ARB No. 51 (“Statement 160”), was issued in December 2007.
Statement 160 clarifies the classification of noncontrolling interests in consolidated statements
of financial position and the accounting for and reporting of transactions between the reporting
entity and holders of such noncontrolling interests. Under Statement 160 noncontrolling interests
are considered equity and should be reported as an element of consolidated equity, net income will
encompass the total income of all consolidated subsidiaries and there will be separate disclosure
on the face of the income statement of the attribution of that income between the controlling and
noncontrolling interests, and increases and decreases in the noncontrolling ownership interest
amount will be accounted for as equity transactions. Statement 160 is effective for the first
annual reporting period beginning on or after December 15, 2008, and earlier application is
prohibited. Statement 160 is required to be adopted prospectively, except for reclassify
noncontrolling interests to equity, separate from the parent’s shareholders’ equity, in the
consolidated statement of financial position and recasting consolidated net income (loss) to
include net income (loss) attributable to both the controlling and noncontrolling interests, both
of which are required to be adopted retrospectively. The Company expects to adopt Statement 160 on
January 1, 2009 and is currently assessing the potential impact that the adoption could have on its
financial statements.

NOTE B—DISCONTINUED OPERATIONS

Sale of non-core radio stations

     On November 16, 2006, the Company announced plans to sell 448 non-core radio stations. The
merger is not contingent on the sales of these stations, and the sales of these stations are not
contingent on the closing of the Company’s merger discussed above. During the first quarter of
2008, the Company revised its plans to sell 173 of these stations because it determined that market
conditions were not advantageous to complete the sales. The Company intends to hold and operate
these stations. Of these, 145 were previously classified as discontinued operations. At March 31,
2008, these 145 non-core stations no longer meet the requirements of Statement of Financial
Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets
(“Statement 144”) for classification as discontinued operations. Therefore, the assets, results of
operations and cash flows from these

F-16

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

145 stations were reclassified to continuing operations in the Company’s consolidated
financial statements.

     The Company has 20 non-core radio stations that are no longer under a definitive asset
purchase agreement as of March 31, 2008. The definitive asset purchase agreement was terminated in
the fourth quarter of 2007. However the Company continues to actively market these radio stations
and they continue to meet the criteria in Statement 144 for classification as discontinued
operations. Therefore, the assets, results of operations and cash flows from these stations remain
classified as discontinued operations in the Company’s consolidated financial statements as of and
for the periods ended December 31, 2007.

     The following table presents the activity related to the Company’s planned divestitures of 448
non-core radio stations:

	 	 	 	 	 
	Total radio stations announced as being marketed for sale on November 16, 2006
	 	 	448	 
	Total radio stations no longer being marketed for sale
	 	 	(173	)
	 
	 	 	 	 
	Adjusted number of radio stations being marketed for sale (“Non-core” radio stations)
	 	 	275	 
	Non-core radio stations sold through March 31, 2008
	 	 	(223	)
	 
	 	 	 	 
	Remaining non-core radio stations at March 31, 2008 classified as discontinued operations
	 	 	52	 
	Non-core radio stations under definitive asset purchase agreements at March 31, 2008
	 	 	(32	)
	 
	 	 	 	 
	Non-core radio stations being marketed for sale
	 	 	20	 
	 
	 	 	 	 

Sale of other radio stations

     In addition to its non-core stations, the Company sold 5 stations in the fourth quarter of
2006 and had definitive asset purchase agreements for 8 stations at March 31, 2008.

Sale of the Television Business

     On April 20, 2007, the Company entered into a definitive agreement with an affiliate (“buyer”)
of Providence Equity Partners Inc. (“Providence”) to sell its television business. Subsequently, a
representative of Providence informed the Company that the buyer is considering its options under
the definitive agreement, including not closing the acquisition on the terms and conditions in the
definitive agreement. The definitive agreement is in full force and effect, has not been terminated
and contains customary closing conditions. There have been no allegations that we have breached any
of the terms or conditions of the definitive agreement or that there is a failure of a condition to
closing the acquisition. On November 29, 2007, the FCC issued its initial consent order approving
the assignment of our television station licenses to the buyer.

     The Company determined that each of these radio station markets and its television business
represent disposal groups. Consistent with the provisions of Statement 144, the Company classified
these assets that are subject to transfer under the definitive asset purchase agreements as
discontinued operations at December 31, 2007 and 2006. Accordingly, depreciation and amortization
associated with these assets was discontinued. Additionally, the Company determined that these
assets comprise operations and cash flows that can be clearly distinguished, operationally and for
financial reporting purposes, from the rest of the Company. As of March 31, 2008, the Company
determined that the estimated fair value less costs to sell attributable to these assets was in
excess of the carrying value of their related net assets held for sale.

F-17

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     Summarized operating results for the years ended December 31, 2007, 2006 and 2005 from these
businesses are as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended December 31,
	 	 	2007	 	2006	 	2005
	 	 	(In thousands)
	Revenue
	 	$	442,263	 	 	$	531,621	 	 	$	483,865	 
	Income before income taxes
	 	$	209,882	 	 	$	84,969	 	 	$	61,282	 

     Included in income from discontinued operations, net are income tax expenses of $64.0
million, $32.3 million and $23.3 million for the years ended December 31, 2007, 2006 and 2005,
respectively. Also included in income from discontinued operations for the years ended December 31,
2007 and 2006 are gains on the sale of certain radio stations of $144.6 million and $0.3 million,
respectively.

     The following table summarizes the carrying amount at December 31, 2007 and 2006 of the major
classes of assets and liabilities of the Company’s businesses classified as discontinued
operations:

	 	 	 	 	 	 	 	 	 
	 	 	December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	Assets
	 	 	 	 	 	 	 	 
	Accounts receivable, net
	 	$	76,426	 	 	$	75,490	 
	Other current assets
	 	 	19,641	 	 	 	20,887	 
	 
	 	 	 	 	 	 
	Total current assets
	 	$	96,067	 	 	$	96,377	 
	 
	 	 	 	 	 	 
	Land, buildings and
improvements
	 	$	73,138	 	 	$	116,631	 
	Transmitter and studio
equipment
	 	 	207,230	 	 	 	259,435	 
	Other property, plant and
equipment
	 	 	22,781	 	 	 	30,437	 
	Less accumulated depreciation
	 	 	138,425	 	 	 	177,621	 
	 
	 	 	 	 	 	 
	Property, plant and equipment, net
	 	$	164,724	 	 	$	228,882	 
	 
	 	 	 	 	 	 
	Definite-lived intangibles, net
	 	$	283	 	 	$	323	 
	Licenses
	 	 	107,910	 	 	 	119,977	 
	Goodwill
	 	 	111,529	 	 	 	256,664	 
	 
	 	 	 	 	 	 
	Total intangible assets
	 	$	219,722	 	 	$	376,964	 
	 
	 	 	 	 	 	 
	Film rights
	 	$	18,042	 	 	$	20,442	 
	Other long-term assets
	 	 	8,338	 	 	 	5,666	 
	 
	 	 	 	 	 	 
	Total non-current assets
	 	$	26,380	 	 	$	26,108	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Liabilities
	 	 	 	 	 	 	 	 
	Accounts payable and accrued
expenses
	 	$	10,565	 	 	$	13,911	 
	Film liability
	 	 	18,027	 	 	 	21,765	 
	Other current liabilities
	 	 	8,821	 	 	 	9,403	 
	 
	 	 	 	 	 	 
	Total current liabilities
	 	$	37,413	 	 	$	45,079	 
	 
	 	 	 	 	 	 
	Film liability
	 	$	19,902	 	 	$	22,158	 
	Other long-term liabilities
	 	 	34,428	 	 	 	9,752	 
	 
	 	 	 	 	 	 
	Total long-term liabilities
	 	$	54,330	 	 	$	31,910	 
	 
	 	 	 	 	 	 

F-18

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Spin-off of Live Nation

     On December 2, 2005, the Company’s Board of Directors approved the spin-off of Live Nation,
made up of the Company’s former live entertainment segment and sports representation business. The
Company’s consolidated statements of operations have been restated to reflect Live Nation’s results
of operations in discontinued operations for the year ended December 31, 2005. The following table
displays financial information for Live Nation’s discontinued operations for the year ended
December 31, 2005:

	 	 	 	 	 
	 	 	2005(1)
	 	 	(In thousands)
	Revenue (including sales to other
Company segments of $0.7 million)

	 	$	2,858,481	 
	Income before income taxes

	 	$	(16,215	)

 

			
	(1)	 	Includes the results of operations for Live Nation through December 21, 2005.

     Included in income from discontinued operations, net is an income tax benefit of $316.7
million for the year ended December 31, 2005.

Transactions with Live Nation

     The Company sells advertising and other services to Live Nation. For the years ended December
31, 2007 and 2006 the Company recorded $6.1 million and $4.3 million, respectively, of revenue for
these advertisements. It is the Company’s opinion that these transactions were recorded at fair
value.

NOTE C—INTANGIBLE ASSETS AND GOODWILL

Definite-lived Intangibles

     The Company has definite-lived intangible assets which consist primarily of transit and street
furniture contracts and other contractual rights in the outdoor segments, talent and program right
contracts in the radio segment, and in the Company’s other segment, representation contracts for
non-affiliated radio and television stations. Definite-lived intangible assets are amortized over
the shorter of either the respective lives of the agreements or over the period of time the assets
are expected to contribute directly or indirectly to the Company’s future cash flows. The following
table presents the gross carrying amount and accumulated amortization for each major class of
definite-lived intangible assets at December 31, 2007 and 2006:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 
	 	 	Gross	 	 	 	 	 	 	Gross	 	 	 	 
	 	 	Carrying	 	 	Accumulated	 	 	Carrying	 	 	Accumulated	 
	 	 	Amount	 	 	Amortization	 	 	Amount	 	 	Amortization	 
	 	 	(In thousands)	 
	Transit, street furniture, and other
outdoor contractual rights
	 	$	867,283	 	 	$	613,897	 	 	$	821,364	 	 	$	530,063	 
	Talent contracts
	 	 	—	 	 	 	—	 	 	 	125,270	 	 	 	115,537	 
	Representation contracts
	 	 	400,316	 	 	 	212,403	 	 	 	349,493	 	 	 	175,658	 
	Other
	 	 	84,004	 	 	 	39,433	 	 	 	121,180	 	 	 	73,556	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	1,351,603	 	 	$	865,733	 	 	$	1,417,307	 	 	$	894,814	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

F-19

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     Total amortization expense from continuing operations related to definite-lived
intangible assets for the years ended December 31, 2007, 2006 and 2005 was $105.0 million, $150.7
million and $153.8 million, respectively. The following table presents the Company’s estimate of
amortization expense for each of the five succeeding fiscal years for definite-lived intangible
assets that exist at December 31, 2007:

	 	 	 	 	 
	 	 	(In thousands)
	2008
	 	$	87,668	 
	2009
	 	 	80,722	 
	2010
	 	 	62,740	 
	2011
	 	 	50,237	 
	2012
	 	 	42,067	 

     As acquisitions and dispositions occur in the future and as purchase price allocations
are finalized, amortization expense may vary.

Indefinite-lived Intangibles

     The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses and
billboard permits. FCC broadcast licenses are granted to both radio and television stations for up
to eight years under the Telecommunications Act of 1996. The Act requires the FCC to renew a
broadcast license if: it finds that the station has served the public interest, convenience and
necessity; there have been no serious violations of either the Communications Act of 1934 or the
FCC’s rules and regulations by the licensee; and there have been no other serious violations which
taken together constitute a pattern of abuse. The licenses may be renewed indefinitely at little or
no cost. The Company does not believe that the technology of wireless broadcasting will be replaced
in the foreseeable future. The Company’s billboard permits are issued in perpetuity by state and
local governments and are transferable or renewable at little or no cost. Permits typically include
the location which allows the Company the right to operate an advertising structure. The Company’s
permits are located on either owned or leased land. In cases where the Company’s permits are
located on leased land, the leases are typically from 10 to 20 years and renew indefinitely, with
rental payments generally escalating at an inflation based index. If the Company loses its lease,
the Company will typically obtain permission to relocate the permit or bank it with the
municipality for future use.

     The Company does not amortize its FCC broadcast licenses or billboard permits. The Company
tests these indefinite-lived intangible assets for impairment at least annually using a direct
method. This direct method assumes that rather than acquiring indefinite-lived intangible assets as
a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible
assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs
start-up costs during the build-up phase which are normally associated with going concern value.
Initial capital costs are deducted from the discounted cash flows model which results in value that
is directly attributable to the indefinite-lived intangible assets.

     Under the direct method, the Company aggregates its indefinite-lived intangible assets at the
market level for purposes of impairment testing as prescribed by EITF 02-07, Unit of Accounting for
Testing Impairment of Indefinite-Lived Intangible Assets. The Company’s key assumptions using the
direct method are market revenue growth rates, market share, profit margin, duration and profile of
the build-up period, estimated start-up capital costs and losses

F-20

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

incurred during the build-up period, the risk-adjusted discount rate and terminal values.
This data is populated using industry normalized information representing an average station within
a market.

Goodwill

     The Company tests goodwill for impairment using a two-step process. The first step, used to
screen for potential impairment, compares the fair value of the reporting unit with its carrying
amount, including goodwill. The second step, used to measure the amount of the impairment loss,
compares the implied fair value of the reporting unit goodwill with the carrying amount of that
goodwill. The Company’s reporting units for radio broadcasting and Americas outdoor advertising are
the reportable segments. The Company determined that each country in its International outdoor
segment constitutes a reporting unit and therefore tests goodwill for impairment at the country
level. The following table presents the changes in the carrying amount of goodwill in each of the
Company’s reportable segments for the years ended December 31, 2006 and 2007:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Americas	 	 	International	 	 	 	 	 	 	 
	 	 	Radio	 	 	Outdoor	 	 	Outdoor	 	 	Other	 	 	Total	 
	 	 	(In thousands)	 
	Balance as of December 31, 2005
	 	$	6,110,684	 	 	$	405,964	 	 	$	343,611	 	 	 	—	 	 	$	6,860,259	 
	Acquisitions
	 	 	42,761	 	 	 	249,527	 	 	 	42,222	 	 	 	—	 	 	 	334,510	 
	Dispositions
	 	 	(10,532	)	 	 	(1,913	)	 	 	—	 	 	 	—	 	 	 	(12,445	)
	Foreign currency
	 	 	—	 	 	 	14,085	 	 	 	40,109	 	 	 	—	 	 	 	54,194	 
	Adjustments
	 	 	(2,300	)	 	 	323	 	 	 	(312	)	 	 	6	 	 	 	(2,283	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as of December 31, 2006
	 	 	6,140,613	 	 	 	667,986	 	 	 	425,630	 	 	 	6	 	 	 	7,234,235	 
	Acquisitions
	 	 	5,608	 	 	 	20,361	 	 	 	13,733	 	 	 	1,994	 	 	 	41,696	 
	Dispositions
	 	 	(3,974	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(3,974	)
	Foreign currency
	 	 	—	 	 	 	78	 	 	 	35,430	 	 	 	—	 	 	 	35,508	 
	Adjustments
	 	 	(96,720	)	 	 	(89	)	 	 	(540	)	 	 	—	 	 	 	(97,349	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as of December 31, 2007
	 	$	6,045,527	 	 	$	688,336	 	 	$	474,253	 	 	$	2,000	 	 	$	7,210,116	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     Included in the Americas’ acquisitions amount above in 2006 is $148.6 million related
to the acquisition of Interspace, all of which is expected to be deductible for tax purposes.

     In 2007, the Company recorded a $97.4 million adjustment to its balance of goodwill related to
tax positions established as part of various radio station acquisitions for which the IRS audit
periods have now closed.

NOTE D—BUSINESS ACQUISITIONS

2007 Acquisitions

     The Company acquired domestic outdoor display faces and additional equity interests in
international outdoor companies for $69.1 million in cash during 2007. The Company’s national
representation business acquired representation contracts for $53.0 million in cash during 2007.

F-21

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2006 Acquisitions

     The Company acquired radio stations for $16.4 million and a music scheduling company
for $44.3 million in cash plus $10.0 million of deferred purchase consideration during 2006. The
Company also acquired Interspace Airport Advertising, Americas and international outdoor display
faces and additional equity interests in international outdoor companies for $242.4 million in
cash. The Company exchanged assets in one of its Americas outdoor markets for assets located in a
different market and recognized a gain of $13.2 million in “Gain on disposition of assets—net”. In
addition, the Company’s national representation firm acquired representation contracts for $38.1
million in cash.

2005 Acquisitions

     During 2005 the Company acquired radio stations for $3.6 million in cash. The Company
also acquired Americas outdoor display faces for $113.2 million in cash. The Company’s
international outdoor segment acquired display faces for $17.1 million and increased its investment
to a controlling majority interest in Clear Media Limited for $8.9 million. Clear Media is a
Chinese outdoor advertising company and as a result of consolidating its operations during the
third quarter of 2005, the acquisition resulted in an increase in the Company’s cash of $39.7
million. Also, the Company’s national representation business acquired new contracts for a total of
$47.7 million.

Acquisition Summary

     The following is a summary of the assets and liabilities acquired and the
consideration given for all acquisitions made during 2007 and 2006:

	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	Property, plant
and equipment
	 	$	28,002	 	 	$	49,641	 
	Accounts
receivable
	 	 	—	 	 	 	18,636	 
	Definite lived
intangibles
	 	 	55,017	 	 	 	177,554	 
	Indefinite-lived
intangible assets
	 	 	15,023	 	 	 	32,862	 
	Goodwill
	 	 	41,696	 	 	 	253,411	 
	Other assets
	 	 	3,453	 	 	 	6,006	 
	 
	 	 	 	 	 	 
	 
	 	 	143,191	 	 	 	538,110	 
	Other
liabilities
	 	 	(13,081	)	 	 	(64,303	)
	Minority
interests
	 	 	—	 	 	 	(15,293	)
	Deferred tax
	 	 	—	 	 	 	(21,361	)
	Subsidiary
common stock issued,
net of minority
interests
	 	 	—	 	 	 	(67,873	)
	 
	 	 	 	 	 	 
	 
	 	 	(13,081	)	 	 	(168,830	)
	 
	 	 	 	 	 	 
	Less: fair
value of net assets
exchanged in swap
	 	 	(8,000	)	 	 	(28,074	)
	 
	 	 	 	 	 	 
	Cash paid for
acquisitions
	 	$	122,110	 	 	$	341,206	 
	 
	 	 	 	 	 	 

     The Company has entered into certain agreements relating to acquisitions that provide
for purchase price adjustments and other future contingent payments based on the financial
performance of the acquired company. The Company will continue to accrue additional

F-22

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

amounts related to such contingent payments if and when it is determinable that the applicable
financial performance targets will be met. The aggregate of these contingent payments, if
performance targets were met, would not significantly impact the Company’s financial position or
results of operations.

NOTE E—INVESTMENTS

     The Company’s most significant investments in nonconsolidated affiliates are listed below:

Australian Radio Network

     The
Company owns a fifty-percent (50%) interest in Australian Radio Network (“ARN”), an
Australian company that owns and operates radio stations in Australia and New Zealand.

Grupo ACIR Comunicaciones

     The Company owns a forty-percent (40%) interest in Grupo ACIR Comunicaciones (“ACIR”), a
Mexican radio broadcasting company. ACIR owns and operates radio stations throughout Mexico.

Summarized Financial Information

     The following table summarizes the Company’s investments in these nonconsolidated
affiliates:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	All	 	 	 	 
	(In thousands)	 	ARN	 	 	ACIR	 	 	Others	 	 	Total	 
	At December 31,
2006
	 	$	145,646	 	 	$	68,260	 	 	$	97,352	 	 	$	311,258	 
	Acquisition
(disposition) of
investments, net
	 	 	—	 	 	 	—	 	 	 	(46	)	 	 	(46	)
	Other, net
	 	 	(22,259	)	 	 	—	 	 	 	2,861	 	 	 	(19,398	)
	Equity in net
earnings (loss)
	 	 	25,832	 	 	 	4,942	 	 	 	4,402	 	 	 	35,176	 
	Foreign currency
transaction adjustment
	 	 	(2,082	)	 	 	—	 	 	 	—	 	 	 	(2,082	)
	Foreign currency
translation adjustment
	 	 	18,337	 	 	 	(297	)	 	 	3,439	 	 	 	21,479	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	At December 31,
2007
	 	$	165,474	 	 	$	72,905	 	 	$	108,008	 	 	$	346,387	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

     The investments in the table above are not consolidated, but are accounted for under the
equity method of accounting, whereby the Company records its investments in these entities in the
balance sheet as “Investments in, and advances to, nonconsolidated affiliates.” The Company’s
interests in their operations are recorded in the statement of operations as “Equity in earnings of
nonconsolidated affiliates”. Accumulated undistributed earnings included in retained deficit for
these investments were $133.6 million, $112.8 million and $90.1 million for December 31, 2007, 2006
and 2005, respectively.

F-23

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 

 Other Investments

     Other investments of $237.6 million and $245.0 million at December 31, 2007 and 2006,
respectively, include marketable equity securities and other investments classified as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Fair	 	 	Unrealized	 	 	 	 
	Investments	 	Value	 	 	Gains	 	 	(Losses)	 	 	Net	 	 	Cost	 
	 	 	(In thousands)	 
	2007
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Available-for
sale
	 	$	140,731	 	 	$	104,996	 	 	$	—	 	 	$	104,996	 	 	$	35,735	 
	Trading
	 	 	85,649	 	 	 	78,391	 	 	 	—	 	 	 	78,391	 	 	 	7,258	 
	Other cost
investments
	 	 	11,218	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	11,218	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	237,598	 	 	$	183,387	 	 	$	—	 	 	$	183,387	 	 	$	54,211	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2006
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Available-for
sale
	 	$	154,297	 	 	$	118,563	 	 	$	—	 	 	$	118,563	 	 	$	35,734	 
	Trading
	 	 	74,953	 	 	 	67,695	 	 	 	—	 	 	 	67,695	 	 	 	7,258	 
	Other cost
investments
	 	 	15,730	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	15,730	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	244,980	 	 	$	186,258	 	 	$	—	 	 	$	186,258	 	 	$	58,722	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     A certain amount of the Company’s trading securities secure its obligations under
forward exchange contracts discussed in Note H.

     The accumulated net unrealized gain on available-for-sale securities, net of tax, of $69.4
million and $79.5 million were recorded in shareholders’ equity in “Accumulated other comprehensive
income” at December 31, 2007 and 2006, respectively. The net unrealized gain (loss) on trading
securities of $10.7 million and $20.5 million for the years ended December 31, 2007 and 2006,
respectively, is recorded on the statement of operations in “Gain (loss) on marketable securities”.
Other cost investments include various investments in companies for which there is no readily
determinable market value.

NOTE F—ASSET RETIREMENT OBLIGATION

     The Company’s asset retirement obligation is reported in “Other long-term liabilities” and
relates to its obligation to dismantle and remove outdoor advertising displays from leased land and
to reclaim the site to its original condition upon the termination or non-renewal of a lease. The
liability is capitalized as part of the related long-lived assets’ carrying value. Due to the high
rate of lease renewals over a long period of time, the calculation assumes that all related assets
will be removed at some period over the next 50 years. An estimate of third-party cost information
is used with respect to the dismantling of the structures and the reclamation of the site. The
interest rate used to calculate the present value of such costs over the retirement period is based
on an estimated risk adjusted credit rate for the same period.

F-24

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The following table presents the activity related to the Company’s asset
retirement obligation:

	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	Balance at
January 1
	 	$	59,280	 	 	$	49,807	 
	Adjustment due
to change in estimate
of related costs
	 	 	8,958	 	 	 	7,581	 
	Accretion of
liability
	 	 	4,236	 	 	 	3,539	 
	Liabilities
settled
	 	 	(1,977	)	 	 	(1,647	)
	 
	 	 	 	 	 	 
	Balance at
December 31
	 	$	70,497	 	 	$	59,280	 
	 
	 	 	 	 	 	 

NOTE G—LONG-TERM DEBT

     Long-term debt at December 31, 2007 and 2006 consisted of the following:

	 	 	 	 	 	 	 	 	 
	 	 	December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	Bank credit facilities
	 	$	174,619	 	 	$	966,488	 
	Senior Notes:
	 	 	 	 	 	 	 	 
	6.25% Senior Notes Due 2011
	 	 	750,000	 	 	 	750,000	 
	3.125% Senior Notes Due 2007
	 	 	—	 	 	 	250,000	 
	4.625% Senior Notes Due 2008
	 	 	500,000	 	 	 	500,000	 
	6.625% Senior Notes Due 2008
	 	 	125,000	 	 	 	125,000	 
	4.25% Senior Notes Due 2009
	 	 	500,000	 	 	 	500,000	 
	7.65% Senior Notes Due 2010
	 	 	750,000	 	 	 	750,000	 
	4.5% Senior Notes Due 2010
	 	 	250,000	 	 	 	250,000	 
	4.4% Senior Notes Due 2011
	 	 	250,000	 	 	 	250,000	 
	5.0% Senior Notes Due 2012
	 	 	300,000	 	 	 	300,000	 
	5.75% Senior Notes Due 2013
	 	 	500,000	 	 	 	500,000	 
	5.5% Senior Notes Due 2014
	 	 	750,000	 	 	 	750,000	 
	4.9% Senior Notes Due 2015
	 	 	250,000	 	 	 	250,000	 
	5.5% Senior Notes Due 2016
	 	 	250,000	 	 	 	250,000	 
	6.875% Senior Debentures Due 2018
	 	 	175,000	 	 	 	175,000	 
	7.25% Senior Debentures Due 2027
	 	 	300,000	 	 	 	300,000	 
	Subsidiary level notes
	 	 	644,860	 	 	 	671,305	 
	Other long-term debt
	 	 	106,119	 	 	 	164,939	 
	Purchase accounting adjustment and original issue (discount)
premium
	 	 	(11,849	)	 	 	(9,823	)
	Fair value adjustments related to interest rate swaps
	 	 	11,438	 	 	 	(29,834	)
	 
	 	 	 	 	 	 
	 
	 	 	6,575,187	 	 	 	7,663,075	 
	Less: current portion
	 	 	1,360,199	 	 	 	336,375	 
	 
	 	 	 	 	 	 
	Total long-term debt
	 	$	5,214,988	 	 	$	7,326,700	 
	 
	 	 	 	 	 	 

Bank Credit Facility

     The Company has a five-year, multi-currency revolving credit facility in the amount of
$1.75 billion. The interest rate is based upon a prime, LIBOR, or Federal Funds rate selected at
the

F-25

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company’s discretion, plus a margin. The multi-currency revolving credit facility can be used for
general working capital purposes including commercial paper support as well as to fund capital
expenditures, share repurchases, acquisitions and the refinancing of public debt securities.

     At December 31, 2007, the outstanding balance on the $1.75 billion credit facility was $174.6
million and, taking into account letters of credit of $82.8 million, $1.5 billion was available for
future borrowings, with the entire balance to be repaid on July 12, 2009. At December 31, 2007,
interest rates on this bank credit facility varied from 5.0% to 5.4%.

Senior Notes

     On February 1, 2007, the Company redeemed its 3.125% Senior Notes at their maturity for
$250.0 million plus accrued interest with proceeds from its bank credit facility.

     On December 17, 2007, the Company announced that it commenced a cash tender offer and consent
solicitation for its outstanding $750.0 million principal amount of the 7.65% Senior Notes due 2010
on the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 17, 2007. As of February 13, 2008, the Company had received tenders and consents
representing 98% of its outstanding 7.65% Senior Notes due 2010. The tender offer is conditioned
upon the consummation of the Merger. The completion of the Merger and the related debt financings
are not subject to, or conditioned upon, the completion of the tender offer.

     All fees and initial offering discounts are being amortized as interest expense over the life
of the respective notes. The aggregate principal amount and market value of the senior notes was
approximately $5.7 billion and $5.0 billion, respectively, at December 31, 2007. The aggregate
principal and market value of the senior notes was approximately $5.9 billion and $5.5 billion,
respectively, at December 31, 2006.

     Interest Rate Swaps: The Company entered into interest rate swap agreements on the 3.125%
senior notes due 2007, the 4.25% senior notes due 2009, the 4.4% senior notes due 2011 and the 5.0%
senior notes due 2012 whereby the Company pays interest at a floating rate and receives the fixed
rate coupon. The fair value of the Company’s swaps was an asset of $11.4 million and a liability of
$29.8 million at December 31, 2007 and 2006, respectively.

Subsidiary Level Notes

     AMFM Operating Inc. (“AMFM”), a wholly-owned subsidiary of the Company, has outstanding
long-term bonds, of which are all 8% senior notes due 2008. On November 13, 2007 AMFM redeemed
$26.4 million of its 8% senior notes pursuant to a Net Proceeds Offer (as defined in the indenture
governing the notes). Following the redemption, $644.9 million principal amount remained
outstanding. The senior notes include a purchase accounting premium of $3.2 million and $7.1
million at December 31, 2007 and 2006, respectively. The fair value of the senior notes was $661.0
million and $701.0 million at December 31, 2007 and 2006, respectively.

     On December 17, 2007, AMFM commenced a cash tender offer and consent solicitation for the
outstanding $644.9 million principal amount of the 8% Senior Notes due 2008 on the terms and
conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated

F-26

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 17, 2007. As of February 13, 2008, AMFM had received tenders and consents representing 87%
of its outstanding 8% Senior Notes due 2008. The tender offer is conditioned upon the consummation
of the Merger. The completion of the Merger and the related debt financings are not subject to, or
conditioned upon, the completion of the tender offer.

Other Borrowings

     Other debt includes various borrowings and capital leases utilized for general operating
purposes. Included in the $106.1 million balance at December 31, 2007, is $87.2 million that
matures in less than one year.

Debt Covenants

     The significant covenants on the Company’s $1.75 billion five-year, multi-currency revolving
credit facility relate to leverage and interest coverage contained and defined in the credit
agreement. The leverage ratio covenant requires the Company to maintain a ratio of consolidated
funded indebtedness to operating cash flow (as defined by the credit agreement) of less than 5.25x.
The interest coverage covenant requires the Company to maintain a minimum ratio of operating cash
flow (as defined by the credit agreement) to interest expense of 2.50x. In the event that the
Company does not meet these covenants, it is considered to be in default on the credit facility at
which time the credit facility may become immediately due. At December 31, 2007, the Company’s
leverage and interest coverage ratios were 3.0x and 5.1x, respectively. This credit facility
contains a cross default provision that would be triggered if we were to default on any other
indebtedness greater than $200.0 million.

     The Company’s other indebtedness does not contain provisions that would make it a default
if the Company were to default on our credit facility.

     The fees the Company pays on its $1.75 billion, five-year multi-currency revolving credit
facility depend on the highest of its long-term debt ratings, unless there is a split rating of
more than one level in which case the fees depend on the long-term debt rating that is one level
lower than the highest rating. Based on the Company’s current ratings level of B-/Baa3, its fees on
borrowings are a 52.5 basis point spread to LIBOR and are 22.5 basis points on the total $1.75
billion facility. In the event the Company’s ratings improve, the fee on borrowings and facility
fee decline gradually to 20.0 basis points and 9.0 basis points, respectively, at ratings of A/A3
or better. In the event that the Company’s ratings decline, the fee on borrowings and facility fee
increase gradually to 120.0 basis points and 30.0 basis points, respectively, at ratings of BB/Ba2
or lower.

     The Company believes there are no other agreements that contain provisions that trigger an
event of default upon a change in long-term debt ratings that would have a material impact to its
financial statements.

     Additionally, the Company’s 8% senior notes due 2008, which were originally issued by AMFM
Operating Inc., a wholly-owned subsidiary of the Company, contain certain restrictive covenants
that limit the ability of AMFM Operating Inc. to incur additional indebtedness, enter into certain
transactions with affiliates, pay dividends, consolidate, or effect certain asset sales.

F-27

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2007, the Company was in compliance with all debt covenants.

Future maturities of long-term debt at December 31, 2007 are as follows:

	 	 	 	 	 
	 	 	(In thousands)	 
	2008 (1)
	 	$	1,357,047	 
	2009
	 	 	686,514	 
	2010 (2)
	 	 	1,000,077	 
	2011
	 	 	1,002,250	 
	2012
	 	 	300,000	 
	Thereafter
	 	 	2,229,710	 
	 
	 	 	 
	Total (3)
	 	$	6,575,598	 
	 
	 	 	 

 

			
	(1)	 	The balance includes the $644.9 million principal amount of the 8%
Senior Notes due 2008 which the Company received tenders and consents
discussed above.
	 
	(2)	 	The balance includes the $750.0 million principal amount of the 7.65%
Senior Notes due 2010 which the Company received tenders and consents
discussed above.
	 
	(3)	 	The total excludes the $3.2 million in unamortized fair value purchase
accounting adjustment premiums related to the merger with AMFM, the
$11.4 million related to fair value adjustments for interest rate swap
agreements and the $15.0 million related to original issue discounts.

NOTE H—FINANCIAL INSTRUMENTS

     The Company has entered into financial instruments, such as interest rate swaps, secured
forward exchange contracts and foreign currency rate management agreements, with various financial
institutions. The Company continually monitors its positions with, and credit quality of, the
financial institutions which are counterparties to its financial instruments. The Company is
exposed to credit loss in the event of nonperformance by the counterparties to the agreements.
However, the Company considers this risk to be low.

Interest Rate Swaps

     The Company has $1.1 billion of interest rate swaps at December 31, 2007 that are designated
as fair value hedges of the underlying fixed-rate debt obligations. The terms of the underlying
debt and the interest rate swap agreements coincide; therefore the hedge qualifies for the
short-cut method defined in Statement 133. Accordingly, no net gains or losses were recorded on the
statement of operations related to the Company’s underlying debt and interest rate swap agreements.
On December 31, 2007, the fair value of the interest rate swap agreements was recorded on the
balance sheet as “Other long-term assets” with the offset recorded in “Long-term debt” of
approximately $11.4 million. On December 31, 2006, the fair value of the interest rate swap
agreements was recorded on the balance sheet as “Other long-term liabilities” with the offset
recorded in “Long-term debt” of approximately $29.8 million. Accordingly, an adjustment was made to
the swaps and carrying value of the underlying debt on December 31, 2007 and 2006 to reflect the
change in fair value.

Secured Forward Exchange Contracts

     In 2001, Clear Channel Investments, Inc., a wholly owned subsidiary of the Company, entered
into two ten-year secured forward exchange contracts that monetized 2.9 million shares of its
investment in American Tower Corporation (“AMT”). The AMT contracts had a value of

F-28

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$17.0 million and $10.3 million recorded in “Other long term liabilities” at December 31, 2007 and
December 31, 2006, respectively. These contracts are not designated as a hedge of the Company’s
cash flow exposure of the forecasted sale of the AMT shares. During the years ended December 31,
2007, 2006 and 2005, the Company recognized losses of $6.7 million, $22.0 million and $18.2
million, respectively, in “Gain (loss) on marketable securities” related to the change in the fair
value of these contracts. To offset the change in the fair value of these contracts, the Company
has recorded AMT shares as trading securities. During the years ended December 31, 2007, 2006 and
2005, the Company recognized income of $10.7 million, $20.5 million and $17.5 million,
respectively, in “Gain (loss) on marketable securities” related to the change in the fair value of
the shares.

Foreign Currency Rate Management

     As a result of the Company’s foreign operations, the Company is exposed to foreign currency
exchange risks related to its investment in net assets in foreign countries. To manage this risk,
the Company holds two United States dollar—Euro cross currency swaps with an aggregate Euro
notional amount of €706.0 million and a corresponding aggregate U.S. dollar notional amount of
$877.7 million. These cross currency swaps had a value of $127.4 million and $68.5 million at
December 31, 2007 and 2006, respectively, which was recorded in “Other long-term obligations”.

     The cross currency swaps require the Company to make fixed cash payments on the Euro notional
amount while it receives fixed cash payments on the equivalent U.S. dollar notional amount, all on
a semiannual basis. The Company has designated the cross currency swaps as a hedge of its net
investment in Euro denominated assets. The Company selected the forward method under the guidance
of the Derivatives Implementation Group Statement 133 Implementation Issue H8, Foreign Currency
Hedges: Measuring the Amount of Ineffectiveness in a Net Investment Hedge. The forward method
requires all changes in the fair value of the cross currency swaps and the semiannual cash payments
to be reported as a cumulative translation adjustment in other comprehensive income (loss) in the
same manner as the underlying hedged net assets. As of December 31, 2007, a $73.5 million loss, net
of tax, was recorded as a cumulative translation adjustment to “Other comprehensive income (loss)”
related to the cross currency swaps.

NOTE I—COMMITMENTS AND CONTINGENCIES

     The Company accounts for its rentals that include renewal options, annual rent escalation
clauses, minimum franchise payments and maintenance related to displays under the guidance in
EITF 01-8, Determining Whether an Arrangement Contains a Lease (“EITF 01-8”), Financial Accounting
Standards No. 13, Accounting for Leases, Financial Accounting Standards No. 29, Determining
Contingent Rentals an amendment of FASB Statement No. 13 (“Statement 29”) and FASB Technical
Bulletin 85-3, Accounting for Operating Leases with Scheduled Rent Increases (“FTB 85-3”).

     The Company considers its non-cancelable contracts that enable it to display advertising on
buses, taxis, trains, bus shelters, etc. to be leases in accordance with the guidance in EITF 01-8.
These contracts may contain minimum annual franchise payments which generally escalate each year.
The Company accounts for these minimum franchise payments on a

F-29

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

straight-line basis in accordance with FTB 85-3. If the rental increases are not scheduled in the
lease, for example an increase based on the CPI, those rents are considered contingent rentals and
are recorded as expense when accruable. Other contracts may contain a variable rent component based
on revenue. The Company accounts for these variable components as contingent rentals under
Statement 29, and records these payments as expense when accruable.

     The Company accounts for annual rent escalation clauses included in the lease term on a
straight-line basis under the guidance in FTB 85-3. The Company considers renewal periods in
determining its lease terms if at inception of the lease there is reasonable assurance the lease
will be renewed. Expenditures for maintenance are charged to operations as incurred, whereas
expenditures for renewal and betterments are capitalized.

     The Company leases office space, certain broadcasting facilities, equipment and the majority
of the land occupied by its outdoor advertising structures under long-term operating leases. The
Company accounts for these leases in accordance with the policies described above.

     The Company’s contracts with municipal bodies or private companies relating to street
furniture, billboard, transit and malls generally require the Company to build bus stops, kiosks
and other public amenities or advertising structures during the term of the contract. The Company
owns these structures and is generally allowed to advertise on them for the remaining term of the
contract. Once the Company has built the structure, the cost is capitalized and expensed over the
shorter of the economic life of the asset or the remaining life of the contract.

     Certain of the Company’s contracts contain penalties for not fulfilling its commitments
related to its obligations to build bus stops, kiosks and other public amenities or
advertising structures. Historically, any such penalties have not materially impacted the
Company’s financial position or results of operations.

     As of December 31, 2007, the Company’s future minimum rental commitments under
non-cancelable operating lease agreements with terms in excess of one year, minimum payments
under non-cancelable contracts in excess of one year, and capital expenditure commitments
consist of the following:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Non-Cancelable	 	 	Non-Cancelable	 	 	Capital	 
	 	 	Operating Leases	 	 	Contracts	 	 	Expenditures	 
	 	 	(In thousands)	 
	2008
	 	$	372,474	 	 	$	776,203	 	 	$	106,187	 
	2009
	 	 	333,870	 	 	 	632,680	 	 	 	33,171	 
	2010
	 	 	298,193	 	 	 	449,232	 	 	 	12,759	 
	2011
	 	 	252,083	 	 	 	399,317	 	 	 	5,483	 
	2012
	 	 	220,678	 	 	 	255,976	 	 	 	1,741	 
	Thereafter
	 	 	1,234,261	 	 	 	756,159	 	 	 	232	 
	 
	 	 	 	 	 	 	 	 	 
	Total
	 	$	2,711,559	 	 	$	3,269,567	 	 	$	159,573	 
	 
	 	 	 	 	 	 	 	 	 

     Rent expense charged to continuing operations for 2007, 2006 and 2005 was $1.2 billion, $1.1
billion and $1.0 billion, respectively.

     The Company is currently involved in certain legal proceedings and, as required, has accrued
its estimate of the probable costs for the resolution of these claims. These estimates

F-30

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

have been developed in consultation with counsel and are based upon an analysis of potential
results, assuming a combination of litigation and settlement strategies. It is possible, however,
that future results of operations for any particular period could be materially affected by changes
in the Company’s assumptions or the effectiveness of its strategies related to these proceedings.

     In various areas in which the Company operates, outdoor advertising is the object of
restrictive and, in some cases, prohibitive zoning and other regulatory provisions, either enacted
or proposed. The impact to the Company of loss of displays due to governmental action has been
somewhat mitigated by federal and state laws mandating compensation for such loss and
constitutional restraints.

     Certain acquisition agreements include deferred consideration payments based on performance
requirements by the seller typically involving the completion of a development or obtaining
appropriate permits that enable the Company to construct additional advertising displays. At
December 31, 2007, the Company believes its maximum aggregate contingency, which is subject to
performance requirements by the seller, is approximately $35.0 million. As the contingencies have
not been met or resolved as of December 31, 2007, these amounts are not recorded. If future
payments are made, amounts will be recorded as additional purchase price.

     The Company has various investments in nonconsolidated affiliates subject to agreements that
contain provisions that may result in future additional investments to be made by the Company. The
put values are contingent upon the financial performance of the investee and are typically based on
the investee meeting certain EBITDA targets, as defined in the agreement. The Company will continue
to accrue additional amounts related to such contingent payments if and when it is determinable
that the applicable financial performance targets will be met. The aggregate of these contingent
payments, if performance targets are met, would not significantly impact the financial position or
results of operations of the Company.

NOTE J—GUARANTEES

     Within the Company’s $1.75 billion credit facility, there exists a $150.0 million sub-limit
available to certain of the Company’s international subsidiaries. This $150.0 million sub-limit
allows for borrowings in various foreign currencies, which are used to hedge net assets in those
currencies and provides funds to the Company’s international operations for certain working capital
needs. Subsidiary borrowings under this sub-limit are guaranteed by the Company. At December 31,
2007, this portion of the $1.75 billion credit facility’s outstanding balance was $80.0 million,
which is recorded in “Long-term debt” on the Company’s financial statements.

     Within the Company’s bank credit facility agreement is a provision that requires the Company
to reimburse lenders for any increased costs that they may incur in an event of a change in law,
rule or regulation resulting in their reduced returns from any change in capital requirements. In
addition to not being able to estimate the potential amount of any future payment under this
provision, the Company is not able to predict if such event will ever occur.

     The Company currently has guarantees that provide protection to its international subsidiary’s
banking institutions related to overdraft lines up to approximately $40.2 million. As of December
31, 2007, no amounts were outstanding under these agreements.

F-31

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     As of December 31, 2007, the Company has outstanding commercial standby letters of credit and
surety bonds of $90.0 million and $52.6 million, respectively. These letters of credit and surety
bonds relate to various operational matters including insurance, bid, and performance bonds as well
as other items. These letters of credit reduce the borrowing availability on the Company’s bank
credit facilities, and are included in the Company’s calculation of its leverage ratio covenant
under the bank credit facilities. The surety bonds are not considered as borrowings under the
Company’s bank credit facilities.

NOTE K—INCOME TAXES

     Significant components of the provision for income tax expense (benefit) are as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	(In thousands)	 
	Current—federal
	 	$	187,700	 	 	$	211,444	 	 	$	(20,614	)
	Current—foreign
	 	 	43,776	 	 	 	40,454	 	 	 	56,879	 
	Current—state
	 	 	21,434	 	 	 	26,765	 	 	 	(2,500	)
	 
	 	 	 	 	 	 	 	 	 
	Total current
	 	 	252,910	 	 	 	278,663	 	 	 	33,765	 
	Deferred—federal
	 	 	175,524	 	 	 	185,053	 	 	 	385,471	 
	Deferred—foreign
	 	 	(1,400	)	 	 	(9,134	)	 	 	(35,040	)
	Deferred—state
	 	 	14,114	 	 	 	15,861	 	 	 	18,851	 
	 
	 	 	 	 	 	 	 	 	 
	Total deferred
	 	 	188,238	 	 	 	191,780	 	 	 	369,282	 
	 
	 	 	 	 	 	 	 	 	 
	Income tax expense
	 	$	441,148	 	 	$	470,443	 	 	$	403,047	 
	 
	 	 	 	 	 	 	 	 	 

     Significant components of the Company’s deferred tax liabilities and assets as of
December 31, 2007 and 2006 are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	Deferred tax liabilities:
	 	 	 	 	 	 	 	 
	Intangibles and fixed assets
	 	$	921,497	 	 	$	753,178	 
	Unrealized gain in marketable securities
	 	 	20,715	 	 	 	38,485	 
	Foreign
	 	 	7,799	 	 	 	4,677	 
	Equity in earnings
	 	 	44,579	 	 	 	26,277	 
	Investments
	 	 	17,585	 	 	 	13,396	 
	Deferred Income
	 	 	4,940	 	 	 	4,129	 
	Other
	 	 	11,814	 	 	 	11,460	 
	 
	 	 	 	 	 	 
	Total deferred tax liabilities
	 	 	1,028,929	 	 	 	851,602	 
	 
	 	 	 	 	 	 	 	 
	Deferred tax assets:
	 	 	 	 	 	 	 	 
	Accrued expenses
	 	 	91,080	 	 	 	19,908	 
	Long-term
debt
	 	 	56,026	 	 	 	35,081	 
	Net operating loss/Capital loss carryforwards
	 	 	521,187	 	 	 	558,371	 
	Bad debt reserves
	 	 	14,051	 	 	 	14,447	 
	Other
	 	 	90,511	 	 	 	66,635	 
	 
	 	 	 	 	 	 
	Total gross
deferred tax assets
	 	 	772,855	 	 	 	694,442	 
	Valuation allowance
	 	 	516,922	 	 	 	553,398	 
	 
	 	 	 	 	 	 
	Total deferred tax assets
	 	 	255,933	 	 	 	141,044	 
	 
	 	 	 	 	 	 
	Net deferred tax liabilities
	 	$	772,996	 	 	$	710,558	 
	 
	 	 	 	 	 	 

F-32

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     Included in the Company’s net deferred tax liabilities are $20.9 million and $19.3 million of
current net deferred tax assets for 2007 and 2006, respectively. The Company presents these assets
in “Other current assets” on its consolidated balance sheets. The remaining $793.9 million and
$729.8 million of net deferred tax liabilities for 2007 and 2006, respectively, are presented in
“Deferred tax liabilities” on the consolidated balance sheets.

     At December 31, 2007, net deferred tax liabilities include a deferred tax asset of $35.7
million relating to stock-based compensation expense under Statement 123(R). Full realization of
this deferred tax asset requires stock options to be exercised at a price equaling or exceeding the
sum of the grant price plus the fair value of the option at the grant date and restricted stock to
vest at a price equaling or exceeding the fair market value at the grant date. The provisions of
Statement 123(R), however, do not allow a valuation allowance to be recorded unless the company’s
future taxable income is expected to be insufficient to recover the asset. Accordingly, there can
be no assurance that the stock price of the Company’s common stock will rise to levels sufficient
to realize the entire tax benefit currently reflected in its balance sheet. See Note L for
additional discussion of Statement 123(R).

     The deferred tax liability related to intangibles and fixed assets primarily relates to the
difference in book and tax basis of acquired FCC licenses and tax deductible goodwill created from
the Company’s various stock acquisitions. In accordance with Statement 142, the Company no longer
amortizes FCC licenses and permits. Thus, a deferred tax benefit for the difference between book
and tax amortization for the Company’s FCC licenses, permits and tax-deductible goodwill is no
longer recognized, as these assets are no longer amortized for book purposes. As a result, this
deferred tax liability will not reverse over time unless the Company recognizes future impairment
charges related to its FCC licenses, permits and tax deductible goodwill or sells its FCC licenses
or permits. As the Company continues to amortize its tax basis in its FCC licenses, permits and tax
deductible goodwill, the deferred tax liability will increase over time.

     During 2005, the Company recognized a capital loss of approximately $2.4 billion as a result
of the spin-off of Live Nation. Of the $2.4 billion capital loss, approximately $734.5 million was
used to offset capital gains recognized in 2002, 2003 and 2004 and the Company received the related
$257.0 million tax refund on October 12, 2006. As of December 31, 2007, the remaining capital loss
carryforward is approximately $1.4 billion and it can be used to offset future capital gains for
the next three years. The Company has recorded an after tax valuation allowance of $516.9 million
related to the capital loss carryforward due to the uncertainty of the ability to utilize the
carryforward prior to its expiration. If the Company is able to utilize the capital loss
carryforward in future years, the valuation allowance will be released and be recorded as a current
tax benefit in the year the losses are utilized.

F-33

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The reconciliation of income tax computed at the U.S. federal statutory tax rates to income
tax expense (benefit) is:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	Amount	 	 	Percent	 	 	Amount	 	 	Percent	 	 	Amount	 	 	Percent	 
	 	 	(In thousands)	 
	Income tax expense (benefit)
at statutory rates
	 	$	448,298	 	 	 	35	%	 	$	399,423	 	 	 	35	%	 	$	356,316	 	 	 	35	%
	State income taxes, net of
federal tax benefit
	 	 	35,548	 	 	 	3	%	 	 	42,626	 	 	 	4	%	 	 	16,351	 	 	 	2	%
	Foreign taxes
	 	 	(8,857	)	 	 	(1	%)	 	 	6,391	 	 	 	1	%	 	 	6,624	 	 	 	1	%
	Nondeductible items
	 	 	6,228	 	 	 	0	%	 	 	2,607	 	 	 	0	%	 	 	2,337	 	 	 	0	%
	Changes in valuation
allowance and other
estimates
	 	 	(34,005	)	 	 	(3	%)	 	 	16,482	 	 	 	1	%	 	 	19,673	 	 	 	2	%
	Other, net
	 	 	(6,064	)	 	 	(0	%)	 	 	2,914	 	 	 	0	%	 	 	1,746	 	 	 	0	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	$	441,148	 	 	 	34	%	 	$	470,443	 	 	 	41	%	 	$	403,047	 	 	 	40	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     During 2007, the Company utilized approximately $2.2 million of net operating loss
carryforwards, the majority of which were generated by certain acquired companies prior to their
acquisition by the Company. The utilization of the net operating loss carryforwards reduced current
taxes payable and current tax expense for the year ended December 31, 2007. The Company’s effective
income tax rate for 2007 was 34.4% as compared to 41.2% for 2006. For 2007, the effective tax rate
was primarily affected by the recording of current tax benefits of approximately $45.7 million
related to the settlement of several tax positions with the Internal Revenue Service (“IRS”) for
the 1999 through 2004 tax years and deferred tax benefits of approximately $14.6 million related to
the release of valuation allowances for the use of certain capital loss carryforwards. These tax
benefits were partially offset by additional current tax expense being recorded in 2007 due to an
increase in Income before income taxes of $139.6 million.

     During 2006, the Company utilized approximately $70.3 million of net operating loss
carryforwards, the majority of which were generated during 2005. The utilization of the net
operating loss carryforwards reduced current taxes payable and current tax expense for the year
ended December 31, 2006. In addition, current tax expense was reduced by approximately $22.1
million related to the disposition of certain operating assets and the filing of an amended tax
return during 2006. As discussed above, the Company recorded a capital loss on the spin-off of Live
Nation. During 2006 the amount of capital loss carryforward and the related valuation allowance was
adjusted to the final amount reported on our 2005 filed tax return.

     During 2005, current tax expense was reduced by approximately $204.7 million from foreign
exchange losses as a result of the Company’s restructuring its international businesses consistent
with its strategic realignment, a foreign exchange loss for tax purposes on the redemption of the
Company’s Euro denominated bonds and tax deductions taken on an amended tax return filing for a
previous year. These losses resulted in a net operating loss of $65.5 million for 2005. The
Company’s deferred tax expense increased as a result of these items. As stated above, the Company
recognized a capital loss of approximately $2.4 billion during 2005. Approximately $925.5 million
of the capital loss was utilized in 2005 and carried back to

F-34

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

earlier years and no amount was utilized in 2006. The anticipated utilization of the capital loss
resulted in a $314.1 million current tax benefit that was recorded as a component of discontinued
operations in 2005.

     The remaining federal net operating loss carryforwards of $9.5 million expires in various
amounts from 2008 to 2020.

     The Company adopted Financial Accounting Standard Board Interpretation No. 48, Accounting for
Uncertainty in Income Taxes (“FIN 48”) on January 1, 2007. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in the financial statements. FIN 48 prescribes a recognition
threshold for the financial statement recognition and measurement of a tax position taken or
expected to be taken within an income tax return. The adoption of FIN 48 resulted in a decrease of
$0.2 million to the January 1, 2007 balance of “Retained deficit”, an increase of $101.7 million in
“Other long term-liabilities” for unrecognized tax benefits and a decrease of $123.0 million in
“Deferred income taxes”. The total amount of unrecognized tax benefits at January 1, 2007 was
$416.1 million, inclusive of $89.6 million for interest. Of this total, $218.4 million represents
the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective
income tax rate in future periods.

     The Company continues to record interest and penalties related to unrecognized tax benefits in
current income tax expense. The total amount of interest accrued at December 31, 2007 was $43.0
million. The total amount of unrecognized tax benefits and accrued interest and penalties at
December 31, 2007 was $237.1 million and is recorded in “Other long-term liabilities” on the
Company’s consolidated balance sheets. Of this total, $232.8 million represents the amount of
unrecognized tax benefits and accrued interest and penalties that, if recognized, would favorably
affect the effective income tax rate in future periods.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Accrued	 	 	Gross	 
	 	 	Unrecognized	 	 	Interest and	 	 	Unrecognized	 
	 	 	Tax Benefits	 	 	Penalties	 	 	Tax Benefits	 
	 	 	(In thousands)	 
	Balance at January 1, 2007
	 	$	326,478	 	 	$	89,692	 	 	$	416,170	 
	Increases due to tax positions taken during 2007
	 	 	18,873	 	 	 	—	 	 	 	18,873	 
	Increase due to tax positions taken in previous years
	 	 	45,404	 	 	 	25,761	 	 	 	71,165	 
	Decreases due to settlements with taxing
authorities
	 	 	(196,236	)	 	 	(72,274	)	 	 	(268,510	)
	Decreases due to lapse of statute of limitations
	 	 	(459	)	 	 	(154	)	 	 	(613	)
	 
	 	 	 	 	 	 	 	 	 
	Balance at December 31, 2007
	 	$	194,060	 	 	$	43,025	 	 	$	237,085	 
	 
	 	 	 	 	 	 	 	 	 

     The Company and its subsidiaries file income tax returns in the United States federal
jurisdiction and various state and foreign jurisdictions. As stated above, the Company settled
several federal tax positions for the 1999 through 2004 tax years with the IRS during the year
ended December 31, 2007. As a result of this settlement and other state and foreign settlements,
the Company reduced its balance of unrecognized tax benefits and associated accrued interest and
penalties by $268.5 million. Of this amount, $52.4 million was recorded as a decrease to current
tax expense, $97.4 million as a decrease to goodwill attributable to prior acquisitions, and $118.7
million as adjustments to current and deferred tax payables and other balance sheet accounts. The
IRS is currently auditing the Company’s 2005 and 2006 tax years. Substantially all

F-35

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

material state, local, and foreign income tax matters have been concluded for years through 1999.
The Company does not expect to resolve any material federal tax positions within the next twelve
months.

NOTE L—SHAREHOLDERS’ EQUITY

Dividends

     The Company’s Board of Directors declared quarterly cash dividends as follows.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount	 	 	 	 	 	 
	 	 	per	 	 	 	 	 	 
	 	 	Common	 	 	 	 	 	Total
	Declaration Date	 	Share	 	Record Date	 	Payment Date	 	Payment
	 	 	(In millions, except per share data)
	2007:
	 	 	 	 	 	 	 	 	 	 	 	 
	February 21, 2007
	 	 	0.1875	 	 	March 31, 2007	 	April 15, 2007	 	$	93.0	 
	April 19, 2007
	 	 	0.1875	 	 	June 30, 2007	 	July 15, 2007	 	 	93.4	 
	July 27, 2007
	 	 	0.1875	 	 	September 30, 2007	 	October 15, 2007	 	 	93.4	 
	December 3, 2007
	 	 	0.1875	 	 	December 31, 2007	 	January 15, 2008	 	 	93.4	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2006:
	 	 	 	 	 	 	 	 	 	 	 	 
	February 14, 2006
	 	 	0.1875	 	 	March 31, 2006	 	April 15, 2006	 	$	95.5	 
	April 26, 2006
	 	 	0.1875	 	 	June 30, 2006	 	July 15, 2006	 	 	94.0	 
	July 25, 2006
	 	 	0.1875	 	 	September 30, 2006	 	October 15, 2006	 	 	92.4	 
	October 25, 2006
	 	 	0.1875	 	 	December 31, 2006	 	January 15, 2007	 	 	92.6	 

Share-Based Payments

     The Company has granted options to purchase its common stock to employees and directors of the
Company and its affiliates under various stock option plans typically at no less than the fair
value of the underlying stock on the date of grant. These options are granted for a term not
exceeding ten years and are forfeited, except in certain circumstances, in the event the employee
or director terminates his or her employment or relationship with the Company or one of its
affiliates. These options vest over a period of up to five years. All option plans contain
anti-dilutive provisions that permit an adjustment of the number of shares of the Company’s common
stock represented by each option for any change in capitalization.

     The Company adopted the fair value recognition provisions of Statement 123(R) on January 1,
2006, using the modified-prospective-transition method. The fair value of the options is estimated
using a Black-Scholes option-pricing model and amortized straight-line to expense over the vesting
period. Prior to January 1, 2006, the Company accounted for its share-based payments under the
recognition and measurement provisions of APB 25 and related Interpretations, as permitted by
Statement 123. Under that method, when options are granted with a strike price equal to or greater
than the market price on the date of issuance, there is no impact on earnings either on the date of
grant or thereafter, absent certain modifications to the options. The amounts recorded as
share-based payments prior to adopting Statement 123(R) primarily related to the expense associated
with restricted stock awards. Under the modified-prospective-transition method, compensation cost
recognized beginning in 2006 includes: (a) compensation cost for all share-based payments granted
prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in
accordance with the original

F-36

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

provisions of Statement 123, and (b) compensation cost for all share-based payments granted
subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the
provisions of Statement 123(R). As permitted under the modified-prospective-transition method,
results for prior periods have not been restated.

     As a result of adopting Statement 123(R) on January 1, 2006, the Company’s income before
income taxes, minority interest and discontinued operations for the year ended December 31, 2006
was $27.3 million lower and net income for the year ended December 31, 2006 was $17.5 million lower
than if it had continued to account for share-based compensation under APB 25. Basic and diluted
earnings per share for the year ended December 31, 2006 were $.04 and $.03 lower, respectively,
than if the Company had continued to account for share-based compensation under APB 25.

     Prior to the adoption of Statement 123(R), the Company presented all tax benefits of
deductions resulting from the exercise of stock options as operating cash flows in the Statement of
Cash Flows. Statement 123(R) requires the cash flows from the tax benefits resulting from tax
deductions in excess of the compensation cost recognized for those options (excess tax benefits) to
be classified as financing cash flows. The excess tax benefit that is required to be classified as
a financing cash inflow after adoption of Statement 123(R) is not material.

     The following table illustrates the effect on net income and earnings per share for the year
ended December 31, 2005 as if the Company had applied the fair value recognition provisions of
Statement 123(R)to options granted under the Company’s stock option plans in all periods presented.
For purposes of this pro forma disclosure, the value of the options, excluding restricted stock
awards, is estimated using a Black-Scholes option-pricing model and amortized to expense over the
options’ vesting periods.

	 	 	 	 	 
	 	 	2005	 
	 	 	(In thousands,	 
	 	 	except per	 
	 	 	share data)	 
	Income before discontinued operations:
	 	 	 	 
	Reported
	 	$	597,151	 
	Add:      Share-based payments included in reported net income, net of
related tax effects
	 	 	6,081	 
	Deduct: Total share-based payments determined under fair value based
method for all awards, net of related tax effects
	 	 	(30,426	)
	 
	 	 	 
	Pro Forma
	 	$	572,806	 
	 
	 	 	 
	Income from discontinued operations, net of tax:
	 	 	 	 
	Reported
	 	$	338,511	 
	Add:      Share-based payments included in reported net income, net of
related tax effects
	 	 	1,313	 
	Deduct: Total share-based payments determined under fair value based
method for all awards, net of related tax effects
	 	 	4,067	 
	 
	 	 	 
	Pro Forma
	 	$	343,891	 
	 
	 	 	 

F-37

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	 	 	 	 	 
	 	 	2005	 
	 	 	(In thousands,	 
	 	 	except per	 
	 	 	share data)	 
	Income before discontinued operations per common share:
	 	 	 	 
	Basic:
	 	 	 	 
	Reported
	 	$	1.09	 
	 
	 	 	 
	Pro Forma
	 	$	1.05	 
	 
	 	 	 
	 
	 	 	 	 
	Diluted:
	 	 	 	 
	Reported
	 	$	1.09	 
	 
	 	 	 
	Pro Forma
	 	$	1.05	 
	 
	 	 	 
	 
	 	 	 	 
	Discontinued operations, net per common share:
	 	 	 	 
	Basic:
	 	 	 	 
	Reported
	 	$	.62	 
	 
	 	 	 
	Pro Forma
	 	$	.63	 
	 
	 	 	 
	 
	 	 	 	 
	Diluted:
	 	 	 	 
	 
	 	 	 
	Reported
	 	$	.62	 
	 
	 	 	 
	Pro Forma
	 	$	.63	 
	 
	 	 	 

     The fair value of each option awarded is estimated on the date of grant using a Black-Scholes
option-pricing model. Expected volatilities are based on implied volatilities from traded options
on the Company’s stock, historical volatility on the Company’s stock, and other factors. The
expected life of options granted represents the period of time that options granted are expected to
be outstanding. The Company uses historical data to estimate option exercises and employee
terminations within the valuation model. Prior to the adoption of Statement 123(R), the Company
recognized forfeitures as they occurred in its Statement 123 pro forma disclosures. Beginning
January 1, 2006, the Company includes estimated forfeitures in its compensation cost and updates
the estimated forfeiture rate through the final vesting date of awards. The risk free interest rate
is based on the U.S. Treasury yield curve in effect at the time of grant for periods equal to the
expected life of the option. The following assumptions were used to calculate the fair value of the
Company’s options on the date of grant during the years ended December 31, 2007, 2006 and 2005:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2007	 	2006	 	2005
	Expected volatility
	 	 	25%	 	 	 	25%	 	 	 	25%	 
	Expected life in years
	 	 	5.5 - 7	 	 	 	5 - 7.5	 	 	 	5 - 7.5	 
	Risk-free interest rate
	 	 	4.74%
- 4.81%	 	 	 	4.61%
- 5.10%	 	 	 	3.76% - 4.44%	 
	Dividend yield
	 	 	1.97%	 	 	 	2.32% - 2.65%	 	 	 	1.46% - 2.36%	 

F-38

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The following table presents a summary of the Company’s stock options outstanding at and stock
option activity during the year ended December 31, 2007 (“Price” reflects the weighted average
exercise price per share):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Weighted Average	 	Aggregate
	 	 	 	 	 	 	 	 	 	 	Remaining	 	Intrinsic
	 	 	Options	 	Price	 	Contractual Term	 	Value
	 	 	(In thousands, except per share data)
	Outstanding, January 1, 2007
	 	 	36,175	 	 	$	42.18	 	 	 	 	 	 	 	 	 
	Granted (a)
	 	 	5	 	 	 	38.11	 	 	 	 	 	 	 	 	 
	Exercised (b)
	 	 	(3,021	)	 	 	23.10	 	 	 	 	 	 	 	 	 
	Forfeited
	 	 	(422	)	 	 	32.05	 	 	 	 	 	 	 	 	 
	Expired
	 	 	(2,094	)	 	 	51.67	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding, December 31, 2007
	 	 	30,643	 	 	 	43.56	 	 	2.43 years	 	$	20,879	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Exercisable
	 	 	23,826	 	 	 	46.79	 	 	1.63 years	 	 	4,089	 
	Expect to Vest
	 	 	6,817	 	 	 	32.26	 	 	5.2 years	 	 	16,790	 

 

			
	(a)	 	The weighted average grant date fair value of options granted
during the years ended December 31, 2007, 2006 and 2005 was
$10.60, $7.21 and $8.01, respectively.
	 
	(b)	 	Cash received from option exercises for the year ended December
31, 2007 was $69.8 million, and the Company received an income tax
benefit of $6.5 million relating to the options exercised during
the year ended December 31, 2007. The total intrinsic value of
options exercised during the years ended December 31, 2007, 2006
and 2005 was $41.2 million, $22.2 million and $10.8 million,
respectively.

     A summary of the Company’s unvested options at and changes during the year ended
December 31, 2007, is presented below:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Weighted
	 	 	 	 	 	 	Average
	 	 	 	 	 	 	Grant
	 	 	 	 	 	 	Date
	 	 	Options	 	Fair Value
	 	 	(In thousands,
	 	 	except per share data)
	Unvested, January 1, 2007
	 	 	7,789	 	 	$	10.77	 
	Granted
	 	 	5	 	 	 	10.60	 
	Vested (a)
	 	 	(556	)	 	 	14.23	 
	Forfeited
	 	 	(421	)	 	 	10.63	 
	 
	 	 	 	 	 	 	 	 
	Unvested, December 31, 2007
	 	 	6,817	 	 	 	10.80	 
	 
	 	 	 	 	 	 	 	 

 

			
	(a)	 	The total fair value of shares vested during the year ended December 31, 2007 and 2006
was $7.9 million and $95.3 million, respectively.

Restricted Stock Awards

     The Company has granted restricted stock awards to employees and directors of the Company and
its affiliates. These common shares hold a legend which restricts their transferability for a term
of up to five years and are forfeited, except in certain circumstances, in the event the employee
or director terminates his or her employment or relationship with the Company prior to the lapse of
the restriction. The restricted stock awards were granted out of the Company’s stock option plans.
Recipients of the restricted stock awards are entitled to all cash dividends as of the date the
award was granted.

F-39

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The following table presents a summary of the Company’s restricted stock outstanding at
and restricted stock activity during the year ended December 31, 2007 (“Price” reflects the
weighted average share price at the date of grant):

	 	 	 	 	 	 	 	 	 
	 	 	Awards	 	Price
	 	 	(In thousands,
	 	 	except per share data)
	Outstanding, January 1, 2007
	 	 	2,282	 	 	$	32.64	 
	Granted
	 	 	1,161	 	 	 	38.07	 
	Vested (restriction lapsed)
	 	 	(53	)	 	 	34.63	 
	Forfeited
	 	 	(89	)	 	 	32.47	 
	 
	 	 	 	 	 	 	 	 
	Outstanding, December 31, 2007
	 	 	3,301	 	 	 	34.52	 
	 
	 	 	 	 	 	 	 	 

Subsidiary Share-Based Awards

     The Company’s subsidiary, Clear Channel Outdoor Holdings, Inc. (“CCO”), grants options to
purchase shares of its Class A common stock to its employees and directors and its affiliates under
its incentive stock plan typically at no less than the fair market value of the underlying stock on
the date of grant. These options are granted for a term not exceeding ten years and are forfeited,
except in certain circumstances, in the event the employee or director terminates his or her
employment or relationship with CCO or one of its affiliates. These options vest over a period of
up to five years. The incentive stock plan contains anti-dilutive provisions that permit an
adjustment of the number of shares of CCO’s common stock represented by each option for any change
in capitalization.

     Prior to CCO’s IPO, CCO did not have any compensation plans under which it granted stock
awards to employees. However, the Company had granted certain of CCO’s officers and other key
employees stock options to purchase shares of the Company’s common stock. All outstanding options
to purchase shares of the Company’s common stock held by CCO employees were converted using an
intrinsic value method into options to purchase shares of CCO Class A common stock concurrent with
the closing of CCO’s IPO.

     The fair value of each option awarded is estimated on the date of grant using a Black-Scholes
option-pricing model. Expected volatilities are based on implied volatilities from traded options
on CCO’s stock, historical volatility on CCO’s stock, and other factors. The expected life of
options granted represents the period of time that options granted are expected to be outstanding.
CCO uses historical data to estimate option exercises and employee terminations within the
valuation model. Prior to the adoption of Statement 123(R), the Company recognized forfeitures as
they occurred in its Statement 123 pro forma disclosures. Beginning January 1, 2006, the Company
includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate
through the final vesting date of awards. The risk free interest rate is based on the U.S. Treasury
yield curve in effect at the time of grant for periods equal to the expected life of the option.
The following assumptions were used to calculate the fair value of CCO’s options on the date of
grant during the years ended December 31, 2007, 2006 and 2005:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2007	 	2006	 	2005
	Expected volatility
	 	 	27%	 	 	 	27%		 	 	25% - 27%	 
	Expected life in years
	 	 	5.0 - 7.0	 	 	 	5.0 - 7.5	 	 	 	1.3 - 7.5	 
	Risk-free interest rate
	 	 	4.76%  -  4.89%	 	 	 	4.58% - 5.08%	 	 	 	4.42% - 4.58%	 
	Dividend yield
	 	 	0%	 	 	 	0%	 	 	 	0%	 

F-40

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The following table presents a summary of CCO’s stock options outstanding at and stock option
activity during the year ended December 31, 2007 (“Price” reflects the weighted average exercise
price per share):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Weighted	 	 
	 	 	 	 	 	 	 	 	 	 	Average	 	 
	 	 	 	 	 	 	 	 	 	 	Remaining	 	Aggregate
	 	 	 	 	 	 	 	 	 	 	Contractual	 	Intrinsic
	 	 	Options	 	Price	 	Term	 	Value
	 	 	(In thousands, except per share data)
	Outstanding, January 1, 2007
	 	 	7,707	 	 	$	23.41	 	 	 	 	 	 	 	 	 
	Granted (a)
	 	 	978	 	 	 	29.02	 	 	 	 	 	 	 	 	 
	Exercised (b)
	 	 	(454	)	 	 	23.85	 	 	 	 	 	 	 	 	 
	Forfeited
	 	 	(71	)	 	 	19.83	 	 	 	 	 	 	 	 	 
	Expired
	 	 	(624	)	 	 	36.25	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding, December 31, 2007
	 	 	7,536	 	 	 	23.08	 	 	4.2 years	 	$	40,259	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Exercisable
	 	 	2,915	 	 	 	26.82	 	 	1.6 years	 	$	6,900	 
	Expect to vest
	 	 	4,622	 	 	 	20.73	 	 	5.9 years	 	$	33,359	 

 

			
	(a)	 	The weighted average grant date fair value of options granted
during the years ended December 31, 2007, 2006 and 2005 was
$11.05, $6.76 and $6.51, respectively.
	 
	(b)	 	Cash received from option exercises for the year ended December
31, 2007 was $10.8 million. The total intrinsic value of options
exercised during the years ended December 31, 2007 and 2006 was
$2.0 million and $0.3 million, respectively.

     A summary of CCO’s unvested options at and changes during the year ended December 31,
2007, is presented below:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Weighted
	 	 	 	 	 	 	Average
	 	 	 	 	 	 	Grant
	 	 	 	 	 	 	Date
	 	 	Options	 	Fair Value
	 	 	(In thousands,
	 	 	except per share data)
	Unvested, January 1, 2007
	 	 	4,151	 	 	$	5.78	 
	Granted
	 	 	978	 	 	 	11.05	 
	Vested (a)
	 	 	(436	)	 	 	4.55	 
	Forfeited
	 	 	(71	)	 	 	5.91	 
	 
	 	 	 	 	 	 	 	 
	Unvested, December 31, 2007
	 	 	4,622	 	 	 	7.01	 
	 
	 	 	 	 	 	 	 	 

 

			
	(a)	 	The total fair value of shares vested during the year
ended December 31, 2007 and 2006 was $2.0 million and
$1.6 million, respectively.

     CCO also grants restricted stock awards to employees and directors of CCO and its affiliates.
These common shares hold a legend which restricts their transferability for a term of up to five
years and are forfeited, except in certain circumstances, in the event the employee terminates his
or her employment or relationship with CCO prior to the lapse of the restriction. The restricted
stock awards were granted out of the CCO’s stock option plan.

F-41

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

     The following table presents a summary of CCO’s restricted stock outstanding at and restricted
stock activity during the year ended December 31, 2007 (“Price” reflects the weighted average share
price at the date of grant):

	 	 	 	 	 	 	 	 	 
	 	 	Awards	 	Price
	 	 	(In thousands,
	 	 	except per share data)
	Outstanding, January 1, 2007
	 	 	217	 	 	$	18.84	 
	Granted
	 	 	293	 	 	 	29.02	 
	Vested (restriction lapsed)
	 	 	(10	)	 	 	18.37	 
	Forfeited
	 	 	(9	)	 	 	20.48	 
	 
	 	 	 	 	 	 	 	 
	Outstanding, December 31, 2007
	 	 	491	 	 	 	24.57	 
	 
	 	 	 	 	 	 	 	 

Unrecognized share-based compensation cost

     As of December 31, 2007, there was $89.8 million of unrecognized compensation cost, net of
estimated forfeitures, related to unvested share-based compensation arrangements. The cost is
expected to be recognized over a weighted average period of approximately three years.

Share Repurchase Programs

     The Company’s Board of Directors approved six separate share repurchase programs during 2004,
2005 and 2006 for an aggregate $5.3 billion. The Company had repurchased an aggregate 130.9 million
shares for $4.3 billion, including commission and fees, under all six share repurchase programs as
of December 31, 2006, with $1.0 billion remaining available. No shares were repurchased during the
year ended December 31, 2007. The final $1.0 billion share repurchase program expired on September
6, 2007.

Shares Held in Treasury

     Included in the 157,744 and 114,449 shares held in treasury are 42,677 and 14,449 shares that
the Company holds in Rabbi Trusts at December 31, 2007 and 2006, respectively, relating to the
Company’s non-qualified deferred compensation plan. No shares were retired from the Company’s
shares held in treasury account during the year ended December 31, 2007 and 46.7 million shares
were retired from the Company’s shares held in treasury account during the year ended December 31,
2006.

F-42

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reconciliation of Earnings per Share

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	(In thousands,	 
	 	 	except per share data)	 
	NUMERATOR:
	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations
	 	$	792,674	 	 	$	638,839	 	 	$	597,151	 
	Income from discontinued operations, net
	 	 	145,833	 	 	 	52,678	 	 	 	338,511	 
	 
	 	 	 	 	 	 	 	 	 
	Net income
	 	 	938,507	 	 	 	691,517	 	 	 	935,662	 
	Effect of dilutive securities:
	 	 	 	 	 	 	 	 	 	 	 	 
	None
	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 
	Numerator for net income per common share—diluted
	 	$	938,507	 	 	$	691,517	 	 	$	935,662	 
	 
	 	 	 	 	 	 	 	 	 
	DENOMINATOR:
	 	 	 	 	 	 	 	 	 	 	 	 
	Weighted average common shares
	 	 	494,347	 	 	 	500,786	 	 	 	545,848	 
	Effect of dilutive securities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Stock options and common stock warrants (a)
	 	 	1,437	 	 	 	853	 	 	 	1,303	 
	 
	 	 	 	 	 	 	 	 	 
	Denominator for net income per common share—diluted
	 	 	495,784	 	 	 	501,639	 	 	 	547,151	 
	 
	 	 	 	 	 	 	 	 	 
	Net income per common share:
	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations—Basic
	 	$	1.60	 	 	$	1.27	 	 	$	1.09	 
	Discontinued operations—Basic
	 	 	.30	 	 	 	.11	 	 	 	.62	 
	 
	 	 	 	 	 	 	 	 	 
	Net income—Basic
	 	$	1.90	 	 	$	1.38	 	 	$	1.71	 
	 
	 	 	 	 	 	 	 	 	 
	Income before discontinued operations—Diluted
	 	$	1.60	 	 	$	1.27	 	 	$	1.09	 
	Discontinued operations —Diluted
	 	 	.29	 	 	 	.11	 	 	 	.62	 
	 
	 	 	 	 	 	 	 	 	 
	Net income—Diluted
	 	$	1.89	 	 	$	1.38	 	 	$	1.71	 
	 
	 	 	 	 	 	 	 	 	 

 

			
	(a)	 	22.2 million, 24.2 million and 27.0 million stock options were outstanding at December 31,
2007, 2006 and 2005, respectively, that were not included in the computation of diluted
earnings per share because to do so would have been anti-dilutive as the respective options’
strike price was greater than the current market price of the shares.

NOTE M—EMPLOYEE STOCK AND SAVINGS PLANS

     The Company has various 401 (k) savings and other plans for the purpose of providing
retirement benefits for substantially all employees. Both the employees and the Company make
contributions to the plan. The Company matches a portion of an employee’s contribution. Company
matched contributions vest to the employees based upon their years of service to the Company.
Contributions from continuing operations to these plans of $39.1 million, $36.2 million and $35.3
million were charged to expense for 2007, 2006 and 2005, respectively.

     The Company has a non-qualified employee stock purchase plan for all eligible employees. Under
the plan, shares of the Company’s common stock may be purchased at 95% of the market value on the
day of purchase. The Company changed its discount from market value offered to participants under
the plan from 15% to 5% in July 2005. Employees may purchase shares having a value not exceeding
10% of their annual gross compensation or $25,000, whichever is lower. During 2006 and 2005,
employees purchased 144,444 and 222,789 shares at weighted average share prices of $28.56 and
$28.79, respectively. Effective January 1, 2007 the Company no longer accepts contributions to this
plan as a condition of its Merger Agreement.

     The Company offers a non-qualified deferred compensation plan for highly compensated
executives allowing deferrals up to 50% of their annual salary and up to 80% of their bonus before
taxes. The Company does not match any deferral amounts and retains ownership of all assets until
distributed. Participants in the plan have the opportunity to choose from different

F-43

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

investment options. In accordance with the provisions of EITF No. 97-14, Accounting for Deferred
Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested, the assets
and liabilities of the non-qualified deferred compensation plan are presented in “Other assets” and
“Other long-term liabilities” in the accompanying consolidated balance sheets, respectively. The
asset under the deferred compensation plan at December 31, 2007 and 2006 was approximately $39.5
million and $32.0 million, respectively. The liability under the deferred compensation plan at
December 31, 2007 and 2006 was approximately $40.9 million and $32.5 million, respectively.

NOTE N—OTHER INFORMATION

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	For the year ended	 
	 	 	December 31,	 
	 	 	2007	 	 	2006	 	 	2005	 
	 	 	(In thousands)	 
	The following details the components of “Other income
(expense)—net”:
	 	 	 	 	 	 	 	 	 	 	 	 
	Foreign exchange gain (loss)
	 	$	6,743	 	 	$	(8,130	)	 	$	7,550	 
	Other
	 	 	(1,417	)	 	 	(463	)	 	 	3,466	 
	 
	 	 	 	 	 	 	 	 	 
	Total other income (expense)—net
	 	$	5,326	 	 	$	(8,593	)	 	$	11,016	 
	 
	 	 	 	 	 	 	 	 	 
	The following details the income tax expense (benefit) on items
of other comprehensive income (loss):
	 	 	 	 	 	 	 	 	 	 	 	 
	Foreign currency translation adjustments
	 	$	(16,233	)	 	$	(22,012	)	 	$	187,216	 
	Unrealized gain (loss) on securities and derivatives:
	 	 	 	 	 	 	 	 	 	 	 	 
	Unrealized holding gain (loss)
	 	$	(5,155	)	 	$	(37,091	)	 	$	(29,721	)
	Unrealized gain (loss) on cash flow derivatives
	 	$	(1,035	)	 	$	46,662	 	 	$	34,711	 

	 	 	 	 	 	 	 	 	 
	 	 	As of December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	The following details the components of “Other current assets”:
	 	 	 	 	 	 	 	 
	Inventory
	 	$	27,900	 	 	$	23,062	 
	Deferred tax asset
	 	 	20,854	 	 	 	19,246	 
	Deposits
	 	 	27,696	 	 	 	37,234	 
	Other prepayments
	 	 	90,631	 	 	 	85,180	 
	Other
	 	 	76,167	 	 	 	79,381	 
	 
	 	 	 	 	 	 
	Total other current assets
	 	$	243,248	 	 	$	244,103	 
	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	As of December 31,	 
	 	 	2007	 	 	2006	 
	 	 	(In thousands)	 
	The following details the components of “Accumulated other
comprehensive income (loss)”:
	 	 	 	 	 	 	 	 
	Cumulative currency translation adjustment
	 	$	314,282	 	 	$	225,459	 
	Cumulative unrealized gain on investments
	 	 	67,693	 	 	 	76,105	 
	Cumulative unrealized gain on cash flow derivatives
	 	 	1,723	 	 	 	3,411	 
	 
	 	 	 	 	 	 
	Total accumulated other comprehensive income (loss)
	 	$	383,698	 	 	$	304,975	 
	 
	 	 	 	 	 	 

F-44

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE O—SEGMENT DATA

     The Company’s reportable operating segments are radio broadcasting, Americas outdoor
advertising and international outdoor advertising. Revenue and expenses earned and charged between
segments are recorded at fair value and eliminated in consolidation. The radio broadcasting segment
also operates various radio networks. The Americas outdoor advertising segment consists of our
operations primarily in the United States, Canada and Latin America, with approximately 93% of its
2007 revenue in this segment derived from the United States. The international outdoor segment
includes operations in Europe, Asia, Africa and Australia. The Americas and international display
inventory consists primarily of billboards, street furniture displays and transit displays. The
other category includes our television business and our media representation firm, as well as other
general support services and initiatives which are ancillary to our other businesses. Share-based
payments are recorded by each segment in direct operating and selling, general and administrative
expenses.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Corporate,	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	merger	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	and gain	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	on	 	 	 	 	 	 	 
	 	 	 	 	 	 	Americas	 	 	International	 	 	 	 	 	 	disposition	 	 	 	 	 	 	 
	 	 	Radio	 	 	Outdoor	 	 	Outdoor	 	 	 	 	 	 	of	 	 	 	 	 	 	 
	 	 	Broadcasting	 	 	Advertising	 	 	Advertising	 	 	Other	 	 	assets – net	 	 	Eliminations	 	 	Consolidated	 
	 	 	(In thousands)	 
	2007
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue
	 	$	3,558,534	 	 	$	1,485,058	 	 	$	1,796,778	 	 	$	207,704	 	 	$	—	 	 	$	(126,872	)	 	$	6,921,202	 
	Direct operating
expenses
	 	 	982,966	 	 	 	590,563	 	 	 	1,144,282	 	 	 	78,513	 	 	 	—	 	 	 	(63,320	)	 	 	2,733,004	 
	Selling, general and
administrative
expenses
	 	 	1,190,083	 	 	 	226,448	 	 	 	311,546	 	 	 	97,414	 	 	 	—	 	 	 	(63,552	)	 	 	1,761,939	 
	Depreciation and
amortization
	 	 	107,466	 	 	 	189,853	 	 	 	209,630	 	 	 	43,436	 	 	 	16,242	 	 	 	—	 	 	 	566,627	 
	Corporate
expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	181,504	 	 	 	—	 	 	 	181,504	 
	Merger expenses 
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	6,762	 	 	 	—	 	 	 	6,762	 
	Gain on disposition
of assets-net 
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	14,113	 	 	 	—	 	 	 	14,113	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income
(loss)
	 	$	1,278,019	 	 	$	478,194	 	 	$	131,320	 	 	$	(11,659	)	 	$	(190,395	)	 	$	—	 	 	$	1,685,479	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Intersegment
revenues
	 	$	44,666	 	 	$	13,733	 	 	$	—	 	 	$	68,473	 	 	$	—	 	 	$	—	 	 	$	126,872	 
	Identifiable
assets
	 	$	11,732,311	 	 	$	2,878,753	 	 	$	2,606,130	 	 	$	736,037	 	 	$	345,404	 	 	$	—	 	 	$	18,298,635	 
	Capital
expenditures
	 	$	78,523	 	 	$	142,826	 	 	$	132,864	 	 	$	2,418	 	 	$	6,678	 	 	$	—	 	 	$	363,309	 
	Share-based
payments
	 	$	22,226	 	 	$	7,932	 	 	$	1,701	 	 	$	—	 	 	$	12,192	 	 	$	—	 	 	$	44,051	 

F-45

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Corporate,	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	merger	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	and gain	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	on	 	 	 	 	 	 	 
	 	 	 	 	 	 	Americas	 	 	International	 	 	 	 	 	 	disposition	 	 	 	 	 	 	 
	 	 	Radio	 	 	Outdoor	 	 	Outdoor	 	 	 	 	 	 	of	 	 	 	 	 	 	 
	 	 	Broadcasting	 	 	Advertising	 	 	Advertising	 	 	Other	 	 	assets - net	 	 	Eliminations	 	 	Consolidated	 
	 	 	(In thousands)	 
	2006
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue
	 	$	3,567,413	 	 	$	1,341,356	 	 	$	1,556,365	 	 	$	223,929	 	 	$	—	 	 	$	(121,273	)	 	$	6,567,790	 
	Direct operating
expenses
	 	 	994,686	 	 	 	534,365	 	 	 	980,477	 	 	 	82,372	 	 	 	—	 	 	 	(59,456	)	 	 	2,532,444	 
	Selling, general and
administrative
expenses
	 	 	1,185,770	 	 	 	207,326	 	 	 	279,668	 	 	 	98,010	 	 	 	—	 	 	 	(61,817	)	 	 	1,708,957	 
	Depreciation and
amortization
	 	 	125,631	 	 	 	178,970	 	 	 	228,760	 	 	 	47,772	 	 	 	19,161	 	 	 	—	 	 	 	600,294	 
	Corporate
expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	196,319	 	 	 	—	 	 	 	196,319	 
	Merger expenses 
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	7,633	 	 	 	—	 	 	 	7,633	 
	Gain on disposition
of assets-net 
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	71,571	 	 	 	—	 	 	 	71,571	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income
(loss)
	 	$	1,261,326	 	 	$	420,695	 	 	$	67,460	 	 	$	(4,225	)	 	$	(151,542	)	 	$	—	 	 	$	1,593,714	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Intersegment
revenues
	 	$	40,119	 	 	$	10,536	 	 	$	—	 	 	$	70,618	 	 	$	—	 	 	$	—	 	 	$	121,273	 
	Identifiable
assets
	 	$	11,873,784	 	 	$	2,820,737	 	 	$	2,401,924	 	 	$	701,239	 	 	$	360,440	 	 	$	—	 	 	$	18,158,124	 
	Capital
expenditures
	 	$	93,264	 	 	$	90,495	 	 	$	143,387	 	 	$	2,603	 	 	$	6,990	 	 	$	—	 	 	$	336,739	 
	Share-based
payments
	 	$	25,237	 	 	$	4,699	 	 	$	1,312	 	 	$	1,656	 	 	$	9,126	 	 	$	—	 	 	$	42,030	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2005
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue 
	 	$	3,380,774	 	 	$	1,216,382	 	 	$	1,449,696	 	 	$	193,466	 	 	$	—	 	 	$	(113,765	)	 	$	6,126,553	 
	Direct operating
expenses
	 	 	924,635	 	 	 	489,826	 	 	 	915,086	 	 	 	81,313	 	 	 	—	 	 	 	(59,246	)	 	 	2,351,614	 
	Selling, general and
administrative
expenses
	 	 	1,140,694	 	 	 	186,749	 	 	 	291,594	 	 	 	86,677	 	 	 	—	 	 	 	(54,519	)	 	 	1,651,195	 
	Depreciation and
amortization
	 	 	128,443	 	 	 	180,559	 	 	 	220,080	 	 	 	45,537	 	 	 	18,858	 	 	 	—	 	 	 	593,477	 
	Corporate
expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	167,088	 	 	 	—	 	 	 	167,088	 
	Gain on disposition
of assets-net 
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	49,656	 	 	 	—	 	 	 	49,656	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income
(loss)
	 	$	1,187,002	 	 	$	359,248	 	 	$	22,936	 	 	$	(20,061	)	 	$	(136,290	)	 	$	—	 	 	$	1,412,835	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Intersegment
revenues
	 	$	36,656	 	 	$	8,181	 	 	$	—	 	 	$	68,928	 	 	$	—	 	 	$	—	 	 	$	113,765	 
	Identifiable
assets
	 	$	11,766,099	 	 	$	2,531,426	 	 	$	2,125,470	 	 	$	792,381	 	 	$	770,169	 	 	$	—	 	 	$	17,985,545	 
	Capital
expenditures
	 	$	82,899	 	 	$	73,084	 	 	$	135,072	 	 	$	2,655	 	 	$	8,945	 	 	$	—	 	 	$	302,655	 
	Share-based
payments
	 	$	212	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	5,869	 	 	$	—	 	 	$	6,081	 

     Revenue of $1.9 billion, $1.7 billion and $1.5 billion and identifiable assets of $2.9
billion, $2.7 billion and $2.2 billion derived from the Company’s foreign operations are included
in the data above for the years ended December 31, 2007, 2006 and 2005, respectively.

F-46

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE P—QUARTERLY RESULTS OF OPERATIONS (Unaudited)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	March 31,	 	 	June 30,	 	 	September 30,	 	 	December 31,	 
	 	 	2007	 	 	2006	 	 	2007	 	 	2006	 	 	2007	 	 	2006	 	 	2007	 	 	2006	 
	 	 	(In thousands, except per share data)	 
	Revenue 
	 	$	1,505,077	 	 	$	1,388,875	 	 	$	1,802,192	 	 	$	1,714,402	 	 	$	1,751,165	 	 	$	1,665,380	 	 	$	1,862,768	 	 	$	1,799,133	 
	Operating expenses:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Direct operating expenses 
	 	 	627,879	 	 	 	582,313	 	 	 	676,255	 	 	 	622,543	 	 	 	689,681	 	 	 	642,893	 	 	 	739,189	 	 	 	684,695	 
	Selling, general and administrative expenses 
	 	 	416,319	 	 	 	404,614	 	 	 	447,190	 	 	 	442,594	 	 	 	431,366	 	 	 	416,863	 	 	 	467,064	 	 	 	444,886	 
	Depreciation and amortization 
	 	 	139,685	 	 	 	142,450	 	 	 	141,309	 	 	 	149,509	 	 	 	139,650	 	 	 	148,533	 	 	 	145,983	 	 	 	159,802	 
	Corporate expenses 
	 	 	48,150	 	 	 	40,507	 	 	 	43,044	 	 	 	48,239	 	 	 	47,040	 	 	 	48,486	 	 	 	43,270	 	 	 	59,087	 
	Merger expenses 
	 	 	1,686	 	 	 	—	 	 	 	2,684	 	 	 	—	 	 	 	2,002	 	 	 	—	 	 	 	390	 	 	 	7,633	 
	Gain (loss) on disposition of assets—net 
	 	 	6,947	 	 	 	48,418	 	 	 	3,996	 	 	 	813	 	 	 	678	 	 	 	9,012	 	 	 	2,492	 	 	 	13,328	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income 
	 	 	278,305	 	 	 	267,409	 	 	 	495,706	 	 	 	452,330	 	 	 	442,104	 	 	 	417,617	 	 	 	469,364	 	 	 	456,358	 
	Interest expense 
	 	 	118,077	 	 	 	114,376	 	 	 	116,422	 	 	 	123,298	 	 	 	113,026	 	 	 	128,276	 	 	 	104,345	 	 	 	118,113	 
	Gain (loss) on marketable securities 
	 	 	395	 	 	 	(2,324	)	 	 	(410	)	 	 	(1,000	)	 	 	676	 	 	 	5,396	 	 	 	6,081	 	 	 	234	 
	Equity in earnings of nonconsolidated affiliates 
	 	 	5,264	 	 	 	6,909	 	 	 	11,435	 	 	 	9,715	 	 	 	7,133	 	 	 	8,681	 	 	 	11,344	 	 	 	12,540	 
	Other income (expense) — net 
	 	 	(12	)	 	 	(648	)	 	 	340	 	 	 	(4,609	)	 	 	(1,403	)	 	 	(601	)	 	 	6,401	 	 	 	(2,735	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before income taxes, minority interest and
discontinued operations 
	 	 	165,875	 	 	 	156,970	 	 	 	390,649	 	 	 	333,138	 	 	 	335,484	 	 	 	302,817	 	 	 	388,845	 	 	 	348,284	 
	Income tax expense 
	 	 	70,466	 	 	 	64,531	 	 	 	159,786	 	 	 	137,332	 	 	 	70,125	 	 	 	124,706	 	 	 	140,771	 	 	 	143,874	 
	Minority interest income (expense)—net 
	 	 	(276	)	 	 	779	 	 	 	(14,970	)	 	 	(13,736	)	 	 	(11,961	)	 	 	(3,674	)	 	 	(19,824	)	 	 	(15,296	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations 
	 	 	95,133	 	 	 	93,218	 	 	 	215,893	 	 	 	182,070	 	 	 	253,398	 	 	 	174,437	 	 	 	228,250	 	 	 	189,114	 
	Discontinued operations 
	 	 	7,089	 	 	 	3,596	 	 	 	20,097	 	 	 	15,418	 	 	 	26,338	 	 	 	11,434	 	 	 	92,309	 	 	 	22,230	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income 
	 	$	102,222	 	 	$	96,814	 	 	$	235,990	 	 	$	197,488	 	 	$	279,736	 	 	$	185,871	 	 	$	320,559	 	 	$	211,344	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income per common share:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations 
	 	$	.19	 	 	$	.18	 	 	$	.44	 	 	$	.36	 	 	$	.51	 	 	$	.36	 	 	$	.46	 	 	$	.38	 
	Discontinued operations 
	 	 	.02	 	 	 	.01	 	 	 	.04	 	 	 	.03	 	 	 	.06	 	 	 	.02	 	 	 	.19	 	 	 	.05	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income 
	 	$	.21	 	 	$	.19	 	 	$	.48	 	 	$	.39	 	 	$	.57	 	 	$	.38	 	 	$	.65	 	 	$	.43	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Diluted:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income before discontinued operations 
	 	$	.19	 	 	$	.18	 	 	$	.44	 	 	$	.36	 	 	$	.51	 	 	$	.36	 	 	$	.46	 	 	$	.38	 
	Discontinued operations 
	 	 	.02	 	 	 	.01	 	 	 	.04	 	 	 	.03	 	 	 	.05	 	 	 	.02	 	 	 	.19	 	 	 	.05	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income 
	 	$	.21	 	 	$	.19	 	 	$	.48	 	 	$	.39	 	 	$	.56	 	 	$	.38	 	 	$	.65	 	 	$	.43	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dividends declared per share 
	 	$	.1875	 	 	$	.1875	 	 	$	.1875	 	 	$	.1875	 	 	$	.1875	 	 	$	.1875	 	 	$	.1875	 	 	$	.1875	 
	Stock price:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	High 
	 	$	37.55	 	 	$	32.84	 	 	$	38.58	 	 	$	31.54	 	 	$	38.24	 	 	$	31.64	 	 	$	38.02	 	 	$	35.88	 
	Low 
	 	 	34.45	 	 	 	27.82	 	 	 	34.90	 	 	 	27.34	 	 	 	33.51	 	 	 	27.17	 	 	 	32.02	 	 	 	28.83	 

     The Company’s Common Stock is traded on the New York Stock Exchange under the symbol CCU.

F-47

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE Q—SUBSEQUENT EVENTS

     On January 15, 2008, the Company redeemed its 4.625% Senior Notes at their maturity for
$500.0 million plus accrued interest with proceeds from its bank credit facility.

     On January 17, 2008, the Company entered into an agreement to sell its 50% interest in Clear
Channel Independent, a South African outdoor advertising company, for approximately $127.0 million
based on the closing price of the acquirer’s shares on the date of announcement. As of December 31,
2007, $54.2 million is recorded in “Investments in and advances to, nonconsolidated affiliates” on
the Company’s consolidated balance sheet related to this investment. The closing of the transaction
is subject to regulatory approval and other customary closing conditions.

     Through May 7, 2008, the Company executed definitive asset purchase agreements for the sale of
17 radio stations in addition to the radio stations under definitive asset purchase agreements at
March 31, 2008. The closing of these sales is subject to antitrust clearances, FCC approval and
other customary closing conditions.

NOTE R—OTHER EVENTS

     The Company is revising its historical financial statements in connection with its
application of Statement 144. During the first quarter of 2008, the Company revised its plans to
sell 173 of its stations. Of these, 145 were previously classified as discontinued operations.
These 145 non-core stations no longer met the requirements of Statement 144 for classification as
discontinued operations. Therefore, the assets, results of operations and cash flows were
reclassified to continuing operations in the quarterly report filed for the quarter ended March 31,
2008 (including the comparable period of the prior year). However, the rules and regulations of the
Securities and Exchange Commission (the “SEC”) applicable to the Company required that it
reclassify the reported assets, liabilities, revenues, expenses and cash flows from these
properties to be consistent with the reporting in its quarterly report for the quarter ended March
31, 2008 for each of the three years presented in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2007, if those financial statements are incorporated by reference in
a registration statement to be filed with the SEC under the Securities Act of 1933, as amended,
even though those financial statements relate to a period prior to the transactions giving rise to
the reclassification.

     The reclassification to continuing operations had no effect on the Company’s reported net
income available to common shareholders as reported in prior SEC filings. Instead, the
reclassification presented the revenue and expenses relating to the 145 stations along with the
Company’s other results of operations, rather than presenting the revenues and expenses as a single
line item titled discontinued operations. In addition to financial statements themselves, certain
disclosures contained in Notes A, B, C, I, K, L, O, P and Q relating to the revisions made in
connection with application of Statement 144 have been modified to reflect the effects of these
reclassifications.

F-48

 

CLEAR
CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS

ASSETS

(In thousands)

	 	 	 	 	 	 	 	 	 
	 	 	March 31,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(Unaudited)	 	 	(Audited)	 
	CURRENT ASSETS
	 	 	 	 	 	 	 	 
	Cash and cash equivalents
	 	$	602,112	 	 	$	145,148	 
	Accounts receivable, net of allowance of $62,791 in 2008 and
$59,169 in 2007
	 	 	1,681,514	 	 	 	1,693,218	 
	Prepaid expenses
	 	 	125,387	 	 	 	116,902	 
	Other current assets
	 	 	270,306	 	 	 	243,248	 
	Current assets from discontinued operations
	 	 	—	 	 	 	96,067	 
	 
	 	 	 	 	 	 
	Total Current Assets
	 	 	2,679,319	 	 	 	2,294,583	 
	PROPERTY, PLANT AND EQUIPMENT
	 	 	 	 	 	 	 	 
	Land, buildings and
improvements
	 	 	851,555	 	 	 	840,832	 
	Structures
	 	 	3,947,728	 	 	 	3,901,941	 
	Towers, transmitters and studio equipment
	 	 	586,804	 	 	 	600,315	 
	Furniture and other equipment
	 	 	526,518	 	 	 	527,714	 
	Construction in progress
	 	 	128,128	 	 	 	119,260	 
	 
	 	 	 	 	 	 
	 
	 	 	6,040,733	 	 	 	5,990,062	 
	Less accumulated depreciation
	 	 	2,965,992	 	 	 	2,939,698	 
	 
	 	 	 	 	 	 
	 
	 	 	3,074,741	 	 	 	3,050,364	 
	Property, plant and equipment from discontinued operations,
net
	 	 	15,487	 	 	 	164,724	 
	INTANGIBLE ASSETS
	 	 	 	 	 	 	 	 
	Definite-lived intangibles, net
	 	 	489,542	 	 	 	485,870	 
	Indefinite-lived intangibles — licenses
	 	 	4,213,262	 	 	 	4,201,617	 
	Indefinite-lived intangibles — permits
	 	 	252,576	 	 	 	251,988	 
	Goodwill
	 	 	7,268,059	 	 	 	7,210,116	 
	Intangible assets from discontinued operations, net
	 	 	31,889	 	 	 	219,722	 
	OTHER ASSETS
	 	 	 	 	 	 	 	 
	Notes receivable
	 	 	11,630	 	 	 	12,388	 
	Investments
in, and advances to, nonconsolidated affiliates
	 	 	296,481	 	 	 	346,387	 
	Other assets
	 	 	361,281	 	 	 	303,791	 
	Other investments
	 	 	351,216	 	 	 	237,598	 
	Other assets from discontinued operations
	 	 	7,728	 	 	 	26,380	 
	 
	 	 	 	 	 	 
	Total Assets
	 	$	19,053,211	 	 	$	18,805,528	 
	 
	 	 	 	 	 	 

See Notes to Consolidated Financial Statements

F-49

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

(In thousands)

	 	 	 	 	 	 	 	 	 
	 	 	March 31,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(Unaudited)	 	 	(Audited)	 
	CURRENT LIABILITIES
	 	 	 	 	 	 	 	 
	Accounts payable
	 	$	129,458	 	 	$	165,533	 
	Accrued expenses
	 	 	832,155	 	 	 	912,665	 
	Accrued interest
	 	 	75,979	 	 	 	98,601	 
	Accrued income taxes
	 	 	148,833	 	 	 	79,973	 
	Current portion of long-term debt
	 	 	869,631	 	 	 	1,360,199	 
	Deferred income
	 	 	242,861	 	 	 	158,893	 
	Current liabilities from discontinued operations
	 	 	—	 	 	 	37,413	 
	 
	 	 	 	 	 	 
	Total Current Liabilities
	 	 	2,298,917	 	 	 	2,813,277	 
	Long-term debt
	 	 	5,072,000	 	 	 	5,214,988	 
	Other long-term obligations
	 	 	167,775	 	 	 	127,384	 
	Deferred income taxes
	 	 	830,937	 	 	 	793,850	 
	Other long-term liabilities
	 	 	560,945	 	 	 	567,848	 
	Long-term liabilities from discontinued operations
	 	 	—	 	 	 	54,330	 
	Minority interest
	 	 	460,728	 	 	 	436,360	 
	Commitments and contingent liabilities (Note 5)
	 	 	 	 	 	 	 	 
	SHAREHOLDERS’ EQUITY
	 	 	 	 	 	 	 	 
	Common Stock
	 	 	49,817	 	 	 	49,808	 
	Additional paid-in capital
	 	 	26,871,648	 	 	 	26,858,079	 
	Retained deficit
	 	 	(17,689,490	)	 	 	(18,489,143	)
	Accumulated other comprehensive income
	 	 	436,544	 	 	 	383,698	 
	Cost of shares held in treasury
	 	 	(6,610	)	 	 	(4,951	)
	 
	 	 	 	 	 	 
	Total Shareholders’ Equity
	 	 	9,661,909	 	 	 	8,797,491	 
	 
	 	 	 	 	 	 
	Total Liabilities and Shareholders’ Equity
	 	$	19,053,211	 	 	$	18,805,528	 
	 
	 	 	 	 	 	 

See Notes to Consolidated Financial Statements

F-50

 

CLEAR
CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except per share data)

	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 
	 	 	March 31,	 
	 	 	2008	 	 	2007	 
	Revenue
	 	$	1,564,207	 	 	$	1,505,077	 
	Operating expenses:
	 	 	 	 	 	 	 	 
	Direct operating expenses (includes share based payments of $3,604 and
$3,000 in 2008 and 2007, respectively, and excludes depreciation and
amortization)
	 	 	705,947	 	 	 	627,879	 
	Selling, general and administrative expenses (includes share
based payments of $3,135 and $2,831 in 2008 and 2007, respectively, and
excludes depreciation and amortization)
	 	 	426,381	 	 	 	416,319	 
	Depreciation and amortization
	 	 	152,278	 	 	 	139,685	 
	Corporate expenses (includes share based payments of $2,851 and
$2,414 in 2008 and 2007, respectively, and excludes depreciation and
amortization)
	 	 	46,303	 	 	 	48,150	 
	Merger expenses
	 	 	389	 	 	 	1,686	 
	Gain on
disposition of assets — net
	 	 	2,097	 	 	 	6,947	 
	 
	 	 	 	 	 	 
	Operating income
	 	 	235,006	 	 	 	278,305	 
	Interest expense
	 	 	100,003	 	 	 	118,077	 
	Gain on marketable securities
	 	 	6,526	 	 	 	395	 
	Equity in earnings of nonconsolidated affiliates
	 	 	83,045	 	 	 	5,264	 
	Other income (expense) — net
	 	 	11,787	 	 	 	(12	)
	 
	 	 	 	 	 	 
	Income before income taxes, minority interest and discontinued operations
	 	 	236,361	 	 	 	165,875	 
	Income tax benefit (expense):
	 	 	 	 	 	 	 	 
	Current
	 	 	(23,833	)	 	 	(32,359	)
	Deferred
	 	 	(42,748	)	 	 	(38,107	)
	 
	 	 	 	 	 	 
	Income tax benefit (expense)
	 	 	(66,581	)	 	 	(70,466	)
	Minority interest expense, net of tax
	 	 	8,389	 	 	 	276	 
	 
	 	 	 	 	 	 
	Income before discontinued operations
	 	 	161,391	 	 	 	95,133	 
	Income from discontinued operations, net
	 	 	638,262	 	 	 	7,089	 
	 
	 	 	 	 	 	 
	Net income
	 	$	799,653	 	 	$	102,222	 
	 
	 	 	 	 	 	 
	Other comprehensive income (loss), net of tax:
	 	 	 	 	 	 	 	 
	Foreign currency translation adjustments
	 	 	57,967	 	 	 	8,751	 
	Unrealized holding gain (loss) on marketable securities
	 	 	(5,121	)	 	 	(6,959	)
	 
	 	 	 	 	 	 
	Comprehensive income
	 	$	852,499	 	 	$	104,014	 
	 
	 	 	 	 	 	 
	Net income per common share:
	 	 	 	 	 	 	 	 
	Income
before discontinued operations — Basic
	 	$	.33	 	 	$	.19	 
	Discontinued
operations — Basic
	 	 	1.29	 	 	 	.02	 
	 
	 	 	 	 	 	 
	Net income — Basic
	 	$	1.62	 	 	$	.21	 
	 
	 	 	 	 	 	 
	Weighted
average common shares — Basic
	 	 	494,749	 	 	 	493,843	 
	Income
before discontinued operations — Diluted
	 	$	.32	 	 	$	.19	 
	Discontinued
operations — Diluted
	 	 	1.29	 	 	 	.02	 
	 
	 	 	 	 	 	 
	Net income — Diluted
	 	$	1.61	 	 	$	.21	 
	 
	 	 	 	 	 	 
	Weighted
average common shares — Diluted
	 	 	496,388	 	 	 	494,868	 
	Dividends declared per share
	 	$	—	 	 	$	.1875	 

See Notes to Consolidated Financial Statements

F-51

 

CLEAR
CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	 	 	 	 	 	 	 	 	 
	 	 	Three Months Ended	 
	 	 	March 31,	 
	 	 	2008	 	 	2007	 
	Cash flows from operating activities:
	 	 	 	 	 	 	 	 
	Net income
	 	$	799,653	 	 	$	102,222	 
	(Income) loss from discontinued operations, net
	 	 	(638,262	)	 	 	(7,089	)
	 
	 	 	 	 	 	 
	 
	 	 	161,391	 	 	 	95,133	 
	Reconciling items:
	 	 	 	 	 	 	 	 
	Depreciation and amortization
	 	 	152,278	 	 	 	139,685	 
	Deferred taxes
	 	 	42,748	 	 	 	38,107	 
	(Gain) loss on disposal of assets
	 	 	(2,097	)	 	 	(6,947	)
	(Gain) loss forward exchange contract
	 	 	(13,342	)	 	 	2,962	 
	(Gain) loss on trading securities
	 	 	6,816	 	 	 	(3,358	)
	Provision for doubtful accounts
	 	 	10,332	 	 	 	9,049	 
	Share-based compensation
	 	 	9,590	 	 	 	8,245	 
	Equity in earnings of nonconsolidated affiliates
	 	 	(83,046	)	 	 	(5,264	)
	Other reconciling items— net
	 	 	11,724	 	 	 	1,047	 
	Changes in operating assets and liabilities:
	 	 	 	 	 	 	 	 
	Changes in other operating assets and liabilities, net of
effects of acquisitions and dispositions
	 	 	71,378	 	 	 	42,804	 
	 
	 	 	 	 	 	 
	Net cash provided by operating activities
	 	 	367,772	 	 	 	321,463	 
	Cash flows from investing activities:
	 	 	 	 	 	 	 	 
	Decrease (increase) in notes receivable— net
	 	 	(735	)	 	 	42	 
	Decrease (increase) in investments in and advances
to nonconsolidated affiliates— net
	 	 	18,376	 	 	 	5,911	 
	Sales (purchases) of investments
	 	 	487	 	 	 	(393	)
	Purchases of property, plant and equipment
	 	 	(93,693	)	 	 	(64,986	)
	Proceeds from disposal of assets
	 	 	11,345	 	 	 	13,078	 
	Acquisition of operating assets, net of cash acquired
	 	 	(83,897	)	 	 	(12,189	)
	Decrease (increase) in other— net
	 	 	(6,140	)	 	 	(12,484	)
	 
	 	 	 	 	 	 
	Net cash used in investing activities
	 	 	(154,257	)	 	 	(71,021	)
	Cash flows from financing activities:
	 	 	 	 	 	 	 	 
	Draws on credit facilities
	 	 	700,089	 	 	 	252,881	 
	Payments on credit facilities
	 	 	(862,850	)	 	 	(239,582	)
	Payments on long-term debt
	 	 	(503,017	)	 	 	(260,416	)
	Proceeds from exercise of stock options, stock
purchase plan, common stock warrants and other
	 	 	5,953	 	 	 	56,555	 
	Payments for purchase of common shares
	 	 	(1,257	)	 	 	—	 
	Dividends paid
	 	 	(93,367	)	 	 	(92,603	)
	 
	 	 	 	 	 	 
	Net cash used in financing activities
	 	 	(754,449	)	 	 	(283,165	)
	Cash flows from discontinued operations:
	 	 	 	 	 	 	 	 
	Net cash (used in) provided by operating activities
	 	 	(88,121	)	 	 	16,685	 
	Net cash provided by investing activities
	 	 	1,086,019	 	 	 	9,228	 
	Net cash provided by (used in) financing activities
	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 
	Net cash provided by discontinued operations
	 	 	997,898	 	 	 	25,913	 
	Net (decrease) increase in cash and cash equivalents
	 	 	456,964	 	 	 	(6,810	)
	Cash and cash equivalents at beginning of period
	 	 	145,148	 	 	 	116,000	 
	 
	 	 	 	 	 	 
	Cash and cash equivalents at end of period
	 	$	602,112	 	 	$	109,190	 
	 
	 	 	 	 	 	 

See Notes to Consolidated Financial Statements

F-52

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1: BASIS OF PRESENTATION AND NEW ACCOUNTING STANDARDS

Preparation of Interim Financial Statements

     The consolidated financial statements were 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 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 in the United States 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. Due to seasonality and other factors, 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 Company’s 2007 Annual Report on Form 10-K.

     The consolidated financial statements include the accounts of the Company and its
subsidiaries. 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.

Merger Update

     The Company’s shareholders approved the adoption of the Merger Agreement, as amended, with a
group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC (the “Sponsors”) on
September 25, 2007. The Company anticipated the merger would close by the end of the first quarter
of 2008. However, on March 26, 2008, the Company, joined by CC Media Holdings, Inc., a unit of the
Sponsors, sued the banks who had committed to financing the debt connected to the merger for
tortious interference. A trial date is set for June 2, 2008. The Company is unable to estimate a
closing date at this time and is not certain that a closing will occur.

Certain Reclassifications

     The historical financial statements and footnote disclosures have been revised to exclude
amounts related to the Company’s television business and certain radio stations as discussed
below.

Discontinued Operations and Assets Held for Sale

Sale of non-core radio stations

     On November 16, 2006, the Company announced plans to sell 448 non-core radio stations. The
merger is not contingent on the sales of these stations, and the sales of these stations are not
contingent on the closing of the Company’s merger discussed above. During the first quarter of
2008, the Company revised its plans to sell 173 of these stations because it

F-53

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

determined that market conditions were not advantageous to complete the sales. The Company
intends to hold and operate these stations. Of these, 145 were classified as discontinued
operations at December 31, 2007. At March 31, 2008, these 145 non-core stations no longer meet the
requirements of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment
or Disposal of Long-lived Assets (“Statement 144”) for classification as discontinued operations.
Therefore, the assets, results of operations and cash flows from these 145 stations were
reclassified to continuing operations in the Company’s consolidated financial statements as of and
for the period ended March 31, 2008, for the period ended March 31, 2007 and as of December 31,
2007. As a result of the reclassification, the Company recorded a $6.6 million charge to
depreciation and amortization expense for depreciation and amortization that would have been
recognized had the 145 stations been continuously classified as continuing operations.

     The Company has 20 non-core radio stations that are no longer under a definitive asset
purchase agreement as of March 31, 2008. However, the Company continues to actively market these
radio stations and they continue to meet the criteria in Statement 144 for classification as
discontinued operations. Therefore, the assets, results of operations and cash flows from these
stations remain classified as discontinued operations in the Company’s consolidated financial
statements as of and for the period ended March 31, 2008, for the period ended March 31, 2007 and
as of December 31, 2007.

     The following table presents the activity related to the Company’s planned divestitures of
radio stations:

	 	 	 	 	 
	Total radio stations announced as being marketed for sale on November 16, 2006
	 	 	448	 
	Total radio stations no longer being marketed for sale
	 	 	(173	)
	 
	 	 	 	 
	Adjusted number of radio stations being marketed for sale (“Non-core” radio stations)
	 	 	275	 
	Non-core radio stations sold through March 31, 2008
	 	 	(223	)
	 
	 	 	 	 
	Remaining non-core radio stations at March 31, 2008 classified as discontinued
operations
	 	 	52	 
	Non-core radio stations under definitive asset purchase agreements
	 	 	(32	)
	 
	 	 	 	 
	Non-core radio stations being marketed for sale
	 	 	20	 
	 
	 	 	 	 

Sale of other radio stations

     In addition to its non-core stations, the Company had definitive asset purchase agreements for
8 stations at March 31, 2008.

     The Company determined that each of the radio station markets represents disposal groups.
Consistent with the provisions of Statement 144, the Company classified these assets that are
subject to transfer under the definitive asset purchase agreements as discontinued operations as of
and for the period ended March 31, 2008, for the period ended March 31, 2007 and as of December 31,
2007. Accordingly, depreciation and amortization associated with these assets was discontinued.
Additionally, the Company determined that these assets comprise operations and cash flows that can
be clearly distinguished, operationally and for financial reporting purposes, from the rest of the
Company. As of March 31, 2008, the Company determined that the estimated fair value less costs to
sell attributable to these assets was in excess of the carrying value of their related net assets
held for sale.

F-54

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Sale of the television business

     On March 14, 2008, the Company announced it had completed the sale of its television business
to Newport Television, LLC for $1.0 billion, adjusted for certain items including proration of
expenses and adjustments for working capital. As a result, the Company recorded a gain of $666.7
million as a component of “Income from discontinued operations, net” in its consolidated statement
of operations during the quarter ended March 31, 2008. Additionally, net income and cash flows from
the television business were classified as discontinued operations in the consolidated statements
of operations and the consolidated statements of cash flows, respectively, in 2008 through the date
of sale and the first quarter of 2007. The net assets related to the television business were
classified as discontinued operations as of December 31, 2007.

Summarized Financial Information of Discontinued Operations

     Summarized operating results of discontinued operations for the three months ended March
31, 2008 and 2007 are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Three Months
	 	 	2008	 	2007
	 	 	(In thousands)
	Revenue
	 	$	69,883	 	 	$	117,005	 
	Income before income taxes
	 	$	695,364	 	 	$	9,365	 

     Included in income from discontinued operations, net are income tax expenses of $57.1
million and $2.3 million for the three months ended March 31, 2008 and 2007, respectively. Also
included in income from discontinued operations for the three months ended March 31, 2008 is a gain
of $688.2 million related to the sale of the Company’s television business and certain radio
stations. The Company estimates utilization of approximately $577.3 million of capital loss
carryforwards to offset a portion of the taxes associated with these gains. As of March 31, 2008,
the Company had approximately $809.2 million in capital loss carryforwards remaining.

     Included in income from discontinued operations for the three months ended March 31, 2007 is a
gain of $2.8 million related to the sale of certain radio stations.

F-55

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

     The following table summarizes the carrying amount at March 31, 2008 and December 31,
2007 of the major classes of assets and liabilities of the Company’s businesses classified as
discontinued operations:

	 	 	 	 	 	 	 	 	 
	 	 	March 31,	 	 	December 31,	 
	 	 	2008	 	 	2007	 
	 	 	(In thousands)	 
	Assets
	 	 	 	 	 	 	 	 
	Accounts receivable, net
	 	$	—	 	 	$	76,426	 
	Other current assets
	 	 	—	 	 	 	19,641	 
	 
	 	 	 	 	 	 
	Total current assets
	 	$	—	 	 	$	96,067	 
	 
	 	 	 	 	 	 
	Land, buildings and improvements
	 	$	9,393	 	 	$	73,138	 
	Transmitter and studio equipment
	 	 	16,133	 	 	 	207,230	 
	Other property, plant and equipment
	 	 	2,725	 	 	 	22,781	 
	Less accumulated depreciation
	 	 	12,764	 	 	 	138,425	 
	 
	 	 	 	 	 	 
	Property, plant and equipment, net
	 	$	15,487	 	 	$	164,724	 
	 
	 	 	 	 	 	 
	Definite-lived intangibles, net
	 	$	—	 	 	$	283	 
	Licenses
	 	 	3,976	 	 	 	107,910	 
	Goodwill
	 	 	27,913	 	 	 	111,529	 
	 
	 	 	 	 	 	 
	Total intangible assets
	 	$	31,889	 	 	$	219,722	 
	 
	 	 	 	 	 	 
	Film rights
	 	$	—	 	 	$	18,042	 
	Other long-term assets
	 	 	7,728	 	 	 	8,338	 
	 
	 	 	 	 	 	 
	Total other assets
	 	$	7,728	 	 	$	26,380	 
	 
	 	 	 	 	 	 
	Liabilities
	 	 	 	 	 	 	 	 
	Accounts payable and accrued expenses
	 	$	—	 	 	$	10,565	 
	Film liability
	 	 	—	 	 	 	18,027	 
	Other current liabilities
	 	 	—	 	 	 	8,821	 
	 
	 	 	 	 	 	 
	Total current liabilities
	 	$	—	 	 	$	37,413	 
	 
	 	 	 	 	 	 
	Film liability
	 	$	—	 	 	$	19,902	 
	Other long-term liabilities
	 	 	—	 	 	 	34,428	 
	 
	 	 	 	 	 	 
	Total long-term liabilities
	 	$	—	 	 	$	54,330	 
	 
	 	 	 	 	 	 

Recent Accounting Pronouncements

     On March 19, 2008, the Financial Accounting Standards Board issued Statement No. 161,
Disclosures about Derivative Instruments and Hedging Activities (“Statement 161”). Statement 161
requires additional disclosures about how and why an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for and how derivative instruments
and related hedged items effect an entity’s financial position, results of operations and cash
flows. It is effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. The Company will adopt the
disclosure requirements beginning January 1, 2009.

F-56

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

New Accounting Standards

     The Company adopted Financial Accounting Standards Board Statement No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities (“Statement 159”), which permits
entities to measure many financial instruments and certain other items at fair value at specified
election dates that are not currently required to be measured at fair value. Unrealized gains and
losses on items for which the fair value option has been elected should be reported in earnings at
each subsequent reporting date. The provisions of Statement 159 were effective as of January 1,
2008. The Company did not elect the fair value option under this standard upon adoption.

     The Company adopted Financial Accounting Standards Board Statement No. 157, Fair Value
Measurements (“Statement 157”) on January 1, 2008 and began to apply its recognition and disclosure
provisions to its financial assets and financial liabilities that are remeasured at fair value at
least annually. Statement 157 establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs
such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in
active markets that are either directly or indirectly observable; and Level 3, defined as
unobservable inputs in which little or no market data exists, therefore requiring an entity to
develop its own assumptions.

     The Company holds marketable equity securities classified in accordance with Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities (“Statement 115”). These equity securities are measured at fair value on each reporting
date using quoted prices in active markets. Due to the fact that the inputs used to measure the
equity securities at fair value are observable, the Company has categorized the securities as Level
1.

     The Company is a party to two U.S. dollar—Euro cross currency swap contracts as discussed in
Note 3. The Company is also a party to $1.1 billion of interest rate swap contracts that are
designated as fair value hedges of the underlying fixed-rate debt obligations. The fair values of
the cross-currency swap contracts and interest rate swap contracts are determined based on inputs
that are readily available in public markets or can be derived from information available in
publicly quoted markets. Due to the fact that the inputs are either directly or indirectly
observable, the Company has classified these contracts as Level 2.

     The Company holds options under two secured forward exchange contracts as discussed in Note 3.
The fair value of these contracts is determined using option pricing models that include both
observable and unobservable inputs (principally volatility). As a result of the impact that
volatility has on the calculation of fair value, the Company has classified these contracts as
Level 3.

F-57

 

     CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

     The Company’s assets and liabilities measured at fair value on a recurring basis
subject to the disclosure requirements of Statement 157 at March 31, 2008 were as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Quoted Prices in	 	 	 	 	 	 	 
	 	 	Active markets for	 	 	Significant Other	 	 	Significant	 
	 	 	Identical Assets	 	 	Observable Inputs	 	 	Unobservable	 
	 	 	(Level 1)	 	 	(Level 2)	 	 	Inputs (Level 3)	 
	 	 	 	 	 	 	(In thousands)	 	 	 	 	 
	Asset / (Liability)
	 	 	 	 	 	 	 	 	 	 	 	 
	Trading securities
	 	$	78,833	 	 	$	—	 	 	$	—	 
	Available-for-sale securities
	 	 	261,018	 	 	 	—	 	 	 	—	 
	Derivatives
	 	 	—	 	 	 	(127,402	)	 	 	(3,636	)
	 
	 	 	 	 	 	 	 	 	 
	Total
	 	$	339, 851	 	 	$	(127,402	)	 	$	(3,636	)
	 
	 	 	 	 	 	 	 	 	 

     For assets and liabilities measured at fair value on a recurring basis using Level 3
inputs, Statement 157 requires a reconciliation of the beginning and ending balances as follows:

	 	 	 	 	 
	 	 	2008	 
	 	 	(In thousands)	 
	Beginning balance at January 1
	 	$	(16,978	)
	Unrealized gain included in “Gain on marketable securities”
	 	 	13,342	 
	 
	 	 	 
	Ending balance at March 31
	 	$	(3,636	)
	 
	 	 	 

Note 2: INTANGIBLE ASSETS AND GOODWILL

Definite-lived Intangibles

     The Company has definite-lived intangible assets which consist primarily of transit and
street furniture contracts and other contractual rights in its Americas and International outdoor
segments, talent and program right contracts in its radio segment, and contracts for non-affiliated
radio and television stations in the Company’s media representation operations. Definite-lived
intangible assets are amortized over the shorter of either the respective lives of the agreements
or over the period of time the assets are expected to contribute directly or indirectly to the
Company’s future cash flows.

     The following table presents the gross carrying amount and accumulated amortization for each
major class of definite-lived intangible assets at March 31, 2008 and December 31, 2007:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	March 31, 2008	 	 	December 31, 2007	 
	 	 	Gross Carrying	 	 	Accumulated	 	 	Gross Carrying	 	 	Accumulated	 
	 	 	Amount	 	 	Amortization	 	 	Amount	 	 	Amortization	 
	 	 	(In thousands)	 
	Transit, street furniture,
and other outdoor contractual
rights
	 	$	918,456	 	 	$	654,343	 	 	$	867,283	 	 	$	613,897	 
	Representation contracts
	 	 	403,982	 	 	 	222,255	 	 	 	400,316	 	 	 	212,403	 
	Other
	 	 	83,922	 	 	 	40,220	 	 	 	84,004	 	 	 	39,433	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	1,406,360	 	 	$	916,818	 	 	$	1,351,603	 	 	$	865,733	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

F-58

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

     Total amortization expense from continuing operations related to definite-lived intangible
assets for the three months ended March 31, 2008 and for the year ended December 31, 2007 was $24.0
million and $105.0 million, respectively. The following table presents the Company’s estimate of
amortization expense for each of the five succeeding fiscal years for definite-lived intangible
assets:

	 	 	 	 	 
	 	 	(In thousands)
	2009
	 	$	85,385	 
	2010
	 	 	68,020	 
	2011
	 	 	52,707	 
	2012
	 	 	43,071	 
	2013
	 	 	38,261	 

     As acquisitions and dispositions occur in the future and as purchase price allocations are
finalized, amortization expense may vary.

Indefinite-lived Intangibles

     The Company’s indefinite-lived intangible assets consist of Federal Communications
Commission (“FCC”) broadcast licenses and billboard permits. FCC broadcast licenses are granted to
both radio and television stations for up to eight years under the Telecommunications Act of 1996.
The Act requires the FCC to renew a broadcast license if: it finds that the station has served the
public interest, convenience and necessity; there have been no serious violations of either the
Communications Act of 1934 or the FCC’s rules and regulations by the licensee; and there have been
no other serious violations which taken together constitute a pattern of abuse. The licenses may be
renewed indefinitely at little or no cost. The Company does not believe that the technology of
wireless broadcasting will be replaced in the foreseeable future. The Company’s billboard permits
are issued in perpetuity by state and local governments and are transferable or renewable at little
or no cost. Permits typically include the location which allows the Company the right to operate an
advertising structure. The Company’s permits are located on either owned or leased land. In cases
where the Company’s permits are located on leased land, the leases are typically from 10 to 20
years and renew indefinitely, with rental payments generally escalating at an inflation based
index. If the Company loses its lease, the Company will typically obtain permission to relocate the
permit or bank it with the municipality for future use.

     The Company does not amortize its FCC broadcast licenses or billboard permits. The Company
tests these indefinite-lived intangible assets for impairment at least annually using a direct
method. This direct method assumes that rather than acquiring indefinite-lived intangible assets as
a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible
assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs
start-up costs during the build-up phase which are normally associated with going concern value.
Initial capital costs are deducted from the discounted cash flows model which results in value that
is directly attributable to the indefinite-lived intangible assets.

     Under the direct method, the Company aggregates its indefinite-lived intangible assets at the
market level for purposes of impairment testing. The Company’s key assumptions using the direct
method are market revenue growth rates, market share, profit margin, duration and profile of the
build-up period, estimated start-up capital costs and losses incurred during the build-up period,
the risk-adjusted discount rate and terminal values. This data is populated using industry
normalized information.

F-59

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Goodwill

The Company tests goodwill for impairment using a two-step process. The first step, used to
screen for potential impairment, compares the fair value of the reporting unit with its carrying
amount, including goodwill. The second step, used to measure the amount of the impairment loss,
compares the implied fair value of the reporting unit goodwill with the carrying amount of that
goodwill. The Company’s reporting units for radio broadcasting and Americas outdoor advertising are
the reportable segments. The Company determined that each country in its International outdoor
segment constitutes a reporting unit. The following table presents the changes in the carrying
amount of goodwill in each of the Company’s reportable segments for the three month period ended
March 31, 2008:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Americas	 	 	International	 	 	 	 	 	 	 
	 	 	Radio	 	 	Outdoor	 	 	Outdoor	 	 	Other	 	 	Total	 
	 	 	(In thousands)	 
	Balance as of December 31, 2007
	 	$	6,045,527	 	 	$	688,336	 	 	$	474,253	 	 	$	2,000	 	 	$	7,210,116	 
	Acquisitions
	 	 	—	 	 	 	25	 	 	 	18,465	 	 	 	—	 	 	 	18,490	 
	Dispositions
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Foreign currency
	 	 	—	 	 	 	(276	)	 	 	39,902	 	 	 	—	 	 	 	39,626	 
	Adjustments
	 	 	(173	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(173	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as of March 31, 2008
	 	$	6,045,354	 	 	$	688,085	 	 	$	532,620	 	 	$	2,000	 	 	$	7,268,059	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Note 3: DERIVATIVE INSTRUMENTS

     The Company holds options under two secured forward exchange contracts that limit its
exposure to and benefit from price fluctuations in American Tower Corporation (“AMT”) over the
terms of the contracts (the “AMT contracts”). These options are not designated as hedges of the
underlying shares of AMT. The AMT contracts had a value of $3.6 million and $17.0 million recorded
in “Other long-term liabilities” at March 31, 2008 and December 31, 2007, respectively. For the
three months ended March 31, 2008 and for the year ended December 31, 2007, the Company recognized
a gain of $13.3 million and a loss of $6.7 million, respectively, in “Gain on marketable
securities” related to the change in fair value of the options. To offset the change in the fair
value of these contracts, the Company has recorded AMT shares as trading securities. During the
three months ended March 31, 2008 and for the year ended December 31, 2007, the Company recognized
a loss of $6.8 million and a gain of $10.7 million, respectively, in “Gain on marketable
securities” related to the change in the fair value of the shares.

     The Company is exposed to foreign currency exchange risks related to its investment in net
assets in foreign countries. To manage this risk, the Company entered into two U.S. dollar — Euro
cross currency swaps with an aggregate Euro notional amount of €706.0 million and a corresponding
aggregate U.S. dollar notional amount of $877.7 million. These cross currency swaps had a value of
$167.8 million at March 31, 2008 and $127.4 million at December 31, 2007, which was recorded in
“Other long-term obligations”. These cross currency swaps require the Company to make fixed cash
payments on the Euro notional amount while it receives fixed cash payments on the equivalent U.S.
dollar notional amount, all on a semiannual basis. The Company has designated these cross currency
swaps as a hedge of its net investment in Euro denominated assets. The Company selected the forward
method under the guidance of the Derivatives Implementation Group Statement 133 Implementation
Issue H8, Foreign Currency

F-60

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Hedges: Measuring the Amount of Ineffectiveness in a Net Investment Hedge. The forward
method requires all changes in the fair value of the cross currency swaps and the semiannual cash
payments to be reported as a cumulative translation adjustment in other comprehensive income in the
same manner as the underlying hedged net assets. As of March 31, 2008, a $104.6 million loss, net
of tax, was recorded as a cumulative translation adjustment to accumulated other comprehensive
income related to the cross currency swap.

Note 4: OTHER DEVELOPMENTS

Acquisitions

     The Company acquired two FCC licenses in its radio segment for $11.6 million in cash
during 2008. The Company acquired outdoor display faces and additional equity interests in
international outdoor companies for $68.6 million in cash during 2008. The Company’s national
representation business acquired representation contracts for $3.7 million in cash during 2008.

     During 2008, the Company exchanged assets in one of its Americas markets for assets
located in a different market and recognized a gain of $2.6 million in “Gain on disposition of
assets—net.”

Disposition of Assets

     The Company received proceeds of $76.0 million related to the sale of radio stations recorded
as investing cash flows from discontinued operations and recorded a gain of $21.5 million as a
component of “income from discontinued operations, net” during the three months ended March 31,
2008. The Company received proceeds of $1.0 billion related to the sale of its television business
recorded as investing cash flows from discontinued operations and recorded a gain of $666.7 million
as a component of “income from discontinued operations, net” during the three months ended March
31, 2008.

     In addition, the Company sold its 50% interest in Clear Channel Independent, a South African
outdoor advertising company, and recognized a gain of $75.6 million in “Equity in earnings of
nonconsolidated affiliates” based on the fair value of the equity securities received. The Company
classified these equity securities as available-for-sale on its consolidated balance sheet in
accordance with Statement 115. The sale of Clear Channel Independent was structured as a tax free
disposition thereby resulting in no current tax expense recognized on the sale. As a result, the
Company’s effective tax rate for the first quarter of 2008 was 28.2%.

Debt Maturities

     On January 15, 2008, the Company redeemed its 4.625% Senior Notes at their maturity for
$500.0 million plus accrued interest with proceeds from its bank credit facility.

Legal Proceedings

     Plaintiff Grantley Patent Holdings, Ltd. (“Grantley”) sued Clear Channel Communications, Inc.
and nine Clear Channel subsidiaries for patent infringement in the United States District Court for
the Eastern District of Texas in November 2006. The four patents at issue claim methods and systems
for electronically combining a traffic and billing system and a software yield management system to
create an inventory management system for the broadcast media

F-61

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

industry. Clear Channel contends that the patents are invalid and alternatively, that Clear
Channel’s systems do not infringe the patents. The case was tried before a jury beginning April 14,
2008. On April 22, the jury found that the patents at issue were valid and that Clear Channel
infringed the patents and awarded damages to Grantley in the amount of $66.0 million. A final
judgment has not yet been entered. Clear Channel plans to vigorously contest the judgment through
post-trial motions, including a motion for judgment as a matter of law on the issue of
non-infringement, willful infringement, invalidity and damages, or in the alternative, a motion for
new trial. If we are not successful at the trial court level, we plan to appeal to the U.S. Court
of Appeals for the Federal Circuit on these same issues. For these reasons, we have accrued an
amount less than the jury award. Ultimate resolution of the case could result in material
additional expense.

     The Company is currently involved in certain legal proceedings and, as required, has accrued
its estimate of the probable costs for the resolution of these claims. These estimates have been
developed in consultation with counsel and are based upon an analysis of potential results,
assuming a combination of litigation and settlement strategies. It is possible, however, that
future results of operations for any particular period could be materially affected by changes in
management’s assumptions or the effectiveness of its strategies related to these proceedings.

Note 5: COMMITMENTS AND CONTINGENCIES

     Certain agreements relating to acquisitions provide for purchase price adjustments and
other future contingent payments based on the financial performance of the acquired companies. The
Company will continue to accrue additional amounts related to such contingent payments if and when
it is determinable that the applicable financial performance targets will be met. The aggregate of
these contingent payments, if performance targets are met, would not significantly impact the
financial position or results of operations of the Company.

     As discussed in Note 4, there are various lawsuits and claims pending against the Company.
Based on current assumptions, the Company has accrued its estimate of the probable costs for the
resolution of these claims. Future results of operations could be materially affected by changes in
these assumptions.

Note 6: GUARANTEES

     Within the Company’s $1.75 billion credit facility, there exists a $150.0 million
sub-limit available to certain of the Company’s international subsidiaries. This $150.0 million
sub-limit allows for borrowings in various foreign currencies, which are used to hedge net assets
in those currencies and provide funds to the Company’s international operations for certain working
capital needs. Subsidiary borrowings under this sub-limit are guaranteed by the Company. At March
31, 2008, there was no outstanding balance on this portion of the $1.75 billion credit facility.

     Within the Company’s bank credit facility agreement is a provision that requires the Company
to reimburse lenders for any increased costs that they may incur in an event of a change in law,
rule or regulation resulting in their reduced returns from any change in capital requirements. In
addition to not being able to estimate the potential amount of any future payment under this
provision, the Company is not able to predict if such event will ever occur.

F-62

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

     The Company guarantees $40.2 million of credit lines provided to certain of its
international subsidiaries by a major international bank. Most of these credit lines relate to
intraday overdraft facilities covering participants in the Company’s European cash management pool.
As of March 31, 2008, no amounts were outstanding under these agreements.

     As of March 31, 2008, the Company has outstanding commercial standby letters of credit and
surety bonds of $89.8 million and $51.2 million, respectively. These letters of credit and surety
bonds relate to various operational matters including insurance, bid, and performance bonds as well
as other items. Letters of credit issued under the Company’s $1.75 billion credit facility reduce
the borrowing availability on the credit facility, and are included in the Company’s calculation of
its leverage ratio covenant under the bank credit facilities. The surety bonds are not considered
as borrowings under the Company’s bank credit facilities.

F-63

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 8: SEGMENT DATA

     The Company has three reportable segments, which it believes best reflects how the
Company is currently managed — radio broadcasting, Americas outdoor advertising and International
outdoor advertising. The Americas outdoor advertising segment consists primarily of operations in
the United States, Canada and Latin America, and the International outdoor segment includes
operations primarily in Europe, Asia and Australia. The category “other” includes media
representation and other general support services and initiatives. Revenue and expenses earned and
charged between segments are recorded at fair value and eliminated in consolidation.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Corporate,	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Merger and	 	 	 	 	 	 	 
	 	 	 	 	 	 	Americas	 	 	International	 	 	 	 	 	 	Gain on	 	 	 	 	 	 	 
	 	 	Radio	 	 	Outdoor	 	 	Outdoor	 	 	 	 	 	 	disposition of	 	 	 	 	 	 	 
	 	 	Broadcasting	 	 	Advertising	 	 	Advertising	 	 	Other	 	 	assets
– net	 	 	Eliminations	 	 	Consolidated	 
	 	 	(In thousands)	 
	Three Months Ended March 31, 2008
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue
	 	$	769,611	 	 	$	333,362	 	 	$	442,217	 	 	$	44,453	 	 	$	—	 	 	$	(25,436	)	 	$	1,564,207	 
	Direct operating expenses
	 	 	231,496	 	 	 	156,245	 	 	 	314,589	 	 	 	17,324	 	 	 	—	 	 	 	(13,707	)	 	 	705,947	 
	Selling, general and
administrative expenses
	 	 	269,282	 	 	 	58,375	 	 	 	86,235	 	 	 	24,218	 	 	 	—	 	 	 	(11,729	)	 	 	426,381	 
	Depreciation and amortization
	 	 	31,487	 	 	 	50,099	 	 	 	54,991	 	 	 	11,555	 	 	 	4,146	 	 	 	—	 	 	 	152,278	 
	Corporate expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	46,303	 	 	 	—	 	 	 	46,303	 
	Merger expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	389	 	 	 	—	 	 	 	389	 
	Gain on disposition of
assets— net
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,097	 	 	 	—	 	 	 	2,097	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income (loss)
	 	$	237,346	 	 	$	68,643	 	 	$	(13,598	)	 	$	(8,644	)	 	$	(48,741	)	 	$	—	 	 	$	235,006	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Intersegment revenues
	 	$	10,964	 	 	$	1,677	 	 	$	—	 	 	$	12,795	 	 	$	—	 	 	$	—	 	 	$	25,436	 
	Identifiable assets
	 	$	11,641,673	 	 	$	2,904,243	 	 	$	2,877,597	 	 	$	721,556	 	 	$	853,038	 	 	$	—	 	 	$	18,998,107	 
	Capital expenditures
	 	$	18,420	 	 	$	30,050	 	 	$	43,251	 	 	$	905	 	 	$	1,067	 	 	$	—	 	 	$	93,693	 
	Share-based payments
	 	$	4,809	 	 	$	1,538	 	 	$	392	 	 	$	—	 	 	$	2,851	 	 	$	—	 	 	$	9,590	 
	 
	 	 	 	 	 	 	 	 
	Three Months Ended March 31, 2007
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue
	 	$	799,201	 	 	$	317,023	 	 	$	373,833	 	 	$	45,674	 	 	$	—	 	 	$	(30,654	)	 	$	1,505,077	 
	Direct operating expenses
	 	 	234,518	 	 	 	134,914	 	 	 	259,291	 	 	 	17,705	 	 	 	—	 	 	 	(18,549	)	 	 	627,879	 
	Selling, general and
administrative expenses
	 	 	276,693	 	 	 	54,243	 	 	 	73,290	 	 	 	24,198	 	 	 	—	 	 	 	(12,105	)	 	 	416,319	 
	Depreciation and amortization
	 	 	29,901	 	 	 	46,561	 	 	 	49,109	 	 	 	9,966	 	 	 	4,148	 	 	 	—	 	 	 	139,685	 
	Corporate expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	48,150	 	 	 	—	 	 	 	48,150	 
	Merger expenses
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,686	 	 	 	—	 	 	 	1,686	 
	Gain on disposition of
assets— net
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	6,947	 	 	 	—	 	 	 	6,947	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operating income (loss)
	 	$	258,089	 	 	$	81,305	 	 	$	(7,857	)	 	$	(6,195	)	 	$	(47,037	)	 	$	—	 	 	$	278,305	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Intersegment revenues
	 	$	15,282	 	 	$	1,883	 	 	$	—	 	 	$	13,489	 	 	$	—	 	 	$	—	 	 	$	30,654	 
	Identifiable assets
	 	$	11,828,170	 	 	$	2,764,927	 	 	$	2,391,523	 	 	$	654,587	 	 	$	332,578	 	 	$	—	 	 	$	17,971,785	 
	Capital expenditures
	 	$	14,677	 	 	$	22,582	 	 	$	24,671	 	 	$	1,589	 	 	$	1,467	 	 	$	—	 	 	$	64,986	 
	Share-based payments
	 	$	4,464	 	 	$	1,126	 	 	$	241	 	 	$	—	 	 	$	2,414	 	 	$	—	 	 	$	8,245	 

     Revenue of $476.6 million and $398.5 million derived from foreign operations are
included in the data above for the three months ended March 31, 2008 and 2007, respectively.
Identifiable assets of $3.1 billion and $2.7 billion derived from foreign operations are included
in the data above at March 31, 2008 and 2007, respectively.

F-64

 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Note 9: SUBSEQUENT EVENTS

     Through May 7, 2008, the Company executed definitive asset purchase agreements
for the sale of 17 radio stations in addition to the radio stations under definitive asset
purchase agreements at March 31, 2008. The closing of these sales is subject to antitrust
clearances, FCC approval and other customary closing conditions.

F-65

 

[THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

     We have not authorized any dealer, salesperson or other person to give any information
or represent anything to you other than the information contained in this offering memorandum. You
must not rely on unauthorized information or representations.

     This offering memorandum does not offer to sell or ask for offers to buy any of the securities
in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do
so, or to any person who can not legally be offered the securities.

     The information in this offering memorandum is current only as of the date on its cover, and
may change after that date. For any time after the cover date of this offering memorandum, we do
not represent that our affairs are the same as described or that the information in this offering
memorandum is correct—nor do we imply those things by delivering this offering memorandum or
selling securities to you.

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	Offering Memorandum Summary
	 	 	1	 
	Risk Factors
	 	 	32	 
	Use of Proceeds
	 	 	50	 
	Capitalization
	 	 	52	 
	Unaudited Pro Forma Condensed
Consolidated Financial Statements
	 	 	54	 
	Selected Historical Consolidated Financial
and Other Data
	 	 	67	 
	Management’s Discussion and Analysis of
Financial Condition and Results of
Operations
	 	 	70	 
	Business
	 	 	108	 
	Management
	 	 	139	 
	Security Ownership of Certain Beneficial
Owners and Management
	 	 	150	 
	Certain Relationships and Related
Transactions
	 	 	152	 
	Description of Other Indebtedness
	 	 	155	 
	Description of the Notes
	 	 	163	 
	Exchange Offer; Registration Rights
	 	 	241	 
	Notice to Investors
	 	 	244	 
	Book-Entry; Delivery and Form
	 	 	248	 
	Private Placement
	 	 	251	 
	Certain United States Federal Income Tax
Considerations
	 	 	253	 
	Certain Considerations for Plan Investors
	 	 	263	 
	Legal Matters
	 	 	266	 
	Independent Registered Public Accounting
Firm
	 	 	266	 
	Available Information
	 	 	266	 
	Index to Consolidated Financial
Statements
	 	 	F-1	 

 

OFFERING MEMORANDUM

 

ClearChannel

BT Triple Crown Merger Co., Inc.

to be merged with and into

Clear Channel Communications, Inc.

$980,000,000 10.75%

Senior Cash Pay Notes due 2016

$1,330,000,000 11.00%/11.75%

Senior Toggle Notes due 2016

Deutsche Bank Securities

Morgan Stanley

Citi

Credit Suisse

RBS Greenwich Capital

Wachovia Securities

          , 2008

 

 

 

 

ANNEX A

Form of Joinder Agreement

          WHEREAS, BT Triple Crown Merger Co., Inc., a Delaware corporation (“Merger Sub”), and
the Initial Purchasers named therein (the “Initial Purchasers”) heretofore executed and
delivered a Purchase Agreement, dated May 13, 2008 (the “Purchase Agreement”), providing
for the issuance and sale of the Securities (as defined therein); and

          NOW, THEREFORE, each of the undersigned hereby agrees for the benefit of the Initial
Purchasers, as follows:

          Capitalized terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement.

          1. Joinder. Each of the undersigned hereby acknowledges that it has received and
reviewed a copy of the Purchase Agreement and all other documents it deems fit in order to enter
into this Joinder Agreement (this “Joinder Agreement”), and acknowledges and agrees to (i)
join and become a party to the Purchase Agreement as indicated by its signature below; (ii) be
bound by all covenants, agreements, representations, warranties and acknowledgments attributable to
each of the undersigned in the Purchase Agreement as if made by, and with respect to, each
signatory hereto; and (iii) perform all obligations and duties requested of each of the undersigned
pursuant to the Purchase Agreement.

          2. Representations and Warranties and Agreements. Each of the undersigned hereby
represents and warrants to and agrees with the Initial Purchasers that it has all the requisite
company power and authority to execute, deliver and perform its obligations under this Joinder
Agreement, that this Joinder Agreement has been duly authorized, executed and delivered and that
the consummation of the transaction contemplated hereby has been duly and validly authorized,
except, in each case, to the extent that the failure to do so would not reasonably be expected to
have a material adverse effect on the condition (financial or otherwise), business or results of
operations of the undersigned and its subsidiaries taken as a whole and after giving effect to the
Transactions.

          3. Counterparts. This Joinder Agreement may be signed in one or more counterparts
(which may be delivered in original form or facsimile or “pdf” file thereof), each of which shall
constitute an original when so executed and all of which together shall constitute one and the same
agreement.

          4. Amendments. No amendment or waiver of any provision of this Joinder Agreement, nor
any consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties thereto.

          5. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.

A-1

 

          6. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS JOINDER AGREEMENT AND THE
TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN.

A-2

 

          IN WITNESS WHEREOF, the undersigned has executed this agreement this [       ] day of [       ], 2008.

	 	 	 	 	 
	 	[PARTY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A-3

 

	 	 	 	 	 

	 	 	 	 	 
	Acknowledged by:	 	 
	 
	 	 	 	 
	DEUTSCHE BANK SECURITIES INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	MORGAN STANLEY SENIOR FUNDING INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	CITIGROUP GLOBAL MARKETS INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	CREDIT SUISSE SECURITIES (USA) LLC	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

A-4

 

	 	 	 	 	 
	GREENWICH CAPITAL MARKETS, INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	WACHOVIA CAPITAL MARKETS, LLC	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

A-5exv10w22

Exhibit 10.22

EXECUTION COPY

 

INDENTURE

Dated as of July 30, 2008

among

BT TRIPLE CROWN MERGER CO., INC.

as the Issuer,

(to be merged with and into

CLEAR CHANNEL COMMUNICATIONS, INC.,

as the surviving entity),

LAW DEBENTURE TRUST COMPANY OF NEW YORK,

as Trustee

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Paying Agent, Registrar and Transfer Agent

10.75% SENIOR CASH PAY NOTES DUE 2016

and

11.00% / 11.75% SENIOR TOGGLE NOTES DUE 2016

 

 

 

CROSS-REFERENCE TABLE*

	 	 	 	 	 	 
	Trust Indenture Act Section	 	Indenture Section
	310	(a)(1)
	 	 	7.10	 
	 	(a)(2)
	 	 	7.10	 
	 	(a)(3)
	 	 	N.A.	 
	 	(a)(4)
	 	 	N.A.	 
	 	(a)(5)
	 	 	7.10	 
	 	(b)
	 	 	7.03, 7.10	 
	 	(c)
	 	 	N.A.	 
	311	 (a)
	 	 	7.11	 
	 	(b)
	 	 	7.11	 
	 	(c)
	 	 	N.A.	 
	312	 (a)
	 	 	2.05	 
	 	(b)
	 	 	13.03	 
	 	(c)
	 	 	13.03	 
	313	 (a)
	 	 	7.06	 
	 	(b)(1)
	 	 	N.A.	 
	 	(b)(2)
	 	 	7.06; 7.07	 
	 	(c)
	 	 	7.06; 13.02	 
	 	(d)
	 	 	7.06	 
	314	 (a)
	 	 	4.03; 13.05	 
	 	(b)
	 	 	N.A.	 
	 	(c)(1)
	 	 	13.04	 
	 	(c)(2)
	 	 	13.04	 
	 	(c)(3)
	 	 	N.A.	 
	 	(d)
	 	 	N.A.	 
	 	(e)
	 	 	13.05	 
	 	(f)
	 	 	N.A.	 
	315	 (a)
	 	 	7.01	 
	 	(b)
	 	 	7.05; 13.02	 
	 	(c)
	 	 	7.01	 
	 	(d)
	 	 	7.01	 
	 	(e)
	 	 	6.14	 
	316	 (a)(last sentence)
	 	 	2.09	 
	 	(a)(1)(A)
	 	 	6.05	 
	 	(a)(1)(B)
	 	 	6.04	 
	 	(a)(2)
	 	 	N.A	 
	 	(b)
	 	 	6.07	 
	 	(c)
	 	 	2.12; 9.04	 
	317	 (a)(1)
	 	 	6.08	 
	 	(a)(2)
	 	 	6.12	 
	 	(b)
	 	 	2.04	 
	318	 (a)
	 	 	13.01	 
	 	(b)
	 	 	N.A.	 
	 	(c)
	 	 	13.01	 

 

			
	N.A. means not applicable.
	 
	*	 	This Cross-Reference Table is not part of the Indenture.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE 1
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	 	 
	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Definitions
	 	 	36	 
	Section 1.03 Incorporation by Reference of Trust Indenture Act
	 	 	37	 
	Section 1.04 Rules of Construction
	 	 	37	 
	Section 1.05 Acts of Holders
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	 	 
	 
	 	 	 	 
	THE NOTES
	 	 	 	 
	 
	 	 	 	 
	Section 2.01 Form and Dating; Terms
	 	 	39	 
	Section 2.02 Execution and Authentication
	 	 	41	 
	Section 2.03 Registrar and Paying Agent
	 	 	41	 
	Section 2.04 Paying Agent To Hold Money in Trust
	 	 	42	 
	Section 2.05 Holder Lists
	 	 	42	 
	Section 2.06 Transfer and Exchange
	 	 	43	 
	Section 2.07 Replacement Notes
	 	 	54	 
	Section 2.08 Outstanding Notes
	 	 	54	 
	Section 2.09 Treasury Notes
	 	 	55	 
	Section 2.10 Temporary Notes
	 	 	55	 
	Section 2.11 Cancellation
	 	 	55	 
	Section 2.12 Defaulted Interest
	 	 	55	 
	Section 2.13 CUSIP Numbers
	 	 	56	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	 	 
	 
	 	 	 	 
	REDEMPTION
	 	 	 	 
	 
	 	 	 	 
	Section 3.01 Notices to Trustee
	 	 	56	 
	Section 3.02 Selection of Notes To Be Redeemed or Purchased
	 	 	56	 
	Section 3.03 Notice of Redemption
	 	 	57	 
	Section 3.04 Effect of Notice of Redemption
	 	 	58	 
	Section 3.05 Deposit of Redemption or Purchase Price
	 	 	58	 
	Section 3.06 Notes Redeemed or Purchased in Part
	 	 	58	 
	Section 3.07 Optional Redemption
	 	 	59	 
	Section 3.08 Mandatory Redemption
	 	 	60	 
	Section 3.09 Offers To Repurchase by Application of Excess Proceeds
	 	 	60	 

-i-

 

	 	 	 	 	 
	 	 	Page
	ARTICLE 4
	 	 	 	 
	 
	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 4.01 Payment of Notes
	 	 	62	 
	Section 4.02 Maintenance of Office or Agency
	 	 	63	 
	Section 4.03 Reports and Other Information
	 	 	63	 
	Section 4.04 Compliance Certificate
	 	 	64	 
	Section 4.05 Taxes
	 	 	65	 
	Section 4.06 Stay, Extension and Usury Laws
	 	 	65	 
	Section 4.07 Limitation on Restricted Payments
	 	 	65	 
	Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
	 	 	73	 
	Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock
	 	 	74	 
	Section 4.10 Asset Sales
	 	 	80	 
	Section 4.11 Transactions with Affiliates
	 	 	82	 
	Section 4.12 Liens
	 	 	84	 
	Section 4.13 Corporate Existence
	 	 	85	 
	Section 4.14 Offer to Repurchase Upon Change of Control
	 	 	85	 
	Section 4.15 Limitation on Guarantees of Indebtedness by Restricted Subsidiaries
	 	 	86	 
	Section 4.16 Limitation on Modification of Existing Senior Notes
	 	 	87	 
	Section 4.17 Limitation on Layering
	 	 	87	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	 	 
	 
	 	 	 	 
	SUCCESSORS
	 	 	 	 
	 
	 	 	 	 
	Section 5.01 Merger, Consolidation or Sale of All or Substantially All Assets
	 	 	88	 
	Section 5.02 Successor Corporation Substituted
	 	 	89	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	 	 
	 
	 	 	 	 
	DEFAULTS AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 6.01 Events of Default
	 	 	90	 
	Section 6.02 Acceleration
	 	 	92	 
	Section 6.03 Other Remedies
	 	 	92	 
	Section 6.04 Waiver of Past Defaults
	 	 	92	 
	Section 6.05 Control by Majority
	 	 	92	 
	Section 6.06 Limitation on Suits
	 	 	92	 
	Section 6.07 Rights of Holders of Notes To Receive Payment
	 	 	93	 
	Section 6.08 Collection Suit by Trustee
	 	 	93	 
	Section 6.09 Restoration of Rights and Remedies
	 	 	93	 
	Section 6.10 Rights and Remedies Cumulative
	 	 	93	 
	Section 6.11 Delay or Omission Not Waiver
	 	 	94	 
	Section 6.12 Trustee May File Proofs of Claim
	 	 	94	 
	Section 6.13 Priorities
	 	 	94	 
	Section 6.14 Undertaking for Costs
	 	 	95	 

-ii-

 

	 	 	 	 	 
	 	 	Page
	ARTICLE 7
	 	 	 	 
	 
	 	 	 	 
	TRUSTEE
	 	 	 	 
	 
	 	 	 	 
	Section 7.01 Duties of Trustee
	 	 	95	 
	Section 7.02 Rights of Trustee
	 	 	96	 
	Section 7.03 Individual Rights of Trustee
	 	 	97	 
	Section 7.04 Trustee’s Disclaimer
	 	 	97	 
	Section 7.05 Notice of Defaults
	 	 	97	 
	Section 7.06 Reports by Trustee to Holders of the Notes
	 	 	97	 
	Section 7.07 Compensation and Indemnity
	 	 	98	 
	Section 7.08 Replacement of Trustee or Agent
	 	 	98	 
	Section 7.09 Successor Trustee by Merger, etc.
	 	 	99	 
	Section 7.10 Eligibility; Disqualification
	 	 	99	 
	Section 7.11 Preferential Collection of Claims Against Issuer
	 	 	100	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	 	 
	 
	 	 	 	 
	LEGAL DEFEASANCE AND COVENANT DEFEASANCE
	 	 	 	 
	 
	 	 	 	 
	Section 8.01 Option To Effect Legal Defeasance or Covenant Defeasance
	 	 	100	 
	Section 8.02 Legal Defeasance and Discharge
	 	 	100	 
	Section 8.03 Covenant Defeasance
	 	 	101	 
	Section 8.04 Conditions to Legal or Covenant Defeasance
	 	 	101	 
	Section 8.05 Deposited Money and Government Securities To Be Held in Trust; Other Miscellaneous Provisions
	 	 	102	 
	Section 8.06 Repayment to Issuer
	 	 	103	 
	Section 8.07 Reinstatement
	 	 	103	 
	 
	 	 	 	 
	ARTICLE 9
	 	 	 	 
	 
	 	 	 	 
	AMENDMENT, SUPPLEMENT AND WAIVER
	 	 	 	 
	 
	 	 	 	 
	Section 9.01 Without Consent of Holders of Notes
	 	 	103	 
	Section 9.02 With Consent of Holders of Notes
	 	 	104	 
	Section 9.03 Compliance with Trust Indenture Act
	 	 	106	 
	Section 9.04 Revocation and Effect of Consents
	 	 	106	 
	Section 9.05 Notation on or Exchange of Notes
	 	 	107	 
	Section 9.06 Trustee To Sign Amendments, etc.
	 	 	107	 
	Section 9.07 Payment for Consent
	 	 	107	 
	 
	 	 	 	 
	ARTICLE 10
	 	 	 	 
	 
	 	 	 	 
	GUARANTEES
	 	 	 	 
	 
	 	 	 	 
	Section 10.01 Guarantee
	 	 	107	 
	Section 10.02 Limitation on Guarantor Liability
	 	 	109	 
	Section 10.03 Execution and Delivery
	 	 	109	 
	Section 10.04 Subrogation
	 	 	110	 
	Section 10.05 Benefits Acknowledged
	 	 	110	 
	Section 10.06 Release of Guarantees
	 	 	110	 

-iii-

 

	 	 	 	 	 
	 	 	Page
	ARTICLE 11
	 	 	 	 
	 
	 	 	 	 
	SUBORDINATION OF GUARANTEES
	 	 	 	 
	 
	 	 	 	 
	Section 11.01 Agreement To Subordinate
	 	 	110	 
	Section 11.02 Liquidation, Dissolution, Bankruptcy
	 	 	111	 
	Section 11.03 Default on Designated Senior Indebtedness of a Guarantor
	 	 	111	 
	Section 11.04 Demand for Payment
	 	 	113	 
	Section 11.05 When Distribution Must Be Paid Over
	 	 	113	 
	Section 11.06 Subrogation
	 	 	113	 
	Section 11.07 Relative Rights
	 	 	113	 
	Section 11.08 Subordination May Not Be Impaired by a Guarantor
	 	 	114	 
	Section 11.09 Rights of Trustee and Paying Agent
	 	 	114	 
	Section 11.10 Distribution or Notice to Representative
	 	 	114	 
	Section 11.11 Article 11 Not To Prevent Events of Default or Limit Right To Demand Payment
	 	 	114	 
	Section 11.12 Trust Moneys Not Subordinated
	 	 	114	 
	Section 11.13 Trustee Entitled To Rely
	 	 	115	 
	Section 11.14 Trustee To Effectuate Subordination
	 	 	115	 
	Section 11.15 Trustee Not Fiduciary for Holders of Designated Senior Indebtedness of Guarantors
	 	 	116	 
	Section 11.16 Reliance by Holders of Designated Senior Indebtedness of a Guarantor on Subordination Provisions
	 	 	116	 
	 
	 	 	 	 
	ARTICLE 12
	 	 	 	 
	 
	 	 	 	 
	SATISFACTION AND DISCHARGE
	 	 	 	 
	 
	 	 	 	 
	Section 12.01 Satisfaction and Discharge
	 	 	116	 
	Section 12.02 Application of Trust Money
	 	 	117	 
	ARTICLE 13
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 13.01 Trust Indenture Act Controls
	 	 	118	 
	Section 13.02 Notices
	 	 	118	 
	Section 13.03 Communication by Holders of Notes with Other Holders of Notes
	 	 	119	 
	Section 13.04 Certificate and Opinion as to Conditions Precedent
	 	 	120	 
	Section 13.05 Statements Required in Certificate or Opinion
	 	 	120	 
	Section 13.06 Rules by Trustee and Agents
	 	 	120	 
	Section 13.07 No Personal Liability of Directors, Officers, Employees and Stockholders
	 	 	120	 
	Section 13.08 Governing Law
	 	 	121	 
	Section 13.09 Waiver of Jury Trial
	 	 	121	 
	Section 13.10 Force Majeure
	 	 	121	 
	Section 13.11 No Adverse Interpretation of Other Agreements
	 	 	121	 
	Section 13.12 Successors
	 	 	121	 
	Section 13.13 Severability
	 	 	121	 

-iv-

 

	 	 	 	 	 
	 	 	Page
	Section 13.14 Counterpart Originals
	 	 	121	 
	Section 13.15 Table of Contents, Headings, etc.
	 	 	121	 
	Section 13.16 Qualification of Indenture
	 	 	122	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A1 Form of Senior Cash Pay Note
	 	 	 	 
	Exhibit A2 Form of Senior Toggle Note
	 	 	 	 
	Exhibit B Form of Certificate of Transfer
	 	 	 	 
	Exhibit C Form of Certificate of Exchange
	 	 	 	 
	Exhibit D Form of Supplemental Indenture to Be Delivered by
Subsequent Guarantors
	 	 	 	 

-v-

 

          INDENTURE, dated as of July 30, 2008, among BT Triple Crown Merger Co., Inc., a Delaware
corporation (“ Merger Co ,” and prior to the consummation of the Merger, the Issuer), and
following the consummation of the Merger, Clear Channel Communications, Inc., a Texas corporation
(“ Clear Channel ,” and following the consummation of the Merger, the Issuer), Law
Debenture Trust Company of New York, as Trustee, and Deutsche Bank Trust Company Americas, as
Paying Agent, Registrar and Transfer Agent.

W I T N E S S E T H

          WHEREAS, the Issuer has duly authorized the creation of an issue of $980,000,000 aggregate
principal amount of 10.75% Senior Cash Pay Notes due 2016 (the “ Senior Cash Pay Notes ”)
and an issue of $1,330,000,000 aggregate principal amount of 11.00% / 11.75% Senior Toggle Notes
due 2016 (the “ Senior Toggle Notes ” and, together with the Senior Cash Pay Notes, the “
Initial Notes ”);

          WHEREAS, Merger Co and Clear Channel, each in its capacity as the Issuer, have duly authorized
the execution and delivery of this Indenture; and

          WHEREAS, following the consummation of the merger of Merger Co with and into Clear Channel on
the Issue Date (the “ Merger ”), with Clear Channel as the surviving entity, Clear Channel
shall assume all of the rights and obligations of Merger Co as the Issuer under this Indenture by
operation of law.

          NOW, THEREFORE, Merger Co and Clear Channel, each in its capacity as the Issuer, the Trustee
and the Paying Agent and Registrar agree as follows for the benefit of each other and for the equal
and ratable benefit of the Holders of the Notes.

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01 Definitions.

          “ 144A Global Note ” means a Global Note substantially in the form of Exhibit
A1 or Exhibit A2 hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee
that will be issued in a denomination equal to the outstanding principal amount of the Notes sold
in reliance on Rule 144A.

          “ ABL Facility ” means the asset-based revolving Credit Facility provided under the
Credit Agreement to be entered into as of the Issue Date by and among the Issuer, the co-borrowers
party thereto, the guarantors party thereto, the lenders party thereto in their capacities as
lenders thereunder and Citibank, N.A., as Administrative Agent, including any notes, mortgages,
guarantees, collateral documents, instruments and agreements executed in connection therewith, and
any amendments, supplements, modifications, extensions, renewals, restatements, refundings or
refinancings thereof and any one or more notes, indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that extend, replace, refund,
refinance, renew or defease any part of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or refinancing facility or indenture that
increases the amount that may be borrowed thereunder or alters the maturity of the loans thereunder
or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the
same or other agent, lender or group of lenders or investors.

 

 

          “ Acquired Indebtedness ” means, with respect to any specified Person,

     (1) Indebtedness of any other Person existing at the time such other Person is merged,
consolidated or amalgamated with or into or became a Restricted Subsidiary of such specified
Person, including Indebtedness incurred in connection with, or in contemplation of, such other
Person merging, consolidating or amalgamating with or into or becoming a Restricted Subsidiary
of such specified Person, and

     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

          “ Additional Notes ” means additional Notes (other than the Initial Notes and other
than Exchange Notes issued in exchange for such Initial Notes) issued from time to time under this
Indenture in accordance with Sections 2.01 and 4.09 hereof.

          “ Affiliate ” of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.

          “ Agent ” means any Registrar, Transfer Agent or Paying Agent.

          “ Applicable Premium ” means, with respect to any Note on any Redemption Date, the
greater of:

     (1) 1.0% of the principal amount of such Note on such Redemption Date; and

     (2) the excess, if any, of (a) the present value at such Redemption Date of (i) the
redemption price of such Note at August 1, 2012 (such redemption price being set forth in
Section 3.07(d) hereof and in Section 5(d) of such Note), plus (ii) all required remaining
interest payments (calculated based on the cash interest rate) due on such Note through August
1, 2012 (excluding accrued but unpaid interest to the Redemption Date), computed using a
discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over
(b) the principal amount of such Note on such Redemption Date.

          “ Applicable Procedures ” means, with respect to any transfer or exchange of or for
beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear
and/or Clearstream that apply to such transfer or exchange.

          “ Asset Sale ” means:

     (1) the sale, conveyance, transfer or other disposition, whether in a single transaction or
a series of related transactions, of property or assets (including by way of a Sale and
Lease-Back Transaction) of the Issuer or any of its Restricted Subsidiaries (each referred to in
this definition as a “ disposition ”); or

     (2) the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a
single transaction or a series of related transactions;

-2-

 

in each case, other than:

     (a) any disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn
out property or assets in the ordinary course of business or any disposition of inventory or
goods (or other assets) held for sale or no longer used in the ordinary course of business;

     (b) the disposition of all or substantially all of the assets of the Issuer in a manner
permitted pursuant to the provisions described under Section 5.01 hereof or any disposition that
constitutes a Change of Control pursuant to this Indenture;

     (c) the making of any Restricted Payment that is permitted to be made, and is made, under
Section 4.07 hereof or the making of any Permitted Investment;

     (d) any disposition of property or assets or issuance or sale of Equity Interests of any
Restricted Subsidiary in any transaction or series of related transactions with an aggregate
fair market value of less than $50,000,000;

     (e) any disposition of property or assets or issuance of securities by a Restricted
Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another Restricted
Subsidiary;

     (f) to the extent allowable under Section 1031 of the Code, any exchange of like property
or assets (excluding any boot thereon) for use in a Similar Business;

     (g) the sale, lease, assignment, sub-lease, license or sub-license of any real or personal
property in the ordinary course of business;

     (h) any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an
Unrestricted Subsidiary;

     (i) foreclosures, condemnation, expropriation or any similar action with respect to assets
or the granting of Liens not prohibited by this Indenture;

     (j) sales of accounts receivable, or participations therein, or Securitization Assets or
related assets in connection with any Receivables Facility or any Qualified Securitization
Financing;

     (k) any financing transaction with respect to property built or acquired by the Issuer or
any Restricted Subsidiary after the Issue Date, including Sale and Lease-Back Transactions and
asset securitizations permitted by this Indenture;

     (l) sales of accounts receivable in connection with the collection or compromise thereof;

     (m) the abandonment of intellectual property rights in the ordinary course of business,
which in the reasonable good faith determination of the Issuer are not material to the conduct
of the business of the Issuer and its Restricted Subsidiaries taken as a whole;

     (n) voluntary terminations of Hedging Obligations;

-3-

 

     (o) the licensing or sub-licensing of intellectual property or other general intangibles in
the ordinary course of business, other than the licensing of intellectual property on a
long-term basis;

     (p) any surrender or waiver of contract rights or the settlement, release or surrender of
contract rights or other litigation claims in the ordinary course of business;

     (q) the unwinding of any Hedging Obligations; or

     (r) the issuance of directors’ qualifying shares and shares issued to foreign nationals as
required by applicable law.

          “ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for
the relief of debtors.

          “ Business Day ” means each day which is not a Legal Holiday.

          “ Capital Stock ” means:

     (1) in the case of a corporation, corporate stock or shares in the capital of such
corporation;

     (2) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital stock;

     (3) in the case of a partnership or limited liability company, partnership or membership
interests (whether general or limited); and

     (4) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing Person but
excluding from all of the foregoing any debt securities convertible into Capital Stock, whether
or not such debt securities include any right of participation with Capital Stock.

          “ Capitalized Lease Obligation ” means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at such time be required
to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto)
prepared in accordance with GAAP.

          “ Capitalized Software Expenditures ” means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted
Subsidiaries during such period in respect of purchased software or internally developed software
and software enhancements that, in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of such Person and its Restricted Subsidiaries.

          “ Cash Equivalents ” means:

     (1) United States dollars;

     (2) (a) Canadian dollars, pounds sterling, euro, or any national currency of any
participating member state of the EMU; or

-4-

 

     (b) in the case of the Issuer or a Restricted Subsidiary, such local currencies held by it
from time to time in the ordinary course of business;

     (3) securities issued or directly and fully and unconditionally guaranteed or insured by
the U.S. government or any agency or instrumentality thereof the securities of which are
unconditionally guaranteed as a full faith and credit obligation of such government with
maturities of 24 months or less from the date of acquisition;

     (4) certificates of deposit, time deposits and eurodollar time deposits with maturities of
one year or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any commercial bank having
capital and surplus of not less than $500,000,000 in the case of U.S. banks and $100,000,000 (or
the U.S. dollar equivalent as of the date of determination) in the case of non-U.S. banks;

     (5) repurchase obligations for underlying securities of the types described in clauses (3)
and (4) entered into with any financial institution meeting the qualifications specified in
clause (4) above;

     (6) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case
maturing within 24 months after the date of creation thereof;

     (7) marketable short-term money market and similar securities having a rating of at least
P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P
shall be rating such obligations, an equivalent rating from another Rating Agency) and in each
case maturing within 24 months after the date of creation thereof;

     (8) readily marketable direct obligations issued by any state, commonwealth or territory of
the United States or any political subdivision or taxing authority thereof having an Investment
Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of
acquisition;

     (9) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from
S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of
acquisition;

     (10) Investments with average maturities of 12 months or less from the date of acquisition
in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the
equivalent thereof) or better by Moody’s; and

     (11) investment funds investing at least 95.0% of their assets in securities of the types
described in clauses (1) through (10) above.

          Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in
currencies other than those set forth in clauses (1) and (2) above, provided that such amounts are
converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any
event within ten Business Days following the receipt of such amounts.

          “ CCO ” means Clear Channel Outdoor Holdings, Inc., a Delaware corporation.

          “ CCU Mirror Note ” means the Revolving Promissory Note dated as of November 10, 2005
between the Issuer, as maker, and CCO, as payee.

-5-

 

          “ Change of Control ” means the occurrence of any of the following after the Issue
Date (and excluding, for the avoidance of doubt, the Transactions):

     (1) the sale, lease or transfer, in one or a series of related transactions (other than by
merger, consolidation or amalgamation), of all or substantially all of the assets of the Issuer
and its Restricted Subsidiaries, taken as a whole, to any Person other than a Permitted Holder;
or

     (2) the Issuer becomes aware of (by way of a report or any other filing pursuant to Section
13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by (A) any
Person (other than any Permitted Holder) or (B) Persons (other than any Permitted Holder) that
are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, or any successor provision), including any such group acting for the purpose of acquiring,
holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act), in a single transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase of “beneficial ownership” (within the
meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50% of
the total voting power of the Voting Stock of the Issuer or any of its direct or indirect parent
companies.

          “ Clear Channel ” means Clear Channel Communications, Inc., a Texas corporation.

          “ Clearstream ” means Clearstream Banking, Société Anonyme.

          “ Code ” means the Internal Revenue Code of 1986, as amended, or any successor
thereto.

          “ Consolidated Depreciation and Amortization Expense ” means, with respect to any
Person, for any period, the total amount of depreciation and amortization expense, including the
amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses and
Capitalized Software Expenditures and amortization of unrecognized prior service costs and
actuarial gains and losses related to pensions and other post-employment benefits, of such Person
and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in
accordance with GAAP.

          “ Consolidated Indebtedness ” means, as of any date of determination, the sum, without
duplication, of (1) the total amount of Indebtedness of the Issuer and its Restricted Subsidiaries
set forth on the Issuer’s consolidated balance sheet (excluding any letters of credit except to the
extent of unreimbursed amounts drawn thereunder), plus (2) the greater of the aggregate liquidation
value and maximum fixed repurchase price without regard to any change of control or redemption
premiums of all Disqualified Stock of the Issuer and the Restricted Guarantors and all Preferred
Stock of its Restricted Subsidiaries that are not Guarantors, in each case, determined on a
consolidated basis in accordance with GAAP.

          “ Consolidated Interest Expense ” means, with respect to any Person for any period,
without duplication, the sum of:

     (1) consolidated interest expense of such Person and its Restricted Subsidiaries for such
period, to the extent such expense was deducted (and not added back) in computing Consolidated
Net Income (including (a) amortization of original issue discount resulting from the issuance of
Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed
with respect to letters of credit or bankers acceptances, (c) non-cash interest expense (but
excluding any non-cash interest expense attributable to the movement in the mark to market
valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (d) the
interest component of Capitalized Lease Obligations, and (e) net payments, if any made (less net

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payments, if any, received), pursuant to interest rate Hedging Obligations with respect to
Indebtedness, and excluding (t) any expense resulting from the discounting of any Indebtedness
in connection with the application of recapitalization accounting or purchase accounting, as the
case may be, in connection with the Transactions or any acquisition, (u) penalties and interest
relating to taxes, (v) any Special Interest, any “special interest” with respect to other
securities and any liquidated damages for failure to timely comply with registration rights
obligations, (w) amortization of deferred financing fees, debt issuance costs, discounted
liabilities, commissions, fees and expenses, (x) any expensing of bridge, commitment and other
financing fees, (y) commissions, discounts, yield and other fees and charges (including any
interest expense) related to any Receivables Facility or Qualified Securitization Financing and
(z) any accretion of accrued interest on discounted liabilities); plus

     (2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued; less

     (3) interest income of such Person and its Restricted Subsidiaries for such period.

          For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by the Issuer to be the rate of interest implicit
in such Capitalized Lease Obligation in accordance with GAAP.

          “ Consolidated Leverage Ratio ” means, as of the date of determination, the ratio of
(a) the Consolidated Indebtedness of the Issuer and its Restricted Subsidiaries on such date, to
(b) EBITDA of the Issuer and its Restricted Subsidiaries for the most recently ended four fiscal
quarters ending immediately prior to such date for which internal financial statements are
available.

          In the event that the Issuer or any Restricted Subsidiary (i) incurs, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes) or (ii) issues or
redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for
which the Consolidated Leverage Ratio is being calculated but prior to or simultaneously with the
event for which the calculation of the Consolidated Leverage Ratio is made (the “ Consolidated
Leverage Ratio Calculation Date ”), then the Consolidated Leverage Ratio shall be calculated
giving pro forma effect to such incurrence, redemption, retirement or
extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred
Stock, as if the same had occurred at the beginning of the applicable four-quarter period.

          For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Leverage Ratio Calculation Date, and other operational changes that the Issuer or any
of its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Leverage Ratio Calculation Date shall be calculated on a pro forma
basis as set forth below assuming that all such Investments, acquisitions, dispositions, mergers,
amalgamations, consolidations, discontinued operations and other operational changes had occurred
on the first day of the four-quarter reference period. If since the beginning of such period any
Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or
any of its Restricted Subsidiaries since the beginning of such period shall have made any
Investment, acquisition, disposition, merger, amalgamation, consolidation, discontinued operation
(other than the Specified

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Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) or operational
change, in each case with respect to an operating unit of a business, that would have required
adjustment pursuant to this definition, then the Consolidated Leverage Ratio shall be calculated
giving pro forma effect thereto in the manner set forth below for such period as if
such Investment, acquisition, disposition, merger, consolidation, discontinued operation or
operational change had occurred at the beginning of the applicable four-quarter period.

          For purposes of this definition, whenever pro forma effect is to be given to
an Investment, acquisition, disposition, amalgamation, merger or consolidation (including the
Transactions) and the amount of income or earnings relating thereto, the pro forma
calculations shall be made in good faith by a responsible financial or accounting officer of the
Issuer (and may include, for the avoidance of doubt, cost savings and operating expense reductions
resulting from such Investment, acquisition, amalgamation, merger or consolidation (including the
Transactions) which is being given pro forma effect that have been or are expected
to be realized); provided , that actions to realize such cost savings and operating expense
reductions are taken within 12 months after the date of such Investment, acquisition, amalgamation,
merger or consolidation.

          For the purposes of this definition, any amount in a currency other than U.S. dollars will be
converted to U.S. dollars based on the average exchange rate for such currency for the most recent
twelve month period immediately prior to the date of determination determined in a manner
consistent with that used in calculating EBITDA for the applicable period.

          “ Consolidated Net Income ” means, with respect to any Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, and otherwise determined in accordance with GAAP; provided ,
however , that, without duplication,

     (1) any net after-tax effect of extraordinary, non-recurring or unusual gains or losses
(less all fees and expenses related thereto) or expenses and Transaction Expenses incurred
within 180 days of the Issue Date shall be excluded;

     (2) the cumulative effect of a change in accounting principles during such period shall be
excluded;

     (3) any net after-tax effect of income (loss) from disposed or discontinued operations
(other than the Specified Assets (as defined in the Senior Credit Facilities as in effect on the
Issue Date) to the extent included in discontinued operations prior to consummation of the
disposition thereof) and any net after-tax gains or losses on disposal of disposed, abandoned or
discontinued operations shall be excluded;

     (4) any net after-tax effect of gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course of business, as
determined in good faith by the Issuer, shall be excluded;

     (5) the Net Income for such period of any Person that is not a Subsidiary, or is an
Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be
excluded; provided that Consolidated Net Income of such Person shall be increased by the
amount of dividends or distributions or other payments that are actually paid in cash or Cash
Equivalents (or to the extent converted into cash or Cash Equivalents) to such Person or a
Subsidiary thereof that is the Issuer or a Restricted Subsidiary in respect of such period;

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     (6) solely for the purpose of determining the amount available for Restricted Payments
under clause (3)(a) of Section 4.07(a) hereof, the Net Income for such period of any Restricted
Subsidiary (other than any Guarantor) shall be excluded to the extent the declaration or payment
of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at
the date of determination permitted without any prior governmental approval (which has not been
obtained) or, directly or indirectly, by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such restriction with
respect to the payment of dividends or similar distributions has been legally waived,
provided that Consolidated Net Income of the Issuer will be increased by the amount of
dividends or other distributions or other payments actually paid in cash (or to the extent
converted into cash) to the Issuer or a Restricted Subsidiary thereof in respect of such period,
to the extent not already included therein;

     (7) effects of purchase accounting adjustments (including the effects of such adjustments
pushed down to such Person and such Subsidiaries) in component amounts required or permitted by
GAAP, resulting from the application of purchase accounting in relation to the Transactions or
any consummated acquisition or the amortization or write-off of any amounts thereof, net of
taxes, shall be excluded,

     (8) any net after-tax effect of income (loss) from the early extinguishment or conversion
of (a) Indebtedness, (b) Hedging Obligations or (c) other derivative instruments shall be
excluded;

     (9) any impairment charge or asset write-off or write-down, including impairment charges or
asset write-offs or write-downs related to intangible assets, long-lived assets, investments in
debt and equity securities or as a result of a change in law or regulation, in each case,
pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be
excluded;

     (10) any non-cash compensation charge or expense, including any such charge or expense
arising from the grant of stock appreciation or similar rights, stock options, restricted stock
or other rights or equity incentive programs, and any cash charges associated with the rollover,
acceleration, or payout of Equity Interests by management of the Issuer or any of its direct or
indirect parent companies in connection with the Transactions, shall be excluded;

     (11) accruals and reserves that are established or adjusted within twelve months after the
Issue Date that are so required to be established as a result of the Transactions in accordance
with GAAP, or changes as a result of adoption or modification of accounting policies, shall be
excluded; and

     (12) to the extent covered by insurance and actually reimbursed, or, so long as the Issuer
has made a determination that there exists reasonable evidence that such amount will in fact be
reimbursed by the insurer and only to the extent that such amount is (a) not denied by the
applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the
date of such evidence with a deduction for any amount so added back to the extent not so
reimbursed within 365 days, expenses with respect to liability or casualty events or business
interruption shall be excluded.

          Notwithstanding the foregoing, for the purpose of Section 4.07 only (other than clause (3)(d)
of Section 4.07(a) hereof), there shall be excluded from Consolidated Net Income any income arising
from any sale or other disposition of Restricted Investments made by the Issuer and its Restricted

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Subsidiaries, any repurchases and redemptions of Restricted Investments from the Issuer and its
Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted
Investments by the Issuer or any of its Restricted Subsidiaries, any sale of the stock of an
Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each
case only to the extent such amounts increase the amount of Restricted Payments permitted under
clause (3)(d) of Section 4.07(a) hereof.

          “ Consolidated Secured Debt Ratio ” means, as of the date of determination, the ratio
of (a) the Consolidated Indebtedness of the Issuer and its Restricted Subsidiaries on such date
that is secured by Liens to (b) EBITDA of the Issuer and its Restricted Subsidiaries for the most
recently ended four fiscal quarters ending immediately prior to such date for which internal
financial statements are available.

          In the event that the Issuer or any Restricted Subsidiary (i) incurs, redeems, retires or
extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital purposes) or (ii) issues or
redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for
which the Consolidated Secured Debt Ratio is being calculated but prior to or simultaneously with
the event for which the calculation of the Consolidated Secured Debt Ratio is made (the “
Consolidated Secured Debt Ratio Calculation Date ”), then the Consolidated Secured Debt
Ratio shall be calculated giving pro forma effect to such incurrence, redemption,
retirement or extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock
or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter
period.

          For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Consolidated Secured Debt Ratio Calculation Date, and other operational changes that the Issuer or
any of its Restricted Subsidiaries has determined to make and/or made during the four-quarter
reference period or subsequent to such reference period and on or prior to or simultaneously with
the Consolidated Secured Debt Ratio Calculation Date shall be calculated on a pro
forma basis as set forth below assuming that all such Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations, discontinued operations and other operational
changes had occurred on the first day of the four-quarter reference period. If since the beginning
of such period any Person that subsequently became a Restricted Subsidiary or was merged with or
into the Issuer or any of its Restricted Subsidiaries since the beginning of such period shall have
made any Investment, acquisition, disposition, merger, amalgamation, consolidation, discontinued
operation (other than the Specified Assets (as defined in the Senior Credit Facilities as in effect
on the Issue Date)) or operational change, in each case with respect to an operating unit of a
business, that would have required adjustment pursuant to this definition, then the Consolidated
Secured Debt Ratio shall be calculated giving pro forma effect thereto in the
manner set forth below for such period as if such Investment, acquisition, disposition, merger,
consolidation, discontinued operation or operational change had occurred at the beginning of the
applicable four-quarter period.

          For purposes of this definition, whenever pro forma effect is to be given to
an Investment, acquisition, disposition, amalgamation, merger or consolidation (including the
Transactions) and the amount of income or earnings relating thereto, the pro forma
calculations shall be made in good faith by a responsible financial or accounting officer of the
Issuer (and may include, for the avoidance of doubt, cost savings and operating expense reductions
resulting from such Investment, acquisition, amalgamation, merger or consolidation (including the
Transactions) which is being given pro forma effect that have been

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or are expected to be realized); provided , that actions to realize such cost savings and
operating expense reductions are taken within 12 months after the date of such Investment,
acquisition, amalgamation, merger or consolidation.

          “ Contingent Obligations ” means, with respect to any Person, any obligation of such
Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness
(“ primary obligations ”) of any other Person (the “ primary obligor ”) in any
manner, whether directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent,

     (1) to purchase any such primary obligation or any property constituting direct or indirect
security therefor,

     (2) to advance or supply funds

     (a) for the purchase or payment of any such primary obligation, or

     (b) to maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, or

     (3) to purchase property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.

          “ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee
specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to
the Holders and the Issuer.

          “ Credit Facilities ” means, with respect to the Issuer or any of its Restricted
Subsidiaries, one or more debt facilities, including the Senior Credit Facilities, or other
financing arrangements (including, without limitation, commercial paper facilities or indentures)
providing for revolving credit loans, term loans, letters of credit or other long-term
indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any notes, indentures or credit
facilities or commercial paper facilities that replace, refund or refinance any part of the loans,
notes, other credit facilities or commitments thereunder, including any such replacement, refunding
or refinancing facility or indenture that increases the amount permitted to be borrowed thereunder
or alters the maturity thereof ( provided that such increase in borrowings is permitted
under Section 4.09 hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors
thereunder and whether by the same or any other agent, lender or group of lenders.

          “ Custodian ” means the Trustee, as custodian with respect to the Notes in global
form, or any successor entity thereto.

          “ Default ” means any event that is, or with the passage of time or the giving of
notice or both would be, an Event of Default.

          “ Definitive Note ” means a certificated Note registered in the name of the Holder
thereof and issued in accordance with Section 2.06(c) hereof, substantially in the form of
Exhibit A1 or Exhibit A2 hereto, as the case may be, except that such Note shall
not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the
Global Note” attached thereto.

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          “ Depositary ” means, with respect to the Notes issuable or issued in whole or in part
in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the
Notes, and any and all successors thereto appointed as Depositary hereunder and having become such
pursuant to the applicable provision of this Indenture.

          “ Designated Non-cash Consideration ” means the fair market value of non-cash
consideration received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale
that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate,
setting forth the basis of such valuation, executed by the principal financial officer of the
Issuer, less the amount of cash or Cash Equivalents received in connection with a subsequent sale
of or collection on such Designated Non-cash Consideration.

          “ Designated Preferred Stock ” means Preferred Stock of the Issuer, a Restricted
Subsidiary or any direct or indirect parent corporation of the Issuer (in each case other than
Disqualified Stock) that is issued for cash (other than to the Issuer or a Restricted Subsidiary or
an employee stock ownership plan or trust established by the Issuer or its Subsidiaries) and is so
designated as Designated Preferred Stock, pursuant to an Officer’s Certificate executed by the
principal financial officer of the Issuer, on the issuance date thereof, the cash proceeds of which
are excluded from the calculation set forth in clause (3) of Section 4.07(a) hereof.

          “ Designated Senior Indebtedness ” means:

     (1) all Indebtedness of any Guarantor under its guarantee of (i) the Senior Credit
Facilities permitted to be incurred pursuant to clause (1) of Section 4.09(b) hereof plus (ii)
the amount of Indebtedness permitted to be incurred pursuant to clause (12)(b) of Section
4.09(b) hereof plus (iii) the amount of additional Indebtedness permitted to be incurred by such
Guarantor under Section 4.09 hereof that is also permitted to be and is secured by a Lien
pursuant to (A) the Consolidated Secured Debt Ratio test set forth in Section 4.12(b) hereof or
(B) clause (20) of the definition of Permitted Liens (in each case plus interest accruing on or
after the filing of any petition in bankruptcy or similar proceeding or for reorganization of
the Guarantor (at the rate provided for in the documentation with respect thereto, regardless of
whether or not a claim for post-filing interest is allowed in such proceedings)), and any and
all other fees, expense reimbursement obligations, indemnification amounts, penalties, and other
amounts (whether existing on the Issue Date or thereafter created or incurred) and all
obligations of the Guarantor to reimburse any bank or other Person in respect of amounts paid
under letters of credit, acceptances or other similar instruments;

     (2) all Hedging Obligations (and guarantees thereof) owing to a Lender (as defined in the
Senior Credit Facilities) or any Affiliate of such Lender (or any Person that was a Lender or an
Affiliate of such Lender at the time the applicable agreement giving rise to such Hedging
Obligation was entered into); and

     (3) all Obligations with respect to the items listed in the preceding clauses (1) and (2);
provided , however , that Designated Senior Indebtedness shall not include:

     (a) any obligation of such Person to the Issuer or any of its Subsidiaries;

     (b) any liability for federal, state, local or other taxes owed or owing by such
Person;

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     (c) any accounts payable or other liability to trade creditors arising in the ordinary
course of business; provided that obligations incurred pursuant to the Credit
Facilities shall not be excluded pursuant to this clause (c);

     (d) any Indebtedness or other Obligation of such Person which is subordinate or junior
in any respect to any other Indebtedness or other Obligation of such Person; or

     (e) that portion of any Indebtedness which at the time of incurrence is incurred in
violation of this Indenture.

          “ Disqualified Stock ” means, with respect to any Person, any Capital Stock of such
Person which, by its terms, or by the terms of any security into which it is convertible or for
which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable (other than solely as a result of a change of control or asset sale) pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other
than solely as a result of a change of control or asset sale), in whole or in part, in each case
prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes
are no longer outstanding; provided , however , that if such Capital Stock is
issued to any plan for the benefit of employees of the Issuer or its Subsidiaries or by any such
plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because
it may be required to be repurchased in order to satisfy applicable statutory or regulatory
obligations; provided further that any Capital Stock held by any future, current or
former employee, director, officer, manager or consultant (or their respective Immediate Family
Members), of the Issuer, any of its Subsidiaries, any of its direct or indirect parent companies or
any other entity in which the Issuer or a Restricted Subsidiary has an Investment, in each case
pursuant to any stock subscription or shareholders’ agreement, management equity plan or stock
option plan or any other management or employee benefit plan or agreement or any distributor equity
plan or agreement shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Issuer or its Subsidiaries.

          “ EBITDA ” means, with respect to any Person for any period, the Consolidated Net
Income of such Person and its Restricted Subsidiaries for such period

     (1) increased (without duplication) by:

     (a) provision for taxes based on income or profits or capital, including, without
limitation, federal, state, franchise and similar taxes, foreign withholding taxes and
foreign unreimbursed value added taxes of such Person and such Subsidiaries paid or accrued
during such period, including penalties and interest related to such taxes or arising from
any tax examinations, to the extent the same were deducted (and not added back) in computing
Consolidated Net Income; provided that the aggregate amount of unreimbursed value added
taxes to be added back for any four consecutive quarter period shall not exceed $2,000,000;
plus

     (b) Fixed Charges of such Person and such Subsidiaries for such period (including (x)
net losses on Hedging Obligations or other derivative instruments entered into for the
purpose of hedging interest rate risk, (y) fees payable in respect of letters of credit and
(z) costs of surety bonds in connection with financing activities, in each case, to the
extent included in Fixed Charges) to the extent the same was deducted (and not added back)
in calculating such Consolidated Net Income; plus

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     (c) Consolidated Depreciation and Amortization Expense of such Person and such
Subsidiaries for such period to the extent the same were deducted (and not added back) in
computing Consolidated Net Income; plus

     (d) any fees, expenses or charges related to any Equity Offering, Investment,
acquisition, Asset Sale, disposition, recapitalization, the incurrence, repayment or
refinancing of Indebtedness permitted to be incurred by this Indenture (including any such
transaction consummated prior to the Issue Date and any such transaction undertaken but not
completed, and any charges or non-recurring merger costs incurred during such period as a
result of any such transaction, in each case whether or not successful (including, for the
avoidance of doubt, the effects of expensing all transaction related expenses in accordance
with FAS 141(R) and gains or losses associated with FIN 45)), or the offering, amendment or
modification of any debt instrument, including (i) the offering, any amendment or other
modification of the Notes, Exchange Notes or the Senior Credit Facilities and any amendment
or modification of the Existing Senior Notes and (ii) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any Receivables Facility,
and, in each case, deducted (and not added back) in computing Consolidated Net Income;
plus

     (e) (x) Transaction Expenses to the extent deducted (and not added back) in computing
Consolidated Net Income, (y) the amount of any severance, relocation costs, curtailments or
modifications to pension and post-retirement employee benefit plans and (z) any
restructuring charge or reserve deducted (and not added back) in such period in computing
Consolidated Net Income, including any restructuring costs incurred in connection with
acquisitions after the Issue Date, costs related to the closure and/or consolidation of
facilities, retention charges, systems establishment costs, conversion costs and excess
pension charges and consulting fees incurred in connection with any of the foregoing;
provided , that the aggregate amount added back pursuant to subclause (z) of this
clause (e) shall not exceed 10.0% of the LTM Cost Base in any four consecutive four quarter
period; plus

     (f) any other non-cash charges, including any (i) write-offs or write-downs, (ii)
equity-based awards compensation expense, (iii) losses on sales, disposals or abandonment
of, or any impairment charges or asset write-off related to, intangible assets, long-lived
assets and investments in debt and equity securities, (iv) all losses from investments
recorded using the equity method and (v) other non-cash charges, non-cash expenses or
non-cash losses reducing Consolidated Net Income for such period ( provided that if
any such non-cash charges represent an accrual or reserve for potential cash items in any
future period, the cash payment in respect thereof in such future period shall be subtracted
from EBITDA in such future period to the extent paid, and excluding amortization of a
prepaid cash item that was paid in a prior period); plus

     (g) the amount of any minority interest expense consisting of Subsidiary income
attributable to minority equity interests of third parties in any non-Wholly-Owned
Subsidiary deducted (and not added back) in such period in calculating Consolidated Net
Income; plus

     (h) the amount of loss on sale of receivables and related assets to the Receivables
Subsidiary in connection with a Receivables Facility deducted (and not added back) in
computing Consolidated Net Income; plus

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     (i) the amount of cost savings projected by the Issuer in good faith to be realized as
a result of specified actions taken during such period or expected to be taken (calculated
on a pro forma basis as though such cost savings had been realized on the
first day of such period), net of the amount of actual benefits realized during such period
from such actions, provided that (A) such amounts are reasonably identifiable and
factually supportable, (B) such actions are taken, committed to be taken or expected to be
taken within 18 months after the Issue Date, (C) no cost savings shall be added pursuant to
this clause (i) to the extent duplicative of any expenses or charges that are otherwise
added back in computing EBITDA with respect to such period and (D) the aggregate amount of
cost savings added pursuant to this clause (i) shall not exceed $100,000,000 for any period
consisting of four consecutive quarters; plus

     (j) to the extent no Default or Event of Default has occurred and is continuing, the
amount of management, monitoring, consulting, transaction and advisory fees and related
expenses paid or accrued in such period to the Investors to the extent otherwise permitted
under Section 4.11 hereof deducted (and not added back) in computing Consolidated Net
Income; plus

     (k) any costs or expense deducted (and not added back) in computing Consolidated Net
Income by such Person or any such Subsidiary pursuant to any management equity plan or stock
option plan or any other management or employee benefit plan or agreement or any stock
subscription or shareholder agreement, to the extent that such cost or expenses are funded
with cash proceeds contributed to the capital of the Issuer or a Restricted Guarantor or net
cash proceeds of an issuance of Equity Interest of the Issuer or a Restricted Guarantor
(other than Disqualified Stock) solely to the extent that such net cash proceeds are
excluded from the calculation set forth in clause (3) of Section 4.07(a) hereof;

     (2) decreased by (without duplication) (a) any non-cash gains increasing Consolidated Net
Income of such Person and such Subsidiaries for such period, excluding any non-cash gains to the
extent they represent the reversal of an accrual or reserve for a potential cash item that
reduced EBITDA in any prior period and (b) the minority interest income consisting of subsidiary
losses attributable to minority equity interests of third parties in any non-Wholly Owned
Subsidiary to the extent such minority interest income is included in Consolidated Net Income;
and

     (3) increased or decreased by (without duplication):

     (a) any net gain or loss resulting in such period from Hedging Obligations and the
application of Statement of Financial Accounting Standards No. 133 and International
Accounting Standards No. 39 and their respective related pronouncements and interpretations;
plus or minus, as applicable, and

     (b) any net gain or loss resulting in such period from currency translation gains or
losses related to currency remeasurements of indebtedness (including any net loss or gain
resulting from hedge agreements for currency exchange risk).

          “ EMU ” means economic and monetary union as contemplated in the Treaty on European
Union.

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          “ Equity Interests ” means Capital Stock and all warrants, options or other rights to
acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable
for, Capital Stock.

          “ Equity Offering ” means any public or private sale of common stock or Preferred
Stock of the Issuer or of a direct or indirect parent of the Issuer (excluding Disqualified Stock),
other than:

     (1) public offerings with respect to any such Person’s common stock registered on Form
S-8;

     (2) issuances to the Issuer or any Subsidiary of the Issuer; and

     (3) any such public or private sale that constitutes an Excluded Contribution.

          “ euro ” means the single currency of participating member states of the EMU.

          “ Euroclear ” means Euroclear S.A./N.V., as operator of the Euroclear system.

          “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.

          “ Exchange Notes ” means the Notes issued in the Exchange Offer pursuant to Section
2.06(f) hereof.

          “ Exchange Offer ” has the meaning set forth in the Registration Rights Agreement.

          “ Exchange Offer Registration Statement ” has the meaning set forth in the
Registration Rights Agreement.

          “ Exchanging Dealer ” has the meaning set forth in the Registration Rights Agreement.

          “ Excluded Contribution ” means net cash proceeds, marketable securities or Qualified
Proceeds received by or contributed to the Issuer from

     (1) contributions to its common equity capital, and

     (2) the sale (other than to a Subsidiary of the Issuer or to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement of the Issuer)
of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Issuer,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate on the date
such capital contributions are made or the date such Equity Interests are sold, as the case may be,
which are excluded from the calculation set forth in clauses (3)(b) and (3)(c) of Section 4.07(a)
hereof.

          “ Existing Senior Notes ” means the Issuer’s 4.625% Senior Notes Due 2008, 6.625%
Senior Notes Due 2008, 4.25% Senior Notes Due 2009, 4.5% Senior Notes Due 2010, 6.25% Senior Notes
Due 2011, 4.4% Senior Notes Due 2011, 5.0% Senior Notes Due 2012, 5.75% Senior Notes Due 2013, 5.5%
Senior Notes Due 2014, 4.9% Senior Notes Due 2015, 5.5% Senior Notes Due 2016, 6.875% Senior
Debentures Due 2018 and 7.25% Debentures Due 2027.

-16-

 

          “ Existing Senior Notes Indenture ” means the Senior Indenture dated as of October 1,
1997 between the Issuer and The Bank of New York, as trustee, as the same may have been amended or
supplemented as of the Issue Date.

          “ Fixed Charges ” means, with respect to any Person for any period, the sum, without
duplication, of:

     (1) Consolidated Interest Expense of such Person and Restricted Subsidiaries for such
period; plus

     (2) all cash dividends or other distributions paid to any Person other than such Person or
any such Subsidiary (excluding items eliminated in consolidation) on any series of Preferred
Stock of the Issuer or a Restricted Subsidiary during such period; plus

     (3) all cash dividends or other distributions paid to any Person other than such Person or
any such Subsidiary (excluding items eliminated in consolidation) on any series of Disqualified
Stock of the Issuer or a Restricted Subsidiary during such period.

          “ Foreign Subsidiary ” means any Subsidiary that is not organized or existing under
the laws of the United States, any state thereof, the District of Columbia, or any territory
thereof, and any Restricted Subsidiary of such Foreign Subsidiary.

          “ GAAP ” means generally accepted accounting principles in the United States of
America which are in effect on the Issue Date.

          “ General Credit Facilities ” means the term and revolving credit facilities under the
Credit Agreement to be entered into as of the Issue Date by and among the Issuer, the subsidiary
guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and
Citibank, N.A., as Administrative Agent, including any notes, mortgages, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and any amendments,
supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof
and any one or more notes, indentures or credit facilities or commercial paper facilities with
banks or other institutional lenders or investors that extend, replace, refund, refinance, renew or
defease any part of the loans, notes, other credit facilities or commitments thereunder, including
any such replacement, refunding or refinancing facility or indenture that increases the amount that
may be borrowed thereunder or alters the maturity of the loans thereunder or adds Restricted
Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or other
agent, lender or group of lenders or investors.

          “ Global Note Legend ” means the legend set forth in Section 2.06(g)(ii) hereof, which
is required to be placed on all Global Notes issued under this Indenture.

          “ Global Notes ” means, individually and collectively, each of the Restricted Global
Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A1 or
Exhibit A2 hereto, issued in accordance with Section 2.01, 2.06(b), 2.06(d) or 2.06(f)
hereof.

          “ Government Securities ” means securities that are:

     (1) direct obligations of the United States of America for the timely payment of which its
full faith and credit is pledged; or

-17-

 

     (2) obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America,

which, in either case, are not callable or redeemable at the option of the issuers thereof, and
shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of the Government
Securities or the specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.

          “ guarantee ” means a guarantee (other than by endorsement of negotiable instruments
for collection in the ordinary course of business), direct or indirect, in any manner (including
letters of credit and reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.

          “ Guarantee ” means the guarantee by any Guarantor of the Issuer’s Obligations under
this Indenture and the Notes.

          “ Guaranteed Leverage Ratio ” means, as of the date of determination, the ratio of (a)
Designated Senior Indebtedness of the Guarantors, to (b) EBITDA of the Issuer and its Restricted
Subsidiaries for the most recently ended four fiscal quarters ending immediately prior to such date
for which internal financial statements are available.

          In the event that any Guarantor (i) incurs, redeems, retires or extinguishes any Indebtedness
(other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary
course of business for working capital purposes) or (ii) issues or redeems Disqualified Stock or
Preferred Stock subsequent to the commencement of the period for which the Guaranteed Leverage
Ratio is being calculated but prior to or simultaneously with the event for which the calculation
of the Guaranteed Leverage Ratio is made (the “ Guaranteed Leverage Ratio Calculation Date
”), then the Guaranteed Leverage Ratio shall be calculated giving pro forma effect
to such incurrence, redemption, retirement or extinguishment of Indebtedness, or such issuance or
redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning
of the applicable four-quarter period.

          For purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, amalgamations, consolidations and discontinued operations (other than the
Specified Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) (as
determined in accordance with GAAP), in each case with respect to an operating unit of a business
made (or committed to be made pursuant to a definitive agreement) during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Guaranteed Leverage Ratio Calculation Date, and other operational changes that the Issuer or any of
its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference
period or subsequent to such reference period and on or prior to or simultaneously with the
Guaranteed Leverage Ratio Calculation Date shall be calculated on a pro forma basis
as set forth below assuming that all such Investments, acquisitions, dispositions, mergers,
amalgamations, consolidations, discontinued operations and other operational changes had occurred
on the first day of the four-quarter reference period. If since the beginning of such period any
Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or
any of its Restricted Subsidiaries since the beginning of such period shall have made any
Investment, acquisition, disposition, merger, amalgamation, consolidation, discontinued operation
(other than the Specified

-18-

 

Assets (as defined in the Senior Credit Facilities as in effect on the Issue Date)) or operational
change, in each case with respect to an operating unit of a business, that would have required
adjustment pursuant to this definition, then the Guaranteed Leverage Ratio shall be calculated
giving pro forma effect thereto in the manner set forth below for such period as if
such Investment, acquisition, disposition, merger, consolidation, discontinued operation or
operational change had occurred at the beginning of the applicable four-quarter period.

          For purposes of this definition, whenever pro forma effect is to be given to
an Investment, acquisition, disposition, amalgamation, merger or consolidation (including the
Transactions) and the amount of income or earnings relating thereto, the pro forma
calculations shall be made in good faith by a responsible financial or accounting officer of the
Issuer (and may include, for the avoidance of doubt, cost savings and operating expense reductions
resulting from such Investment, acquisition, amalgamation, merger or consolidation (including the
Transactions) which is being given pro forma effect that have been or are expected
to be realized; provided , that actions to realize such cost savings and operating expense
reductions are taken within 12 months after the date of such Investment, acquisition, amalgamation,
merger or consolidation.

          “ Guarantor ” means each Person that Guarantees the Notes in accordance with the terms
of this Indenture.

          “ Hedging Obligations ” means, with respect to any Person, the obligations of such
Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign
exchange contract, currency swap agreement or similar agreement providing for the transfer or
mitigation of interest rate or currency risks either generally or under specific contingencies.

          “ Holder ” means the Person in whose name a Note is registered on the registrar’s
books.

          “ Holdings ” means Clear Channel Capital I, LLC.

          “ Immediate Family Member ” means with respect to any individual, such individual’s
child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse,
former spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and
daughter-in-law (including adoptive relationships) and any trust, partnership or other bona fide
estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any
private foundation or fund that is controlled by any of the foregoing individuals or any
donor-advised fund of which any such individual is the donor.

          “ Indebtedness ” means, with respect to any Person, without duplication:

     (1) any indebtedness (including principal and premium) of such Person, whether or not
contingent:

     (a) in respect of borrowed money;

     (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit
or bankers’ acceptances (or, without duplication, reimbursement agreements in respect
thereof);

     (c) representing the balance deferred and unpaid of the purchase price of any property
(including Capitalized Lease Obligations), except (i) any such balance that constitutes

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an obligation in respect of a commercial letter of credit, a trade payable or similar
obligation to a trade creditor, in each case accrued in the ordinary course of business,
(ii) liabilities accrued in the ordinary course of business and (iii) any earn-out
obligations until such obligation becomes a liability on the balance sheet of such Person in
accordance with GAAP; or

     (d) representing any Hedging Obligations;

if and to the extent that any of the foregoing Indebtedness (other than letters of credit (other
than commercial letters of credit) and Hedging Obligations) would appear as a liability upon a
balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

     (2) to the extent not otherwise included, any obligation by such Person to be liable for,
or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in
clause (1) of a third Person (whether or not such items would appear upon the balance sheet of
such obligor or guarantor), other than by endorsement of negotiable instruments for collection
in the ordinary course of business; and

     (3) to the extent not otherwise included, the obligations of the type referred to in clause
(1) of a third Person secured by a Lien on any asset owned by such first Person, whether or not
such Indebtedness is assumed by such first Person;

provided , however , that notwithstanding the foregoing, Indebtedness shall be
deemed not to include (a) Contingent Obligations incurred in the ordinary course of business and
(b) obligations under or in respect of Receivables Facilities or any Qualified Securitization
Financing.

          “ Indenture ” means this Indenture, as amended or supplemented from time to time.

          “ Independent Financial Advisor ” means an accounting, appraisal, investment banking
firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that
is, in the good faith judgment of the Issuer, qualified to perform the task for which it has been
engaged.

          “ Indirect Participant ” means a Person who holds a beneficial interest in a Global
Note through a Participant.

          “ Initial Notes ” has the meaning set forth in the recitals hereto.

          “ Initial Purchasers ” means Deutsche Bank Securities Inc., Morgan Stanley & Co.
Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich Capital
Markets, Inc. and Wachovia Capital Markets, LLC.

          “ Interest Payment Date ” means February 1 and August 1 of each year to stated
maturity.

          “ Investment Grade Rating ” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other
Rating Agency.

          “ Investment Grade Securities ” means:

     (1) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than Cash Equivalents);

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     (2) debt securities or debt instruments with an Investment Grade Rating, but excluding any
debt securities or instruments constituting loans or advances among the Issuer and the
Subsidiaries of the Issuer;

     (3) investments in any fund that invests exclusively in investments of the type described
in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending investment or
distribution; and

     (4) corresponding instruments in countries other than the United States customarily
utilized for high quality investments.

          “ Investments ” means, with respect to any Person, all investments by such Person in
other Persons (including Affiliates) in the form of loans (including guarantees), advances or
capital contributions (excluding accounts receivable, trade credit, advances to customers and
commission, travel and similar advances to directors, officers, employees and consultants, in each
case made in the ordinary course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any other Person and investments that
are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person
in the same manner as the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property. For purposes of the definition of
“Unrestricted Subsidiary” and Section 4.07 hereof:

     (1) “Investments” shall include the portion (proportionate to the Issuer’s direct or
indirect equity interest in such Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided , however , that upon a redesignation of such Subsidiary as
a Restricted Subsidiary, the Issuer or applicable Restricted Subsidiary shall be deemed to
continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if
positive) equal to:

     (a) the Issuer’s direct or indirect “Investment” in such Subsidiary at the time of such
redesignation; less

     (b) the portion (proportionate to the Issuer’s direct or indirect equity interest in
such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time
of such redesignation; and

     (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its
fair market value at the time of such transfer, in each case as determined in good faith by the
Issuer.

          “ Investors ” means Thomas H. Lee Partners L.P. and Bain Capital LLC, each of their
respective Affiliates and any investment funds advised or managed by any of the foregoing, but not
including, however, any portfolio companies of any of the foregoing.

          “ Issue Date ” means July 30, 2008.

          “ Issuer ” means, prior to the consummation of the Merger, Merger Co, and following
the consummation of the Merger, Clear Channel.

          “ Issuer Order ” means a written request or order signed on behalf of the Issuer by an
Officer, who must be the principal executive officer, the principal financial officer, the
treasurer or the principal accounting officer of the Issuer, and delivered to the Trustee.

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          “ Legal Holiday ” means a Saturday, a Sunday or a day on which commercial banking
institutions are not required to be open in the State of New York.

          “ Letter of Transmittal ” means the letter of transmittal to be prepared by the Issuer
and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.

          “ Lien ” means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed
to constitute a Lien.

          “ LTM Cost Base ” means, for any consecutive four quarter period, the sum of (a)
direct operating expenses, (b) selling, general and administrative expenses and (c) corporate
expenses, in each case excluding depreciation and amortization, of the Issuer and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.

          “ Merger ” has the meaning set forth in the recitals hereto.

          “ Merger Co ” means BT Triple Crown Merger Co., Inc., a Delaware corporation.

          “ Moody’s ” means Moody’s Investors Service, Inc. and any successor to its rating
agency business.

          “ Net Income ” means, with respect to any Person, the net income (loss) of such Person
and its Subsidiaries that are Restricted Subsidiaries, determined in accordance with GAAP and
before any reduction in respect of Preferred Stock dividends.

          “ Net Proceeds ” means the aggregate cash proceeds received by the Issuer or any of
its Restricted Subsidiaries in respect of any Asset Sale, including any cash received upon the sale
or other disposition of any Designated Non-cash Consideration received in any Asset Sale, net of
the direct costs relating to such Asset Sale and the sale or disposition of such Designated
Non-cash Consideration, including legal, accounting and investment banking fees, payments made in
order to obtain a necessary consent or required by applicable law, and brokerage and sales
commissions, any relocation expenses incurred as a result thereof, other fees and expenses,
including title and recordation expenses, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing arrangements), amounts
required to be applied to the repayment of principal, premium, if any, and interest on
unsubordinated Indebtedness required (other than required by clause (1) of Section 4.10(b) hereof)
to be paid as a result of such transaction and any deduction of appropriate amounts to be provided
by the Issuer or any of its Restricted Subsidiaries as a reserve in accordance with GAAP against
any liabilities associated with the asset disposed of in such transaction and retained by the
Issuer or any of its Restricted Subsidiaries after such sale or other disposition thereof,
including pension and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with such transaction,
and in the case of any Asset Sale by a Restricted Subsidiary that is not a Wholly-Owned Subsidiary,
a portion of the aggregate cash proceeds equal to the portion of the outstanding Equity Interests
of such non-Wholly-Owned Subsidiary owned by Persons other than the Issuer and any other Restricted
Subsidiary (to the extent such proceeds are committed to be distributed to such Persons).

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          “ Non-U.S. Person ” means a Person who is not a U.S. Person.

          “ Notes ” means the Initial Notes and more particularly means any Note authenticated
and delivered under this Indenture. For all purposes of this Indenture, the term “Notes” shall also
include any Additional Notes that may be issued under a supplemental indenture.

          “ Obligations ” means any principal (including any accretion), interest (including any
interest accruing on or subsequent to the filing of a petition in bankruptcy, reorganization or
similar proceeding at the rate provided for in the documentation with respect thereto, whether or
not such interest is an allowed claim under applicable state, federal or foreign law), premium,
penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect
to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of
payment of such principal (including any accretion), interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities, payable under the documentation governing any
Indebtedness.

          “ Offering Memorandum ” means the offering memorandum, dated July 30, 2008, relating
to the sale of the Initial Notes.

          “ Officer ” means the Chairman of the Board, the Chief Executive Officer, the
President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or
the Secretary of the Issuer.

          “ Officer’s Certificate ” means a certificate signed on behalf of the Issuer by an
Officer of the Issuer, who must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of the Issuer, that meets the
requirements set forth in this Indenture.

          “ Opinion of Counsel ” means a written opinion from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer or the
Trustee.

          “ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a
Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with
respect to DTC, shall include Euroclear and Clearstream).

          “ Permitted Asset Swap ” means the substantially concurrent purchase and sale or
exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash
Equivalents between the Issuer or any of its Restricted Subsidiaries and another Person.

          “ Permitted Holder ” means any of the Investors and members of management of the
Issuer (or its direct parent or CC Media Holdings, Inc.) who are holders of Equity Interests of the
Issuer (or any of its direct or indirect parent companies) on the Issue Date and any group (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision)
of which any of the foregoing are members; provided that (x) in the case of such group and
without giving effect to the existence of such group or any other group, such Investors and members
of management, collectively, have beneficial ownership of more than 50.0% of the total voting power
of the Voting Stock of the Issuer or any of its direct or indirect parent companies and (y) for
purposes of this definition, the amount of Equity Interests held by members of management who
qualify as “Permitted Holders” shall never exceed the amount of Equity Interests held by such
members of management on the Issue Date. Any person or group whose acquisition of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision)
constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance
with the requirements of Section 4.14 hereof (or would result in a Change of Control Offer in the
absence of the waiver of such requirement by Holders in accordance with Section 4.14 hereof) will
thereafter, together with its Affiliates, constitute an additional Permitted Holder.

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          “ Permitted Investments ” means:

     (1) any Investment in the Issuer or any of its Restricted Subsidiaries;

     (2) any Investment in cash and Cash Equivalents or Investment Grade Securities;

     (3) any Investment by the Issuer or any of its Restricted Subsidiaries in a Person that is
engaged in a Similar Business if as a result of such Investment:

     (a) such Person becomes a Restricted Subsidiary; or

     (b) such Person, in one transaction or a series of related transactions, is
amalgamated, merged or consolidated with or into, or transfers or conveys substantially all
of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary,

     and, in each case, any Investment held by such Person; provided that such Investment was
not acquired by such Person in contemplation of such acquisition, merger, consolidation or
transfer;

     (4) any Investment in securities or other assets not constituting Cash Equivalents or
Investment Grade Securities and received in connection with an Asset Sale made pursuant to
Section 4.10(a) hereof or any other disposition of assets not constituting an Asset Sale;

     (5) any Investment existing on the Issue Date or made pursuant to a binding commitment in
effect on the Issue Date or an Investment consisting of any extension, modification or renewal
of any such Investment or binding commitment existing on the Issue Date; provided that
the amount of any such Investment may be increased (x) as required by the terms of such
Investment or binding commitment as in existence on the Issue Date (including as a result of the
accrual or accretion of interest or original issue discount or the issuance of pay-in-kind
securities) or (y) as otherwise permitted under this Indenture;

     (6) any Investment acquired by the Issuer or any of its Restricted Subsidiaries:

     (a) in exchange for any other Investment, accounts receivable or notes receivable held
by the Issuer or any such Restricted Subsidiary in connection with or as a result of a
bankruptcy workout, reorganization or recapitalization of the issuer of such other
Investment, accounts receivable or notes receivable; or

     (b) as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect to any
secured Investment in default;

     (7) Hedging Obligations permitted under clause (10) of Section 4.09(b) hereof;

     (8) any Investment the payment for which consists of Equity Interests (exclusive of
Disqualified Stock) of the Issuer or any of its direct or indirect parent companies;
provided , however , that such Equity Interests will not increase the amount
available for Restricted Payments under clause (3) of Section 4.07(a) hereof;

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     (9) Indebtedness (including any guarantee thereof) permitted under Section 4.09 hereof;

     (10) any transaction to the extent it constitutes an Investment that is permitted and made
in accordance with the provisions of Section 4.11(b) hereof (except transactions described in
clauses (2), (5) and (9) of Section 4.11(b) hereof);

     (11) any Investment consisting of a purchase or other acquisition of inventory, supplies,
material or equipment;

     (12) additional Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (12) that are at that time outstanding (without
giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash or marketable securities), not to exceed the greater of $600,000,000 and
2.00% of Total Assets (with the fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value);

     (13) Investments relating to a Receivables Subsidiary that, in the good faith determination
of the Issuer, are necessary or advisable to effect any Receivables Facility;

     (14) advances to, or guarantees of Indebtedness of, employees, directors, officers and
consultants not in excess of $20,000,000 outstanding at any one time, in the aggregate;

     (15) loans and advances to officers, directors and employees consistent with industry
practice or past practice, as well as for moving expenses and other similar expenses incurred in
the ordinary course of business or consistent with past practice or to fund such Person’s
purchase of Equity Interests of the Issuer or any direct or indirect parent company thereof;

     (16) Investments in the ordinary course of business consisting of endorsements for
collection or deposit;

     (17) Investments by the Issuer or any of its Restricted Subsidiaries in any other Person
pursuant to a “local marketing agreement” or similar arrangement relating to a station owned or
licensed by such Person;

     (18) any performance guarantee and Contingent Obligations in the ordinary course of
business and the creation of liens on the assets of the Issuer or any Restricted Subsidiary in
compliance with Section 4.12 hereof;

     (19) any purchase or repurchase of the Notes; and

     (20) any Investment in a Similar Business having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (20) that are at that time
outstanding, not to exceed $200,000,000 (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in value).

          “ Permitted Liens ” means, with respect to any Person:

     (1) pledges, deposits or security by such Person under workmen’s compensation laws,
unemployment insurance, employers’ health tax and other social security laws or similar
legislation (including in respect of deductibles, self insured retention amounts and premiums
and

-25-

 

adjustments thereto) or good faith deposits in connection with bids, tenders, contracts (other
than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to
secure public or statutory obligations of such Person or deposits of cash or U.S. government
bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security
for contested taxes or import duties or for the payment of rent, in each case incurred in the
ordinary course of business;

     (2) Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s, repairmen’s and
mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days or
being contested in good faith by appropriate actions or other Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be proceeding with an
appeal or other proceedings for review if adequate reserves with respect thereto are maintained
on the books of such Person in accordance with GAAP;

     (3) Liens for taxes, assessments or other governmental charges not yet overdue for a period
of more than 30 days or subject to penalties for nonpayment or which are being contested in good
faith by appropriate actions diligently pursued, if adequate reserves with respect thereto are
maintained on the books of such Person in accordance with GAAP, or for property taxes on
property that the Issuer or any Subsidiary thereof has determined to abandon if the sole
recourse for such tax, assessment, charge, levy or claim is to such property;

     (4) Liens in favor of issuers of performance, surety, bid, indemnity, warranty, release,
appeal or similar bonds or with respect to other regulatory requirements or letters of credit or
bankers’ acceptances issued, and completion guarantees provided for, in each case, issued
pursuant to the request of and for the account of such Person in the ordinary course of its
business or consistent with past practice prior to the Issue Date;

     (5) minor survey exceptions, minor encumbrances, ground leases, easements or reservations
of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines,
drains, telegraph and telephone and cable television lines, gas and oil pipelines and other
similar purposes, or zoning, building codes or other restrictions (including minor defects and
irregularities in title and similar encumbrances) as to the use of real properties or Liens
incidental to the conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness and which do not in the aggregate
materially impair their use in the operation of the business of such Person;

     (6) Liens securing obligations under Indebtedness permitted to be incurred pursuant to
clause (5), (12)(b) or (18) of Section 4.09(b) hereof; provided that Liens securing
obligations under Indebtedness permitted to be incurred pursuant to clause (18) of Section
4.09(b) hereof extend only to the assets or Equity Interests of Foreign Subsidiaries;

     (7) Liens existing on the Issue Date;

     (8) Liens existing on property or shares of stock or other assets of a Person at the time
such Person becomes a Subsidiary; provided , however , that such Liens are not
created or incurred in connection with, or in contemplation of, such other Person becoming such
a Subsidiary; provided , further , however , that such Liens may not
extend to any other property or other assets owned by the Issuer or any of its Restricted
Subsidiaries;

     (9) Liens existing on property or other assets at the time the Issuer or a Restricted
Subsidiary acquired the property or such other assets, including any acquisition by means of an

-26-

 

amalgamation, merger or consolidation with or into the Issuer or any of its Restricted
Subsidiaries; provided , however , that such Liens are not created or incurred
in connection with, or in contemplation of, such acquisition, amalgamation, merger or
consolidation; provided further that the Liens may not extend to any other property
owned by the Issuer or any of its Restricted Subsidiaries;

     (10) Liens securing obligations under Indebtedness or other obligations of the Issuer or a
Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary permitted to be
incurred in accordance with Section 4.09 hereof;

     (11) Liens securing Hedging Obligations permitted to be incurred under this Indenture;

     (12) Liens on specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances or letters of credit
issued or created for the account of such Person to facilitate the purchase, shipment or storage
of such inventory or other goods;

     (13) leases, subleases, licenses or sublicenses granted to others in the ordinary course of
business which do not materially interfere with the ordinary conduct of the business of the
Issuer or any of its Restricted Subsidiaries and do not secure any Indebtedness;

     (14) Liens arising from Uniform Commercial Code (or equivalent statutes) financing
statement filings regarding operating leases, consignments or accounts entered into by the
Issuer and its Restricted Subsidiaries in the ordinary course of business;

     (15) Liens in favor of the Issuer or any Guarantor;

     (16) Liens on equipment of the Issuer or any of its Restricted Subsidiaries granted in the
ordinary course of business;

     (17) Liens on (x) accounts receivable and related assets incurred in connection with a
Receivables Facility, and (y) any Securitization Assets and related assets incurred in
connection with a Qualified Securitization Financing;

     (18) Liens to secure any refinancing, refunding, extension, renewal or replacement (or
successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part,
of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8), and
(9); provided that (a) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property), and (b) the
obligations under Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of
the Indebtedness described under clauses (6), (7), (8), and (9) at the time the original Lien
became a Permitted Lien under this Indenture, and (ii) an amount necessary to pay any fees and
expenses, including premiums, related to such refinancing, refunding, extension, renewal or
replacement;

     (19) deposits made or other security provided in the ordinary course of business to secure
liability to insurance carriers;

     (20) other Liens securing Indebtedness or other obligations which do not exceed $50,000,000
in the aggregate at any one time outstanding;

-27-

 

     (21) Liens securing judgments for the payment of money not constituting an Event of Default
under clause (5) of Section 6.01(a) hereof so long as such Liens are adequately bonded and any
appropriate legal proceedings that may have been duly initiated for the review of such judgment
have not been finally terminated or the period within which such proceedings may be initiated
has not expired;

     (22) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods in the ordinary course of
business;

     (23) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial
Code on items in the course of collection, (ii) attaching to commodity trading accounts or other
commodity brokerage accounts incurred in the ordinary course of business, and (iii) in favor of
banking institutions arising as a matter of law encumbering deposits (including the right of
set-off) and which are within the general parameters customary in the banking industry;

     (24) Liens deemed to exist in connection with Investments in repurchase agreements
permitted under this Indenture; provided that such Liens do not extend to any assets
other than those that are the subject of such repurchase agreement;

     (25) Liens encumbering reasonable customary initial deposits and margin deposits and
similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in
the ordinary course of business and not for speculative purposes;

     (26) Liens that are contractual rights of set-off (i) relating to the establishment of
depository relations with banks not given in connection with the issuance of Indebtedness, (ii)
relating to pooled deposit or sweep accounts of the Issuer or any of its Restricted Subsidiaries
to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of
business of the Issuer and its Restricted Subsidiaries or (c) relating to purchase orders and
other agreements entered into with customers of the Issuer or any of its Restricted Subsidiaries
in the ordinary course of business;

     (27) Liens securing the Existing Senior Notes to the extent permitted by the Senior Credit
Facilities as in effect on the Issue Date;

     (28) Liens securing obligations owed by the Issuer or any Restricted Subsidiary to any
lender under any Senior Credit Facility or any Affiliate of such a lender in respect of any
overdraft and related liabilities arising from treasury, depository and cash management services
or any automated clearing house transfers of funds;

     (29) the rights reserved or vested in any Person by the terms of any lease, license,
franchise, grant or permit held by the Issuer or any Restricted Subsidiary thereof or by a
statutory provision, to terminate any such lease, license, franchise, grant or permit, or to
require annual or periodic payments as a condition to the continuance thereof;

     (30) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale or purchase of goods entered into by the Issuer or any Restricted
Subsidiary in the ordinary course of business;

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     (31) Liens solely on any cash earnest money deposits made by the Issuer or any of its
Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted;
and

     (32) security given to a public utility or any municipality or governmental authority when
required by such utility or authority in connection with the operations of that Person in the
ordinary course of business.

          For purposes of this definition, the term “Indebtedness” shall be deemed to include interest
on and the costs in respect of such Indebtedness.

          “ Person ” means any individual, corporation, limited liability company, partnership,
joint venture, association, joint stock company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other entity.

          “ Preferred Stock ” means any Equity Interest with preferential rights of payment of
dividends or upon liquidation, dissolution, or winding up.

          “ Private Placement Legend ” means the legend set forth in Section 2.06(g)(i) hereof
to be placed on all Notes issued under this Indenture, except where otherwise permitted by the
provisions of this Indenture.

          “ Proof of Claim ” shall mean a proof of claim or debt filed in accordance with and
pursuant to any applicable provisions of the Bankruptcy Law, the Federal Rules of Bankruptcy
Procedure and/or a final order of the U.S. bankruptcy court.

          “ Proper Proof of Claim ” shall mean, at any time, a Proof of Claim in an amount not
less than the sum of the aggregate outstanding principal amount of the Notes at such time plus
accrued but unpaid interest on the Notes at such time.

          “ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.

          “ Qualified Proceeds ” means assets that are used or useful in, or Capital Stock of
any Person engaged in, a Similar Business; provided that the fair market value of any such
assets or Capital Stock shall be determined by the Issuer in good faith.

          “ Qualified Securitization Financing ” means any transaction or series of transactions
that may be entered into by Holdings, the Issuer or any of its Restricted Subsidiaries pursuant to
which such Person may sell, convey or otherwise transfer to (A) one or more Securitization
Subsidiaries or (B) any other Person (in the case of a transfer by a Securitization Subsidiary), or
may grant a security interest in, any Securitization Assets of CCO or any of its Subsidiaries
(other than any assets that have been transferred or contributed to CCO or its Subsidiaries by the
Issuer or any other Restricted Subsidiary of the Issuer) that are customarily granted in connection
with asset securitization transactions similar to the Qualified Securitization Financing entered
into of a Securitization Subsidiary that meets the following conditions: (a) the board of directors
of the Issuer shall have determined in good faith that such Qualified Securitization Financing
(including the terms, covenants, termination events and other provisions) is in the aggregate
economically fair and reasonable to the Issuer and the Securitization Subsidiary, (b) all sales,
transfers and/or contributions of Securitization Assets and related assets to the Securitization
Subsidiary are made at fair market value, (c) the financing terms, covenants, termination events
and other provisions thereof, including any Standard Securitization Undertakings, shall be market
terms (as determined in good faith by the Issuer), (d) after giving pro forma
effect to such Qualified Securitization Financing,

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(x) the Consolidated Leverage Ratio of the Issuer would be (A) less than 8.0 to 1.0 and (B) lower
than the Consolidated Leverage Ratio of the Issuer immediately prior to giving pro
forma effect to such Qualified Securitization Financing and (y) the Guaranteed Leverage
Ratio of the Issuer would be (A) less than 6.5 to 1.0 and (B) lower than the Guaranteed Leverage
Ratio of the Issuer immediately prior to giving pro forma effect to such Qualified
Securitization Financing, (e) the proceeds from such sale will be used by the Issuer to permanently
reduce Obligations under the Senior Credit Facilities and to correspondingly reduce commitments
with respect thereto and (f) the Trustee shall have received an Officer’s Certificate of the Issuer
certifying that all of the requirements of clauses (a) through (e) have been satisfied.

          “ Rating Agencies ” means Moody’s and S&P or if Moody’s or S&P or both shall not make
a rating on the Notes publicly available, a nationally recognized statistical rating agency or
agencies, as the case may be, selected by the Issuer which shall be substituted for Moody’s or S&P
or both, as the case may be.

          “ Receivables Facility ” means any of one or more receivables financing facilities as
amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the
obligations of which are non-recourse (except for customary representations, warranties, covenants
and indemnities made in connection with such facilities) to the Issuer or any of its Restricted
Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Issuer or any of its
Restricted Subsidiaries sells their accounts receivable to either (a) a Person that is not a
Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its accounts receivable to
a Person that is not a Restricted Subsidiary.

          “ Receivables Fees ” means distributions or payments made directly or by means of
discounts with respect to any accounts receivable or participation interest therein issued or sold
in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in
connection with, any Receivables Facility.

          “ Receivables Subsidiary ” means any Subsidiary formed for the purpose of, and that
solely engages only in one or more Receivables Facilities and other activities reasonably related
thereto.

          “ Record Date ” for the interest or Special Interest, if any, payable on any
applicable Interest Payment Date means the January 15 or July 15 (whether or not a Business Day)
next preceding such Interest Payment Date.

          “ Registration Rights Agreement ” means the Registration Rights Agreement with respect
to the Notes dated the Issue Date, among the Issuer, the Guarantors and the Initial Purchasers and
any similar registration rights agreements with respect to any Additional Notes.

          “ Regulation S ” means Regulation S promulgated under the Securities Act.

          “ Regulation S Global Note ” means a Regulation S Temporary Global Note or Regulation
S Permanent Global Note, as applicable.

          “ Regulation S Permanent Global Note ” means a permanent Global Note in the form of
Exhibit A1 or Exhibit A2 bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Note upon expiration of the Restricted Period.

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          “ Regulation S Temporary Global Note ” means a temporary Global Note in the form of
Exhibit A1 or Exhibit A2 bearing the Global Note Legend, the Private Placement
Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903.

          “ Regulation S Temporary Global Note Legend ” means the legend set forth in Section
2.06(g)(iii) hereof.

          “ Related Business Assets ” means assets (other than cash or Cash Equivalents) used or
useful in a Similar Business, provided that any assets received by the Issuer or a
Restricted Subsidiary in exchange for assets transferred by the Issuer or a Restricted Subsidiary
shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless
upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.

          “ Representative ” means any trustee, agent or representative (if any) for an issue of
Designated Senior Indebtedness of a Guarantor.

          “ Responsible Officer ” means, when used with respect to the Trustee, any officer
within the corporate trust department of the Trustee, including any vice president, assistant vice
president, assistant treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred because of such Person’s
knowledge of and familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.

          “ Restricted Definitive Note ” means a Definitive Note bearing the Private Placement
Legend.

          “ Restricted Global Note ” means a Global Note bearing the Private Placement Legend.

          “ Restricted Guarantor ” means a Guarantor that is a Restricted Subsidiary.

          “ Restricted Investment ” means an Investment other than a Permitted Investment.

          “ Restricted Period ” means the 40-day distribution compliance period as defined in
Regulation S.

          “ Restricted Subsidiary ” means, at any time, any direct or indirect Subsidiary of the
Issuer (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary;
provided , however , that upon the occurrence of an Unrestricted Subsidiary ceasing
to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
“Restricted Subsidiary.”

          “ Rule 144 ” means Rule 144 promulgated under the Securities Act.

          “ Rule 144A ” means Rule 144A promulgated under the Securities Act.

          “ Rule 903 ” means Rule 903 promulgated under the Securities Act.

          “ Rule 904 ” means Rule 904 promulgated under the Securities Act.

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          “ S&P ” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and
any successor to its rating agency business.

          “ Sale and Lease-Back Transaction ” means any arrangement providing for the leasing by
the Issuer or any of its Restricted Subsidiaries of any real or tangible personal property, which
property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to a
third Person in contemplation of such leasing.

          “ SEC ” means the U.S. Securities and Exchange Commission.

          “ Secured Indebtedness ” means any Indebtedness of the Issuer or any of its Restricted
Subsidiaries secured by a Lien.

          “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

          “ Securitization Assets ” means any properties, assets and revenue streams associated
with the Americas Outdoor Advertising segment of the Issuer and its Subsidiaries, and any other
assets related thereto, subject to a Qualified Securitization Financing and the proceeds thereof.

          “ Securitization Fees ” means distributions or payments made directly or by means of
discounts with respect to any participation interest issued or sold in connection with, and other
fees paid to a Person that is not a Securitization Subsidiary in connection with, any Qualified
Securitization Financing.

          “ Securitization Subsidiary ” means a Restricted Subsidiary or direct Wholly-Owned
Subsidiary of Holdings (other than the Issuer) to which the Issuer or any of its Restricted
Subsidiaries sells, conveys or otherwise transfers Securitization Assets and related assets that
engages in no activities other than in connection with the ownership and financing of
Securitization Assets, all proceeds thereof and all rights (contingent and other), collateral and
other assets relating thereto, and any business or activities incidental or related to such
business, and which is designated by the board of directors of the Issuer or such other Person as
provided below as a Securitization Subsidiary and (a) no portion of the Indebtedness or any other
obligations (contingent or otherwise) of which (i) is guaranteed by Holdings, the Issuer or any
other Subsidiary of Holdings, other than another Securitization Subsidiary (excluding guarantees of
obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings), (ii) is recourse to or obligates Holdings, the Issuer or any other
Subsidiary of the Issuer, other than another Securitization Subsidiary, in any way other than
pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of
Holdings, the Issuer or any other Subsidiary of the Issuer, other than another Securitization
Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings, (b) with which none of Holdings, the Issuer
or any other Subsidiary of the Issuer, other than another Securitization Subsidiary, has any
material contract, agreement, arrangement or understanding other than on terms which the Issuer
reasonably believes to be no less favorable to Holdings, the Issuer or such Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of the Issuer and (c) to
which none of Holdings, the Issuer or any other Subsidiary of the Issuer, other than another
Securitization Subsidiary, has any obligation to maintain or preserve such entity’s financial
condition or cause such entity to achieve certain levels of operating results.

          “ Senior Cash Pay Notes ” has the meaning set forth in the recitals hereto.

          “ Senior Credit Facilities ” means (i) any ABL Facility and (ii) the General Credit
Facilities.

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          “ Senior Toggle Notes ” has the meaning set forth in the recitals hereto.

          “ Shelf Registration Statement ” means the Shelf Registration Statement as defined in
the Registration Rights Agreement.

          “ Significant Party ” means any Guarantor or Restricted Subsidiary that would be a
“significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant
to the Securities Act, as such regulation is in effect on the Issue Date.

          “ Similar Business ” means any business conducted or proposed to be conducted by the
Issuer and its Subsidiaries on the Issue Date or any business that is similar, reasonably related,
incidental or ancillary thereto.

          “ Special Interest ” means all additional interest then owing pursuant to the
Registration Rights Agreement.

          “ Sponsor Management Agreement ” means the management agreement between certain
management companies associated with the Investors and the Issuer and/or any direct or indirect
parent company, in substantially the form delivered to the Initial Purchasers prior to the Issue
Date and as amended, supplemented, amended and restated, replaced or otherwise modified from time
to time; provided , however , that the terms of any such amendment, supplement,
amendment and restatement or replacement agreement are not, taken as a whole, less favorable to the
holders of the Notes in any material respect than the original agreement in effect on the Issue
Date.

          “ Standard Securitization Undertakings ” means representations, warranties, covenants
and indemnities entered into by Holdings (or any direct or indirect parent company of Holdings) or
any of its Subsidiaries that the Issuer has determined in good faith to be customary in a
securitization financing.

          “ Stated Maturity ” means, with respect to any installment of interest or principal on
any series of Indebtedness, the date on which the payment of interest or principal was scheduled to
be paid in the original documentation governing such Indebtedness, and will not include any
contingent obligations to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.

          “ Subordinated Indebtedness ” means:

     (1) any Indebtedness of the Issuer which is by its terms subordinated in right of payment
to the Notes; and

     (2) any Indebtedness of any Guarantor which is by its terms subordinated in right of
payment to the Guarantee of such entity of the Notes.

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          “ Subsidiary ” means, with respect to any Person, a corporation, partnership, joint
venture, limited liability company or other business entity (excluding, for the avoidance of doubt,
charitable foundations) of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body (other than securities
or interests having such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.

          “ Total Assets ” means total assets of the Issuer and its Restricted Subsidiaries on a
consolidated basis prepared in accordance with GAAP, shown on the most recent balance sheet of the
Issuer and its Restricted Subsidiaries as may be expressly stated.

          “ Transaction Expenses ” means any fees or expenses incurred or paid by the Issuer or
any of its Subsidiaries in connection with the Transactions.

          “ Transactions ” means the “Transactions” as defined in the Senior Credit Facilities
as in effect on the Issue Date.

          “ Treasury Rate ” means, as of any Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical
Release is no longer published, any publicly available source of similar market data)) most nearly
equal to the period from the Redemption Date to August 1, 2012; provided , however
, that if the period from the Redemption Date to August 1, 2012 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a constant maturity
of one year will be used.

          “ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-777bbbb).

          “ Trustee ” means Law Debenture Trust Company of New York, as trustee, until a
successor replaces it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.

          “ Unrestricted Definitive Note ” means one or more Definitive Notes that do not bear
and are not required to bear the Private Placement Legend.

          “ Unrestricted Global Note ” means a permanent Global Note, substantially in the form
of Exhibit A1 or Exhibit A2 , that bears the Global Note Legend and that has the
“Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited
with or on behalf of and registered in the name of the Depositary, representing Notes that do not
bear the Private Placement Legend.

          “ Unrestricted Subsidiary ” means:

     (1) any Subsidiary of the Issuer which at the time of determination is an Unrestricted
Subsidiary (as designated by the Issuer, as provided below); and

     (2) any Subsidiary of an Unrestricted Subsidiary.

          The Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary

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or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien
on, any property of, the Issuer or any Restricted Subsidiary of the Issuer (other than solely any
Unrestricted Subsidiary of the Subsidiary to be so designated); provided that

     (1) any Unrestricted Subsidiary must be an entity of which the Equity Interests entitled to
cast at least a majority of the votes that may be cast by all Equity Interests having ordinary
voting power for the election of directors or Persons performing a similar function are owned,
directly or indirectly, by the Issuer;

     (2) such designation complies with Section 4.07 hereof; and

     (3) each of:

     (a) the Subsidiary to be so designated; and

     (b) its Subsidiaries

has not at the time of designation, and does not thereafter, incur any Indebtedness pursuant to
which the lender has recourse to any of the assets of the Issuer or any Restricted Subsidiary.

Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that, immediately after giving effect to such designation, no Default shall have
occurred and be continuing and either:

     (1) the Issuer could incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test described in Section 4.09(a) hereof; or

     (2) the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries
would be equal to or less than such ratio immediately prior to such designation, in each
case on a pro forma basis taking into account such designation.

     Any such designation by the Issuer shall be notified by the Issuer to the Trustee by promptly
filing with the Trustee a copy of the resolution of the board of directors of the Issuer or any
committee thereof giving effect to such designation and an Officer’s Certificate certifying that
such designation complied with the foregoing provisions.

          “ U.S. Person ” means a U.S. person as defined in Rule 902(k) under the Securities
Act.

          “ Voting Stock ” of any Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the board of directors of such Person.

          “ Weighted Average Life to Maturity ” means, when applied to any Indebtedness,
Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by
dividing:

     (1) the sum of the products of the number of years from the date of determination to the
date of each successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the
amount of such payment; by

     (2) the sum of all such payments.

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          “ Wholly-Owned Subsidiary ” of any Person means a Subsidiary of such Person, 100.0% of
the outstanding Equity Interests of which (other than directors’ qualifying shares and shares
issued to foreign nationals as required under applicable law) shall at the time be owned by such
Person or by one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or
more Wholly-Owned Subsidiaries of such Person.

Section 1.02 Other Definitions.

	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Affiliate Transaction”
	 	 	4.11	(a)
	“AHYDO”
	 	 	3.08	(b)
	“AHYDO Catch-Up Payment”
	 	 	3.08	(b)
	“Asset Sale Offer”
	 	 	4.10	(c)
	“Authentication Order”
	 	 	2.02	 
	“Blockage Notice”
	 	 	11.03	 
	“Change of Control Offer”
	 	 	4.14	(a)
	“Change of Control Payment”
	 	 	4.14	(a)
	“Change of Control Payment Date”
	 	 	4.14	(a)
	“Covenant Defeasance”
	 	 	8.03	 
	“Defeased Covenants”
	 	 	8.03	 
	“DTC”
	 	 	2.03	 
	“Event of Default”
	 	 	6.01	(a)
	“Excess Proceeds”
	 	 	4.10	(c)
	“incur” or “incurrence”
	 	 	4.09	(a)
	“Legal Defeasance”
	 	 	8.02	 
	“Non-Payment Default”
	 	 	11.03	 
	“Note Register”
	 	 	2.03	 
	“Offer Amount”
	 	 	3.09	(b)
	“Offer Period”
	 	 	3.09	(b)
	“Pari Passu Indebtedness”
	 	 	4.10	(c)
	“Partial PIK Interest”
	 	 	4.01	 
	“Paying Agent”
	 	 	2.03	 
	“Payment Blockage Period”
	 	 	11.03	 
	“Payment Default”
	 	 	11.03	 
	“PIK Interest”
	 	 	4.01	 
	“PIK Notes”
	 	 	2.01	(d)
	“PIK Payment”
	 	 	2.01	(d)
	“Purchase Date”
	 	 	3.09	(b)
	“Redemption Date”
	 	 	3.07	(a)
	“Refinancing Indebtedness”
	 	 	4.09	(b)
	“Refunding Capital Stock”
	 	 	4.07	(b)
	“Registrar”
	 	 	2.03	 
	“Restricted Payments”
	 	 	4.07	(a)
	“Special Redemption”
	 	 	3.08	(a)
	“Special Redemption Amount”
	 	 	3.08	(a)
	“Special Redemption Date”
	 	 	3.08	(a)
	“Successor Company”
	 	 	5.01	(a)
	“Successor Person”
	 	 	5.01	(c)
	“Transfer Agent”
	 	 	2.03	 
	“Treasury Capital Stock”
	 	 	4.07	(b)

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Section 1.03 Incorporation by Reference of Trust Indenture Act.

          Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is
incorporated by reference in and made a part of this Indenture.

          The following Trust Indenture Act terms used in this Indenture have the following meanings:

     “indenture securities” means the Notes;

     “indenture security Holder” means a Holder of a Note;

     “indenture to be qualified” means this Indenture;

     “indenture trustee” or “institutional trustee” means the Trustee; and

     “obligor” on the Notes and the Guarantees means the Issuer and the Guarantors,
respectively, and any successor obligor upon the Notes and the Guarantees, respectively.

          All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by
Trust Indenture Act reference to another statute or defined by SEC rule under the Trust Indenture
Act have the meanings so assigned to them.

Section 1.04 Rules of Construction.

          Unless the context otherwise requires:

     (a) a term has the meaning assigned to it;

     (b) an accounting term not otherwise defined has the meaning assigned to it in accordance
with GAAP;

     (c) “or” is not exclusive;

     (d) words in the singular include the plural, and in the plural include the singular;

     (e) “will” shall be interpreted to express a command;

     (f) provisions apply to successive events and transactions;

     (g) references to sections of, or rules under, the Securities Act shall be deemed to
include substitute, replacement or successor sections or rules adopted by the SEC from time to
time;

     (h) unless the context otherwise requires, any reference to an “Article,” “Section” or
“clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

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          (i) words used herein implying any gender shall apply to both genders;

          (j) the words “including,” “includes” and similar words shall be deemed to be followed by
“without limitation”;

          (k) the principal amount of any Preferred Stock at any time shall be (i) the maximum
liquidation value of such Preferred Stock at such time or (ii) the maximum mandatory redemption or
mandatory repurchase price with respect to such Preferred Stock at such time, whichever is greater;
and

          (l) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
this Indenture as a whole and not any particular Article, Section, clause or other subdivision.

Section 1.05 Acts of Holders.

          (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing. Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Issuer. Proof of execution of any such instrument or of a writing
appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any
purpose of this Indenture and (subject to Section 7.01 hereof) conclusive in favor of the Trustee
and the Issuer, if made in the manner provided in this Section 1.05.

          (b) The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by the certificate of any notary public
or other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof. Where such execution
is by or on behalf of any legal entity other than an individual, such certificate or affidavit
shall also constitute proof of the authority of the Person executing the same. The fact and date of
the execution of any such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner that the Trustee deems sufficient.

          (c) The ownership of Notes shall be proved by the Note Register.

          (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by
the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note
issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of any action taken, suffered or omitted by the Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Note.

          (e) The Issuer may, in the circumstances permitted by the Trust Indenture Act, set a record
date for purposes of determining the identity of Holders entitled to give any request, demand,
authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to
any action by vote or consent authorized or permitted to be given or taken by Holders. Unless
otherwise specified, if not set by the Issuer prior to the first solicitation of a Holder made by
any Person in respect of any such action, or in the case of any such vote, prior to such vote, any
such record date shall be the later of 30 days prior to the first solicitation of such consent or
the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.

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          (f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard
to any particular Note may do so with regard to all or any part of the principal amount of such
Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount. Any notice given or action taken by a
Holder or its agents with regard to different parts of such principal amount pursuant to this
Section 1.05(f) shall have the same effect as if given or taken by separate Holders of each such
different part.

          (g) Without limiting the generality of the foregoing, a Holder, including DTC, that is the
Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing,
any request, demand, authorization, direction, notice, consent, waiver or other action provided in
this Indenture to be made, given or taken by Holders, and any Person that is the Holder of a Global
Note, including DTC, may provide its proxy or proxies to the beneficial owners of interests in any
such Global Note through such depositary’s standing instructions and customary practices.

          (h) The Issuer may fix a record date for the purpose of determining the Persons who are
beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such
depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request,
demand, authorization, direction, notice, consent, waiver or other action provided in this
Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on
such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled
to make, give or take such request, demand, authorization, direction, notice, consent, waiver or
other action, whether or not such Holders remain Holders after such record date. No such request,
demand, authorization, direction, notice, consent, waiver or other action shall be valid or
effective if made, given or taken more than 90 days after such record date.

ARTICLE 2

THE NOTES

Section 2.01 Form and Dating; Terms.

          (a) General. The Notes and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A1 (in the case of the Senior Cash Pay Notes) or
Exhibit A2 (in the case of the Senior Toggle Notes) hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rules or usage. Each Note shall be dated
the date of its authentication. The Notes shall be in denominations of $2,000 and integral
multiples of $1,000 in excess thereof, subject to the issuance of PIK Interest pursuant to
Section 4.01 hereof, in which case the aggregate principal amount of the Senior Toggle Notes may be
increased by, or PIK Notes may be issued in, an aggregate principal amount equal to the amount of
PIK Interest paid by the Issuer for the applicable interest period.

          (b) Global Notes. Notes issued in global form shall be substantially in the form of
Exhibit A1 or Exhibit A2 attached hereto (including the Global Note Legend thereon
and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A1 or Exhibit A2
attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges
of Interests in the Global Note” attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global
Note” attached thereto and each Global Note shall provide that it shall represent up to the
aggregate principal amount of Notes from time to time endorsed thereon (and, with respect to the
Senior Toggle Notes, giving effect to any PIK Interest made thereon by increasing the aggregate
principal amount of such Global Note) and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as applicable, to reflect
exchanges

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and redemptions and, with respect to the Senior Toggle Notes, payment of PIK Interest made thereon
by increasing the aggregate principal amount of such Global Note. Any endorsement of a Global Note
to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding
Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06
hereof.

          (c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall
be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited
on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the
accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the
Issuer and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be
terminated upon the receipt by the Trustee of:

     (i) a written certificate from the Depositary, together with copies of certificates from
Euroclear and Clearstream certifying that they have received certification of non-United States
beneficial ownership of 100% of the aggregate principal amount of each Regulation S Temporary
Global Note (except to the extent of any beneficial owners thereof who acquired an interest
therein during the Restricted Period pursuant to another exemption from registration under the
Securities Act and who shall take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section 2.06(b) hereof); and

     (ii) an Officer’s Certificate from the Issuer.

          Following the termination of the Restricted Period, beneficial interests in the Regulation S
Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent
Global Note pursuant to the Applicable Procedures. Simultaneously with the authentication of the
Regulation S Permanent Global Note, the Trustee shall cancel the Regulation S Temporary Global
Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in connection with
transfers of interest as hereinafter provided.

          (d) PIK Notes. In connection with the payment of PIK Interest or Partial PIK Interest
in respect of the Senior Toggle Notes, the Issuer is entitled to, without the consent of the
Holders and without regard to Section 4.09 hereof, increase the outstanding principal amount of the
Senior Toggle Notes or issue additional Senior Toggle Notes (the
“ PIK Notes ”) under this
Indenture on the same terms and conditions as the Senior Toggle Notes issued on the Issue Date (in
each case, a “ PIK Payment ”). The Notes, including any PIK Notes, and any Additional Notes
subsequently issued under this Indenture will be treated as a single class for all purposes under
this Indenture, including waivers, amendments, redemptions and offers to purchase, except as
provided in Article 9 hereof. Unless the context requires otherwise, references to “Notes” for all
purposes of this Indenture shall include any Additional Notes and PIK Notes that are actually
issued and any increase in the principal amount of the outstanding Senior Toggle Notes (including
PIK Notes) as a result of a PIK Payment, and references to “principal amount” of the Notes or the
Senior Toggle Notes shall include any increase in the principal amount of the outstanding Senior
Toggle Notes (including PIK Notes) as a result of a PIK Payment.

          (e) Terms. The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is unlimited.

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          The terms and provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Indenture and the Issuer, the Trustee and the Paying Agent and Registrar, by
their execution and delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby. However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

          The Notes shall be subject to repurchase by the Issuer pursuant to an Asset Sale Offer as
provided in Section 4.10 hereof or a Change of Control Offer as provided in Section 4.14 hereof.
The Notes shall not be redeemable, other than as provided in Article 3 hereof.

          Additional Notes ranking pari passu with the Initial Notes may be created and
issued from time to time by the Issuer without notice to or consent of the Holders and shall be
consolidated with and form a single class with the Initial Notes and shall have the same terms as
to status, redemption or otherwise as the Initial Notes; provided that the Issuer’s ability
to issue Additional Notes shall be subject to the Issuer’s compliance with Section 4.09 hereof. Any
Additional Notes shall be issued with the benefit of an indenture supplemental to this Indenture.

          (f) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating
Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the
“General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall
be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and
the Regulation S Permanent Global Note that are held by Participants through Euroclear or
Clearstream.

Section 2.02 Execution and Authentication.

          At least one Officer shall execute the Notes on behalf of the Issuer by manual or facsimile
signature.

          If an Officer whose signature is on a Note no longer holds that office at the time such Note
is authenticated, such Note shall nevertheless be valid.

          A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for
any purpose until authenticated substantially in the form of Exhibit A1 or Exhibit
A2 attached hereto by the manual or facsimile signature of the Trustee. The signature shall be
conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.

          On the Issue Date, the Trustee shall, upon receipt of an Issuer Order (an “ Authentication
Order ”), authenticate and deliver the Initial Notes. In addition, at any time, from time to
time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any
Additional Notes and Exchange Notes for an aggregate principal amount specified in such
Authentication Order for such Additional Notes or Exchange Notes issued hereunder.

          The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate
Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes authentication by such agent.
An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the
Issuer.

Section 2.03 Registrar and Paying Agent.

          The Issuer shall maintain an office or agency in the Borough of Manhattan, City of New York,
where Notes may be presented for registration (“
Registrar ”), an office or agency in the
Borough of

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Manhattan, City of New York, where Notes may be presented for transfer or exchange (“ Transfer
Agent ”) and an office or agency in the Borough of Manhattan, City of New York, where Notes may
be presented for payment (“ Paying Agent ”). The Registrar shall keep a register of the
Notes (“ Note Register ”) and of their transfer and exchange. The Issuer may appoint one or
more co-registrars, one or more co-transfer agents and one or more additional paying agents. The
term “Registrar” includes any co-registrar, the term “Transfer Agent” includes any co-transfer
agent and the term “Paying Agent” includes any additional paying agent. The Issuer may change any
Paying Agent, Transfer Agent or Registrar without prior notice to any Holder. So long as any series
of Notes is listed on an exchange and the rules of such exchange so require, the Issuer shall
satisfy any requirement of such exchange as to paying agents, registrars and transfer agents and
shall comply with any notice requirements required by such exchange in connection with any change
of paying agent, registrar or transfer agent. The Issuer shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Issuer fails to appoint or
maintain another entity as Registrar, Transfer Agent or Paying Agent, the Trustee shall act as
such. The Issuer or any of its Subsidiaries may act as Paying Agent, Transfer Agent or Registrar.

          The
Issuer initially appoints The Depository Trust Company (“ DTC ”) to act as
Depositary with respect to the Global Notes.

          The Issuer initially appoints the Trustee to act as Custodian with respect to the Global
Notes. The Issuer initially appoints Deutsche Bank Trust Company Americas to act as the Paying
Agent, Registrar and Transfer Agent for the Notes.

Section 2.04 Paying Agent To Hold Money in Trust.

          The Issuer shall require each Paying Agent other than the Trustee or Deutsche Bank Trust
Company Americas to agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if
any, or Special Interest, if any, or interest on the Notes, and shall notify the Trustee of any
default by the Issuer in making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Issuer at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall have no further
liability for the money. If the Issuer or a Subsidiary acts as Paying Agent, it shall segregate and
hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Issuer, Deutsche Bank Trust
Company Americas (for so long as it acts as Paying Agent) or the Trustee (if Deutsche Bank Trust
Company Americas ceases to act as Paying Agent hereunder) shall serve as Paying Agent for the
Notes.

Section 2.05 Holder Lists.

          The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of all Holders and shall otherwise comply with
Trust Indenture Act Section 312(a). If the Trustee is not the Registrar, the Issuer shall furnish
to the Trustee at least two Business Days before each Interest Payment Date and at such other times
as the Trustee may request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes and the Issuer shall
otherwise comply with Trust Indenture Act Section 312(a).

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Section 2.06 Transfer and Exchange.

          (a) Transfer and Exchange of Global Notes. Except as otherwise set forth in this
Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee
of the Depositary or to a successor Depositary or a nominee of such successor Depositary. A
beneficial interest in a Global Note may not be exchanged for a Definitive Note unless (i) the
Depositary (x) notifies the Issuer that it is unwilling or unable to continue as Depositary for
such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and,
in either case, a successor Depositary is not appointed by the Issuer within 120 days or (ii) there
shall have occurred and be continuing a Default with respect to the Notes. Upon the occurrence of
any of the events in clause (i) or (ii) above, Definitive Notes delivered in exchange for any
Global Note or beneficial interests therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the Depositary (in accordance with its
customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as
provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for,
or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07
or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note,
except for Definitive Notes issued subsequent to any of the events in clause (i) or (ii) above and
pursuant to Section 2.06(c) hereof. A Global Note may not be exchanged for another Note other than
as provided in this Section 2.06(a); provided , however , beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

          (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer
and exchange of beneficial interests in the Global Notes shall be effected through the Depositary,
in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also shall require compliance with either subparagraph (i) or
(ii) below, as applicable, as well as one or more of the other following subparagraphs, as
applicable:

     (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests
in any Restricted Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided , however ,
that prior to the expiration of the Restricted Period, transfers of beneficial interests in the
Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).

     (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In
connection with all transfers and exchanges of beneficial interests that are not subject to
Section 2.06(b)(i) hereof, the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the Depositary to credit
or cause to be credited a beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive

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Note in an amount equal to the beneficial interest to be transferred or exchanged and
(2) instructions given by the Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to effect the transfer or exchange
referred to in (1) above; provided that in no event shall Definitive Notes be issued
upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note
prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903. Upon consummation of an Exchange Offer by the Issuer
in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.

     (iii) Transfer of Beneficial Interests to Another Restricted Global Note. A
beneficial interest in any Restricted Global Note may be transferred to a Person who takes
delivery thereof in the form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives
the following:

     (A) if the transferee will take delivery in the form of a beneficial interest in the
144A Global Note, a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; or

     (B) if the transferee will take delivery in the form of a beneficial interest in the
Regulation S Global Note, a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof.

     (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for
Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any
Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) hereof and:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance
with the Registration Rights Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) an Exchanging Dealer,
(2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is
an affiliate (as defined in Rule 144) of the Issuer;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by an Exchanging Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

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     (D) the Registrar receives the following:

     (1) if the holder of such beneficial interest in a Restricted Global Note proposes
to exchange such beneficial interest for a beneficial interest in an Unrestricted
Global Note, a certificate from such Holder substantially in the form of
Exhibit C hereto, including the certifications in item (1)(a) thereof; or

     (2) if the holder of such beneficial interest in a Restricted Global Note proposes
to transfer such beneficial interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in item
(4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain compliance with the Securities
Act.

     If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when
an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of
an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate
one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate
principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.

     Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred
to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted
Global Note.

          (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

          (i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes.
If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the
occurrence of any of the events in clause (i) or (ii) of Section 2.06(a) hereof and receipt by the
Registrar of the following documentation:

     (A) if the holder of such beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Restricted Definitive Note, a certificate from such
holder substantially in the form of Exhibit C hereto, including the certifications in
item (2)(a) thereof;

     (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A,
a certificate substantially in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

     (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of
Exhibit B hereto, including the certifications in item (2) thereof;

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     (D) if such beneficial interest is being transferred pursuant to an exemption from the
registration requirements of the Securities Act in accordance with Rule 144, a certificate
substantially in the form of Exhibit B hereto, including the certifications in item
(3)(a) thereof;

     (E) if such beneficial interest is being transferred to the Issuer or any of its
Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the
certifications in item (3)(b) thereof; or

     (F) if such beneficial interest is being transferred pursuant to an effective registration
statement under the Securities Act, a certificate substantially in the form of Exhibit B
hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Issuer shall execute and the Trustee shall
authenticate and mail to the Person designated in the instructions a Definitive Note in the
applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names
such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend
and shall be subject to all restrictions on transfer contained therein.

          (ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes.
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S
Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who
takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the
Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to
Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an
exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

          (iii)
Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial
interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence
of any of the events in subsection (i) or (ii) of Section 2.06(a) hereof and if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with
the Registration Rights Agreement and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) an Exchanging Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
of the Issuer;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;

     (C) such transfer is effected by an Exchanging Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

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     (D) the Registrar receives the following:

     (1) if the holder of such beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from
such holder substantially in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or

     (2) if the holder of such beneficial interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who shall take delivery thereof in the form of
an Unrestricted Definitive Note, a certificate from such holder substantially in the form of
Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if
the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the Securities Act.

          (iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive
Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to
exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to
a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of
any of the events in clause (i) or (ii) of Section 2.06(a) hereof and satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Issuer shall execute and the Trustee shall authenticate and mail to the Person designated
in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be
registered in such name or names and in such authorized denomination or denominations as the holder
of such beneficial interest shall instruct the Registrar through instructions from or through the
Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive
Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private
Placement Legend.

          (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

          (i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes.
If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon
receipt by the Registrar of the following documentation:

     (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in
the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

     (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with
Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

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     (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the
form of Exhibit B hereto, including the certifications in item (2) thereof;

     (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from
the registration requirements of the Securities Act in accordance with Rule 144, a certificate
substantially in the form of Exhibit B hereto, including the certifications in item
(3)(a) thereof;

     (E) if such Restricted Definitive Note is being transferred to the Issuer or any of its
Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the
certifications in item (3)(b) thereof; or

     (F) if such Restricted Definitive Note is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate substantially in the form of
Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the
aggregate principal amount of, in the case of clause (A) above, the applicable Restricted Global
Note, in the case of clause (B) above, the applicable 144A Global Note, and in the case of clause
(C) above, the applicable Regulation S Global Note.

          (ii)
Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with
the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee,
in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not
(1) an Exchanging Dealer, (2) a Person participating in the distribution of the Exchange Notes
or (3) a Person who is an affiliate (as defined in Rule 144) of the Issuer;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;

     (C) such transfer is effected by an Exchanging Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a
beneficial interest in the Unrestricted Global Note, a certificate from such Holder
substantially in the form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or

     (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder substantially in the form of Exhibit B
hereto, including the certifications in item (4) thereof;

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and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if
the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the Securities Act.

               Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii),
the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.

          (iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global
Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.

          If any such exchange or transfer from a Definitive Note to a beneficial interest is effected
pursuant to subparagraph (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note
has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so
transferred.

          (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a
Holder of Definitive Notes and such Holder’s compliance with the provisions of this
Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior
to such registration of transfer or exchange, the requesting Holder shall present or surrender to
the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer or exchange in form satisfactory to the Registrar duly executed by such Holder or by its
attorney, duly authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required pursuant to the
following provisions of this Section 2.06(e):

          (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted
Definitive Note may be transferred to and registered in the name of Persons who take delivery
thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

     (A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor
must deliver a certificate substantially in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

     (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the certifications in
item (2) thereof; or

     (C) if the transfer will be made pursuant to any other exemption from the registration
requirements of the Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications required by item (3) thereof, if
applicable.

          (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted
Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or
transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with
the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee,
in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not
(1) an Exchanging Dealer, (2) a Person participating in the distribution of the Exchange Notes
or (3) a Person who is an affiliate (as defined in Rule 144) of the Issuer;

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     (B) any such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) any such transfer is effected by an Exchanging Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes
for an Unrestricted Definitive Note, a certificate from such Holder substantially in the
form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

     (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes
to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder substantially in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.

          (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of
Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the
Holder thereof.

          (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Issuer shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not Exchanging Dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined
in Rule 144) of the Issuer, and accepted for exchange in the Exchange Offer and (ii) Unrestricted
Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes tendered for acceptance by Persons that certify in the applicable Letters of
Transmittal that (x) they are not Exchanging Dealers, (y) they are not participating in a
distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Issuer, and accepted for exchange in the Exchange Offer. Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global
Notes to be reduced accordingly, and the Issuer shall execute and the Trustee shall authenticate
and mail to the Persons designated by the Holders of Definitive Notes so accepted Unrestricted
Definitive Notes in the applicable principal amount. Any Notes that remain outstanding after the
consummation of the Exchange Offer, and Exchange Notes issued in connection with the Exchange
Offer, shall be treated as a single class of securities under this Indenture.

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          (g) Legends. The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable
provisions of this Indenture:

          (i) Private Placement Legend.

     (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive
Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend
in substantially the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3),
OR (7) UNDER THE SECURITIES ACT (AN “ACCREDITED INVESTOR”)), (2) AGREES THAT IT WILL NOT
WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE

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IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE
AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON”
HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.”

     (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to
subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this
Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear
the Private Placement Legend.

          (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the
following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS
NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h) OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER. UNLESS AND UNTIL IT IS EXCHANGED IN
WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.”

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          (iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global
Note shall bear a legend in substantially the following form:

“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND
PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE
(AS DEFINED HEREIN).”

          (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial
interests in a particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11
hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial
interest in another Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note, such other Global
Note shall be increased accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

          (i) General Provisions Relating to Transfers and Exchanges.

          (i) To permit registrations of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication
Order in accordance with Section 2.02 hereof or at the Registrar’s request.

          (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or
to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuer may
require payment of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05
hereof).

          (iii) Neither the Registrar nor the Issuer shall be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part.

          (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or
exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

          (v) The Issuer shall not be required (A) to issue, to register the transfer of or to exchange
any Notes during a period beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part,
(C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding
Interest Payment Date or (D) to register the transfer of or to exchange any Notes selected for
redemption or tendered (and not withdrawn) for repurchase in connection with a Change of Control
Offer or an Asset Sale Offer.

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          (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any
Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if
any) and interest (including Special Interest, if any) on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.

          (vii) Upon surrender for registration of transfer of any Note at the office or agency of the
Issuer designated pursuant to Section 4.02 hereof, the Issuer shall execute, and the Trustee shall
authenticate and mail, in the name of the designated transferee or transferees, one or more
replacement Notes of any authorized denomination or denominations of a like aggregate principal
amount.

          (viii) At the option of the Holder, subject to Section 2.06(a) hereof, Notes may be exchanged
for other Notes of any authorized denomination or denominations of a like aggregate principal
amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global
Notes or Definitive Notes are so surrendered for exchange, the Issuer shall execute, and the
Trustee shall authenticate and mail, the replacement Global Notes and Definitive Notes to which the
Holder making the exchange is entitled in accordance with the provisions of Section 2.02 hereof.

          (ix) All certifications, certificates and Opinions of Counsel required to be submitted to the
Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.

Section 2.07 Replacement Notes.

          If either (x) any mutilated Note is surrendered to the Trustee, the Registrar or the Issuer,
or (y) if the Issuer and the Trustee receive evidence to their satisfaction of the ownership and
destruction, loss or theft of any Note, then the Issuer shall issue and the Trustee, upon receipt
of an Authentication Order and satisfaction of any other requirements of the Trustee, shall
authenticate a replacement Note. If required by the Trustee or the Issuer, an indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to
protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of
them may suffer if a Note is replaced. The Issuer may charge for its expenses in replacing a Note.

          Every replacement Note is a contractual obligation of the Issuer and shall be entitled to all
of the benefits of this Indenture equally and proportionately with all other Notes duly issued
hereunder.

Section 2.08 Outstanding Notes.

          The Notes outstanding at any time are all the Notes authenticated by the Trustee except for
those canceled by it, those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof, and those described
in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does
not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds such Note.

          If a Note is replaced pursuant to Section 2.07 hereof, such Note shall cease to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide
purchaser.

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          If the principal amount of any Note is considered paid under Section 4.01 hereof, such Note
shall cease to be outstanding and interest thereon shall cease to accrue.

          If the Paying Agent (other than the Issuer, a Subsidiary or an Affiliate of any thereof)
holds, on a redemption date or maturity date, money sufficient to pay any Notes payable on such
date, then such Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest on and after such date.

Section 2.09 Treasury Notes.

          In determining whether the Holders of the required principal amount of Notes have concurred in
any direction, waiver or consent, Notes owned by the Issuer or any Affiliate of the Issuer, shall
be considered as though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a
Responsible Officer of the Trustee knows are so owned shall be so disregarded. Notes so owned which
have been pledged in good faith shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent
with respect to such pledged Notes and that the pledgee is not the Issuer or any obligor upon the
Notes or any Affiliate of the Issuer or such other obligor.

Section 2.10 Temporary Notes.

          Until certificates representing Notes are ready for delivery, the Issuer may prepare and the
Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form of certificated Notes but may have variations that the
Issuer considers appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate
definitive Notes in exchange for temporary Notes.

          Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to
all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this
Indenture.

Section 2.11 Cancellation.

          The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and
Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or
the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall dispose of cancelled Notes (subject to the
record retention requirement of the Exchange Act) in its customary manner. Certification of the
disposal of all cancelled Notes shall be delivered to the Issuer upon its request therefor. The
Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.

Section 2.12 Defaulted Interest.

          If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted
interest to the Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Issuer shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Issuer

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shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such defaulted interest as provided in this
Section 2.12. The Trustee shall fix or cause to be fixed each such special record date and payment
date; provided that no such special record date shall be less than 10 days prior to the
related payment date for such defaulted interest. The Trustee shall notify the Issuer of such
special record date promptly, and in any event at least 20 days before such special record date. At
least 15 days before the special record date, the Issuer (or, upon the written request of the
Issuer, the Trustee in the name and at the expense of the Issuer) shall mail or cause to be mailed,
first-class postage prepaid, to each Holder a notice at his or her address as it appears in the
Note Register that states the special record date, the related payment date and the amount of such
interest to be paid.

          Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note
delivered under this Indenture upon registration of transfer of, in exchange for or in lieu of any
other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried
by such other Note.

Section 2.13 CUSIP Numbers.

          The Issuer in issuing the Notes may use CUSIP numbers (if then generally in use) and, if so,
the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders;
provided , that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in any notice of
redemption and that reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.
The Issuer will as promptly as practicable notify the Trustee of any change in the CUSIP numbers.

ARTICLE 3

REDEMPTION

Section 3.01 Notices to Trustee.

          If the Issuer elects to redeem Notes pursuant to Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer’s
Certificate setting forth (i) the paragraph or subparagraph of such Notes and/or Section of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of the Senior Cash Pay Notes and/or Senior Toggle Notes, as the case may be, to be
redeemed and (iv) the redemption price.

Section 3.02 Selection of Notes To Be Redeemed or Purchased.

          If less than all of the Senior Cash Pay Notes and/or Senior Toggle Notes, as the case may be,
are to be redeemed or purchased in an offer to purchase at any time, the Registrar shall select the
Notes to be redeemed or purchased (a) if such Notes are listed on any national securities exchange,
in compliance with the requirements of the principal national securities exchange on which such
Notes are listed or (b) on a pro rata basis to the extent practicable or, to the
extent that selection on a pro rata basis is not practicable for any reason, by lot
or by such other method as the Registrar shall deem appropriate or as required by the rules of the
Depositary. In the event of partial redemption or purchase by lot, the particular Notes to be
redeemed or purchased shall be selected, unless otherwise provided herein, not less than 30 nor
more than 60 days prior to the redemption date by the Registrar from the outstanding Notes not
previously called for redemption or purchase.

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          The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption
or purchase and, in the case of any Note selected for partial redemption or purchase, the principal
amount thereof to be redeemed or purchased. Notes and portions of Notes selected shall be in
amounts of $2,000 or integral multiples of $1,000; no Notes of $2,000 or less can be redeemed in
part (other than PIK Notes, which may be redeemed in minimum amounts of $1.00 and integral
multiples thereof), except that if all of the Notes of a Holder are to be redeemed or purchased,
the entire outstanding amount of Notes held by such Holder, even if not in a principal amount of at
least $2,000 or an integral multiple of $1,000, shall be redeemed or purchased. Except as provided
in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption
or purchase also apply to portions of Notes called for redemption or purchase.

Section 3.03 Notice of Redemption.

          Subject to Section 3.09 hereof, the Issuer shall mail or cause to be mailed by first-class
mail, postage prepaid, notices of redemption at least 30 days but not more than 60 days before the
purchase or redemption date to each Holder of Notes to be redeemed at such Holder’s registered
address, to the Trustee to forward to each Holder of Notes at such Holder’s registered address, or
shall otherwise deliver on such timeframe such notice in accordance with the procedures of DTC,
except that redemption notices may be mailed more than 60 days prior to a redemption date if the
notice is issued in connection with Article 8 or Article 12 hereof.

          The notice shall identify the Notes to be redeemed and shall state:

     (a) the redemption date;

     (b) the redemption price;

     (c) that if any Note is to be redeemed in part only, the portion of the principal amount of
that Note that is to be redeemed and that, after the redemption date upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original
Note representing the same indebtedness to the extent not redeemed will be issued in the name of
the Holder of the Notes upon cancellation of the original Note;

     (d) the name and address of the Paying Agent;

     (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the
redemption price;

     (f) that, unless the Issuer defaults in making such redemption payment, interest on Notes
called for redemption ceases to accrue on and after the redemption date;

     (g) the paragraph or subparagraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and

     (h) that no representation is made as to the correctness or accuracy of the CUSIP number,
if any, listed in such notice or printed on the Notes.

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          At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name
and at its expense; provided that the Issuer shall have delivered to the Trustee, at least
2 Business Days before notice of redemption is required to be mailed or caused to be mailed to
Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee),
an Officer’s Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.

Section 3.04 Effect of Notice of Redemption.

          Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the redemption price
(except as provided in Section 3.07 hereof and in Section 5 of the Notes). The notice, if mailed in
a manner herein provided, shall be conclusively presumed to have been given, whether or not the
Holder receives such notice. In any case, failure to give such notice by mail or any defect in the
notice to the Holder of any Note designated for redemption in whole or in part shall not affect the
validity of the proceedings for the redemption of any other Note. Subject to Section 3.05 hereof,
on and after the redemption date, interest shall cease to accrue on Notes or portions of Notes
called for redemption.

Section 3.05 Deposit of Redemption or Purchase Price.

          On the redemption or purchase date, the Issuer shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid
interest (including Special Interest, if any) on all Notes to be redeemed or purchased on that
date. The Trustee or the Paying Agent shall promptly return to the Issuer any money deposited with
the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the
redemption price of, and accrued and unpaid interest (including Special Interest, if any) on, all
Notes to be redeemed or purchased.

          If the Issuer complies with the provisions of the preceding paragraph, on and after the
redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes
called for redemption or purchase. If a Note is redeemed or purchased on or after a Record Date but
on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the
redemption or purchase date shall be paid to the Person in whose name such Note was registered at
the close of business on such Record Date. If any Note called for redemption or purchase shall not
be so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply
with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption
or purchase date until such principal is paid, and to the extent lawful on any interest accrued to
the redemption or purchase date not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

          Upon surrender of a Note that is redeemed or purchased in part, the Issuer shall issue and the
Trustee shall authenticate for the Holder at the expense of the Issuer a new Note equal in
principal amount to the unredeemed or unpurchased portion of the Note surrendered representing the
same indebtedness to the extent not redeemed or purchased; provided , that each new Note
will be in a principal amount of $2,000 or an integral multiple of $1,000. It is understood that,
notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an
Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new
Note.

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Section 3.07 Optional Redemption.

          (a) At any time prior to August 1, 2012, the Notes may be redeemed or purchased (by the Issuer
or any other Person), in whole or in part, upon notice as provided in Section 3.03 hereof, at a
redemption price equal to 100.0% of the principal amount of such Notes redeemed plus the Applicable
Premium as of the date of redemption (the “ Redemption
Date ”) and, without duplication,
accrued and unpaid interest to the Redemption Date, subject to the rights of Holders of such Notes
on the relevant Record Date to receive interest due on the relevant Interest Payment Date.

          (b) Until August 1, 2011, the Issuer may, at its option, on one or more occasions, upon notice
as provided in Section 3.03 hereof, redeem up to 40.0% of the then outstanding aggregate principal
amount of each of (i) the Senior Cash Pay Notes at a redemption price equal to 110.750% of the
aggregate principal amount thereof, and (ii) the Senior Toggle Notes (and any PIK Notes issued in
respect thereof) at a redemption price equal to 111.00% of the aggregate principal amount thereof,
in each case, plus accrued and unpaid interest thereon to the applicable Redemption Date, subject
to the right of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date, with the net cash proceeds of one or more Equity Offerings to the
extent such net cash proceeds are received by or contributed to the Issuer; provided that
at least 50.0% of the sum of the aggregate principal amount of the Senior Cash Pay Notes or Senior
Toggle Notes, as applicable, originally issued under this Indenture and any Additional Notes that
are Senior Cash Pay Notes or Senior Toggle Notes, as applicable, issued under this Indenture after
the Issue Date (but excluding PIK Notes in the case of the Senior Toggle Notes) remains outstanding
immediately after the occurrence of each such redemption; provided further that
each such redemption occurs within 180 days of the date of closing of each such Equity Offering.
Notice of any redemption upon any Equity Offering may be given prior to such redemption, and any
such redemption or notice may, at the Issuer’s discretion, be subject to one or more conditions
precedent, including, but not limited to, completion of the related Equity Offering.

          (c) Except pursuant to Sections 3.07(a) and (b), the Notes shall not be redeemable at the
Issuer’s option before August 1, 2012.

          (d) On and after August 1, 2012, each of the Senior Cash Pay Notes and the Senior Toggle Notes
may be redeemed or purchased (by the Issuer or any other Person), at the Issuer’s option, in whole
or in part, upon notice as described in Section 3.03 hereof, at the redemption prices (expressed as
percentages of principal amount of the Senior Cash Pay Notes or Senior Toggle Notes, as applicable,
to be redeemed) set forth below plus accrued and unpaid interest thereon to the applicable
Redemption Date, subject to the right of Holders of record of such Notes on the relevant Record
Date to receive interest due on the relevant Interest Payment Date, if redeemed during the
twelve-month period beginning on August 1 of each of the years indicated below:

	 	 	 	 	 	 	 	 	 
	 	 	Senior	 	 	Senior	 
	 	 	Cash Pay Notes	 	 	Toggle	 
	Year	 	Percentage	 	 	Notes Percentage	 
	2012
	 	 	105.375	%	 	 	105.500	%
	2013
	 	 	102.688	%	 	 	102.750	%
	2014 and thereafter
	 	 	100.000	%	 	 	100.000	%

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          (e) Any redemption of the Notes pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

          (a) On
August 1, 2015 (the “ Special Redemption Date ”), the Issuer shall be required
to redeem for cash a portion (the “ Special Redemption
Amount ”) of Senior Toggle Notes
equal to the product of (x) $30,000,000 and (y) the lesser of (i) one and (ii) a fraction the
numerator of which is the aggregate principal amount outstanding on the Special Redemption Date of
the Senior Toggle Notes for United States federal income tax purposes and the denominator of which
is $1,330,000,000, as determined by the Issuer in good faith and rounded to the nearest $2,000
(such redemption, the “ Special Redemption ”). The redemption price for each portion of a
Senior Toggle Note so redeemed pursuant to the Special Redemption will equal 100% of the principal
amount of such portion plus any accrued and unpaid interest thereon to the Special Redemption Date.

          (b) On the first Interest Payment Date following the fifth anniversary of the “issue date” as
defined in Treasury Regulation Section 1.1273-2(a)(2) of each series of Notes ( i.e., the
Senior Cash Pay Notes and Senior Toggle Notes), and on each Interest Payment Date thereafter, the
Issuer shall redeem a portion of the principal amount of each then outstanding Note in such series
in an amount equal to the AHYDO Catch-Up Payment for such Interest Payment Date with respect to
such Note. The “ AHYDO Catch-Up Payment ” for a particular Interest Payment Date with
respect to each Note in a series means the minimum principal prepayment sufficient to ensure that
as of the close of such Interest Payment Date, the aggregate amount which would be includible in
gross income with respect to such Note before the close of such Interest Payment Date (as described
in Section 163(i)(2)(A) of the Code) does not exceed the sum (described in Section 163(i)(2)(B) of
the Code) of (i) the aggregate amount of interest to be paid on such Note (including for this
purpose any AHYDO Catch-Up Payments) before the close of such Interest Payment Date plus (ii) the
product of the issue price of such Note as defined in Section 1273(b) of the Code ( i.e. ,
the first price at which a substantial amount of the Notes in such series is sold, disregarding for
this purpose sales to bond houses, brokers or similar persons acting in the capacity of
underwriters, placement agents or wholesalers) and its yield to maturity (within the meaning of
Section 163(i)(2)(B) of the Code), with the result that such Note is not treated as having
“significant original issue discount” within the meaning of Section 163(i)(1)(C) of the Code;
provided , however , for avoidance of doubt, that if the yield to maturity of such
Note is less than the amount described in Section 163(i)(1)(B) of the Code, the AHYDO Catch-Up
Payment shall be zero for each Interest Payment Date with respect to such Note. This
Section 3.08(b) shall be interpreted consistently with the intent that no Senior Cash Pay Note and
that no Senior Toggle Note shall be an “applicable high yield discount obligation” (an “
AHYDO ”) within the meaning of Section 163(i)(1) of the Code. The computations and
determinations required in connection with any AHYDO Catch-Up Payment shall be made by the Issuer
in its good faith reasonable discretion and shall be binding upon the Holders absent manifest
error.

          (c) The Special Redemption and any AHYDO Catch-Up Payments shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof. The Issuer shall not be required to make any other
mandatory redemption or sinking fund payments with respect to the Notes.

Section 3.09 Offers To Repurchase by Application of Excess Proceeds.

          (a) The Issuer shall follow the procedures specified in clauses (b) through (f) of this
Section 3.09 for any Asset Sale Offer commenced pursuant to Section 4.10 hereof.

          (b) An Asset Sale Offer shall remain open for a period of 20 Business Days following its
commencement and no longer, except to the extent that a longer period is required by applicable

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law (the
“ Offer Period ”). No later than five Business Days after the termination of the
Offer Period (the “ Purchase Date ”), the Issuer shall apply all Excess Proceeds (the “
Offer Amount ”) to the purchase of Notes and, if required, Pari Passu Indebtedness (on a
pro rata basis, if applicable), or, if less than the Offer Amount has been
tendered, all Notes and Pari Passu Indebtedness tendered in response to the Asset Sale Offer.
Payment for any Notes so purchased shall be made in the same manner as interest payments are made.

          (c) If the Purchase Date is on or after a Record Date and on or before the related Interest
Payment Date, any accrued and unpaid interest and Special Interest, if any, up to but excluding the
Purchase Date, shall be paid to the Person in whose name a Note is registered at the close of
business on such Record Date, and no additional interest shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.

          (d) Upon the commencement of an Asset Sale Offer, the Issuer shall send, by first-class mail,
a notice to each of the Holders, with a copy to the Trustee and the Registrar, or otherwise in
accordance with the procedures of DTC. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:

     (i) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10
hereof and the length of time the Asset Sale Offer shall remain open;

     (ii) the Offer Amount, the purchase price and the Purchase Date;

     (iii) that any Note not tendered or accepted for payment shall continue to accrue interest;

     (iv) that, unless the Issuer defaults in making such payment, any Note accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date;

     (v) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may
elect to have Notes purchased in minimum principal amounts of $2,000 and integral multiples of
$1,000 only (or if PIK Notes are issued and PIK Interest or Partial PIK Interest is paid, in
minimum principal amounts of $1.00 and integral multiples of $1.00 with respect thereto);

     (vi) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall
be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase”
attached to the Note completed, or transfer such Note by book-entry transfer, to the Issuer, the
Depositary, if appointed by the Issuer, or a Paying Agent at the address specified in the notice
at least three days before the Purchase Date;

     (vii) that Holders shall be entitled to withdraw their election if the Issuer, the
Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of
the Offer Period, a telegram, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Note purchased;

     (viii) that, if the aggregate principal amount of Notes and Pari Passu Indebtedness
surrendered by the holders thereof exceeds the Offer Amount, the Registrar shall select the
Notes and such Pari Passu Indebtedness to be purchased on a pro rata basis based
on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered
(with such adjustments

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as may be deemed appropriate by the Registrar so that only Notes in denominations of $2,000 or
integral multiples of $1,000 (or if PIK Notes are issued and PIK Interest or Partial PIK
Interest is paid, in minimum principal amounts of $1.00 and integral multiples of $1.00 with
respect thereto) shall be purchased); and

     (ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal
in principal amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer) representing the same indebtedness to the extent not repurchased.

          (e) On or before the Purchase Date, the Issuer shall, to the extent lawful, (1) accept for
payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or
portions thereof validly tendered pursuant to the Asset Sale Offer, or if less than the Offer
Amount has been tendered, all Notes tendered and (2) deliver or cause to be delivered to the
Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate
principal amount of Notes or portions thereof so tendered.

          (f) The Issuer, the Depositary or the Paying Agent, as the case may be, shall promptly mail or
deliver to each tendering Holder an amount equal to the purchase price of the Notes properly
tendered by such Holder and accepted by the Issuer for purchase, and the Issuer shall promptly
issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and
mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder (it being
understood that, notwithstanding anything in this Indenture to the contrary, no Opinion of Counsel
or Officer’s Certificate is required for the Trustee to authenticate and mail or deliver such new
Note) in a principal amount equal to any unpurchased portion of the Note surrendered representing
the same indebtedness to the extent not repurchased; provided that each such new Note shall
be in a principal amount of $2,000 or an integral multiple of $1,000 (or if PIK Notes are issued
and PIK Interest or Partial PIK Interest is paid, in minimum principal amounts of $1.00 and
integral multiples of $1.00 with respect thereto). Any Note not so accepted for purchase shall be
promptly mailed or delivered by the Issuer to the Holder thereof. The Issuer shall publicly
announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date.

          Other than as specifically provided in this Section 3.09 or Section 4.10 hereof, any purchase
pursuant to this Section 3.09 shall be made pursuant to the applicable provisions of Sections 3.01
through 3.06 hereof.

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes.

          The Issuer shall pay or cause to be paid the principal of, premium, if any, Special Interest,
if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal,
premium, if any, Special Interest, if any, and interest shall be considered paid on the date due if
the Paying Agent, if other than the Issuer or a Subsidiary, holds as of noon Eastern Time on the
due date money deposited by the Issuer in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due; provided that with
respect to the Senior Toggle Notes, for any interest period, if the Issuer elects to pay interest
on the Senior Toggle Notes entirely by increasing the principal amount of the outstanding Senior
Toggle Notes or by issuing PIK Notes (“ PIK Interest ”) or paying 50.0% of such interest in
the form of PIK Interest (“ Partial PIK Interest ”), in each case, in the matter provided
in the Senior Toggle Notes, then all such interest paid in the form of PIK Interest or Partial PIK

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Interest shall be considered paid or duly provided for, for all purposes of this Indenture, and
shall not be considered overdue. If a payment date is not a Business Day, payment may be made on
the next succeeding day that is a Business Day, and for the avoidance of doubt, no additional
interest or other amounts shall be payable in respect of the interest period for which such payment
is made as a result of such extension of time.

          The Issuer shall pay all Special Interest, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.

          The Issuer shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and Special Interest
(without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02 Maintenance of Office or Agency.

          The Issuer shall maintain in the Borough of Manhattan, City of New York an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee, Registrar or Transfer Agent)
where Notes may be surrendered for registration of transfer or for exchange or presented for
payment and where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any time the Issuer shall
fail to maintain any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

          The Issuer may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided that no such designation or rescission shall in any
manner relieve the Issuer of its obligation to maintain an office or agency in the Borough of
Manhattan, City of New York for such purposes. The Issuer shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location of any such other
office or agency.

          The Issuer hereby initially designates the office of the Trustee located at Law Debenture
Trust Company of New York, 400 Madison Avenue, Suite 4D, New York, NY 10017, as one such office or
agency of the Issuer in accordance with Section 2.03 hereof.

Section 4.03 Reports and Other Information.

          (a) Notwithstanding that the Issuer may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on
forms provided for such annual and quarterly reporting pursuant to rules and regulations
promulgated by the SEC, from and after the Issue Date, the Issuer shall file with the SEC no later
than 15 days after the periods set forth below,

     (1) within 90 days (or any other time period then in effect under the rules and regulations
of the Exchange Act with respect to the filing of a Form 10-K by a non-accelerated filer) after
the end of each fiscal year, annual reports on Form 10-K, or any successor or comparable form,
containing the information required to be contained therein, or required in such successor or
comparable form;

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     (2) within 45 days after the end of each of the first three fiscal quarters of each fiscal
year, reports on Form 10-Q containing all quarterly information that would be required to be
contained in Form 10-Q, or any successor or comparable form;

     (3) promptly from time to time after the occurrence of an event required to be therein
reported, such other reports on Form 8-K, or any successor or comparable form; and

     (4) any other information, documents and other reports which the Issuer would be required
to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

in each case, in a manner that complies in all material respects with the requirements specified in
such form; provided that the Issuer shall not be so obligated to file such reports with the
SEC if the SEC does not permit such filing, in which event the Issuer shall make available such
information to prospective purchasers of Notes, in addition to providing such information to the
Trustee and the Holders of the Notes, in each case within 5 days after the time the Issuer would
have been required to file such information with the SEC as required pursuant to this
Section 4.03(a). To the extent any such information is not furnished within the time periods
specified above in this Section 4.03(a) and such information is subsequently furnished (including
upon becoming publicly available, by filing such information with the SEC), the Issuer shall be
deemed to have satisfied its obligations with respect thereto at such time and any Default with
respect thereto shall be deemed to have been cured; provided , that such cure shall not
otherwise affect the rights of the Holders under Article 6 hereof if Holders of at least 25.0% in
principal amount of the then total outstanding Notes have declared the principal, premium, if any,
interest and any other monetary obligations on all the then outstanding Notes to be due and payable
immediately and such declaration shall not have been rescinded or cancelled prior to such cure. In
addition, to the extent not satisfied by the foregoing, for so long as any Notes are outstanding,
the Issuer shall furnish to Holders and to securities analysts and prospective investors, upon
their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

          (b) In the event that any direct or indirect parent company of the Issuer is or becomes a
Guarantor of the Notes, the Issuer may satisfy its obligations in this Section 4.03 with respect to
financial information relating to the Issuer by furnishing financial information relating to such
parent; provided that the same is accompanied by consolidating information that explains in
reasonable detail the differences between the information relating to such parent, on the one hand,
and the information relating to the Issuer and its Restricted Subsidiaries on a standalone basis,
on the other hand.

          (c) Notwithstanding the foregoing, the requirements of this Section 4.03 shall be deemed
satisfied prior to the commencement of the exchange offer or the effectiveness of the shelf
registration statement by the filing with the SEC of the exchange offer registration statement or
shelf registration statement in accordance with the terms of the Registration Rights Agreement, and
any amendments thereto, with such financial information that satisfies Regulation S-X of the
Securities Act.

Section 4.04 Compliance Certificate.

          (a) The Issuer and each Guarantor (to the extent that such Guarantor is so required under the
Trust Indenture Act) shall deliver to the Trustee, within 120 days after the end of each fiscal
year ending after the Issue Date, a certificate from the principal executive officer, principal
financial officer or principal accounting officer stating that a review of the activities of the
Issuer and its Restricted Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officer with a view to determining whether the Issuer has kept,
observed, performed and fulfilled its obligations under this Indenture, and further stating, as to
such Officer signing such certificate, that to the best of his or her knowledge the Issuer has
kept, observed, performed and fulfilled each and every condition and

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covenant contained in this Indenture during such fiscal year and is not in default in the
performance or observance of any of the terms, provisions, covenants and conditions of this
Indenture (or, if a Default shall have occurred, describing all such Defaults of which he or she
may have knowledge and what action the Issuer is taking or proposes to take with respect thereto).

          (b) When any Default has occurred and is continuing under this Indenture of which the Issuer
is aware, or if the Trustee or the holder of any other evidence of Indebtedness of the Issuer or
any Subsidiary gives any notice or takes any other action with respect to a claimed Default of
which the Issuer is aware, the Issuer shall promptly (which shall be no more than five (5) Business
Days) deliver to the Trustee by registered or certified mail or by facsimile transmission an
Officer’s Certificate specifying such event and what action the Issuer proposes to take with
respect thereto.

Section 4.05 Taxes.

          The Issuer shall pay or discharge, and shall cause each of its Restricted Subsidiaries to pay
or discharge, prior to delinquency, all material taxes, lawful assessments, and governmental levies
except such as are contested in good faith and by appropriate actions or where the failure to
effect such payment or discharge is not adverse in any material respect to the Holders of the
Notes.

Section 4.06 Stay, Extension and Usury Laws.

          The Issuer and each of the Guarantors covenant (to the extent that they may lawfully do so)
that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this Indenture; and the
Issuer and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly
waive all benefit or advantage of any such law, and covenant (to the extent that they may lawfully
do so) that they shall not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Trustee, but shall suffer and permit the execution of every such power
as though no such law has been enacted.

Section 4.07 Limitation on Restricted Payments.

          (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly:

     (I) declare or pay any dividend or make any distribution or any payment having the effect
thereof on account of the Issuer’s or any Restricted Subsidiary’s Equity Interests (in such
Person’s capacity as holder of such Equity Interests), including any dividend or distribution
payable in connection with any merger or consolidation other than:

     (A) dividends or distributions payable solely in Equity Interests (other than
Disqualified Stock) of the Issuer; or

     (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of
any dividend or distribution payable on or in respect of any class or series of securities
issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary of the Issuer, the
Issuer or a Restricted Subsidiary receives at least its pro rata share of
such dividend or distribution in accordance with its Equity Interests in such class or
series of securities;

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     (II) purchase, redeem, defease or otherwise acquire or retire for value any Equity
Interests of the Issuer or any direct or indirect parent of the Issuer, including in connection
with any merger or consolidation;

     (III) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or
retire for value in each case, prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness other than:

     (A) Indebtedness permitted under clause (8) of Section 4.09(b) hereof; or

     (B) the purchase, repurchase or other acquisition of Subordinated Indebtedness of the
Issuer or any Restricted Subsidiary purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one year of the
date of purchase, repurchase or acquisition; or

     (IV) make any Restricted Investment

(all such payments and other actions set forth in clauses (I) through (IV) above being collectively
referred to as “ Restricted Payments ”), unless, at the time of such Restricted Payment:

     (1) no Default shall have occurred and be continuing or would occur as a consequence
thereof;

     (2) immediately after giving effect to such transaction on a pro forma
basis, the Issuer could incur $1.00 of additional Indebtedness pursuant to the Consolidated
Leverage Ratio test set forth in Section 4.09(a) hereof; and

     (3) such Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Issuer and its Restricted Subsidiaries after the Issue Date (including
Restricted Payments permitted by clauses (1), (2) (with respect to the payment of dividends on
Refunding Capital Stock (as defined below) pursuant to clause (c) thereof only), (6)(c) and
(8) of Section 4.07(b) hereof, but excluding all other Restricted Payments permitted by
Section 4.07(b) hereof), is less than the sum of (without duplication):

     (a) 50.0% of the Consolidated Net Income of the Issuer for the period (taken as one
accounting period) beginning on the first day of the fiscal quarter commencing after the
Issue Date to the end of the Issuer’s most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment, or, in the case
such Consolidated Net Income for such period is a deficit, minus 100% of such deficit; plus

     (b) 100% of the aggregate net proceeds (including cash and the fair market value, as
determined in good faith by the Issuer, of marketable securities or other property) received
by the Issuer or a Restricted Subsidiary since immediately after the Issue Date (other
than net cash proceeds to the extent such net cash proceeds have been used to incur
Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of
Section 4.09(b) hereof) from the issue or sale of:

     (i) (A) Equity Interests of the Issuer, including Treasury Capital Stock (as
defined below), but excluding cash proceeds and the fair market value, as determined in
good faith by the Issuer, of marketable securities or other property received from the
sale of:

     (x) Equity Interests to members of management, directors or consultants of the
Issuer, its Restricted Subsidiaries and any direct or indirect parent company of
the Issuer, after the Issue Date to the extent such amounts have been applied to
Restricted Payments made in accordance with clause (4) of Section 4.07(b) hereof;
and

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     (y) Designated Preferred Stock; and

(B) to the extent such proceeds or other property are actually contributed to the
capital of the Issuer or any Restricted Subsidiary, Equity Interests of the Issuer’s
direct or indirect parent companies (excluding contributions of the proceeds from the
sale of Designated Preferred Stock of such companies or contributions to the extent
such amounts have been applied to Restricted Payments made in accordance with clause
(4) of Section 4.07(b) hereof); or

     (ii) debt of the Issuer or any Restricted Subsidiary that has been converted into
or exchanged for such Equity Interests of the Issuer or a direct or indirect parent
company of the Issuer;

provided , however , that this clause (b) shall not include the proceeds
from (W) Refunding Capital Stock (as defined below), (X) Equity Interests or convertible
debt securities sold to the Issuer or a Restricted Subsidiary, as the case may be,
(Y) Disqualified Stock or debt securities that have been converted into Disqualified Stock
or (Z) Excluded Contributions; plus

     (c) 100% of the aggregate amount of net proceeds (including cash and the fair market
value, as determined in good faith by the Issuer, of marketable securities or other
property) contributed to the capital of the Issuer following the Issue Date (other than
(i) net cash proceeds to the extent such net cash proceeds have been used to incur
Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of
Section 4.09(b) hereof, (ii) by a Restricted Subsidiary and (iii) from any Excluded
Contributions); plus

     (d) 100% of the aggregate amount of proceeds (including cash and the fair market value,
as determined in good faith by the Issuer, of marketable securities or other property)
received by the Issuer or a Restricted Subsidiary by means of:

     (i) the sale or other disposition (other than to the Issuer or a Restricted
Subsidiary) of Restricted Investments made by the Issuer or its Restricted Subsidiaries
and repurchases and redemptions of such Restricted Investments from the Issuer or its
Restricted Subsidiaries and repayments of loans or advances, and releases of
guarantees, which constitute Restricted Investments by the Issuer or its Restricted
Subsidiaries, in each case with respect to Restricted Investments made after the Issue
Date; or

     (ii) the sale or other disposition (other than to the Issuer or a Restricted
Subsidiary) of the stock of an Unrestricted Subsidiary or a dividend or distribution
from an Unrestricted Subsidiary after the Issue Date; plus

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     (e) in the case of the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary after the Issue Date, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Issuer in good faith or if such fair market
value may exceed $100,000,000, in writing by an Independent Financial Advisor, at the time
of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary, other than
to the extent such Investment constituted a Permitted Investment.

     (b) Section 4.07(a) hereof shall not prohibit:

     (1) the payment of any dividend within 60 days after the date of declaration thereof, if at
the date of declaration such payment would have complied with the provisions of this Indenture;

     (2) (a) the redemption, repurchase, retirement or other acquisition of any (i) Equity
Interests (“ Treasury Capital Stock ”) or Subordinated Indebtedness of the Issuer or any
Restricted Subsidiary or (ii) Equity Interests of any direct or indirect parent company of the
Issuer, in the case of each of clause (i) and (ii), in exchange for, or out of the proceeds of
the substantially concurrent sale or issuance (other than to the Issuer or a Restricted
Subsidiary) of, Equity Interests of the Issuer, or any direct or indirect parent company of the
Issuer to the extent contributed to the capital of the Issuer or any Restricted Subsidiary (in
each case, other than any Disqualified Stock) (“ Refunding
Capital Stock ”), (b) the
declaration and payment of dividends on the Treasury Capital Stock out of the proceeds of the
substantially concurrent sale (other than to the Issuer or a Restricted Subsidiary) of the
Refunding Capital Stock, and (c) if immediately prior to the retirement of Treasury Capital
Stock, the declaration and payment of dividends thereon was permitted under clause (6)(a) or (b)
of this Section 4.07(b), the declaration and payment of dividends on the Refunding Capital Stock
(other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase,
retire or otherwise acquire any Equity Interests of any direct or indirect parent company of the
Issuer) in an aggregate amount per year no greater than the aggregate amount of dividends per
annum that were declarable and payable on such Treasury Capital Stock immediately prior to such
retirement;

     (3) the redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness of the Issuer or a Restricted Subsidiary made by exchange for, or out of the
proceeds of the substantially concurrent sale of, new Indebtedness of the Issuer or a Restricted
Subsidiary, as the case may be, which is incurred in compliance with Section 4.09 hereof so long
as:

     (a) the principal amount (or accreted value, if applicable) of such new Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus any accrued
and unpaid interest on, the Subordinated Indebtedness being so redeemed, repurchased,
exchanged, acquired or retired for value, plus the amount of any premium required to be paid
under the terms of the instrument governing the Subordinated Indebtedness being so redeemed,
repurchased, exchanged, acquired or retired and any fees and expenses incurred in connection
with such redemption, repurchase, exchange, acquisition or retirement and the issuance of
such new Indebtedness;

     (b) such new Indebtedness is subordinated to the Notes or the applicable Guarantee at
least to the same extent as such Subordinated Indebtedness so purchased, exchanged,
redeemed, repurchased, exchanged, acquired or retired for value;

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     (c) such new Indebtedness has a final scheduled maturity date equal to or later than
the final scheduled maturity date of the Subordinated Indebtedness being so redeemed,
repurchased, exchanged, acquired or retired; and

     (d) such new Indebtedness has a Weighted Average Life to Maturity equal to or greater
than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being
so redeemed, repurchased, acquired or retired;

     (4) a Restricted Payment to pay for the repurchase, retirement or other acquisition for
value of Equity Interests (other than Disqualified Stock) of the Issuer or any of its direct or
indirect parent companies held by any future, present or former employee, director, officer or
consultant of the Issuer, any of its Subsidiaries or any of its direct or indirect parent
companies pursuant to any management equity plan or stock option plan or any other management or
employee benefit plan or agreement (including, for the avoidance of doubt, any principal and
interest payable on any notes issued by the Issuer or any direct or indirect parent company of
the Issuer in connection with any such repurchase, retirement or acquisition), or any stock
subscription or shareholder agreement, including any Equity Interest rolled over by management
of the Issuer or any direct or indirect parent company of the Issuer in connection with the
Transactions; provided , however , that the aggregate Restricted Payments made
under this clause (4) do not exceed in any calendar year $50,000,000 with unused amounts in any
calendar year being carried over to succeeding calendar years subject to a maximum of
$75,000,000 in any calendar year; provided further that such amount in any
calendar year may be increased by an amount not to exceed:

     (a) the cash proceeds from the sale of Equity Interests (other than Disqualified Stock)
of the Issuer and, to the extent contributed to the capital of the Issuer, Equity Interests
of any of the direct or indirect parent companies of the Issuer, in each case to employees,
directors, officers or consultants of the Issuer, any of its Subsidiaries or any of its
direct or indirect parent companies that occurs after the Issue Date (other than Equity
Interests the proceeds of which are used to fund the Transactions), to the extent the cash
proceeds from the sale of such Equity Interests have not otherwise been applied to the
payment of Restricted Payments by virtue of clause (3) of Section 4.07(a) hereof;
plus

     (b) the cash proceeds of key man life insurance policies received by the Issuer (or by
any direct or indirect parent company to the extent actually contributed in cash to the
Issuer) or any of its Restricted Subsidiaries after the Issue Date; less

     (c) the amount of any Restricted Payments previously made with the cash proceeds
described in clauses (a) and (b) of this clause (4);

and provided further that cancellation of Indebtedness owing to the Issuer or
any Restricted Subsidiary from employees, directors, officers or consultants of the Issuer, any
of its Subsidiaries or its direct or indirect parent companies in connection with a repurchase
of Equity Interests of the Issuer or any of the Issuer’s direct or indirect parent companies
will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other
provision of this Indenture;

     (5) the declaration and payment of dividends to holders of any class or series of
Disqualified Stock of the Issuer or any of its Restricted Subsidiaries issued in accordance with
Section 4.09 hereof;

     (6) (a) the declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by the Issuer or any of its
Restricted

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Subsidiaries after the Issue Date, provided that the amount of dividends paid pursuant
to this clause (a) shall not exceed the aggregate amount of cash actually received by the Issuer
or a Restricted Subsidiary from the issuance of such Designated Preferred Stock;

     (b) a Restricted Payment to a direct or indirect parent company of the Issuer, the proceeds
of which will be used to fund the payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) of such parent corporation issued
after the Issue Date, provided that the amount of Restricted Payments paid pursuant to
this clause (b) shall not exceed the aggregate amount of cash actually contributed to the
capital of the Issuer from the sale of such Designated Preferred Stock; or

     (c) the declaration and payment of dividends on Refunding Capital Stock that is Preferred
Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this
Section 4.07(b);

provided , however , that, in the case of each of (a), (b) and (c) of this
clause (6), for the most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of issuance of such Designated Preferred
Stock or the declaration of such dividends on Refunding Capital Stock that is Preferred Stock,
after giving effect to such issuance or declaration on a pro forma basis, the
Issuer could incur $1.00 of additional Indebtedness pursuant to the Consolidated Leverage Ratio
test set forth in Section 4.09(a) hereof;

     (7) repurchases of Equity Interests deemed to occur upon exercise of stock options or
warrants if such Equity Interests represent a portion of the exercise price of such options or
warrants;

     (8) the declaration and payment of dividends on the Issuer’s common stock (or a Restricted
Payment to any direct or indirect parent entity to fund a payment of dividends on such entity’s
common stock), following the first public Equity Offering of such common stock after the Issue
Date, of up to 6% per annum of the net cash proceeds received by (or, in the case of a
Restricted Payment to a direct or indirect parent entity, contributed to the capital of) the
Issuer in or from any such public Equity Offering;

     (9) Restricted Payments that are made with Excluded Contributions;

     (10) other Restricted Payments in an aggregate amount taken together with all other
Restricted Payments made pursuant to this clause (10) not to exceed $400,000,000;

     (11) distributions or payments of Receivables Fees and Securitization Fees;

     (12) any Restricted Payment used to fund or effect the Transactions and the fees and
expenses related thereto or owed to Affiliates, in each case to the extent permitted by Section
4.11 hereof, and any payments to holders of Equity Interests of the Issuer (immediately prior to
giving effect to the Transactions) in connection with, or as a result of, their exercise of
appraisal rights and the settlement of any claims or actions (whether actual, contingent or
potential) with respect thereto;

     (13) the repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to the provisions similar to those set forth in Sections 4.10
and 4.14 hereof; provided that all Notes tendered by Holders in connection with a Change
of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired
for value;

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     (14) the declaration and payment of dividends or the payment of other distributions by the
Issuer or a Restricted Subsidiary to, or the making of loans or advances to, any of the Issuer’s
direct or indirect parent companies in amounts required for any direct or indirect parent
companies to pay, in each case without duplication,

     (a) franchise taxes and other fees, taxes and expenses required to maintain their legal
existence;

     (b) federal, foreign, state and local income or franchise and similar taxes;
provided that, in each fiscal year, the amount of such payments shall not exceed the
amount that the Issuer and its Restricted Subsidiaries would be required to pay in respect
of federal, foreign, state and local income or franchise taxes if such entities were
corporations paying taxes separately from any parent entity at the highest combined
applicable federal, foreign, state, local or franchise tax rate for such fiscal year (and to
the extent of any amounts actually received in cash from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries);

     (c) customary salary, bonus and other benefits payable to directors, officers and
employees of any direct or indirect parent company of the Issuer to the extent such
salaries, bonuses and other benefits are attributable to the ownership or operation of the
Issuer and its Restricted Subsidiaries;

     (d) general operating and overhead costs and expenses of any direct or indirect parent
company of the Issuer to the extent such costs and expenses are attributable to the
ownership or operation of the Issuer and its Restricted Subsidiaries;

     (e) amounts payable to the Investors pursuant to the Sponsor Management Agreement;

     (f) fees and expenses other than to Affiliates of the Issuer related to (i) any equity
or debt offering of such parent entity (whether or not successful) and (ii) any Investment
otherwise permitted under this covenant (whether or not successful);

     (g) cash payments in lieu of issuing fractional shares in connection with the exercise
of warrants, options or other securities convertible into or exchangeable for Equity
Interests of the Issuer or any direct or indirect parent of the Issuer; and

     (h) to finance Investments otherwise permitted to be made pursuant to this covenant;
provided that (A) such Restricted Payment shall be made substantially concurrently
with the closing of such Investment; (B) such direct or indirect parent company shall,
immediately following the closing thereof, cause (1) all property acquired (whether assets
or Equity Interests) to be contributed to the capital of the Issuer or one of its Restricted
Subsidiaries or (2) the merger of the Person formed or acquired into the Issuer or one of
its Restricted Subsidiaries (to the extent not prohibited by Section 5.01 hereof) in order
to consummate such Investment; (C) such direct or indirect parent company and its Affiliates
(other than the Issuer or a Restricted Subsidiary) receives no consideration or other
payment in connection with such transaction except to the extent the Issuer or a Restricted

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Subsidiary could have given such consideration or made such payment in compliance with this
Indenture; (D) any property received by the Issuer shall not increase amounts available for
Restricted Payments pursuant to clause (3) of Section 4.07(a) hereof; and (E) such
Investment shall be deemed to be made by the Issuer or a Restricted Subsidiary by another
provision of this covenant (other than pursuant to clause (10) hereof) or pursuant to the
definition of “Permitted Investments” (other than clause (9) thereof);

     (15) the distribution, by dividend or otherwise, of shares of Capital Stock of, or
Indebtedness owed to the Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries;

     (16) payments or distributions to dissenting stockholders pursuant to applicable law,
pursuant to or in connection with a consolidation, merger or transfer of all or substantially
all of the assets of the Issuer and its Restricted Subsidiaries, taken as a whole, that complies
with Section 5.01 hereof; provided that as a result of such consolidation, merger or
transfer of assets, the Issuer shall make a Change of Control Offer and that all Notes tendered
by Holders in connection with such Change of Control Offer have been repurchased, redeemed or
acquired for value;

     (17) any Restricted Payments relating to a Securitization Subsidiary that, in the good
faith determination of the Issuer, are necessary or advisable to effect any Qualified
Securitization Financing; and

     (18) purchase Equity Interests of CCO not owned by the Issuer or its Restricted
Subsidiaries (whether by tender offer, open market purchase, merger or otherwise);

provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (10), (15) and (17) of this Section 4.07(b), no Default
shall have occurred and be continuing or would occur as a consequence thereof.

          (c) The Issuer shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary
except pursuant to the second to last sentence of the definition of “Unrestricted Subsidiary.” For
purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding
Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the
Subsidiary so designated shall be deemed to be Investments in an amount determined as set forth in
the last sentence of the definition of “Investments.” Such designation will be permitted only if a
Restricted Payment in such amount would be permitted at such time under this Section 4.07 or
pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.

          (d) Notwithstanding the foregoing provisions of this Section 4.07, the Issuer shall not, and
shall not permit any of its Restricted Subsidiaries to, pay any cash dividend or make any cash
distribution on, or in respect of, the Issuer’s Capital Stock or purchase for cash or otherwise
acquire for cash any Capital Stock of the Issuer or any direct or indirect parent of the Issuer for
the purpose of paying any cash dividend or making any cash distribution to, or acquiring Capital
Stock of any direct or indirect parent of the Issuer for cash from, the Investors, or guarantee any
Indebtedness of any Affiliate of the Issuer for the purpose of paying such dividend, making such
distribution or so acquiring such Capital Stock to or from the Issuer, in each case by means of
utilization of the cumulative Restricted Payment credit provided by Section 4.07(a) hereof, or the
exceptions provided by clauses (1) or (10) of Section 4.07(b) hereof or clause (12) of the
definition of “Permitted Investments,” unless the most recent interest payment made by the Issuer
was a Cash Interest payment and the Issuer has not made a PIK Election with respect to the next
interest payment due and, in each case, such payment is otherwise in compliance with this covenant.

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Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

          (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries that are not
Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to:

     (1) (A) pay dividends or make any other distributions to the Issuer or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or

     (B) pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

     (2) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

     (3) sell, lease or transfer any of its properties or assets to the Issuer or any of its
Restricted Subsidiaries.

     (b) The restrictions in Section 4.08(a) hereof shall not apply to encumbrances or restrictions
existing under or by reason of:

     (1) contractual encumbrances or restrictions in effect on the Issue Date, including without
limitation, pursuant to the Existing Senior Notes;

     (2) (x) the Senior Credit Facilities and the related documentation, (y) this Indenture, the
Notes and the Guarantees and (z) the Exchange Notes and the related indenture and guarantees;

     (3) purchase money obligations for property acquired in the ordinary course of business and
Capital Lease Obligations that impose restrictions of the nature discussed in clause (3) of
Section 4.08(a) hereof on the property so acquired;

     (4) applicable law or any applicable rule, regulation or order;

     (5) any agreement or other instrument of a Person acquired by or merged, consolidated or
amalgamated with or into the Issuer or any Restricted Subsidiary thereof in existence at the
time of such acquisition, merger, consolidation or amalgamation (but, in any such case, not
created in contemplation thereof), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person so acquired and its
Subsidiaries, or the property or assets of the Person so acquired and its Subsidiaries or the
property or assets so assumed;

     (6) contracts for the sale of assets, including customary restrictions with respect to a
Subsidiary of (i) the Issuer or (ii) a Restricted Subsidiary, pursuant to an agreement that has
been entered into for the sale or disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary that impose restrictions on the assets to be sold;

     (7) Secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.09 and
4.12 hereof that limit the right of the debtor to dispose of the assets securing such
Indebtedness;

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     (8) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business;

     (9) other Indebtedness, Disqualified Stock or Preferred Stock of Foreign Subsidiaries
permitted to be incurred subsequent to the Issue Date pursuant to Section 4.09 hereof;

     (10) customary provisions in any joint venture agreement or other similar agreement
relating solely to such joint venture;

     (11) customary provisions contained in any lease, sublease, license, sublicense or similar
agreement, including with respect to intellectual property, and other agreements, in each case,
entered into in the ordinary course of business;

     (12) any encumbrances or restrictions created in connection with any Receivables Facility
or Qualified Securitization Financing that, in the good faith determination of the Issuer, are
necessary or advisable to effect such Receivables Facility or Qualified Securitization
Financing; and

     (13) any encumbrances or restrictions of the type referred to in clauses (1), (2) and (3)
of Section 4.08(a) hereof imposed by any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the contracts, instruments
or obligations referred to in clauses (1) through (12) of this Section 4.08(b); provided
that such amendments, modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Issuer, no more restrictive
with respect to such encumbrance and other restrictions taken as a whole than those prior to
such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing.

Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock.

          (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (collectively, “ incur “ and collectively, an “
incurrence “) with respect to any Indebtedness (including Acquired Indebtedness) and the
Issuer and the Restricted Guarantors shall not issue any shares of Disqualified Stock and shall not
permit any Restricted Subsidiary that is not a Guarantor to issue any shares of Disqualified Stock
or Preferred Stock; provided , however , that the Issuer and the Restricted
Guarantors may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified
Stock, and any Restricted Subsidiary that is not a Guarantor may incur Indebtedness (including
Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred Stock, if
the Consolidated Leverage Ratio at the time such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued would have been no greater than 7.5 to 1.0
determined on a pro forma basis (including a pro forma application
of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of
proceeds therefrom had occurred at the beginning of the most recently ended four fiscal quarters
for which internal financial statements are available; provided , however , that
Restricted Subsidiaries that are not Guarantors may not incur Indebtedness or issue Disqualified
Stock or Preferred Stock if, after giving pro forma effect to such incurrence or
issuance (including a pro forma application of the net proceeds therefrom), more
than an aggregate of $750,000,000 of Indebtedness or Disqualified Stock or Preferred Stock of
Restricted Subsidiaries that are not Guarantors is outstanding pursuant to this paragraph at such
time.

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     (b) Section 4.09(a) hereof shall not apply to:

     (1) the incurrence of Indebtedness under Credit Facilities by the Issuer or any of its
Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’
acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a
principal amount equal to the face amount thereof), up to an aggregate principal amount of
$16,770,638,000 outstanding at any one time, less the aggregate amount of proceeds received from
the sale of any Securitization Assets made since the Issue Date;

     (2) the incurrence by the Issuer and any Restricted Guarantor of Indebtedness represented
by the Notes (including any PIK Notes and any Guarantee, but excluding any Additional Notes);

     (3) the incurrence by the Issuer and any Restricted Guarantor of Indebtedness represented
by the Exchange Notes and related guarantees of the Exchange Notes to be issued in exchange for
the Notes (including any PIK Notes but excluding any Additional Notes) and Guarantees pursuant
to the Registration Rights Agreement;

     (4) Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Issue
Date (other than Indebtedness described in clauses (1) and (2) of this Section 4.09(b));

     (5) Indebtedness (including Capitalized Lease Obligations) incurred or Disqualified Stock
and Preferred Stock issued by the Issuer or any of its Restricted Subsidiaries, to finance the
purchase, lease or improvement of property (real or personal) or equipment that is used or
useful in a Similar Business, whether through the direct purchase of assets or the Equity
Interests of any Person owning such assets in an aggregate principal amount, together with any
Refinancing Indebtedness in respect thereof and all other Indebtedness incurred and Disqualified
Stock and/or Preferred Stock issued and outstanding under this clause (5), not to exceed
$150,000,000 at any time outstanding; so long as such Indebtedness exists at the date of such
purchase, lease or improvement, or is created within 270 days thereafter;

     (6) Indebtedness incurred by the Issuer or any Restricted Subsidiary constituting
reimbursement obligations with respect to bankers’ acceptances and letters of credit issued in
the ordinary course of business, including letters of credit in respect of workers’ compensation
claims, or other Indebtedness with respect to reimbursement type obligations regarding workers’
compensation claims; provided , however , that upon the drawing of such bankers’
acceptances and letters of credit or the incurrence of such Indebtedness, such obligations are
reimbursed within 30 days following such drawing or incurrence;

     (7) Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary providing
for indemnification, adjustment of purchase price or similar obligations, in each case, incurred
or assumed in connection with the disposition of any business, assets or a Subsidiary, other
than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that such Indebtedness is not reflected on the balance sheet (other than by
application of FIN 45 or in respect of acquired contingencies and contingent consideration
recorded under FAS 141(R)) of the Issuer or any Restricted Subsidiary (contingent obligations
referred to in a footnote to financial statements and not otherwise reflected on the balance
sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (7));

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     (8) Indebtedness of the Issuer to a Restricted Subsidiary or a Restricted Subsidiary to the
Issuer or another Restricted Subsidiary; provided that any such Indebtedness (other than
pursuant to the CCU Mirror Note) owing by the Issuer or a Guarantor to a Restricted Subsidiary
that is not a Guarantor is expressly subordinated in right of payment to the Notes or the
Guarantee of the Notes, as the case may be; provided further that any subsequent
issuance or transfer of any Capital Stock or any other event which results in any Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Issuer or another Restricted Subsidiary or any pledge of such
Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence
of such Indebtedness not permitted by this clause (8);

     (9) shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another
Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock
(except to the Issuer or a Restricted Subsidiary or pursuant to any pledge of such Preferred
Stock constituting a Permitted Lien) shall be deemed in each case to be an issuance of such
shares of Preferred Stock not permitted by this clause (9);

     (10) Hedging Obligations (excluding Hedging Obligations entered into for speculative
purposes) for the purpose of limiting interest rate risk with respect to any Indebtedness
permitted to be incurred pursuant to this covenant, exchange rate risk or commodity pricing
risk;

     (11) obligations in respect of self-insurance, customs, stay, performance, bid, appeal and
surety bonds and completion guarantees and other obligations of a like nature provided by the
Issuer or any of its Restricted Subsidiaries in the ordinary course of business;

     (12) (a) Indebtedness or Disqualified Stock of the Issuer or any Restricted Guarantor and
Indebtedness, Disqualified Stock or Preferred Stock of any Restricted Subsidiary that is not a
Guarantor in an aggregate principal amount or liquidation preference equal to 200.0% of the net
cash proceeds received by the Issuer and its Restricted Subsidiaries since immediately after the
Issue Date from the issue or sale of Equity Interests of the Issuer or cash contributed to the
capital of the Issuer (in each case, other than proceeds of Disqualified Stock or sales of
Equity Interests to, or contributions received from, the Issuer or any of its Subsidiaries) as
determined in accordance with clauses (3)(b) and (3)(c) of Section 4.07(a) hereof to the extent
such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted
Payments or to make other Investments, payments or exchanges pursuant to Section 4.07(b) hereof
or to make Permitted Investments (other than Permitted Investments specified in clauses (1), (2)
and (3) of the definition thereof); provided, however, that any amounts in
excess of 100.0% shall be Subordinated Indebtedness of the Issuer or any Restricted Subsidiary
that has a Stated Maturity that is no earlier than 90 days after the Stated Maturity of the
Notes or Disqualified Stock or Preferred Stock of any Restricted Subsidiary that has a Stated
Maturity that is no earlier than 90 days after the Stated Maturity of the Notes, and (b)
Indebtedness or Disqualified Stock of the Issuer or a Restricted Guarantor not otherwise
permitted hereunder, and Indebtedness, Disqualified Stock or Preferred Stock of any Restricted
Subsidiary that is not a Guarantor not otherwise permitted hereunder in an aggregate principal
amount or liquidation preference, which when aggregated with the principal amount and
liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then
outstanding and incurred pursuant to this clause (12)(b), does not at any one time outstanding
exceed $1,000,000,000 (it being understood that any Indebtedness incurred or Disqualified Stock
or Preferred Stock issued pursuant to this clause (12)(b) shall cease to be deemed incurred

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or outstanding for purposes of this clause (12)(b) but shall be deemed incurred for the purposes
of the first paragraph of this covenant from and after the first date on which the Issuer or
such Restricted Subsidiary could have incurred such Indebtedness or issued such Disqualified
Stock or Preferred Stock under the first paragraph of this covenant without reliance on this
clause (12)(b));

     (13) the incurrence by the Issuer or any Restricted Subsidiary of Indebtedness or issuance
by the Issuer or any Restricted Subsidiary of Disqualified Stock or Preferred Stock which serves
to extend, replace, refund, refinance, renew or defease:

     (a) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued as
permitted under Section 4.09(a) hereof and clauses (2), (3), (4), (5), (12)(a) and (14) of
this Section 4.09(b), or

     (b) any Indebtedness incurred or Disqualified Stock or Preferred Stock issued to so
extend, replace, refund, refinance, renew or defease the Indebtedness, Disqualified Stock or
Preferred Stock described in clause (a) above,

including, in each case, additional Indebtedness, Disqualified Stock or Preferred Stock incurred
to pay premiums (including tender premiums), defeasance costs and fees and expenses in
connection therewith (collectively, the “ Refinancing
Indebtedness ”) prior to its
respective maturity; provided, however, that such Refinancing Indebtedness:

     (A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness
is incurred which is not less than the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or Preferred Stock being extended, replaced, refunded,
refinanced, renewed or defeased (except by virtue of prepayment of such Indebtedness),

     (B) to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances,
renews or defeases (i) Indebtedness subordinated or pari passu to the Notes
or any Guarantee thereof, such Refinancing Indebtedness is subordinated or pari
passu to the Notes or the Guarantee at least to the same extent as the Indebtedness
being extended, replaced, refunded, refinanced, renewed or defeased or (ii) Disqualified
Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or
Preferred Stock, respectively, and

     (C) shall not include:

     (i) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary
that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred
Stock Indebtedness, Disqualified Stock or Preferred Stock of the Issuer;

     (ii) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted
Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or
Preferred Stock of the Issuer or a Restricted Guarantor; or

     (iii) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a
Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred
Stock of an Unrestricted Subsidiary;

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and provided further that subclauses (A) and (B) of this clause (13) will not
apply to any extension, replacement, refunding, refinancing, renewal or defeasance of any
Indebtedness under a Credit Facility;

     (14) Indebtedness, Disqualified Stock or Preferred Stock of (x) the Issuer or a Restricted
Subsidiary incurred or issued to finance an acquisition or (y) Persons that are acquired by the
Issuer or any Restricted Subsidiary or merged into the Issuer or a Restricted Subsidiary in
accordance with the terms of this Indenture; provided that after giving effect to such
acquisition or merger, either:

     (i) the Issuer would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Leverage Ratio test set forth in Section 4.09(a) hereof, or

     (ii) the Consolidated Leverage Ratio is less than the Consolidated Leverage Ratio
immediately prior to such acquisition or merger;

     (15) Indebtedness arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within five Business Days of
its incurrence;

     (16) Indebtedness of the Issuer or any of its Restricted Subsidiaries supported by a letter
of credit issued pursuant to any Credit Facility, in a principal amount not in excess of the
stated amount of such letter of credit;

     (17) (a) any guarantee by the Issuer or a Restricted Subsidiary of Indebtedness or other
obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred
by such Restricted Subsidiary is permitted under the terms of this Indenture, or

     (b) any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer;
provided that such Restricted Subsidiary shall comply with Section 4.15 hereof;

     (18) Indebtedness of Foreign Subsidiaries of the Issuer in an amount not to exceed at any
one time outstanding and together with any other Indebtedness incurred under this clause (18)
$250,000,000 (it being understood that any Indebtedness incurred pursuant to this clause (18)
shall cease to be deemed incurred or outstanding for purposes of this clause (18) but shall be
deemed incurred under Section 4.09(a) hereof from and after the first date on which such Foreign
Subsidiary could have incurred such Indebtedness under Section 4.09(a) hereof without reliance
on this clause (18));

     (19) Indebtedness consisting of Indebtedness issued by the Issuer or any of its Restricted
Subsidiaries to future, current or former officers, directors, employees and consultants thereof
or any direct or indirect parent thereof, their respective estates, heirs, family members,
spouses or former spouses, in each case to finance the purchase or redemption of Equity
Interests of the Issuer, a Restricted Subsidiary or any of their respective direct or indirect
parent companies to the extent described in clause (4) of Section 4.07(b) hereof;

     (20) cash management obligations and Indebtedness in respect of netting services, employee
credit card programs and similar arrangements in connection with cash management and deposit
accounts; and

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     (21) customer deposits and advance payments received in the ordinary course of business
from customers for goods purchased in the ordinary course of business.

     (c) For purposes of determining compliance with this Section 4.09:

     (1) in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or
any portion thereof) meets the criteria of more than one of the categories of permitted
Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through (21) of
Section 4.09(b) hereof or is entitled to be incurred pursuant to Section 4.09(a) hereof, the
Issuer, in its sole discretion, may classify or reclassify such item of Indebtedness,
Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to
include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one
of the above clauses of Section 4.09(b) hereof or under Section 4.09(a) hereof; provided
that all Indebtedness outstanding under the Credit Facilities on the Issue Date will be treated
as incurred on the Issue Date under clause (1) of Section 4.09(b) hereof; and

     (2) at the time of incurrence or any reclassification thereafter, the Issuer shall be
entitled to divide and classify an item of Indebtedness in more than one of the types of
Indebtedness described in Sections 4.09(a) and 4.09(b) hereof.

          (d) Accrual of interest or dividends, the accretion of accreted value, the accretion or
amortization of original issue discount and the payment of interest or dividends in the form of
additional Indebtedness, Disqualified Stock or Preferred Stock, as applicable, will not be deemed
to be an incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for
purposes of this Section 4.09.

          (e) For purposes of determining compliance with any U.S. dollar-denominated restriction on the
incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated
in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on
the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case
of revolving credit debt; provided that if such Indebtedness is incurred to refinance other
Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable
U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange
rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness
does not (i) exceed the principal amount of such Indebtedness being refinanced plus (ii) the
aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing.

          (f) The principal amount of any Indebtedness incurred to refinance other Indebtedness, if
incurred in a different currency from the Indebtedness being refinanced, shall be calculated based
on the currency exchange rate applicable to the currencies in which such respective Indebtedness is
denominated that is in effect on the date of such refinancing. The principal amount of any
non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date
shall be the principal amount thereof that would be shown on a balance sheet of the Issuer dated
such date prepared in accordance with GAAP.

          (g) The Issuer shall not, and shall not permit any Restricted Guarantor to, directly or
indirectly, incur any Indebtedness (including Acquired Indebtedness) that is contractually
subordinated or junior in right of payment to any Indebtedness of the Issuer or such Restricted
Guarantor (other than Indebtedness constituting Designated Senior Indebtedness), as the case may
be, unless such Indebtedness is expressly subordinated in right of payment to the Notes or such
Restricted Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is
subordinated to other Indebtedness of the Issuer or

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such Restricted Guarantor, as the case may be. For the purposes of this Indenture, Indebtedness
that is unsecured is not deemed to be subordinated or junior to Secured Indebtedness merely because
it is unsecured, and unsubordinated Indebtedness is not deemed to be subordinated or junior to any
other unsubordinated Indebtedness merely because it has a junior priority with respect to the same
collateral.

Section 4.10 Asset Sales.

     (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale, unless:

     (1) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value (as determined in good faith
by the Issuer) of the assets sold or otherwise disposed of; and

     (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration
therefor received by the Issuer or such Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents; provided that the amount of:

     (A) any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most
recent balance sheet or in the footnotes thereto) of the Issuer or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the Notes or that
are owed to the Issuer or a Restricted Subsidiary, that are assumed by the transferee of any
such assets and for which the Issuer and all of its Restricted Subsidiaries have been
validly released by all creditors in writing,

     (B) any securities, notes or other obligations or assets received by the Issuer or such
Restricted Subsidiary from such transferee that are converted by the Issuer or such
Restricted Subsidiary into cash (to the extent of the cash received) within 180 days
following the closing of such Asset Sale, and

     (C) any Designated Non-cash Consideration received by the Issuer or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all
other Designated Non-cash Consideration received pursuant to this clause (c) that is at that
time outstanding, not to exceed $300,000,000 at the time of the receipt of such Designated
Non-cash Consideration, with the fair market value of each item of Designated Non-cash
Consideration being measured at the time received and without giving effect to subsequent
changes in value

shall be deemed to be cash for purposes of this provision and for no other purpose.

          (b) Within 18 months after the receipt of any Net Proceeds of any Asset Sale by the Issuer or
any Restricted Subsidiary, the Issuer or such Restricted Subsidiary, at its option, may apply the
Net Proceeds from such Asset Sale,

          (1) to permanently reduce:

     (A) Obligations under the Senior Credit Facilities and to correspondingly reduce
commitments with respect thereto;

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     (B) Obligations under Pari Passu Indebtedness (as defined below) that is secured by a
Lien, which Lien is permitted by this Indenture, and to correspondingly reduce commitments
with respect thereto;

     (C) Obligations under (i) Notes (to the extent such purchases are at or above 100% of
the principal amount thereof) or (ii) any other Pari Passu Indebtedness of the Issuer or a
Restricted Guarantor (and to correspondingly reduce commitments with respect thereto);
provided that the Issuer shall equally and ratably reduce Obligations under the
Notes as provided in Section 5 of each of the Notes and Section 3.02 hereof through
open-market purchases (to the extent such purchases are at or above 100.0% of the principal
amount thereof) or by making an offer (in accordance with the procedures set forth in
Section 3.09 and Section 4.10(c) hereof) to all Holders of Notes to purchase a pro
rata amount of Notes at 100% of the principal amount thereof, plus accrued but
unpaid interest; or

     (D) Indebtedness of a Restricted Subsidiary that is not a Guarantor, other than
Indebtedness owed to the Issuer or another Restricted Subsidiary; or

     (2) to (a) make an Investment in any one or more businesses, provided that such
Investment in any business is in the form of the acquisition of Capital Stock and results in the
Issuer or Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of
such business such that it constitutes a Restricted Subsidiary, (b) acquire properties, (c) make
capital expenditures or (d) acquire other assets that, in the case of each of clauses (a), (b),
(c) and (d) are either (x) used or useful in a Similar Business or (y) replace the businesses,
properties and/or assets that are the subject of such Asset Sale;

provided that, in the case of clause (2) above, a binding commitment shall be treated as a
permitted application of the Net Proceeds from the date of such commitment so long as the Issuer or
such other Restricted Subsidiary enters into such commitment with the good faith expectation that
such Net Proceeds will be applied to satisfy such commitment within the later of 18 months after
receipt of such Net Proceeds and 180 days following such commitment; provided that if such
commitment is cancelled or terminated after the later of such 18 month or 180 day period for any
reason before such Net Proceeds are applied, then such Net Proceeds shall constitute Excess
Proceeds.

          (c) Any Net Proceeds from any Asset Sale that are not invested or applied as provided and
within the time period set forth in Section 4.10(b) hereof shall be deemed to constitute “
Excess Proceeds.” When the aggregate amount of Excess Proceeds with respect to the Notes
exceeds $100,000,000, the Issuer shall make an offer to all Holders of the Notes and, if required
by the terms of any Indebtedness that is pari passu in right of payment with such
Notes (“ Pari Passu Indebtedness ”), to the holders of such Pari Passu Indebtedness (an “
Asset Sale Offer ”), to purchase the maximum aggregate principal amount of such Notes and
the maximum aggregate principal amount (or accreted value, if less) of such Pari Passu Indebtedness
that is a minimum of $2,000 or an integral multiple of $1,000 thereof, or if PIK Notes are issued
or PIK Interest or Partial PIK Interest is paid, a minimum of $1.00 and an integral multiple of
$1.00, (in each case in aggregate principal amount) that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof (or
accreted value, if applicable) plus accrued and unpaid interest to the date fixed for the closing
of such offer, in accordance with the procedures set forth in this Indenture. The Issuer shall
commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the
date that Excess Proceeds exceed $100,000,000 by mailing the notice required pursuant to the terms
of this Indenture, with a copy to the Trustee or otherwise in accordance with the procedures of
DTC. The Issuer, in its sole discretion, may

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satisfy the foregoing obligations with respect to any Net Proceeds from an Asset Sale by making an
Asset Sale Offer with respect to such Net Proceeds prior to the expiration of the relevant 18 month
period (or such longer period provided above) or with respect to Excess Proceeds of $100,000,000 or
less.

          To the extent that the aggregate principal amount of Notes and the aggregate principal amount
(or accreted value, if applicable) of such Pari Passu Indebtedness tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds with respect to the Notes, the Issuer may use any
remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained
in this Indenture. If the aggregate principal amount of Notes and the aggregate principal amount
(or accreted value, if applicable) of the Pari Passu Indebtedness surrendered in an Asset Sale
Offer exceeds the amount of Excess Proceeds with respect to the Notes, the Trustee or the Paying
Agent shall select the Notes and the Issuer or the agent for such Pari Passu Indebtedness shall
select such other Pari Passu Indebtedness to be purchased on a pro rata basis based
on the principal amount of the Notes and the aggregate principal amount (or accreted value, if
applicable) of such Pari Passu Indebtedness tendered in accordance with Section 3.09 hereof. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

          (d) Pending the final application of any Net Proceeds pursuant to this Section 4.10, the
holder of such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness
outstanding under a revolving credit facility, including under any Senior Credit Facility, or
otherwise invest such Net Proceeds in any manner not prohibited by this Indenture.

          (e) The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Issuer shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this Indenture by virtue thereof.

Section 4.11 Transactions with Affiliates.

          (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of their properties or assets to,
or purchase any property or assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of
the Issuer (each of the foregoing, an “ Affiliate
Transaction ”) involving aggregate
payments or consideration in excess of $20,000,000, unless:

     (1) such Affiliate Transaction is on terms that are not materially less favorable to the
Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on
an arm’s-length basis; and

     (2) the Issuer delivers to the Trustee with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate payments or consideration in excess of
$40,000,000, a resolution adopted by the majority of the board of directors of the Issuer
approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that
such Affiliate Transaction complies with clause (1) of this Section 4.11(a).

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     (b) Section 4.11(a) hereof shall not apply to the following:

     (1) transactions between or among the Issuer or any of its Restricted Subsidiaries;

     (2) Restricted Payments permitted by Section 4.07 hereof and Investments constituting
Permitted Investments;

     (3) the payment of management, consulting, monitoring, transaction, advisory and
termination fees and related expenses and indemnities, directly or indirectly, to the Investors,
in each case pursuant to the Sponsor Management Agreement;

     (4) the payment of reasonable and customary fees and compensation consistent with past
practice or industry practices paid to, and indemnities provided on behalf of, employees,
officers, directors or consultants of the Issuer, any of its direct or indirect parent companies
or any of its Restricted Subsidiaries;

     (5) transactions in which the Issuer or any of its Restricted Subsidiaries, as the case may
be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such
transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view
or stating that the terms are not materially less favorable to the Issuer or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable transaction by
the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

     (6) any agreement as in effect as of the Issue Date (other than the Sponsor Management
Agreement), or any amendment thereto (so long as any such amendment is not disadvantageous in
any material respect in the good faith judgment of the board of directors of the Issuer to the
Holders when taken as a whole as compared to the applicable agreement as in effect on the Issue
Date);

     (7) the existence of, or the performance by the Issuer or any of its Restricted
Subsidiaries of its obligations under the terms of, any stockholders agreement, principal
investors agreement (including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Issue Date and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the
performance by the Issuer or any of its Restricted Subsidiaries of obligations under any future
amendment to any such existing agreement or under any similar agreement entered into after the
Issue Date shall only be permitted by this clause (7) to the extent that the terms of any such
amendment or new agreement are not otherwise disadvantageous in any material respect in the good
faith judgment of the board of directors of the Issuer to the Holders when taken as a whole;

     (8) the Transactions and the payment of all fees and expenses related to the Transactions,
including Transaction Expenses;

     (9) transactions with customers, clients, suppliers, contractors, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary course of business and
otherwise in compliance with the terms of this Indenture which are fair to the Issuer and its
Restricted Subsidiaries, in the reasonable determination of the board of directors of the Issuer
or the senior management thereof, or are on terms at least as favorable as would reasonably have
been obtained at such time from an unaffiliated party;

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     (10) the issuance of Equity Interests (other than Disqualified Stock) by the Issuer or a
Restricted Subsidiary;

     (11) sales of accounts receivable, or participations therein, or Securitization Assets or
related assets in connection with any Receivables Facility or any Qualified Securitization
Financing;

     (12) payments by the Issuer or any of its Restricted Subsidiaries to any of the Investors
made for any financial advisory, financing, underwriting or placement services or in respect of
other investment banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the board of directors
of the Issuer in good faith or as otherwise permitted by this Indenture;

     (13) payments or loans (or cancellation of loans) to employees or consultants of the
Issuer, any of its direct or indirect parent companies or any of its Restricted Subsidiaries and
employment agreements, severance arrangements, stock option plans and other similar arrangements
with such employees or consultants which, in each case, are approved by a majority of the board
of directors of the Issuer in good faith; and

     (14) Investments by the Investors in debt securities of the Issuer or any of its Restricted
Subsidiaries so long as (i) the investment is being offered generally to other investors on the
same or more favorable terms and (ii) the investment constitutes less than 5.0% of the proposed
or outstanding issue amount of such class of securities.

Section 4.12 Liens.

          (a) The Issuer shall not, and shall not permit any Restricted Guarantor to, directly or
indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures
Obligations under any Indebtedness or any related guarantee, on any asset or property of the Issuer
or any Restricted Guarantor, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, unless:

     (1) in the case of Liens securing Subordinated Indebtedness, the Notes and related
Guarantees are secured by a Lien on such property, assets or proceeds that is senior in priority
to such Liens; or

     (2) in all other cases, the Notes or the Guarantees are equally and ratably secured.

          (b) Section 4.12(a) hereof shall not apply to (i) Liens securing the Notes (including PIK
Notes) and the related Guarantees or the Exchange Notes (including PIK Notes issued in respect
thereof) and related guarantees, (ii) Liens securing Obligations under any Indebtedness and related
guarantees under Credit Facilities, including any letter of credit facility relating thereto, that
was permitted by the terms of this Indenture to be incurred pursuant to clause (1) of Section
4.09(b) hereof and (iii) Liens incurred to secure Obligations in respect of any Indebtedness
permitted to be incurred pursuant to Section 4.09 hereof; provided that, with respect to
Liens securing Obligations permitted under this subclause (iii), at the time of incurrence and
after giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be
no greater than 6.75 to 1.0.

          (c) Any Lien created for the benefit of the Holders of the Notes pursuant to this Section 4.12
shall be deemed automatically and unconditionally released and discharged upon the release and
discharge of the applicable Lien described in clauses (1) and (2) of Section 4.12(a) hereof.

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Section 4.13 Corporate Existence.

          Subject to Article 5 hereof, the Issuer shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, in accordance with its
organizational documents (as the same may be amended from time to time).

Section 4.14 Offer to Repurchase Upon Change of Control.

          (a) If a Change of Control occurs, unless the Issuer has previously or concurrently mailed a
redemption notice with respect to all the outstanding Notes as set forth in Section 5 of each of
the Notes and Section 3.03 hereof, the Issuer shall make an offer to purchase all of the Notes
pursuant to the offer described below (the “ Change of
Control Offer ”) at a price in cash
(the “ Change of Control Payment ”) equal to 101.0% of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase, subject to the right of
Holders of the Notes of record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date. Within 30 days following any Change of Control, the Issuer shall send notice
of such Change of Control Offer by first-class mail, with a copy to the Trustee, to each Holder of
Notes to the address of such Holder appearing in the security register with a copy to the Trustee,
or otherwise in accordance with the procedures of DTC, with the following information:

     (1) that a Change of Control Offer is being made pursuant to this Section 4.14, and that
all Notes properly tendered pursuant to such Change of Control Offer shall be accepted for
payment by the Issuer;

     (2) the purchase price and the purchase date, which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the “ Change of Control Payment
Date ”);

     (3) that any Note not properly tendered shall remain outstanding and continue to accrue
interest;

     (4) that unless the Issuer defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue
interest on the Change of Control Payment Date;

     (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer
shall be required to surrender such Notes, with the form entitled “Option of Holder to Elect
Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at
the address specified in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date;

     (6) that Holders shall be entitled to withdraw their tendered Notes and their election to
require the Issuer to purchase such Notes, provided that the Paying Agent receives, not
later than the close of business on the fifth Business Day preceding the Change of Control
Payment Date, a telegram, facsimile transmission or letter setting forth the name of the Holder
of the Notes, the principal amount of Notes tendered for purchase, and a statement that such
Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

     (7) that the Holders whose Notes are being repurchased only in part shall be issued new
Notes equal in principal amount to the unpurchased portion of the Notes surrendered. The
unpurchased portion of the Notes must be equal to a minimum of $2,000 or an integral multiple

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of $1,000 in principal amount; provided , however , that if PIK Notes are issued
or PIK Interest or Partial PIK Interest is paid, the principal amount of such unpurchased
portion may equal a minimum of $1.00 or an integral multiple of $1.00;

     (8) if such notice is mailed prior to the occurrence of a Change of Control, stating that
the Change of Control Offer is conditional on the occurrence of such Change of Control; and

     (9) the other instructions, as determined by the Issuer, consistent with this Section 4.14,
that a Holder must follow.

     The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been
given, whether or not the Holder receives such notice. If (a) the notice is mailed in a manner
herein provided and (b) any Holder fails to receive such notice or a Holder receives such notice
but it is defective, such Holder’s failure to receive such notice or such defect shall not affect
the validity of the proceedings for the purchase of the Notes as to all other Holders that properly
received such notice without defect. The Issuer shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder to the extent such
laws or regulations are applicable in connection with the repurchase by the Issuer of Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have breached its obligations
under this Indenture by virtue thereof.

     (b) On the Change of Control Payment Date, the Issuer shall, to the extent permitted by law,

     (1) accept for payment all Notes issued by it or portions thereof properly tendered
pursuant to the Change of Control Offer;

     (2) deposit with the Paying Agent an amount equal to the aggregate Change of Control
Payment in respect of all Notes or portions thereof so tendered; and

     (3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so
accepted together with an Officer’s Certificate to the Trustee stating that such Notes or
portions thereof have been tendered to and purchased by the Issuer.

     (c) The Issuer shall not be required to make a Change of Control Offer following a Change of
Control if a third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Section 4.14 applicable to a Change
of Control Offer made by the Issuer and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of
Control Offer may be made in advance of a Change of Control, conditional upon such Change of
Control, if a definitive agreement is in place for the Change of Control at the time of making of
the Change of Control Offer.

     (d) Other than as specifically provided in this Section 4.14, any purchase pursuant to this
Section 4.14 shall be made pursuant to the provisions of Sections 3.02, 3.05 and 3.06 hereof.

Section 4.15 Limitation on Guarantees of Indebtedness by Restricted Subsidiaries.

     The Issuer shall not permit any Restricted Subsidiary that is a Wholly-Owned Subsidiary of the
Issuer (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee other
capital markets debt securities), other than a Guarantor, a Foreign Subsidiary or a Securitization
Subsidiary, to guarantee the payment of any Indebtedness of the Issuer or any Restricted Guarantor
unless:

     (1) such Restricted Subsidiary within 30 days executes and delivers a supplemental
indenture to this Indenture, the form of which is attached as Exhibit D hereto,
providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee
of Indebtedness of the Issuer or any Restricted Guarantor, if such Indebtedness is by its
express terms subordinated in right of payment to the Notes or a related Guarantee, any such
guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated
in right of payment to such Guarantee substantially to the same extent as such Indebtedness is
subordinated to the Notes or such Restricted Guarantor’s related Guarantee; and

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     (2) such Restricted Subsidiary shall within 30 days deliver to the Trustee an Opinion of
Counsel reasonably satisfactory to the Trustee;

provided that this Section 4.15 shall not be applicable to (i) any guarantee of any
Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was
not incurred in connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary and (ii) guarantees of any Qualified Securitization Financing by any Restricted
Subsidiary.

          The Issuer may elect, in its sole discretion, to cause any Subsidiary that is not otherwise
required to be a Restricted Guarantor to become a Restricted Guarantor, in which case such
Subsidiary shall not be required to comply with the 30 day period described in clause (1) of this
Section 4.15.

Section 4.16 Limitation on Modification of Existing Senior Notes.

          The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, amend any of
the Existing Senior Notes or the Existing Senior Notes Indenture, or any supplemental indenture in
respect thereof, to create, incur or assume any Lien that secures any of the Existing Senior Notes
other than to the extent permitted by the Senior Credit Facilities as in effect on the Issue Date.

Section 4.17 Limitation on Layering.

          (a) The Issuer shall not permit any Restricted Guarantor to, directly or indirectly, incur any
Indebtedness that is subordinate in right of payment to any Designated Senior Indebtedness of such
Restricted Guarantor, as the case may be, unless such Indebtedness is either:

          (1) equal in right of payment with the such Restricted Guarantor’s Guarantee of the Notes;
or

          (2) expressly subordinated in right of payment to such Restricted Guarantor’s Guarantee of
the Notes.

          (b) For the purposes of this Indenture, Indebtedness that is unsecured is not deemed to be
subordinated or junior to Secured Indebtedness merely because it is unsecured, and unsubordinated
Indebtedness is not deemed to be subordinated or junior to any other unsubordinated Indebtedness
merely because it has a junior priority with respect to the same collateral.

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ARTICLE 5

SUCCESSORS

Section 5.01 Merger, Consolidation or Sale of All or Substantially All Assets.

          (a) The Issuer shall not consolidate or merge with or into or wind up into (whether or not the
Issuer is the surviving corporation), and shall not sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the properties or assets of the Issuer and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions, to any Person
unless:

     (1) the Issuer is the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Issuer) or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made is organized or existing
under the laws of the United States, any state thereof, the District of Columbia, or any
territory thereof (the Issuer or such Person, as the case may be, being herein called the “
Successor Company ”); provided that in the case where the Successor Company is
not a corporation, a co-obligor of the Notes is a corporation;

     (2) the Successor Company, if other than the Issuer, expressly assumes all the obligations
of the Issuer under the Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;

     (3) immediately after such transaction, no Default exists;

     (4) immediately after giving pro forma effect to such transaction and any
related financing transactions, as if such transactions had occurred at the beginning of the
applicable four-quarter period,

     (A) the Successor Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Leverage Ratio test set forth in Section 4.09(a)
hereof, or

     (B) the Consolidated Leverage Ratio for the Successor Company and its Restricted
Subsidiaries would be equal to or less than such Consolidated Leverage Ratio immediately
prior to such transaction;

     (5) each Restricted Guarantor, unless it is the other party to the transactions described
above, in which case clause (1)(B) of Section 5.01(c) hereof shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations
under this Indenture and the Notes; and

     (6) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer and such supplemental
indentures, if any, comply with this Indenture.

          (b) The Successor Company shall succeed to, and be substituted for the Issuer under this
Indenture and the Notes, as applicable. Notwithstanding the foregoing, clauses (2), (3), (4), (5)
and (6) of Section 5.01(a) hereof shall not apply to the Transactions (including the merger).
Notwithstanding clauses (3) and (4) of Section 5.01(a) hereof,

     (x) the Issuer or any Restricted Subsidiary may consolidate with or merge into or transfer
all or part of its properties and assets to the Issuer or a Restricted Guarantor; and

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     (y) the Issuer may merge with an Affiliate of the Issuer solely for the purpose of
reorganizing the Issuer in the United States, any state thereof, the District of Columbia or any
territory thereof so long as the amount of Indebtedness of the Issuer and its Restricted
Subsidiaries is not increased thereby.

          (c) No Restricted Guarantor shall, and the Issuer shall not permit any Restricted Guarantor
to, consolidate or merge with or into or wind up into (whether or not the Issuer or such Guarantor
is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related transactions, to any
Person unless:

     (1) (A) such Restricted Guarantor is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than such Restricted Guarantor) or to which
such sale, assignment, transfer, lease, conveyance or other disposition will have been made is
organized or existing under the laws of the jurisdiction of organization of such Restricted
Guarantor, as the case may be, or the laws of the United States, any state thereof, the District
of Columbia, or any territory thereof (such Restricted Guarantor or such Person, as the case may
be, being herein called the “ Successor Person “);

     (B) the Successor Person, if other than such Restricted Guarantor, expressly assumes all
the obligations of such Restricted Guarantor under this Indenture and such Restricted
Guarantor’s related Guarantee pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;

     (C) immediately after such transaction, no Default exists; and

     (D) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer and such supplemental
indentures, if any, comply with this Indenture; or

     (2) the transaction complies with clauses (1) and (2) of Section 4.10(a) hereof.

          (d) In the case of clause (1) of Section 4.10(c) hereof, the Successor Person shall succeed
to, and be substituted for, such Restricted Guarantor under this Indenture and such Restricted
Guarantor’s Guarantee. Notwithstanding the foregoing, any Restricted Guarantor may (1) merge or
consolidate with or into or wind up into or transfer all or part of its properties and assets to
another Restricted Guarantor or the Issuer, (2) merge with an Affiliate of the Issuer solely for
the purpose of reincorporating the Guarantor in the United States, any state thereof, the District
of Columbia or any territory thereof or (3) convert into (which may be effected by merger with a
Restricted Subsidiary that has substantially no assets and liabilities) a corporation, partnership,
limited partnership, limited liability corporation or trust organized or existing under the laws of
the jurisdiction of organization of such Restricted Guarantor (which may be effected by merger so
long as the survivor thereof is a Restricted Guarantor).

Section 5.02 Successor Corporation Substituted.

	 
	          Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Issuer in accordance with
Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which
the Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this
Indenture referring to the Issuer shall refer instead to the successor corporation and not to the
Issuer), and may exercise every right and power of the Issuer under

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this Indenture with the same effect as if such Successor Person had been named as the Issuer
herein; provided that the predecessor Issuer shall not be relieved from the obligation to
pay the principal of and interest and Special Interest, if any, on the Notes except in the case of
a sale, assignment, transfer, lease, conveyance or other disposition of all of the Issuer’s assets
that meets the requirements of Section 5.01 hereof.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

          (a) An “Event of Default” wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body):

     (1) default in payment when due and payable, upon redemption, acceleration or otherwise, of
principal of, or premium, if any, on the Notes;

     (2) default for 30 days or more in the payment when due of interest on or with respect to
the Notes;

     (3) failure by the Issuer or any Guarantor for 60 days after receipt of written notice
given by the Trustee or the Holders of not less than 25.0% in principal amount of the then
outstanding Notes (with a copy to the Trustee) to comply with any of its obligations, covenants
or agreements (other than a default referred to in clauses (1) and (2) of this Section 6.01(a))
contained in this Indenture or the Notes;

     (4) default under any mortgage, indenture or instrument under which there is issued or by
which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of
its Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or any of its
Restricted Subsidiaries, other than Indebtedness owed to the Issuer or a Restricted Subsidiary,
whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes,
if both:

     (a) such default either results from the failure to pay any principal of such
Indebtedness at its stated final maturity (after giving effect to any applicable grace
periods) or relates to an obligation other than the obligation to pay principal of any such
Indebtedness at its stated final maturity and results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated maturity; and

     (b) the principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal at stated final maturity
(after giving effect to any applicable grace periods), or the maturity of which has been so
accelerated, aggregate $100,000,000 or more at any one time outstanding;

     (5) failure by the Issuer or any Significant Party to pay final non-appealable judgments
aggregating in excess of $100,000,000, which final judgments remain unpaid, undischarged and
unstayed for a period of more than 90 days after such judgments become final, and in the event
such judgments are covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgments or decrees which is not promptly stayed;

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     (6) the Issuer or any Significant Party, pursuant to or within the meaning of any
Bankruptcy Law:

     (i) commences proceedings to be adjudicated bankrupt or insolvent;

     (ii) consents to the institution of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking reorganization or relief under
applicable Bankruptcy Law;

     (iii) consents to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of it or for all or substantially all of its
property;

     (iv) makes a general assignment for the benefit of its creditors; or

     (v) generally is not paying its debts as they become due;

     (7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law
that:

     (i) is for relief against the Issuer or any Significant Party in a proceeding in which
the Issuer or any such Significant Party is to be adjudicated bankrupt or insolvent;

     (ii) appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Issuer or any Significant Party, or for all or substantially all of the
property of the Issuer or any Significant Party; or

     (iii) orders the liquidation of the Issuer or any Significant Party;

     and the order or decree remains unstayed and in effect for 60 consecutive days; or

     (8) the Guarantee of any Significant Party shall for any reason cease to be in full force
and effect or be declared null and void or any responsible officer of any Guarantor that is a
Significant Party, as the case may be, denies in writing that it has any further liability under
its Guarantee or gives written notice to such effect, other than by reason of the termination of
this Indenture or the release of any such Guarantee in accordance with this Indenture.

          (b) In the event of any Event of Default specified in clause (4) of Section 6.01(a) hereof,
such Event of Default and all consequences thereof (excluding any resulting payment default, other
than as a result of acceleration of the Notes) shall be annulled, waived and rescinded,
automatically and without any action by the Trustee or the Holders, if within 20 days after such
Event of Default arose:

     (1) the Indebtedness or guarantee that is the basis for such Event of Default has been
discharged; or

     (2) holders thereof have rescinded or waived the acceleration, notice or action (as the
case may be) giving rise to such Event of Default; or

     (3) the default that is the basis for such Event of Default has been cured.

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Section 6.02 Acceleration.

          If any Event of Default (other than an Event of Default specified in clause (6) or (7) of
Section 6.01(a) hereof with respect to the Issuer) occurs and is continuing under this Indenture,
the Trustee or the Holders of at least 25.0% in principal amount of the then total outstanding
Notes (with a copy to the Trustee) may declare the principal, premium, if any, interest and any
other monetary obligations on all the then outstanding Notes to be due and payable immediately.
Upon the effectiveness of such declaration, such principal, premium, if any, and interest shall be
due and payable immediately. The Trustee shall have no obligation to accelerate the Notes if in the
best judgment of the Trustee, acceleration is not in the best interest of the Holders of the Notes.

          Notwithstanding the foregoing, in the case of an Event of Default arising under clause (6) or
(7) of Section 6.01(a) hereof with respect to the Issuer, all outstanding Notes shall be due and
payable without further action or notice.

Section 6.03 Other Remedies.

          If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

          The Holders of a majority in aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default
and its consequences under this Indenture (except a continuing Default in the payment of interest
on, premium, if any, or the principal of any Note held by a non-consenting Holder) and rescind any
acceleration with respect to the Notes and its consequences (except if such rescission would
conflict with any judgment of a court of competent jurisdiction). Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent
or other Default or impair any right consequent thereto.

Section 6.05 Control by Majority.

          Holders of a majority in principal amount of the then total outstanding Notes may direct the
time, method and place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow
any direction that conflicts with law or this Indenture or that the Trustee determines is unduly
prejudicial to the rights of any other Holder of a Note or that would involve the Trustee in
personal liability.

Section 6.06 Limitation on Suits.

          Subject to Section 6.07 hereof, no Holder of a Note may pursue any remedy with respect to this
Indenture or the Notes unless:

     (1) such Holder has previously given the Trustee notice that an Event of Default is
continuing;

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     (2) Holders of at least 25.0% in principal amount of the total outstanding Notes have
requested the Trustee to pursue the remedy;

     (3) Holders of the Notes have offered the Trustee security or indemnity reasonably
satisfactory to it against any loss, liability or expense;

     (4) the Trustee has not complied with such request within 60 days after the receipt thereof
and the offer of security or indemnity; and

     (5) Holders of a majority in principal amount of the total outstanding Notes have not given
the Trustee a direction inconsistent with such request within such 60-day period.

          A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a
Note or to obtain a preference or priority over another Holder of a Note.

Section 6.07 Rights of Holders of Notes To Receive Payment.

          Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium, if any, and Special Interest, if any, and interest on the
Note, on or after the respective due dates expressed in the Note (including in connection with an
Asset Sale Offer or a Change of Control Offer), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected without the consent of
such Holder.

Section 6.08 Collection Suit by Trustee.

          If an Event of Default specified in Section 6.01(a)(1) or (2) hereof occurs and is continuing,
the Trustee is authorized to recover judgment in its own name and as trustee of an express trust
against the Issuer for the whole amount of principal of, premium, if any, and Special Interest, if
any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel.

Section 6.09 Restoration of Rights and Remedies.

          If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceedings, the Issuer, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding has been
instituted.

Section 6.10 Rights and Remedies Cumulative.

          Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or remedy.

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Section 6.11 Delay or Omission Not Waiver.

          No delay or omission of the Trustee or of any Holder of any Note to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

Section 6.12 Trustee May File Proofs of Claim.

          The Trustee is authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer
(or any other obligor upon the Notes including the Guarantors), its creditors or its property and
shall be entitled and empowered to participate as a member in any official committee of creditors
appointed in such matter and to collect, receive and distribute any money or other property payable
or deliverable on any such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

Section 6.13 Priorities.

          If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in
the following order:

     (i) to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof,
including payment of all compensation, expenses and liabilities incurred, and all advances made,
by the Trustee and the costs and expenses of collection;

     (ii) to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if
any, and Special Interest, if any, and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal, premium, if any, and
Special Interest, if any, and interest, respectively; and

     (iii) to the Issuer or to such party as a court of competent jurisdiction shall direct,
including a Guarantor, if applicable.

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          The Trustee may fix a record date and payment date for any payment to Holders of Notes
pursuant to this Section 6.13.

Section 6.14 Undertaking for Costs.

          In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.14 does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01 Duties of Trustee.

          (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of care and skill in
its exercise, as a prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.

          (b) Except during the continuance of an Event of Default:

     (i) the duties of the Trustee shall be determined solely by the express provisions of this
Indenture and the Trustee need perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the requirements of this Indenture (but
need not confirm or investigate the accuracy of mathematical calculations or other facts stated
therein).

     (c) The Trustee may not be relieved from liabilities for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

     (i) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01;

     (ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee
was negligent in ascertaining the pertinent facts; and

     (iii) the Trustee shall not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

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          (d) Whether or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to this Section 7.01.

          (e) The Trustee shall be under no obligation to exercise any of its rights or powers under
this Indenture at the request or direction of any of the Holders of the Notes unless the Holders
have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or
expense.

          (f) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law or as the Trustee may agree in
writing with the Issuer.

Section 7.02 Rights of Trustee.

          
(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall
incur no liability or additional liability of any kind by reason of such inquiry or investigation.

          
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate
or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee
may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

          

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any agent or attorney appointed with due care.

          

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith
that it believes to be authorized or within the rights or powers conferred upon it by this
Indenture.
 

          

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Issuer shall be sufficient if signed by an Officer of the Issuer.

 

          

(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or indemnity satisfactory to it against such
risk or liability is not assured to it.
  

          

(g) The Trustee shall not be deemed to have knowledge or notice of any Default or Event of
Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written
notice of any event which is in fact such a Default or Event of Default is received by the Trustee
at the Corporate Trust Office of the Trustee, and such notice references the Notes and this
Indenture.
  

          

(h) In no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.
 

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(i) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder.

           
(j) In the event the Issuer is re
quired to pay Special Interest, the Issuer will provide
written notice to the Trustee of the Issuer’s obligation to pay Special Interest no later than 15
days prior to the next Interest Payment Date, which notice shall set forth the amount of the
Special Interest to be paid by the Issuer. The Trustee shall not at any time be under any duty or
responsibility to any Holders to determine whether the Special Interest is payable or the amount
thereof.

Section 7.03 Individual Rights of Trustee.

          The Trustee in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would
have if it were not Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee
is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

          The Trustee shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the
proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any
provision of this Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document in connection with
the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05 Notice of Defaults.

          If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to Holders of Notes a notice of the Default within 90 days after it occurs. The Trustee may
withhold from the Holders notice of any continuing Default, except a Default relating to the
payment of principal, premium, if any, or interest, if it determines that withholding notice is in
their interest.

Section 7.06 Reports by Trustee to Holders of the Notes.

          Within 60 days after each February 1, beginning with the February 1 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of
the Notes a brief report dated as of such reporting date that complies with Trust Indenture Act
Section 313(a) (but if no event described in Trust Indenture Act Section 313(a) has occurred within
the twelve months preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with Trust Indenture Act Section 313(b)(2). The Trustee shall also transmit by mail
all reports as required by Trust Indenture Act Section 313(c).

          A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to
the Issuer and filed with the SEC and each stock exchange on which the Notes are listed in
accordance with Trust Indenture Act Section 313(d). The Issuer shall promptly notify the Trustee
when the Notes are listed on any stock exchange or delisted therefrom.

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Section 7.07 Compensation and Indemnity.

          The Issuer shall pay to the Trustee and any Agent from time to time such compensation for its
acceptance of this Indenture and services hereunder as the parties shall agree in writing from time
to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Issuer shall reimburse each of the Trustee and each Agent promptly upon
request for all reasonable disbursements, advances and expenses incurred or made by it in addition
to the compensation for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee’s or each such Agent’s agents and counsel.

          The Issuer and the Guarantors, jointly and severally, shall indemnify each of the Trustee and
each Agent for, and hold each of the Trustee and each Agent harmless against, any and all loss,
damage, claims, liability or expense (including attorneys’ fees) incurred by it in connection with
the acceptance or administration of this trust and the performance of its duties hereunder
(including the costs and expenses of enforcing this Indenture against the Issuer or any of the
Guarantors (including this Section 7.07) or defending itself against any claim whether asserted by
any Holder, the Issuer or any Guarantor, or liability in connection with the acceptance, exercise
or performance of any of its powers or duties hereunder). Each of the Trustee and each Agent shall
notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Trustee or
any Agent to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall defend the claim and the Trustee or applicable Agent may have separate counsel and the
Issuer shall pay the fees and expenses of such counsel. The Issuer need not reimburse any expense
or indemnify against any loss, liability or expense incurred by the Trustee or any Agent through
such Person’s own willful misconduct, negligence or bad faith.

          The obligations of the Issuer under this Section 7.07 shall survive the satisfaction and
discharge of this Indenture or the earlier resignation or removal of the Trustee or any Agent, as
applicable.

          To secure the payment obligations of the Issuer and the Guarantors in this Section 7.07, each
of the Trustee and each Agent shall have a Lien prior to the Notes on all money or property held or
collected by such Person, except money or property held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.

          When the Trustee or any Agent incurs expenses or renders services after an Event of Default
specified in clause (6) or (7) of Section 6.01(a) hereof occurs, the expenses and the compensation
for the services (including the fees and expenses of its agents and counsel) are intended to
constitute expenses of administration under any Bankruptcy Law.

          The Trustee shall comply with the provisions of Trust Indenture Act Section 313(b)(2) to the
extent applicable.

Section 7.08 Replacement of Trustee or Agent.

          A resignation or removal of the Trustee or any Agent and appointment of a successor Trustee or
any successor Agent shall become effective only upon the acceptance of appointment as provided in
this Section 7.08 by such successor Trustee or successor Agent, as applicable. The Trustee or any
Agent may resign in writing at any time and be discharged from the trust hereby created by so
notifying the Issuer. The Holders of a majority in principal amount of the then outstanding Notes
may remove the Trustee or any Agent by so notifying the Trustee or such Agent and the Issuer in
writing. The Issuer may remove the Trustee or any Agent if:

     (a) in the case of the Trustee, such Trustee fails to comply with Section 7.10 hereof;

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     (b) the Trustee or such Agent is adjudged a bankrupt or an insolvent Person or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

     (c) a custodian or public officer takes charge of the Trustee or such Agent or such
Person’s property; or

     (d) the Trustee or such Agent becomes incapable of acting.

          If the Trustee or any Agent resigns or is removed or if a vacancy exists in the office of
Trustee or any Agent for any reason, the Issuer shall promptly appoint a successor Trustee or
successor Agent. Within one year after the successor Trustee or successor Agent takes office, the
Holders of a majority in principal amount of the then outstanding Notes may appoint a successor
Trustee or successor Agent, as applicable, to replace such successor Trustee or successor Agent
appointed by the Issuer.

          If a successor Trustee or successor Agent does not take office within 60 days after the
retiring Trustee or Agent, as applicable, resigns or is removed, the retiring Trustee or Agent (at
the Issuer’s expense), the Issuer or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee or successor Agent.

          If the Trustee, after written request by any Holder who has been a Holder for at least six
months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

          A successor Trustee or successor Agent shall deliver a written acceptance of its appointment
to the retiring Trustee or Agent and to the Issuer. Thereupon, the resignation or removal of the
retiring Trustee or Agent shall become effective, and the successor Trustee or successor Agent
shall have all the rights, powers and duties of the Trustee or the applicable Agent under this
Indenture. The successor Trustee or successor Agent shall mail a notice of its succession to
Holders. The retiring Trustee or Agent shall promptly transfer all property held by it as Trustee
or Agent to the successor Trustee or successor Agent, as applicable; provided all sums
owing to the retiring Trustee or Agent hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee or any Agent pursuant to
this Section 7.08, the Issuer’s obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee or Agent.

Section 7.09 Successor Trustee by Merger, etc.

          If the Trustee or any Agent consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust or relevant agent business, as applicable, to, another
corporation, the successor corporation without any further act shall be the successor Trustee or
successor Agent, as applicable.

Section 7.10 Eligibility; Disqualification.

          There shall at all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof that is authorized
under

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such laws to exercise corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition.

This Indenture shall always have a Trustee who satisfies the requirements of Trust Indenture
Act Sections 310(a)(1), (2) and (5). The Trustee is subject to Trust Indenture Act Section 310(b).

Section 7.11 Preferential Collection of Claims Against Issuer.

          The Trustee is subject to Trust Indenture Act Section 311(a), excluding any creditor
relationship listed in Trust Indenture Act Section 311(b). A Trustee who has resigned or been
removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option To Effect Legal Defeasance or Covenant Defeasance.

          The Issuer may, at its option and at any time, elect to have either Section 8.02 or 8.03
hereof applied to all outstanding Notes upon compliance with the conditions set forth below in this
Article 8.

Section 8.02 Legal Defeasance and Discharge.

          Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section
8.02, the Issuer and the Guarantors shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to
all outstanding Notes and Guarantees on the date the conditions set forth below are satisfied (“
Legal Defeasance “). For this purpose, Legal Defeasance means that the Issuer shall be
deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes,
which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof
and the other Sections of this Indenture referred to in clauses (a) and (b) below, to have
satisfied all its other obligations under such Notes and this Indenture including that of the
Guarantors (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging the same) and to have cured all then existing Events of Default, except
for the following provisions which shall survive until otherwise terminated or discharged
hereunder:

     (a) the rights of Holders of Notes to receive payments in respect of the principal of,
premium, if any, and interest on the Notes when such payments are due solely out of the trust
created pursuant to this Indenture as referenced in Section 8.04 hereof;

     (b) the Issuer’s obligations with respect to Notes concerning issuing temporary Notes,
registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payment and money for security payments held in trust;

     (c) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s
obligations in connection therewith; and

     (d) this Section 8.02.

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          Subject to compliance with this Article 8, the Issuer may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

          Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section
8.03, the Issuer and the Guarantors shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be released from their obligations under the covenants (each, a ”
Defeased Covenant , and collectively, the “ Defeased Covenants ”) contained in
Sections 4.03, 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17
hereof and clauses (4) and (5) of Section 5.01(a), Sections 5.01(c) and 5.01(d) hereof with respect
to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are
satisfied (“ Covenant Defeasance ”), and the Notes shall thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such Defeased Covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Issuer may omit to comply with
and shall have no liability in respect of any term, condition or limitation set forth in any
Defeased Covenant, whether directly or indirectly, by reason of any reference elsewhere herein to
any such Defeased Covenant or by reason of any reference in any such Defeased Covenant to any other
provision herein or in any other document, and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the
Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(a)(3), 6.01(a)(4), 6.01(a)(5), 6.01(a)(6) (solely with respect to any Significant Party),
6.01(a)(7) (solely with respect to any Significant Party) and 6.01(a)(8) hereof shall not
constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

          In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:

     (1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal amount of, premium, if any, and interest
due on the Notes on the stated maturity date or on the redemption date, as the case may be, of
such principal amount, premium, if any, or interest on such Notes, and the Issuer must specify
whether such Notes are being defeased to maturity or to a particular redemption date;

     (2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions,

     (a) the Issuer has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or

     (b) since the issuance of the Notes, there has been a change in the applicable
U.S. federal income tax law,

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in either case to the effect that, and based thereon such Opinion of Counsel shall confirm
that, subject to customary assumptions and exclusions, the Holders of the Notes will not
recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result
of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such Legal Defeasance had
not occurred;

     (3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to
such tax on the same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;

     (4) no Default (other than that resulting from borrowing funds to be applied to make such
deposit and any similar and simultaneous deposit relating to such other Indebtedness, and in
each case, the granting of Liens in connection therewith) shall have occurred and be continuing
on the date of such deposit;

     (5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under any Senior Credit Facility or any other material agreement or
instrument governing Indebtedness (other than this Indenture) to which, the Issuer or any
Restricted Guarantor is a party or by which the Issuer or any Restricted Guarantor is bound
(other than that resulting from any borrowing of funds to be applied to make the deposit
required to effect such Legal Defeasance or Covenant Defeasance and any similar and simultaneous
deposit relating to other Indebtedness, and, in each case, the granting of Liens in connection
therewith);

     (6) the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that
the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or
defrauding any creditors of the Issuer or any Restricted Guarantor or others; and

     (7) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions)
each stating that all conditions precedent provided for or relating to the Legal Defeasance or
the Covenant Defeasance, as the case may be, have been complied with.

Section 8.05 Deposited Money and Government Securities To Be Held in Trust; Other Miscellaneous
Provisions.

          Subject to Section 8.06 hereof, all money and Government Securities (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the “ Trustee ”) pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Issuer or a Guarantor acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect of principal,
premium and Special Interest, if any, and interest, but such money need not be segregated from
other funds except to the extent required by law.

          The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the cash or Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of the outstanding Notes.

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          Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay
to the Issuer from time to time upon the request of the Issuer any money or Government Securities
held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.

Section 8.06 Repayment to Issuer.

          Any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust
for the payment of the principal of, premium and Special Interest, if any, or interest on any Note
and remaining unclaimed for two years after such principal, and premium and Special Interest, if
any, or interest has become due and payable shall be paid to the Issuer on its request or (if then
held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Issuer for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof,
shall thereupon cease.

Section 8.07 Reinstatement.

          If the Trustee or Paying Agent is unable to apply any U.S. dollars or Government Securities in
accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuer’s obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such
time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided that, if the Issuer makes any payment of
principal of, premium and Special Interest, if any, or interest on any Note following the
reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

          Notwithstanding Section 9.02 hereof, the Issuer, any Guarantor (with respect to a Guarantee to
which it is a party or this Indenture) and the Trustee may amend or supplement this Indenture and
any Guarantee or Notes without the consent of any Holder:

     (1) to cure any ambiguity, omission, mistake, defect or inconsistency;

     (2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

     (3) to comply with Section 5.01 hereof;

     (4) to provide for the assumption of the Issuer’s or any Guarantor’s obligations to the
Holders in a transaction that complies with this Indenture;

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     (5) to make any change that would provide any additional rights or benefits to the Holders
or that does not adversely affect the legal rights under this Indenture of any such Holder;

     (6) to add covenants for the benefit of the Holders or to surrender any right or power
conferred upon the Issuer or any Guarantor;

     (7) to comply with requirements of the SEC in order to effect or maintain the qualification
of this Indenture under the Trust Indenture Act;

     (8) to evidence and provide for the acceptance and appointment under this Indenture of a
successor Trustee thereunder pursuant to the requirements thereof;

     (9) to add a Guarantor under this Indenture;

     (10) to conform the text of this Indenture or the Guarantees or the Notes to any provision
of the “Description of the Notes” section of the Offering Memorandum to the extent that such
provision in such “Description of the Notes” section was intended to be a verbatim recitation of
a provision of this Indenture, Guarantee or Notes;

     (11) to provide for the issuance of Exchange Notes or private exchange notes, which are
identical to Exchange Notes except that they are not freely transferable; or

     (12) to make any amendment to the provisions of this Indenture relating to the transfer and
legending of Notes as permitted by this Indenture, including, without limitation to facilitate
the issuance and administration of the Notes; provided , however , that (a)
compliance with this Indenture as so amended would not result in Notes being transferred in
violation of the Securities Act or any applicable securities law and (b) such amendment does not
materially and adversely affect the rights of Holders to transfer Notes.

          Upon the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 7.02(b) hereof (to the extent requested by the
Trustee), the Trustee shall join with the Issuer and the Guarantors in the execution of any amended
or supplemental indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations that may be therein contained, but the Trustee
shall not be obligated to enter into any such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise. Notwithstanding the foregoing,
no Opinion of Counsel shall be required in connection with the addition of a Guarantor under this
Indenture upon execution and delivery by such Guarantor and the Trustee of a supplemental indenture
to this Indenture, the form of which is attached as Exhibit D hereto, and delivery of an
Officer’s Certificate.

Section 9.02 With Consent of Holders of Notes.

          Except as provided below in this Section 9.02, the Issuer and the Trustee may amend or
supplement this Indenture, any Guarantee and the Notes with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding, other than Notes beneficially owned
by the Issuer or any of its Affiliates, including consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes, and any existing Default or Event of Default or
compliance with any provision of this Indenture or the Notes issued thereunder may be waived with
the consent of the Holders of a majority in principal amount of the then outstanding Notes, other
than Notes beneficially owned by the Issuer or any of its Affiliates (including consents obtained
in connection with a purchase of or tender offer

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or exchange offer for the Notes); provided that if any amendment, waiver or other
modification would only affect the Senior Cash Pay Notes or the Senior Toggle Notes, only the
consent of the holders of at least a majority in principal amount of the then outstanding Senior
Cash Pay Notes or Senior Toggle Notes (and not the consent of at least a majority in principal
amount of all of the then outstanding Notes), as the case may be, shall be required. Sections 2.08
and 2.09 hereof shall determine which Notes are considered to be “outstanding” for purposes of this
Section 9.02.

          Upon the request of the Issuer accompanied by a resolution of its board of directors
authorizing the execution of any such amended or supplemental indenture, and upon the filing with
the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02(b) hereof (to
the extent requested by the Trustee), the Trustee shall join with the Issuer in the execution of
such amended or supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.

          It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to
approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such
consent approves the substance thereof.

          After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer
shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Issuer to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amended or supplemental
indenture or waiver.

          Without the consent of each affected Holder of Notes, an amendment or waiver under this
Section 9.02 may not, with respect to any Notes held by a non-consenting Holder:

          (1) reduce the principal amount of such Notes whose Holders must consent to an amendment,
supplement or waiver;

          (2) reduce the principal amount of or change the fixed final maturity of any such Note or
alter or waive the provisions with respect to the redemption of such Notes (other than
provisions relating to Sections 3.09, 4.10 and 4.14 hereof);

          (3) reduce the rate of or change the time for payment of interest on any Note;

          (4) waive a Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that resulted from
such acceleration) or in respect of a covenant or provision contained in this Indenture or any
Guarantee which cannot be amended or modified without the consent of all affected Holders;

          (5) make any Note payable in money other than that stated therein;

          (6) make any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders to receive payments of principal of or premium, if any, or
interest on the Notes;

          (7) make any change to this paragraph of this Section 9.02;

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     (8) impair the right of any Holder to receive payment of principal of, or interest on such
Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such Holder’s Notes;

     (9) make any change to the ranking of the Notes that would adversely affect the Holders;

     (10) except as expressly permitted by this Indenture, modify the Guarantees of any
Significant Party in any manner adverse to the Holders of the Notes; or

     (11) after the Issuer’s obligation to purchase Notes arises thereunder, amend, change or
modify in any respect materially adverse to the Holders of the Notes the obligations of the
Issuer to make and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate an Asset Sale Offer with respect to any Asset Sale that has been consummated
or, after such Change or Control has occurred or such Asset Sale has been consummated, modify
any of the provisions or definitions with respect thereto in a manner that is materially adverse
to the Holders of the Notes.

          Notwithstanding anything in this Indenture to the contrary, (1) no amendment to, or waiver of,
the subordination provisions of this Indenture with respect to the Guarantees (or the component
definitions used therein), if adverse to the interests of the holders of the Designated Senior
Indebtedness of the Guarantors, may be made without the consent of the holders of a majority of
such Designated Senior Indebtedness (or their Representative), and (2) no amendment or supplement
to this Indenture or the Notes that modifies or waives the specific rights or obligations of any
Agent may be made without the consent of such Agent (it being understood that the Trustee’s
execution of any such amendment or supplement shall constitute such consent if the Trustee is then
also acting as such Agent).

Section 9.03 Compliance with Trust Indenture Act.

          Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended
or supplemental indenture that complies with the Trust Indenture Act as then in effect.

Section 9.04 Revocation and Effect of Consents.

          Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a
Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written notice of revocation
before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every Holder.

          The Issuer may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement, or waiver. If a record
date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at
such record date (or their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether
or not such Persons continue to be Holders after such record date. No such consent shall be valid
or effective for more than 120 days after such record date unless the consent of the requisite
number of Holders has been obtained.

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Section 9.05 Notation on or Exchange of Notes.

          The Trustee may place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Issuer in exchange for all Notes may issue and the Trustee
shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

          Failure to make the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.

Section 9.06 Trustee To Sign Amendments, etc.

          The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article
9 if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. The Issuer may not sign an amendment, supplement or waiver until its
board of directors approves it. In executing any amendment, supplement or waiver, the Trustee shall
be provided with and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in
addition to the documents required by Section 13.04 hereof, an Officer’s Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and
binding obligation of the Issuer and any Guarantors party thereto, enforceable against them in
accordance with its terms, subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03 hereof). Notwithstanding the foregoing, no Opinion of Counsel will be
required for the Trustee to execute any amendment or supplement adding a new Guarantor under this
Indenture.

Section 9.07 Payment for Consent.

          The Issuer shall not, and shall not permit any of its Subsidiaries to, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to or for
the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Notes unless such consideration is offered to all
Holders and is paid to all Holders that so consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or agreement.

ARTICLE 10

GUARANTEES

Section 10.01 Guarantee.

          Subject to this Article 10, from and after the consummation of the Transactions, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of
the Issuer hereunder or thereunder, that: (a) the principal of, and interest, premium and Special
Interest, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the
Notes, if any, if lawful, and all other Obligations of the Issuer to the Holders or the Trustee
hereunder or under the Notes shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at stated maturity,

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by acceleration or otherwise. Failing payment by the Issuer when due of any amount so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.

          The Guarantors hereby agree that their obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of this Indenture or the Notes, the
absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with
respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any
action to enforce the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor (other than payment in full of all of the Obligations
of the Issuer hereunder and under the Notes). Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the
Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands
whatsoever and covenants that this Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes and this Indenture or by release in accordance with the
provisions of this Indenture.

          Each Guarantor also agrees to pay any and all costs and expenses (including reasonable
attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under this Section
10.01.

          If any Holder or the Trustee is required by any court or otherwise to return to the Issuer,
the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation
to either the Issuer or the Guarantors, any amount paid either to the Trustee or such Holder, then
this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

          Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to
the Holders in respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations
(whether or not due and payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the rights of the
Holders under the Guarantees.

          Each Guarantee shall remain in full force and effect and continue to be effective should any
petition be filed by or against the Issuer for liquidation, reorganization, should the Issuer
become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of the Issuer’s assets, and shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee on the Notes or Guarantees,
whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment
or performance had not been made. In the event that any payment or any part thereof, is rescinded,
reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or
returned.

          In case any provision of any Guarantee shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

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          The Guarantee issued by any Guarantor shall be a general unsecured senior obligation of such
Guarantor, shall be subordinated in right of payment to the Designated Senior Indebtedness of such
Guarantor and shall be pari passu in right of payment with all other existing and
future senior indebtedness of such Guarantor, if any.

          Each payment to be made by a Guarantor in respect of its Guarantee shall be made without
set-off, counterclaim, reduction or diminution of any kind or nature.

Section 10.02 Limitation on Guarantor Liability.

          Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to
any Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors
hereby irrevocably agree that the obligations of each Guarantor shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws and after giving effect to any
collections from, rights to receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in
the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under applicable law. Each Guarantor that makes a payment under its Guarantee
shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a
contribution from each other Guarantor in an amount equal to such other Guarantor’s pro
rata portion of such payment based on the respective net assets of all the Guarantors at
the time of such payment determined in accordance with GAAP.

Section 10.03 Execution and Delivery.

          (a) To evidence its Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees
that this Indenture (or a supplemental indenture pursuant to Section 4.15 hereof) shall be executed
on behalf of such Guarantor by its President, one of its Vice Presidents or one of its Assistant
Vice Presidents.

          (b) Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof shall
remain in full force and effect notwithstanding the absence of the endorsement of any notation of
such Guarantee on the Notes.

          (c) If an officer of a Guarantor whose signature is on this Indenture (or a supplemental
indenture pursuant to Section 4.15 hereof) no longer holds that office at the time the Trustee
authenticates a Note, the Guarantee of such Guarantor shall be valid nevertheless.

          (d) The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

          (e) If required by Section 4.15 hereof, the Issuer shall cause any newly created or acquired
Restricted Subsidiary to comply with the provisions of Section 4.15 hereof and this Article 10, to
the extent applicable.

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Section 10.04 Subrogation.

          Each Guarantor shall be subrogated to all rights of Holders of Notes against the Issuer in
respect of any amounts paid by any Guarantor pursuant to the provisions of Section 10.01 hereof;
provided that, if an Event of Default has occurred and is continuing, no Guarantor shall be
entitled to enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Issuer under this Indenture or the Notes
shall have been paid in full.

Section 10.05 Benefits Acknowledged.

          Each Guarantor acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it
pursuant to its Guarantee are knowingly made in contemplation of such benefits.

Section 10.06 Release of Guarantees.

          A Guarantee by a Guarantor shall be automatically and unconditionally released and discharged,
and no further action by such Guarantor, the Issuer or the Trustee is required for the release of
such Guarantor’s Guarantee, upon:

     (1) (A) any sale, exchange or transfer (by merger, consolidation or otherwise) of (i) the
Capital Stock of such Guarantor after which the applicable Guarantor is no longer a Restricted
Subsidiary or (ii) all or substantially all the assets of such Guarantor, which sale, exchange
or transfer is made in compliance with Sections 4.10(a)(1) and (2) hereof;

     (B) the release or discharge of the guarantee by such Guarantor of the General Credit
Facilities or the guarantee which resulted in the creation of such Guarantee, except a discharge
or release by or as a result of payment under such guarantee;

     (C) the designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted
Subsidiary; or

     (D) the exercise by the Issuer of its legal defeasance option or covenant defeasance option
as set forth in Article 8 hereof or the discharge of the Issuer’s obligations under this
Indenture in accordance with the terms set forth in Article 12 hereof; and

     (2) such Guarantor delivering to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for in this Indenture relating to
such transaction have been complied with.

ARTICLE 11

SUBORDINATION OF GUARANTEES

Section 11.01 Agreement To Subordinate.

          Each Guarantor agrees, and each Holder by accepting a Note agrees, that the Obligations of
such Guarantor under its Guarantee are subordinated in right of payment, to the extent and in the
manner provided in this Article 11, to the prior payment in full in cash of all existing and future
Designated Senior Indebtedness of such Guarantor and that the subordination is for the benefit of
and enforceable by the holders of such Designated Senior Indebtedness. A Guarantor’s Obligations
under its Guarantee shall

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in all respects rank pari passu in right of payment with all other existing and
future Indebtedness (other than Subordinated Indebtedness) of such Guarantor, and will be senior in
right of payment to all existing and future Subordinated Indebtedness of such Guarantor; and only
Indebtedness of such Guarantor that is Designated Senior Indebtedness shall rank senior to the
Obligations of such Guarantor under its Guarantee in accordance with the provisions set forth
herein. All provisions of this Article 11 shall be subject to Section 11.12 hereof.

Section 11.02 Liquidation, Dissolution, Bankruptcy.

          Upon any payment or distribution of the assets of a Guarantor to creditors upon a total or
partial liquidation or dissolution or reorganization of or similar proceeding relating to such
Guarantor or its property:

     (i) the holders of Designated Senior Indebtedness of such Guarantor shall be entitled to
receive payment in full in cash of such Designated Senior Indebtedness before Holders shall be
entitled to receive any payment or distribution of any kind or character with respect to any
Obligations on, or relating to, such Guarantor’s Guarantee; and

     (ii) until the Designated Senior Indebtedness of such Guarantor is paid in full in cash,
any payment or distribution to which Holders would be entitled but for the subordination
provisions of this Article 11 shall be made to holders of such Designated Senior Indebtedness as
their interests may appear.

To the extent any payment of Designated Senior Indebtedness of any Guarantor (whether by or on
behalf of such Guarantor, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment
is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or similar Person, the Designated Senior Indebtedness of such Guarantor or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had
not occurred. It is further agreed that any diminution (whether pursuant to court decree or
otherwise, including without limitation for any of the reasons described in the preceding sentence)
of any Guarantor’s obligation to make any distribution or payment pursuant to any Designated Senior
Indebtedness of such Guarantor, except to the extent such diminution occurs by reason of the
repayment (which has not been disgorged or returned) of such Designated Senior Indebtedness of such
Guarantor in cash, shall have no force or effect for purposes of the subordination provisions
contained in this Article 11, with any turnover of payments as otherwise calculated pursuant to
this Article 11 to be made as if no such diminution had occurred. The Issuer shall promptly give
written notice to the Trustee of any such dissolution, winding-up, liquidation, or reorganization
of any Guarantor, provided that any delay or failure to give such notice shall have no effect on
the subordination provisions contained in this Article 11.

Section 11.03 Default on Designated Senior Indebtedness of a Guarantor.

          A Guarantor shall not make any payment or distribution of any kind or character with respect
to its Obligations under its Guarantee if either of the following occurs (a “ Payment
Default ”):

     (i) any Obligation on any Designated Senior Indebtedness of such Guarantor is not paid in
full in cash when due; or

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     (ii) any other default on Designated Senior Indebtedness of such Guarantor occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms;

unless, in either case, the Payment Default has been cured or waived and any such acceleration has
been rescinded or such Designated Senior Indebtedness has been paid in full in cash;
provided , however , that such Guarantor shall be entitled to make a payment or
distribution under its Guarantee without regard to the foregoing if the Issuer and the Trustee
receive written notice approving such payment from the Representatives of all Designated Senior
Indebtedness with respect to which the Payment Default has occurred and is continuing.

          During the continuance of any default (other than a Payment Default) (a “ Non-Payment
Default ”) with respect to any Designated Senior Indebtedness of a Guarantor pursuant to which
the maturity thereof may be accelerated without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace periods, such
Guarantor shall not make any payment or distribution of any kind or character with respect to its
Obligations under its Guarantee for a period (a “ Payment Blockage Period ”) commencing
upon the receipt by the Trustee (with a copy to such Guarantor and the Issuer) of written notice (a
” Blockage Notice “) of such Non-Payment Default from the Representative of such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter. The Payment Blockage Period shall end earlier if such Payment Blockage Period is
terminated:

     (i) by written notice to the Trustee, the relevant Guarantor and the Issuer from the Person
or Persons who gave such Blockage Notice;

     (ii) because the default giving rise to such Blockage Notice is cured, waived or otherwise
no longer continuing; or

     (iii) because such Designated Senior Indebtedness has been discharged or repaid in full in
cash.

          Notwithstanding the provisions described in the immediately preceding paragraph (but subject
to the provisions contained in the first paragraph of this Section 11.03 and Section 11.02 hereof),
unless the holders of such Designated Senior Indebtedness or the Representative of such Designated
Senior Indebtedness shall have accelerated the maturity of such Designated Senior Indebtedness or a
Payment Default has occurred and is continuing, the relevant Guarantor shall be permitted to resume
paying its Guarantee after the end of such Payment Blockage Period. Each Guarantee shall not be
subject to more than one Payment Blockage Period in any consecutive 360-day period irrespective of
the number of Non-Payment Defaults with respect to Designated Senior Indebtedness during such
period. However, in no event shall the total number of days during which any Payment Blockage
Period or Periods on a Guarantee is in effect exceed 179 days in the aggregate during any
consecutive 360-day period, and there must be at least 181 days during any consecutive 360-day
period during which no Payment Blockage Period is in effect. Notwithstanding the foregoing,
however, no Non-Payment Default that existed or was continuing on the date of commencement of any
Payment Blockage Period with respect to any Designated Senior Indebtedness and that was the basis
for the initiation of such Payment Blockage Period shall be, or be made, the basis for a subsequent
Payment Blockage Period unless such default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of
any financial covenants during the period after the date of delivery of such initial Blockage
Notice, that, in either case, would give rise to a Non-Payment Default pursuant to any provisions
under which a Non-Payment Default previously existed or was continuing shall constitute a new
Non-Payment Default for this purpose).

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Section 11.04 Demand for Payment.

          If payment of the Notes is accelerated because of an Event of Default and a demand for payment
is made on a Guarantor pursuant to Article 11 hereof, the Issuer or such Guarantor shall promptly
notify the holders of the Designated Senior Indebtedness of such Guarantor or the Representative of
such Designated Senior Indebtedness of such demand; provided that any failure to give such
notice shall have no effect whatsoever on the provisions of this Article 11. So long as there shall
remain outstanding any Designated Senior Indebtedness under the Senior Credit Facilities and the
relevant Guarantor is a guarantor thereof, a Blockage Notice may be given only by the respective
Representatives thereunder unless otherwise agreed to in writing by the requisite lenders named
therein. If any Designated Senior Indebtedness of a Guarantor is outstanding, such Guarantor may
not pay its Guarantee until five Business Days after the Representatives of all the issuers of such
Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may make any
payment or distribution under its Guarantee only if this Indenture otherwise permits payment at
that time.

Section 11.05 When Distribution Must Be Paid Over.

          If a distribution is made to Holders that, due to this Article 11, should not have been made
to them, such Holders are required to hold it in trust for the holders of Designated Senior
Indebtedness of the applicable Guarantor and pay it over to them as their interests may appear.

Section 11.06 Subrogation.

          After all Designated Senior Indebtedness of a Guarantor is paid in full in cash and until the
Notes are paid in full, Holders shall be subrogated to the rights of holders of such Designated
Senior Indebtedness to receive distributions applicable to such Designated Senior Indebtedness. A
distribution made under this Article 11 to holders of such Designated Senior Indebtedness which
otherwise would have been made to Holders is not, as between the applicable Guarantor and Holders,
a payment by such Guarantor on such Designated Senior Indebtedness.

Section 11.07 Relative Rights.

          This Article 11 defines the relative rights of Holders and holders of Designated Senior
Indebtedness of a Guarantor. Nothing in this Indenture shall:

     (i) impair, as between such Guarantor and Holders, the obligation of such Guarantor, which
is absolute and unconditional, to make payments under its Guarantee in accordance with its
terms;

     (ii) prevent the Trustee or any Holder from exercising its available remedies upon a
default by such Guarantor under its obligations with respect to its Guarantee, subject to the
rights of holders of Designated Senior Indebtedness of such Guarantor to receive payments or
distributions otherwise payable to Holders and such other rights of such holders of Designated
Senior Indebtedness as set forth herein; or

     (iii) affect the relative rights of Holders and creditors of such Guarantor other than
their rights in relation to holders of the Designated Senior Indebtedness of such Guarantor.

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Section 11.08 Subordination May Not Be Impaired by a Guarantor.

          No right of any holder of Designated Senior Indebtedness of a Guarantor to enforce the
subordination of the Obligations of such Guarantor under its Guarantee shall be impaired by any act
or failure to act by such Guarantor or by its failure to comply with this Indenture.

Section 11.09 Rights of Trustee and Paying Agent.

          Notwithstanding Section 11.03 hereof, the Trustee or any Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence of facts that would
prohibit the making of any payments unless a Responsible Officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article 11; provided ,
however , that notwithstanding the foregoing, the subordination of the Guarantees to the
Designated Senior Indebtedness of the Guarantors shall not be affected and the Holders receiving
any payments in contravention of Section 11.02 and/or 11.03 (and such respective payments) shall
otherwise be subject to the provisions of this Article 11. A Guarantor, the Registrar, the Paying
Agent, a Representative or a holder of Designated Senior Indebtedness of such Guarantor shall be
entitled to give the notice that payments may not be made under this Article 11; provided ,
however , that, if an issue of Designated Senior Indebtedness of such Guarantor has a
Representative, only the Representative shall be entitled to give such notice.

          The Trustee in its individual or any other capacity shall be entitled to hold any Designated
Senior Indebtedness of a Guarantor with the same rights it would have if it were not Trustee. The
Registrar and the Paying Agent shall be entitled to do the same with like rights. The Trustee shall
be entitled to all the rights set forth in this Article 11 with respect to any Designated Senior
Indebtedness of a Guarantor which may at any time be held by it, to the same extent as any other
holder of such Designated Senior Indebtedness; and nothing in Article 7 hereof shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article 11 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 7.07 hereof or any other Section of this
Indenture.

Section 11.10 Distribution or Notice to Representative.

          Whenever a distribution is to be made or a notice given to holders of any Designated Senior
Indebtedness of a Guarantor, the distribution may be made and the notice given to their
Representative (if any).

Section 11.11 Article 11 Not To Prevent Events of Default or Limit Right To Demand Payment
        .

          The failure of a Guarantor to make a payment pursuant its Guarantee by reason of any provision
in this Article 11 shall not be construed as preventing the occurrence of a default by such
Guarantor under its Guarantee. Nothing in this Article 11 shall have any effect on the right of the
Holders or the Trustee to make a demand for payment on a Guarantor pursuant to Article 10 hereof.

Section 11.12 Trust Moneys Not Subordinated.

          Notwithstanding anything contained herein to the contrary, payments from money or the proceeds
of Government Securities held in trust by the Trustee for the payment of principal (including any
accretion) of and interest on the Notes pursuant to Article 8 or Article 12 hereof shall not be
subordinated to the prior payment of any Designated Senior Indebtedness of any Guarantor or subject
to the restrictions set forth in this Article 11, and none of the Holders shall be obligated to pay
over any such amount to such Guarantor or any holder of Designated Senior Indebtedness of such
Guarantor or any

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other creditor of such Guarantor; provided , that the subordination provisions of this
Article 11 were not violated at the time the applicable amounts were deposited in trust pursuant to
Article 8 or Article 12 hereof, as the case may be, and such deposit was otherwise made in
accordance with Article 8 or Article 12 hereof.

Section 11.13 Trustee Entitled To Rely.

          Upon any payment or distribution pursuant to this Article 11, the Trustee and the Holders
shall be entitled to rely (a) upon any order or decree of a court of competent jurisdiction in
which any proceedings of the nature referred to in Section 11.02 hereof are pending, (b) upon a
certificate of the liquidating trustee or agent or other Person making such payment or distribution
to the Trustee or to the Holders or (c) upon the Representatives of Designated Senior Indebtedness
of a Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of such Designated Senior Indebtedness and other Indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right of any Person as a
holder of Designated Senior Indebtedness of a Guarantor to participate in any payment or
distribution pursuant to this Article 11, the Trustee shall be entitled to request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Designated
Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such Person under this
Article 11, and, if such evidence is not furnished, the Trustee shall be entitled to defer any
payment to such Person pending judicial determination as to the right of such Person to receive
such payment. The provisions of Sections 7.01 and 7.02 hereof shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 11.

Section 11.14 Trustee To Effectuate Subordination.

          A Holder by its acceptance of a Note agrees to be bound by this Article 11 and authorizes and
expressly directs the Trustee, on its behalf, to take such action as may be necessary or
appropriate to effectuate the subordination between the Holders and the holders of Designated
Senior Indebtedness of a Guarantor as provided in this Article 11 and appoints the Trustee as its
attorney-in-fact for such purpose.

          If the Trustee does not file a Proper Proof of Claim in any proceeding prior to 15 days before
the expiration of the time to file a Proof of Claim in such proceeding, then the holders of
Designated Senior Indebtedness of any Guarantor (or their Representative) are hereby authorized to
have the right to file and are (or is) hereby authorized to file, in the name of the Trustee, a
Proof of Claim for and on behalf of the Holders; provided , that (i) if the holders of the
Designated Senior Indebtedness of such Guarantor (or their Representative) file any Proof of Claim
as contemplated above and the Trustee shall subsequently file a Proper Proof of Claim in such
proceeding before the expiration of the time to file a Proof of Claim in such proceeding, such
subsequent Proper Proof of Claim filed by the Trustee shall supersede any such Proof of Claim
theretofore filed by the holders of the Designated Senior Indebtedness of such Guarantor (or their
Representative), and such Proof of Claim theretofore filed by the holders of the Designated Senior
Indebtedness of such Guarantor (or their Representative) shall thereupon be deemed to be withdrawn,
and (ii) the foregoing provisions of this paragraph shall not be construed to authorize the holders
of the Designated Senior Indebtedness (or their Representative) to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes, or to authorize the holders of the Designated Senior Indebtedness
(or their Representative) to vote in respect of the claim of any Holder in any such proceeding.
This Section 11.14 is intended solely to permit the holders of Designated Senior Indebtedness of
any Guarantor to preserve their “turnover

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right” pursuant to the applicable subordination provisions in this Article 11 in circumstances
where a Proper Proof of Claim has not been filed by the Trustee before the expiration of the time
to file a Proof of Claim in a bankruptcy proceeding, and nothing herein shall impair the rights of
the Trustee under Section 6.13 and 7.07 hereof.

Section 11.15 Trustee Not Fiduciary for Holders of Designated Senior Indebtedness of
Guarantors.

          The Trustee shall not be deemed to owe any fiduciary duty to the holders of any Designated
Senior Indebtedness of a Guarantor and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Holders or such Guarantor or any other Person, money or assets
to which any holders of any Designated Senior Indebtedness of such Guarantor shall be entitled by
virtue of this Article 11 or otherwise.

Section 11.16 Reliance by Holders of Designated Senior Indebtedness of a Guarantor on
Subordination Provisions.

          Each Holder by accepting a Note acknowledges and agrees that the subordination provisions in
this Article 11 are, and are intended to be, an inducement and a consideration to each holder of
any Designated Senior Indebtedness of a Guarantor, whether such Designated Senior Indebtedness was
created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or
to continue to hold, such Designated Senior Indebtedness, and such holder of such Designated Senior
Indebtedness shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Designated Senior Indebtedness.

          Without in any way limiting the generality of the foregoing paragraph, the holders of any
Designated Senior Indebtedness of a Guarantor may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee
or the Holders and without impairing or releasing the subordination provided in this Article 11 or
the obligations hereunder of the Holders to the holders of such Designated Senior Indebtedness of
such Guarantor, do any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, such Designated Senior Indebtedness of
such Guarantor, or otherwise amend or supplement in any manner such Designated Senior Indebtedness
of such Guarantor, or any instrument evidencing the same or any agreement under which such
Designated Senior Indebtedness of such Guarantor is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such Designated Senior
Indebtedness of such Guarantor; (iii) release any Person liable in any manner for the payment or
collection of such Designated Senior Indebtedness of such Guarantor; and (iv) exercise or refrain
from exercising any rights against such Guarantor and any other Person.

ARTICLE 12

SATISFACTION AND DISCHARGE

Section 12.01 Satisfaction and Discharge.

          This Indenture shall be discharged and shall cease to be of further effect as to all Notes,
when either:

     (1) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed
Notes which have been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for cancellation; or

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     (2) (A) all Notes not theretofore delivered to the Trustee for cancellation have become due
and payable by reason of the making of a notice of redemption or otherwise, shall become due and
payable within one year or are to be called for redemption and redeemed within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Issuer, and the Issuer or any Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders of the Notes cash in U.S. dollars, Government Securities, or a
combination thereof, in such amounts as will be sufficient without consideration of any
reinvestment of interest to pay and discharge the entire indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation for principal, premium, if any, and
accrued interest to the date of maturity or redemption thereof, as the case may be;

     (B) no Default (other than that resulting from borrowing funds to be applied to make such
deposit or any similar and simultaneous deposit relating to other Indebtedness and in each case,
the granting of Liens in connection therewith) with respect to this Indenture or the Notes shall
have occurred and be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or constitute a default
under any Senior Credit Facility or any other material agreement or instrument governing
Indebtedness (other than this Indenture) to which the Issuer or any Guarantor is a party or by
which the Issuer or any Guarantor is bound (other than resulting from any borrowing of funds to
be applied to make such deposit and any similar and simultaneous deposit relating to other
Indebtedness and, in each case, the granting of Liens in connection therewith);

     (C) the Issuer has paid or caused to be paid all sums payable by it under this Indenture;
and

     (D) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited
money toward the payment of the Notes at maturity or the redemption date, as the case may be.

          In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

          Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (A) of clause (2) of this Section 12.01, the
provisions of Section 12.02 and Section 8.06 hereof shall survive such satisfaction and discharge.

Section 12.02 Application of Trust Money.

          Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 12.01 hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium and Special Interest, if any) and interest
for whose payment such money has been deposited with the Trustee; but such money need not be
segregated from other funds except to the extent required by law.

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          If the Trustee or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 12.01 hereof by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Issuer’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01 hereof;
provided that if the Issuer has made any payment of principal of, premium and Special
Interest, if any, or interest on any Notes because of the reinstatement of its obligations, the
Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from
the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE 13

MISCELLANEOUS

Section 13.01 Trust Indenture Act Controls.

          If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
Trust Indenture Act Section 318(c), the imposed duties shall control.

Section 13.02 Notices.

          Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly
given if in writing and delivered in person or mailed by first-class mail (registered or certified,
return receipt requested), facsimile or overnight air courier guaranteeing next day delivery, to
the others’ address:

If to the Issuer and/or any Guarantor:

Clear Channel Communications, Inc.

200 East Basse Road

San Antonio, TX 78209

Attention: Brian Coleman, Senior Vice President and Treasurer

Telephone: (210) 832-3311

Facsimile: (210) 832-3432

with a copy to:

Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY

Attention: Jay J. Kim, Esq.

Telephone: (212) 596-9000

Facsimile: (212) 596-9090

If to the Trustee:

Law Debenture Trust Company of New York

400 Madison Avenue, Suite 4D

New York, NY 10017

Attention: Vice President

Telephone: (212) 750-6474

Facsimile: (212) 750-1361

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If to the initial Paying Agent and Registrar:

Deutsche Bank Trust Company Americas

60 Wall Street, 27th Floor

MS: NYC60-2710

New York, NY 10005

Attention.: Trust & Securities Services

Facsimile: (732) 578-4635

with a copy to:

Deutsche Bank National Trust Company

25 DeForest Avenue

Mail Stop: SUM01-0105

Summit, New Jersey 07901

Attention: Trust & Securities Services

Facsimile: (732) 578-4635

          The Issuer, any Guarantor or the Trustee, by notice to the others, may designate additional or
different addresses for subsequent notices or communications.

          All notices and communications (other than those sent to Holders) shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five calendar days after being
deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged,
if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery; and, subject to compliance with the Trust Indenture Act, on
the first date on which publication is made, if given by publication; provided that any
notice or communication delivered to the Trustee shall be deemed effective upon actual receipt
thereof.

          Any notice or communication to a Holder shall be mailed by first-class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in Trust Indenture Act Section 313(c), to the extent required by
the Trust Indenture Act. Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.

          If a notice or communication is mailed or otherwise delivered in the manner provided above
within the time prescribed, such notice or communication shall be deemed duly given, whether or not
the addressee receives it.

          If the Issuer mails a notice or communication to Holders, it shall mail a copy to the Trustee
and each Agent at the same time.

Section 13.03 Communication by Holders of Notes with Other Holders of Notes.

          Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar
and anyone else shall have the protection of Trust Indenture Act Section 312(c).

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Section 13.04 Certificate and Opinion as to Conditions Precedent.

          Upon any request or application by the Issuer or any of the Guarantors to the Trustee to take
any action under this Indenture, the Issuer or such Guarantor, as the case may be, shall furnish to
the Trustee:

     (a) An Officer’s Certificate in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 13.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and

     (b) An Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 13.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants have been satisfied.

Section 13.05 Statements Required in Certificate or Opinion.

          Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to Section 4.04 hereof or Trust
Indenture Act Section 314(a)(4)) shall comply with the provisions of Trust Indenture Act Section
314(e) and shall include:

     (a) a statement that the Person making such certificate or opinion has read such covenant
or condition;

     (b) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based;

     (c) a statement that, in the opinion of such Person, he or she has made such examination or
investigation as is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with (and, in the case of an Opinion of Counsel,
may be limited to reliance on an Officer’s Certificate as to matters of fact); and

     (d) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been complied with; provided , however , that with respect to
matters of fact an Opinion of Counsel may rely on an Officer’s Certificate or certificates of
public officials.

Section 13.06 Rules by Trustee and Agents.

          The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 13.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

          No past, present or future director, officer, employee, incorporator, member, partner or
stockholder of the Issuer or any Guarantor or any of their direct or indirect parent companies
shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the
Guarantees or this Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder by accepting Notes waives and releases all such
liability. The waiver and release are part of the consideration for issuance of the Notes.

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Section 13.08 Governing Law.

          THIS INDENTURE, THE NOTES AND ANY GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

Section 13.09 Waiver of Jury Trial.

          EACH OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 13.10 Force Majeure.

          In no event shall the Trustee or any Agent be responsible or liable for any failure or delay
in the performance of its obligations under this Indenture arising out of or caused by, directly or
indirectly, forces beyond its reasonable control, including without limitation strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications
or computer (software or hardware) services.

Section 13.11 No Adverse Interpretation of Other Agreements.

          This Indenture may not be used to interpret any other indenture, loan or debt agreement of the
Issuer or its Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

Section 13.12 Successors.

          All agreements of the Issuer in this Indenture and the Notes shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors. All agreements of each
Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section
10.06 hereof.

Section 13.13 Severability.

          In case any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

Section 13.14 Counterpart Originals.

          The parties may sign any number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. This Indenture may be executed in
multiple counterparts which, when taken together, shall constitute one instrument.

Section 13.15 Table of Contents, Headings, etc.

          The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part of
this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

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Section 13.16 Qualification of Indenture.

          The Issuer and the Guarantors shall qualify this Indenture under the Trust Indenture Act in
accordance with the terms and conditions of the Registration Rights Agreement and shall pay all
reasonable costs and expenses (including attorneys’ fees and expenses for the Issuer, the
Guarantors and the Trustee) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of this Indenture and the Notes and printing this Indenture and the
Notes. The Trustee shall be entitled to receive from the Issuer and the Guarantors any such
Officer’s Certificates, Opinions of Counsel or other documentation as it may reasonably request in
connection with any such qualification of this Indenture under the Trust Indenture Act.

[Signatures on following page]

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	 	BT TRIPLE CROWN MERGER CO., INC.,

as Issuer

 	 
	 	By:  	/s/ John P. Connaughton
 	 
	 	 	Name:  	John P. Connaughton 	 
	 	 	Title:  	Co-President and Secretary 	 
	 

The undersigned hereby acknowledges and agrees that, upon the effectiveness of the merger of BT
Triple Crown Merger Co., Inc. with and into Clear Channel Communications, Inc. with Clear Channel
Communications, Inc. continuing as the surviving corporation under the name “Clear Channel
Communications, Inc.”, it will succeed by operation of law to all of the rights and obligations of
BT Triple Crown Merger Co., Inc. set forth herein and that all references herein to the “Issuer”
shall thereupon be deemed to be references to the undersigned.

	 	 	 	 	 
	 	CLEAR CHANNEL COMMUNICATIONS, INC.

 	 
	 	By:  	/s/ Mark P. Mays
 	 
	 	 	Name:  	Mark P. Mays 	 
	 	 	Title:  	Chief Executive Officer and Chief Operating Officer 	 
	 

Signature Page to Indenture

 

	 	 	 	 	 
	 	LAW DEBENTURE TRUST COMPANY OF NEW

YORK, as Trustee

 	 
	 	By:  	/s/ James D. Heaney
 	 
	 	 	Name:  	James D. Heaney 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to Indenture

 

	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Paying Agent, Registrar and Transfer Agent

 	 
	 	By:  	/s/ Annie Jaghatspanyan
 	 
	 	 	Name:  	Annie Jaghatspanyan 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	                   /s/ Jennifer Davis
 	 
	 	 	Name:  	Jennifer Davis 	 
	 	 	Title:  	Associate 	 
	 

Signature Page to Indenture

 

EXHIBIT A1

[Face of Senior Cash Pay Note]

          [Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

          [Insert the Private Placement Legend, if applicable pursuant to the provisions of the
Indenture]

          [Insert the Regulation S Temporary Global Note Legend, if applicable pursuant to the
provisions of the Indenture]

          [THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTION 1271 ET SEQ. OF THE
INTERNAL REVENUE CODE. THE ISSUE DATE IS [•]. INFORMATION REGARDING THE ISSUE PRICE, THE YIELD TO
MATURITY AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT UNDER THIS NOTE CAN BE PROMPTLY OBTAINED BY
SENDING A WRITTEN REQUEST TO THE TREASURER OF THE ISSUER AT 200 EAST BASSE ROAD, SAN ANTONIO, TX
78209.]

A1-1

 

CUSIP [        ]

ISIN [         ]1

[[RULE 144A][REGULATION S] GLOBAL NOTE

representing up to

$980,000,000

10.75% Senior Cash Pay Notes due 2016

			
	No. ___
	 	[$                    ]

BT TRIPLE CROWN MERGER CO., INC.

as the Issuer

(to be merged with and into CLEAR CHANNEL COMMUNICATIONS, INC.,

with CLEAR CHANNEL COMMUNICATIONS, INC. as the surviving entity)

promises to pay to CEDE & CO. or registered assigns, the principal sum [set forth on the Schedule
of Exchanges of Interests in the Global Note attached hereto] [of                                          United
States Dollars] on August 1, 2016.

Interest Payment Dates: February 1 and August 1

Record Dates: January 15 and July 15

 

			
	1	 	Rule 144A Note CUSIP: 184502 AZ5
	 
	 	 	Rule 144A Note ISIN: US184502AZ53
	 
	 	 	Regulation S Note CUSIP: U18285 AD5
	 
	 	 	Regulation S Note ISIN: USU18285AD55
	 
	 	 	Exchange Note CUSIP:
	 
	 	 	Exchange Note ISIN:

A1-2

 

IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

Dated: [•]

	 	 	 	 	 
	 	BT TRIPLE CROWN MERGER CO., INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

The undersigned hereby acknowledges and agrees that, upon the effectiveness of the merger of BT
Triple Crown Merger Co., Inc. with and into Clear Channel Communications, Inc. with Clear Channel
Communications, Inc. continuing as the surviving corporation under the name “Clear Channel
Communications, Inc.”, it will succeed by operation of law to all of the rights and obligations of
BT Triple Crown Merger Co., Inc. set forth herein and that all references herein to the “Issuer”
shall thereupon be deemed to be references to the undersigned.

	 	 	 	 	 
	 	CLEAR CHANNEL COMMUNICATIONS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A1-3

 

	 	 	 	 	 

This is one of the Notes referred to in the within-mentioned Indenture:

	 	 	 	 	 
	 	LAW DEBENTURE TRUST COMPANY OF NEW YORK,

  as Trustee
 	 
	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

A1-4

 

	 	 	 	 	 

[Back of Senior Cash Pay Note]

10.75% Senior Cash Pay Notes due 2016

          Capitalized terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

          1. INTEREST. BT Triple Crown Merger Co., Inc., a Delaware corporation (to be merged with and
into CLEAR CHANNEL COMMUNICATIONS, INC., with CLEAR CHANNEL COMMUNICATIONS, INC. as the surviving
entity) (the “Issuer”), promises to pay interest on the principal amount of this Senior
Cash Pay Note at 10.75% per annum from July 30, 20082 until maturity and
shall pay the Special Interest, if any, payable pursuant to the Registration Rights Agreement
referred to below. The Issuer shall pay interest and Special Interest, if any, semi-annually in
arrears on February 1 and August 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Senior
Cash Pay Notes shall accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that the first Interest Payment
Date shall be February 1, 2009. The Issuer shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at the interest rate on the Senior Cash Pay Notes; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Special Interest, if any, (without regard to any applicable grace periods) from time
to time on demand at the interest rate on the Senior Cash Pay Notes. Interest shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.

          2. METHOD OF PAYMENT. The Issuer shall pay interest, and Special Interest, if any, on the
Senior Cash Pay Notes to the Persons who are registered Holders of the Senior Cash Pay Notes at the
close of business on the January 15 or July 15 (whether or not a Business Day), as the case may be,
next preceding the Interest Payment Date, even if such Senior Cash Pay Notes are canceled after
such Record Date and on or before such Interest Payment Date, except as provided in Section 2.12 of
the Indenture with respect to defaulted interest. Payment of interest and Special Interest, if
any, may be made by check mailed to the Holders at their addresses set forth in the register of
Holders, provided that payment by wire transfer of immediately available funds shall be
required with respect to principal of and interest, premium and Special Interest, if any, on, all
Global Notes and all other Senior Cash Pay Notes the Holders of which shall have provided wire
transfer instructions to the Issuer or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts.

          3. PAYING AGENT, TRANSFER AGENT AND REGISTRAR. Initially, Deutsche Bank Trust Company
Americas shall act as Paying Agent, Transfer Agent and Registrar. The Issuer may change any Paying
Agent, Transfer Agent or Registrar without notice to the Holders. The Issuer or any of its
Subsidiaries may act in any such capacity.

          4. INDENTURE. The Issuer issued the Senior Cash Pay Notes under an Indenture, dated as of
July 30, 2008 (the “Indenture”), among the Issuer, the Trustee and the Paying Agent,
Registrar

 

			
	2	 	With respect to the Initial Notes

A1-5

 

and Transfer Agent. This Senior Cash Pay Note is one of a duly authorized issue of notes of
the Issuer designated as its 10.75% Senior Cash Pay Notes due 2016. The Issuer shall be entitled
to issue Additional Notes pursuant to Sections 2.01 and 4.09 of the Indenture. The terms of the
Senior Cash Pay Notes include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The
Senior Cash Pay Notes are subject to all such terms, and Holders are referred to the Indenture and
the Trust Indenture Act for a statement of such terms. To the extent any provision of this Senior
Cash Pay Note conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling.

          5. OPTIONAL REDEMPTION.

          (a) Except as described below under Sections 5(b) and 5(c) below, the Senior Cash Pay Notes
shall not be redeemable at the Issuer’s option before August 1, 2012.

          (b) At any time prior to August 1, 2012, the Senior Cash Pay Notes may be redeemed or
purchased (by the Issuer or any other Person), in whole or in part, upon notice as provided in
Section 3.03 of the Indenture, at a redemption price equal to 100.0% of the principal amount of the
Senior Cash Pay Notes redeemed plus the Applicable Premium as of the date of redemption (the
“Redemption Date”) and, without duplication, accrued and unpaid interest to the Redemption
Date, subject to the right of Holders of record on the relevant Record Date to receive interest due
on the relevant Interest Payment Date.

          (c) Until August 1, 2011, the Issuer may, at its option, on one or more occasions, redeem up
to 40.0% of the aggregate principal amount of Senior Cash Pay Notes, upon notice provided as
described in Section 3.03 of the Indenture, at a redemption price equal to 110.750% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon to the applicable
Redemption Date, subject to the right of Holders of Senior Cash Pay Notes of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date, with the net cash
proceeds of one or more Equity Offerings to the extent such net cash proceeds are received by or
contributed to the Issuer; provided that at least 50.0% of the sum of the aggregate
principal amount of Senior Cash Pay Notes originally issued under the Indenture on the Issue Date
and any Additional Notes that are Senior Cash Pay Notes issued under the Indenture after the Issue
Date remains outstanding immediately after the occurrence of each such redemption; provided
further that each such redemption occurs within 180 days of the date of closing of each
such Equity Offering. Notice of any redemption upon any Equity Offering may be given prior to the
completion of the related Equity Offering, and any such redemption or notice may, at the Issuer’s
discretion, be subject to one or more conditions precedent, including, but not limited to,
completion of the related Equity Offering.

          (d) On and after August 1, 2012, the Senior Cash Pay Notes may be redeemed or purchased (by
the Issuer or any other Person), at the Issuer’s option, in whole or in part, upon notice provided
as described in Section 3.03 of the Indenture, at the redemption prices (expressed as percentages
of principal amount of the Senior Cash Pay Notes to be redeemed) set forth below, plus accrued and
unpaid interest thereon to the applicable Redemption Date, subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant Interest Payment Date,
if redeemed during the twelve-month period beginning on August 1 of each of the years indicated
below:

	 	 	 	 	 
	 	 	Senior	 
	 	 	Cash Pay	 
	Year	 	Notes Percentage	 
	2012
	 	 	105.375	%
	2013
	 	 	102.688	%
	2014 and thereafter
	 	 	100.000	%

A1-6

 

          (e) Any redemption of Senior Cash Pay Notes pursuant to this Section 5 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 of the Indenture.

          6. MANDATORY REDEMPTION. On the first Interest Payment Date following the fifth anniversary
of the “issue date” as defined in Treasury Regulation Section 1.1273-2(a)(2) of the Senior Cash Pay
Notes, and on each Interest Payment Date thereafter, the Issuer shall redeem a portion of the
principal amount of each then outstanding Senior Cash Pay Note in an amount equal to the AHYDO
Catch-Up Payment for such Interest Payment Date with respect to such Note. The “AHYDO Catch-Up
Payment” for a particular Interest Payment Date with respect to each Senior Cash Pay Note means
the minimum principal prepayment sufficient to ensure that as of the close of such Interest Payment
Date, the aggregate amount which would be includible in gross income with respect to such Senior
Cash Pay Note before the close of such Interest Payment Date (as described in Section 163(i)(2)(A)
of the Code) does not exceed the sum (described in Section 163(i)(2)(B) of the Code) of (i) the
aggregate amount of interest to be paid on such Senior Cash Pay Note (including for this purpose
any AHYDO Catch-Up Payments) before the close of such Interest Payment Date plus (ii) the product
of the issue price of such Senior Cash Pay Note as defined in Section 1273(b) of the Code
(i.e., the first price at which a substantial amount of the Senior Cash Pay Notes is sold,
disregarding for this purpose sales to bond houses, brokers or similar persons acting in the
capacity of underwriters, placement agents or wholesalers) and its yield to maturity (within the
meaning of Section 163(i)(2)(B) of the Code), with the result that such Senior Cash Pay Note is not
treated as having “significant original issue discount” within the meaning of Section 163(i)(1)(C)
of the Code; provided, however, for avoidance of doubt, that if the yield to
maturity of such Senior Cash Pay Note is less than the amount described in Section 163(i)(1)(B) of
the Code, the AHYDO Catch-Up Payment shall be zero for each Interest Payment Date with respect to
such Senior Cash Pay Note. This Section 6 shall be interpreted consistently with the intent that
no Senior Cash Pay Note shall be an “applicable high yield discount obligation” (an
“AHYDO”) within the meaning of Section 163(i)(1) of the Code. The computations and
determinations required in connection with any AHYDO Catch-Up Payment shall be made by the Issuer
in its good faith reasonable discretion and shall be binding upon the Holders absent manifest
error.

          The Issuer shall not be required to make any other mandatory redemption or sinking fund
payments with respect to the Senior Cash Pay Notes.

          7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall
be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date
(except that redemption notices may be mailed more than 60 days prior to a redemption date if the
notice is issued in connection with Article 8 or Article 12 of the Indenture) to each Holder whose
Senior Cash Pay Notes are to be redeemed at its registered address. Notes in denominations larger
than $2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior
Cash Pay Notes held by a Holder are to be redeemed. On and after the redemption date, interest
shall cease to accrue on Senior Cash Pay Notes or portions thereof called for redemption.

          8. OFFERS TO REPURCHASE.

          (a) If a Change of Control occurs, unless the Issuer has previously or concurrently mailed a
redemption notice with respect to all the outstanding Senior Cash Pay Notes as set forth in Section
3.03 of the Indenture and Section 5 hereof, the Issuer shall make an offer to purchase all of the
Senior

A1-7

 

Cash Pay Notes pursuant to the offer described below (the “Change of Control Offer”)
at a price in cash (the “Change of Control Payment”) equal to 101.0% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject
to the right of Holders of the Senior Cash Pay Notes of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date. The Change of Control Offer shall be
made in accordance with Section 4.14 of the Indenture.

          (b) If the Issuer or any of its Restricted Subsidiaries consummates an Asset Sale, within 10
Business Days of each date that Excess Proceeds exceed $100,000,000, the Issuer shall make an offer
to all Holders of the Senior Cash Pay Notes and, if required by the terms of any Indebtedness that
is pari passu in right of payment with the Senior Cash Pay Notes (“Pari Passu
Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”),
to purchase the maximum aggregate principal amount of the Senior Cash Pay Notes and the maximum
aggregate principal amount (or accreted value, if less) of such Pari Passu Indebtedness that is a
minimum of $2,000 or an integral multiple of $1,000, that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100.0% of the principal amount thereof (or
accreted value, if applicable), plus accrued and unpaid interest to the date fixed for the closing
of such offer, in accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Senior Cash Pay Notes and such Pari Passu Indebtedness tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess
Proceeds for general corporate purposes, subject to compliance with other covenants contained in
the Indenture. If the aggregate principal amount of Senior Cash Pay Notes and the Pari Passu
Indebtedness surrendered in an Asset Sale Offer by such holders thereof exceeds the amount of
Excess Proceeds, the Senior Cash Pay Notes (as selected by the Trustee or the Paying Agent) and
such Pari Passu Indebtedness (as selected by the agent thereof) shall be purchased on a pro
rata basis based on the principal amount of the Senior Cash Pay Notes and the principal
amount (or accreted value, if applicable) of such Pari Passu Indebtedness tendered. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero.
Holders of Senior Cash Pay Notes that are the subject of an offer to repurchase shall receive an
Asset Sale Offer from the Issuer prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to
the Senior Cash Pay Notes.

          9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Cash Pay Notes are in registered form
without coupons in denominations of $2,000 and integral multiples of $1,000. The transfer of
Senior Cash Pay Notes may be registered and Senior Cash Pay Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents, and the Issuer may require a Holder to pay any
taxes and fees required by law or permitted by the Indenture. The Issuer need not exchange or
register the transfer of any Senior Cash Pay Note or portion of a Senior Cash Pay Note selected for
redemption, except for the unredeemed portion of any Senior Cash Pay Note being redeemed in part.
Also, the Issuer need not exchange or register the transfer of (x) any Senior Cash Pay Notes for a
period of 15 days before a selection of Senior Cash Pay Notes to be redeemed or (y) any Senior Cash
Pay Notes selected for redemption or tendered (and not withdrawn) for repurchase in connection with
a Change of Control Offer or an Asset Sale Offer.

          10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Cash Pay Note may be treated as
its owner for all purposes.

          11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture, the Guarantees or the Senior Cash Pay
Notes may be amended or supplemented as provided in the Indenture.

A1-8

 

          12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section
6.01 of the Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25.0% in principal amount of the then outstanding Notes may declare the
principal, premium, if any, interest and any other monetary obligations on all the then outstanding
Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding Notes shall become
due and payable immediately without further action or notice. Holders may not enforce the
Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of
the Notes notice of any continuing Default (except a Default relating to the payment of principal,
premium, if any, or interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its
consequences under the Indenture except a continuing Default in payment of interest on, premium, if
any, or the principal of, any of the Notes held by a non-consenting Holder. The Issuer is required
to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the
Issuer is required within five (5) Business Days after becoming aware of any Default, to deliver to
the Trustee a statement specifying such Default and what action the Issuer proposes to take with
respect thereto.

          13. AUTHENTICATION. This Senior Cash Pay Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of
the Trustee.

          14. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES.
In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted
Global Notes and Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement, dated as of July 30, 2008, among the Issuer, the Guarantors named
therein and the other parties named on the signature pages thereof (the “Registration Rights
Agreement”), including the right to receive Special Interest (as defined in the Registration
Rights Agreement).

          15. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE
INDENTURE, THE NOTES AND THE GUARANTEES.

          16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Senior
Cash Pay Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as printed on the
Senior Cash Pay Notes or as contained in any notice of redemption and reliance may be placed only
on the other identification numbers placed thereon.

          The Issuer shall furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement. Requests may be made to the Issuer at the
following address:

Clear Channel Communications, Inc.

200 East Basse Road

San Antonio, TX 78209

A1-9

 

Attention: Brian Coleman, Senior Vice President and Treasurer

A1-10

 

ASSIGNMENT FORM

To assign this Senior Cash Pay Note, fill in the form below:

(I) or (we) assign and transfer this Senior Cash Pay Note to:                                                                
                                        

(Insert assignee’ legal name)                    
                   

      

(Insert assignee’s soc. sec. or tax I.D. no.)

      

      

      

      

(Print or type assignee’s name, address and zip code)

     and irrevocably appoint                                                                                                                         
                                     to transfer this Senior Cash Pay Note on the books of the Issuer. The agent may substitute another
to act for him.

Date:                                                             

	 	 	 	 	 
	 	 	 
	 	Your Signature:  	
 	 
	 	 	(Sign exactly as your name appears on 

the face of this Senior Cash Pay Note) 	 
	 

Signature Guarantee*:                                                                                 

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

A1-11

 

OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Senior Cash Pay Note purchased by the Issuer pursuant to
Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

[     ] Section 4.10           [     ] Section 4.14

          If you want to elect to have only part of this Senior Cash Pay Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have
purchased:

$                                        

Date:                                                             

	 	 	 	 	 
	 	 	 
	 	Your Signature:  	
 	 
	 	 	(Sign exactly as your name appears on 

the face of this Senior Cash Pay Note) 	 
	 	Tax Identification No.:                                                            
	 
	 

Signature Guarantee*:                                                                                 

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

A1-12

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

          The initial outstanding principal amount of this Global Note is $                                        . The following
exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive
Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global
Note, have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Amount of increase	 	Principal Amount of	 	Signature of
	 	 	 	 	in Principal	 	this Global Note	 	authorized officer
	 	 	Amount of decrease	 	Amount of this	 	following such	 	of Trustee or
	Date of Exchange	 	in Principal Amount	 	Global Note	 	decrease or increase	 	Note Custodian
	 

	 	 
	 	 
	 	 
	 	 

 

			
	* 	 	This schedule should be included only if the Note is issued in global form.

A1-13

 

EXHIBIT A2

[Face of Senior Toggle Note]

          [Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

          [Insert the Private Placement Legend, if applicable pursuant to the provisions of the
Indenture]

          [Insert the Regulation S Temporary Global Note Legend, if applicable pursuant to the
provisions of the Indenture]

          [THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTION 1271 ET SEQ. OF THE
INTERNAL REVENUE CODE. THE ISSUE DATE IS [•]. INFORMATION REGARDING THE ISSUE PRICE, THE YIELD TO
MATURITY AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT UNDER THIS NOTE CAN BE PROMPTLY OBTAINED BY
SENDING A WRITTEN REQUEST TO THE TREASURER OF THE ISSUER AT 200 EAST BASSE ROAD, SAN ANTONIO, TX
78209.]

           

A2-1

 

CUSIP [          ]

ISIN [          ]3

[[RULE 144A][REGULATION S] GLOBAL NOTE

representing up to

$1,330,000,000

11.00% / 11.75% Senior Toggle Notes due 2016

	 	 	 
	No. ___

	 	[$____________]

BT TRIPLE CROWN MERGER CO., INC.

as the Issuer

          (to be merged with and into CLEAR CHANNEL COMMUNICATIONS, INC.,
with CLEAR CHANNEL COMMUNICATIONS, INC. as the surviving entity)

promises to pay to CEDE & CO. or registered assigns, the principal sum [set forth on the Schedule
of Exchanges of Interests in the Global Note attached hereto] [of                                                              United
States Dollars] on August 1, 2016.

Interest Payment Dates: February 1 and August 1

Record Dates: January 15 and July 15

 

			
	3 	 	Rule 144A Note CUSIP: 184502 BC5 

Rule 144A Note ISIN: US184502BC59 

Regulation S Note CUSIP: U18285 AE3 

Regulation S Note ISIN: USU18285AE39 

Exchange Note CUSIP: 

Exchange Note ISIN:

A2-2

 

          IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

Dated: [•]

	 	 	 	 	 
	 	BT TRIPLE CROWN MERGER CO., INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

The undersigned hereby acknowledges and agrees that, upon the effectiveness of the merger of BT
Triple Crown Merger Co., Inc. with and into Clear Channel Communications, Inc. with Clear Channel
Communications, Inc. continuing as the surviving corporation under the name “Clear Channel
Communications, Inc.”, it will succeed by operation of law to all of the rights and obligations of
BT Triple Crown Merger Co., Inc. set forth herein and that all references herein to the “Issuer”
shall thereupon be deemed to be references to the undersigned.

	 	 	 	 	 
	 	CLEAR CHANNEL COMMUNICATIONS, INC. 

 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A2-3

 

	 	 	 	 	 

This is one of the Notes referred to in the within-mentioned Indenture:

	 	 	 	 	 
	 	LAW DEBENTURE TRUST COMPANY OF NEW YORK, as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

A2-4

 

	 	 	 	 	 

[Back of Senior Toggle Note]

11.00% / 11.75% Senior Toggle Notes due 2016

          Capitalized terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

          1. INTEREST. BT Triple Crown Merger Co., Inc., a Delaware corporation (to be merged with and
into CLEAR CHANNEL COMMUNICATIONS, INC., with CLEAR CHANNEL COMMUNICATIONS, INC. as the surviving
entity) (the “Issuer”), promises to pay interest on the principal amount of this Senior
Toggle Note as follows: Cash Interest on the Senior Toggle Notes shall accrue at a rate of 11.00%
per annum and be payable in cash. PIK Interest and Partial PIK Interest on the Senior Toggle Notes
shall accrue at a rate of 11.75% per annum and be payable (a) with respect to the Senior Toggle
Notes represented by one or more global notes registered in the name of, or held by, the Depository
Trust Company (“DTC”) or its nominee on the relevant Record Date, by increasing the
principal amount of any outstanding Senior Toggle Notes represented by such global notes by an
amount equal to the amount of PIK Interest or Partial PIK Interest, as applicable, for the
applicable interest period (rounded up to the nearest whole US dollar) and (b) with respect to
Senior Toggle Notes represented by certificated notes, by issuing PIK Notes in certificated form in
an aggregate principal amount equal to the amount of PIK Interest or Partial PIK Interest, as
applicable, for the applicable interest period (rounded up to the nearest whole dollar) and the
Trustee shall, at the request of the Issuer, authenticate and deliver such PIK Notes in
certificated form for original issuance to the Holders on the relevant Record Date, as shown by the
records of the Register. In the event that the Issuer elects to pay Partial PIK Interest for any
interest period, each Holder shall be entitled to receive Cash Interest in respect of 50% of the
principal amount of the Senior Toggle Notes held by such Holder on the relevant Record Date and
Partial PIK Interest in respect of 50% of the principal amount of the Senior Toggle Notes held by
such Holder on the relevant Record Date. Interest that is paid in the form of PIK Interest or
Partial PIK Interest shall be considered paid or duly provided for, for all purposes under the
Indenture, and shall not be considered overdue. Following an increase in the principal amount of
the outstanding Senior Toggle Notes represented by global notes as a result of a PIK Payment, such
Senior Toggle Notes shall bear interest on such increased principal amount from and after the date
of such PIK Payment. Any PIK Notes issued in certificated form shall be dated as of the applicable
interest payment date and shall bear interest from and after such date. All PIK Notes issued
pursuant to a PIK Payment shall mature on August 1, 2016, and shall be governed by, and subject to
the terms, provisions and conditions of, the Indenture and shall have the same rights and benefits
as the Senior Toggle Notes issued on the Issue Date. Any certificated PIK Notes shall be issued
with the description “PIK” on the face of such PIK Note. Interest on the Senior Toggle Notes shall
be payable semi-annually in arrears on each February 1 and August 1 to the Holders of Senior Toggle
Notes of record on the immediately preceding January 15 and July 15. Interest on the Senior Toggle
Notes shall accrue from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance; provided that the first Interest Payment Date shall
be February 1, 20094. Interest shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.

          2. METHOD OF PAYMENT. For any interest period, the Issuer may, at its option, elect to pay
interest on the Senior Toggle Notes (1) entirely in cash (“Cash Interest”), (2) entirely by
increasing the principal amount of the outstanding Senior Toggle Notes or by issuing PIK Notes
(“PIK Interest”)

 

			
	4	 	With respect to the Initial Notes.

A2-5

 

or (3) 50.0% as Cash Interest and 50.0% as PIK Interest (“Partial PIK
Interest”). The Issuer must elect the form of interest payment with respect to each interest
period by delivering a notice to the Trustee and the Paying Agent no later than 10 Business Days
prior to the beginning of such interest period. The Trustee shall promptly deliver a corresponding
notice to the Holders. In the absence of such an election for any interest period, interest on the
Senior Toggle Notes shall be payable according to the election for the previous interest period.
The Issuer shall pay interest, and Special Interest, if any, on the Notes to the Persons who are
registered Holders of the Senior Toggle Notes at the close of business on the January 15 or July 15
(whether or not a Business Day), as the case may be, next preceding the Interest Payment Date, even
if such Senior Toggle Notes are canceled after such Record Date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted
interest.

          3. PAYING AGENT, TRANSFER AGENT AND REGISTRAR. Initially, Deutsche Bank Trust Company
Americas shall act as Paying Agent, Transfer Agent and Registrar. The Issuer may change any Paying
Agent, Transfer Agent or Registrar without notice to the Holders. The Issuer or any of its
Subsidiaries may act in any such capacity.

          4. INDENTURE. The Issuer issued the Senior Toggle Notes under an Indenture, dated as of July
30, 2008 (the “Indenture”), among the Issuer, the Trustee and the Paying Agent, Registrar
and Transfer Agent. This Senior Toggle Note is one of a duly authorized issue of notes of the
Issuer designated as its 11.00%/11.75% Senior Toggle Notes due 2016. The Issuer shall be entitled
to issue Additional Notes pursuant to Sections 2.01 and 4.09 of the Indenture. The terms of the
Senior Toggle Notes include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The
Senior Toggle Notes are subject to all such terms, and Holders are referred to the Indenture and
the Trust Indenture Act for a statement of such terms. To the extent any provision of this Senior
Toggle Note conflicts with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling.

          5. OPTIONAL REDEMPTION.

          (a) Except as described below under clauses 5(b) and 5(c) of this Section 5, the Senior Toggle
Notes shall not be redeemable at the Issuer’s option before August 1, 2012.

          (b) At any time prior to August 1, 2012, the Senior Toggle Notes may be redeemed or purchased
(by the Issuer or any other Person), in whole or in part, upon notice as provided in Section 3.03
of the Indenture, at a redemption price equal to 100.0% of the principal amount of Senior Toggle
Notes redeemed plus the Applicable Premium as of the date of redemption (the “Redemption
Date”) and, without duplication, accrued and unpaid interest to the Redemption Date, subject to
the rights of Holders of Senior Toggle Notes on the relevant Record Date to receive interest due on
the relevant Interest Payment Date.

          (c) Until August 1, 2011, the Issuer may, at its option, on one or more occasions, redeem up
to 40% of the then outstanding aggregate principal amount of Senior Toggle Notes (and any PIK Notes
issued in respect thereof), upon notice as provided in Section 3.03 of the Indenture, at a
redemption price equal to 111.00% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon to the applicable Redemption Date, subject to the right of Holders of
record on the relevant Record Date to receive interest due on the relevant Interest Payment Date,
with the net cash proceeds of one or more Equity Offerings to the extent such net cash proceeds are
received by or contributed to the Issuer; provided that at least 50.0% of the sum of the
aggregate principal amount of Senior Toggle Notes originally issued under the Indenture and any
Additional Notes that are Senior Toggle Notes issued under the Indenture after the Issue Date (but
excluding PIK Notes) remains outstanding immediately after the

A2-6

 

occurrence of each such redemption;
provided further that each such redemption occurs within 180 days of
the date of closing of each such Equity Offering. Notice of any redemption upon any Equity
Offering may be given prior to the completion of the related Equity Offering, and any such
redemption or notice may, at the Issuer’s discretion, be subject to one or more conditions
precedent, including, but not limited to, completion of the related Equity Offering.

          (d) On and after August 1, 2012, the Senior Toggle Notes may be redeemed or purchased (by the
Issuer or any other Person), at the Issuer’s option, in whole or in part, upon notice as described
in Section 3.03 of the Indenture, at the redemption prices (expressed as percentages of principal
amount of the Senior Toggle Notes to be redeemed) set forth below plus accrued and unpaid interest
thereon to the applicable Redemption Date, subject to the right of Holders of record of Senior
Toggle Notes on the relevant Record Date to receive interest due on the relevant Interest Payment
Date, if redeemed during the twelve-month period beginning on August 1 of each of the years
indicated below:

	 	 	 	 	 
	 	 	Senior	 
	 	 	Toggle	 
	Year	 	Notes Percentage	 
	2012
	 	 	105.500	%
	2013
	 	 	102.750	%
	2014 and thereafter
	 	 	100.000	%

          (e) Any redemption of the Senior Toggle Notes pursuant to this Section 5 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.

          6. MANDATORY REDEMPTION. (a) On August 1, 2015 (the “Special Redemption Date”), the
Issuer shall be required to redeem for cash a portion (the “Special Redemption Amount”) of
Senior Toggle Notes equal to the product of (x) $30,000,000 and (y) the lesser of (i) one and (ii)
a fraction the numerator of which is the aggregate principal amount outstanding on the Special
Redemption Date of the Senior Toggle Notes for United States federal income tax purposes and the
denominator of which is $1,330,000,000, as determined by the Issuer in good faith and rounded to
the nearest $2,000 (such redemption, the “Special Redemption”). The redemption price for
each portion of a Senior Toggle Note so redeemed pursuant to the Special Redemption shall equal
100% of the principal amount of such portion plus any accrued and unpaid interest thereon to the
Special Redemption Date.

          (b) On the first Interest Payment Date following the fifth anniversary of the “issue date” as
defined in Treasury Regulation Section 1.1273-2(a)(2) of the Senior Toggle Notes, and on each
Interest Payment Date thereafter, the Issuer shall redeem a portion of the principal amount of each
then outstanding Senior Toggle Note in an amount equal to the AHYDO Catch-Up Payment for such
Interest Payment Date with respect to such Note. The “AHYDO Catch-Up Payment” for a
particular Interest Payment Date with respect to each Senior Toggle Note means the minimum
principal prepayment sufficient to ensure that as of the close of such Interest Payment Date, the
aggregate amount which would be includible in gross income with respect to such Senior Toggle Note
before the close of such Interest Payment Date (as described in Section 163(i)(2)(A) of the Code)
does not exceed the sum (described in Section 163(i)(2)(B) of the Code) of (i) the aggregate amount
of interest to be paid on such Senior Toggle Note (including for this purpose any AHYDO Catch-Up
Payments) before the close of such Interest Payment Date plus (ii) the product of the issue price
of such Senior Toggle Note as defined in Section 1273(b) of the Code (i.e., the first price
at which a substantial amount of the Senior Toggle Notes is sold, disregarding for this purpose
sales to bond houses, brokers or similar persons acting in the capacity of

A2-7

 

underwriters, placement agents or wholesalers) and its yield to maturity (within the meaning
of Section 163(i)(2)(B) of the Code), with the result that such Senior Toggle Note is not treated
as having “significant original issue discount” within the meaning of Section 163(i)(1)(C) of the
Code; provided, however, for avoidance of doubt, that if the yield to maturity of
such Senior Toggle Note is less than the amount described in Section 163(i)(1)(B) of the Code, the
AHYDO Catch-Up Payment shall be zero for each Interest Payment Date with respect to such Senior
Toggle Note. This Section 6(b) shall be interpreted consistently with the intent that no Senior
Toggle Note shall be an “applicable high yield discount obligation” (an “AHYDO”) within the
meaning of Section 163(i)(1) of the Code. The computations and determinations required in
connection with any AHYDO Catch-Up Payment shall be made by the Issuer in its good faith reasonable
discretion and shall be binding upon the Holders absent manifest error.

          (c) Other than the Special Redemption and any AHYDO Catch-Up Payments, the Issuer shall not be
required to make any mandatory redemption or sinking fund payments with respect to the Senior
Toggle Notes.

          7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall
be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date
(except that redemption notices may be mailed more than 60 days prior to a redemption date if the
notice is issued in connection with Article 8 or Article 12 of the Indenture) to each Holder whose
Senior Toggle Notes are to be redeemed at its registered address. Senior Toggle Notes in
denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Senior Toggle Notes held by a Holder are to be redeemed. On and after the
redemption date, interest shall cease to accrue on Senior Toggle Notes or portions thereof called
for redemption.

          8. OFFERS TO REPURCHASE. (a) If a Change of Control occurs, unless the Issuer has previously
or concurrently mailed a redemption notice with respect to all the outstanding Notes as set forth
in Section 3.03 of the Indenture and Section 5 hereof, the Issuer shall make an offer to purchase
all of the Senior Toggle Notes pursuant to the offer described below (the “Change of Control
Offer”) at a price in cash (the “Change of Control Payment”) equal to 101.0% of the
aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of
purchase, subject to the right of Holders of the Senior Toggle Notes of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date. The Change of Control
Offer shall be made in accordance with Section 4.14 of the Indenture.

          (b) If the Issuer or any of its Restricted Subsidiaries consummates an Asset Sale, within 10
Business Days of each date that Excess Proceeds exceed $100,000,000, the Issuer shall make an offer
to all Holders of the Senior Toggle Notes and, if required by the terms of any Indebtedness that is
pari passu in right of payment with the Senior Toggle Notes (“Pari Passu
Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”),
to purchase the maximum aggregate principal amount of the Senior Toggle Notes and the maximum
aggregate principal amount (or accreted value, if less) of such Pari Passu Indebtedness that is a
minimum of $2,000 or an integral multiple of $1,000, that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100.0% of the principal amount thereof (or
accreted value, if applicable), plus accrued and unpaid interest to the date fixed for the closing
of such offer, in accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Senior Toggle Notes and such Pari Passu Indebtedness tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess
Proceeds for general corporate purposes, subject to compliance with other covenants contained in
the Indenture. If the aggregate principal amount of Senior Toggle Notes and the Pari Passu
Indebtedness surrendered in an Asset Sale Offer by such holders thereof exceeds the amount of
Excess Proceeds, the Senior Toggle Notes (as selected by the Trustee or the Paying Agent) and such
Pari Passu Indebtedness (as

A2-8

 

selected by the agent thereof) shall be purchased on a pro rata basis based on
the principal amount of the Senior Toggle Notes and the principal amount (or accreted value, if
applicable) of such Pari Passu Indebtedness tendered. Upon completion of any such Asset Sale
Offer, the amount of Excess Proceeds shall be reset to zero. Holders of Senior Toggle Notes that
are the subject of an offer to repurchase will receive an Asset Sale Offer from the Issuer prior to
any related purchase date and may elect to have such Notes purchased by completing the form
entitled “Option of Holder to Elect Purchase” attached to the Senior Toggle Notes.

          9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Toggle Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000. The transfer of Senior Toggle
Notes may be registered and Senior Toggle Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents, and the Issuer may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Issuer need not exchange or register the
transfer of any Senior Toggle Note or portion of a Senior Toggle Note selected for redemption,
except for the unredeemed portion of any Senior Toggle Note being redeemed in part. Also, the
Issuer need not exchange or register the transfer of (x) any Senior Toggle Note for a period of 15
days before a selection of Senior Toggle Notes to be redeemed or (y) any Senior Toggle Note
selected for redemption or tendered (and not withdrawn) for repurchase in connection with a Change
of Control Offer or an Asset Sale Offer.

          10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Toggle Note may be treated as
its owner for all purposes.

          11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture, the Guarantees or the Senior Toggle
Notes may be amended or supplemented as provided in the Indenture.

          12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section
6.01 of the Indenture. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25.0% in principal amount of the then outstanding Notes may declare the
principal, premium, if any, interest and any other monetary obligations on all the then outstanding
Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding Notes shall become
due and payable immediately without further action or notice. Holders may not enforce the
Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of
the Notes notice of any continuing Default (except a Default relating to the payment of principal,
premium, if any, or interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its
consequences under the Indenture except a continuing Default in payment of interest on, premium, if
any, or the principal of, any of the Notes held by a non-consenting Holder. The Issuer is required
to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the
Issuer is required within five (5) Business Days after becoming aware of any Default, to deliver to
the Trustee a statement specifying such Default and what action the Issuer proposes to take with
respect thereto.

          13. AUTHENTICATION. This Senior Toggle Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of
the Trustee.

A2-9

 

          14. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES.
In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted
Global Notes and Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement, dated as of July 30, 2008, among the Issuer, the Guarantors named
therein and the other parties named on the signature pages thereof (the “Registration Rights
Agreement”), including the right to receive Special Interest (as defined in the Registration
Rights Agreement).

          15. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE
INDENTURE, THE NOTES AND THE GUARANTEES.

          16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Senior
Toggle Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as printed on the
Senior Toggle Notes or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.

          The Issuer shall furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement. Requests may be made to the Issuer at the
following address:

Clear Channel Communications, Inc. 

200 East Basse Road 

San Antonio, TX 78209 

Attention: Brian Coleman, Senior Vice President and Treasurer

A2-10

 

ASSIGNMENT FORM

          To assign this Senior Toggle Note, fill in the form below:

	 	 	 
	(I) or (we) assign and transfer this Senior Toggle Note to:
	 	 
	 

	 	 
	 

	 	(Insert assignee’ legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

	 	 	 
	and irrevocably appoint 
	 	 
	 

	 	 

 to transfer this Senior Toggle Note on the books of the Issuer. The agent may substitute another
to act for him.

Date: _______________________________________

	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on
	 

	 	 	 	the face of this Senior Toggle Note)

Signature Guarantee*:  _______________________________________

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

A2-11

 

OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Senior Toggle Note purchased by the Issuer pursuant to
Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

[     ] Section 4.10                      [     ] Section 4.14

          If you want to elect to have only part of this Senior Toggle Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have
purchased:

$_______________

Date:   _______________________________________

	 	 	 	 	 	 
	 
    
	 	Your Signature:	 	 
	 
    
	 	 	(Sign exactly as your name appears on
	 
    
	 	 	the face of this Senior Toggle Note)
	 
    
	 	Tax Identification No.:

	 
    
	 	 	 	 

Signature Guarantee*:  _______________________________________

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

A2-12

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

     The initial outstanding principal amount of this Global Note is $_________. The following
exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive
Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global
Note, have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Principal Amount	 	 	 	 
	 	 	 	 	Amount of	 	 	Amount of increase	 	 	of 	 	 	Signature of	 
	 	 	 	 	decrease	 	 	in Principal	 	 	this Global Note	 	 	authorized officer	 
	Date of	 	 	in Principal	 	 	Amount of this	 	 	following such	 	 	of Trustee or	 
	Exchange	 	 	Amount	 	 	Global Note	 	 	decrease or increase	 	 	Note Custodian	 

 

			
	*	 	This schedule should be included only if the Note is issued in global form.

A2-13

 

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Clear Channel Communications, Inc.

200 East Basse Road

San Antonio, TX 78209

Attention: Brian Coleman, Senior Vice President and Treasurer

Law Debenture Trust Company of New York

400 Madison Avenue, Suite 4D

New York, NY 10017

Attention: Vice President

Deutsche Bank Services Tennessee Inc.

648 Grassmere Park Road

Nashville, TN USA 37211

Attention: Transfer Department

Telephone: (800) 735-7777

          Re: 10.75% Senior Cash Pay Notes due 2016 and 11.00% /11.75% Senior Toggle Notes due 2016

          Reference is hereby made to the Indenture, dated as of July 30, 2008 (the
“Indenture”), among the Issuer, the Trustee and the Paying Agent. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.

          _________ (the “Transferor”) owns and proposes to transfer the Note[s] or
interest in such Note[s] specified in Annex A hereto, in the principal amount of $_________ in
such Note[s] or interests (the “Transfer”), to _________ (the “Transferee”),
as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby
certifies that:

[CHECK ALL THAT APPLY]

          1.  [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL
NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933, as amended (the
“Securities Act”), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Note for its own account,
or for one or more accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance
with any applicable blue sky securities laws of any state of the United States.

          2.  [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S
GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant
to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the
Transferor hereby further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the

B-1

 

Transferee was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the
Indenture and the Securities Act.

          3.  [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION
S. The Transfer is being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and
in accordance with the Securities Act and any applicable blue sky securities laws of any state of
the United States, and accordingly the Transferor hereby further certifies that (check one):

     (a)  [ ] such Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act;

or

     (b)  [ ] such Transfer is being effected to the Issuer or a subsidiary thereof;

or

     (c)  [ ] such Transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus delivery
requirements of the Securities Act.

          4.  [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED
GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.(a)  [ ] CHECK IF TRANSFER IS PURSUANT TO RULE
144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any state of the United States and (ii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note
will no longer be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

          (b)  [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance
with the transfer restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture,

B-2

 

the transferred beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.

          (c)  [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being
effected pursuant to and in compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

B-3

 

          This certificate and the statements contained herein are made for your benefit and the benefit
of the Issuer.

	 	 	 	 	 
	 	[Insert Name of Transferor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:  _______________________________________

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER                

          1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

	 	(a)	 	 [ ] a beneficial interest in the:

	 	(i)	 	 [ ] 144A Global Note (CUSIP [                    ]), or
	 
	 	(ii)	 	 [ ] Regulation S Global Note (CUSIP [                    ]), or

	 	(b)	 	 [ ] a Restricted Definitive Note.

          2. After the Transfer the Transferee will hold:

[CHECK ONE]

	 	(a)	 	 [ ] a beneficial interest in the:

	 	(i)	 	 [ ] 144A Global Note (CUSIP [                    ]), or
	 
	 	(ii)	 	 [ ] Regulation S Global Note (CUSIP [                    ]), or
	 
	 	(iii)	 	 [ ] Unrestricted Global Note (CUSIP [                    ]); or

	 	(b)	 	 [ ] a Restricted Definitive Note; or
	 
	 	(c)	 	 [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.

B-5

 

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Clear Channel Communications, Inc.

200 East Basse Road

San Antonio, TX 78209

Attention: Brian Coleman, Senior Vice President and Treasurer

Law Debenture Trust Company of New York

400 Madison Avenue, Suite 4D

New York, NY 10017

Attention: Vice President

Deutsche Bank Services Tennessee Inc.

648 Grassmere Park Road

Nashville, TN USA 37211

Attention: Transfer Department

Telephone: (800) 735-7777

Re: 10.75% Senior Cash Pay Notes due 2016 and 11.00% / 11.75% Senior Toggle Notes due 2016

          Reference is hereby made to the Indenture, dated as of July 30, 2008 (the
“Indenture”), among the Issuer, the Trustee and the Paying Agent. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.

          _________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in
such Note[s] specified herein, in the principal amount of $_________ in such Note[s] or interests
(the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

          1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE
FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

     a)  [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the
Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an
Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions applicable to
the Global Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the “Securities Act”), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

     b)  [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial
interest in a Restricted Global Note for an Unrestricted

C-1

 

Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired
in compliance with any applicable blue sky securities laws of any state of the United
States.

     c)  [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted
Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.

     d)  [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED
DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note
for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted
Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii)
the restrictions on transfer contained in the Indenture and the Private Placement Legend are
not required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

          2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

	a)	 	 [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO
RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial
interest in a Restricted Global Note for a Restricted Definitive Note with an equal
principal amount, the Owner hereby certifies that the Restricted Definitive Note is being
acquired for the Owner’s own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture and the
Securities Act.

     b)  [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN
A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted
Definitive Note for a beneficial interest in the [CHECK ONE]  [ ] 144A Global Note  [ ]
Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions

C-2

 

applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Note and in the Indenture and the Securities Act.

          This certificate and the statements contained herein are made for your benefit and the benefit
of the Issuer and are dated  _______________________________________

..

	 	 	 	 	 
	 	[Insert Name of Transferor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:  _______________________________________

C-3

 

EXHIBIT D

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

          Supplemental Indenture (this “Supplemental Indenture”), dated as of _________, among
_________ (the “Guaranteeing Subsidiary”), a subsidiary of Clear Channel
Communications, Inc., a Texas corporation (the “Issuer”) and Law Debenture Trust Company of
New York, as trustee (the “Trustee”).

W I T N E S S E T H

          WHEREAS, Clear Channel Communications, Inc. has heretofore executed and delivered to the
Trustee an indenture (the “Indenture”), dated as of July 30, 2008, providing for the
issuance of an unlimited aggregate principal amount of 10.75% Senior Cash Pay Notes due 2016 (the
“Senior Cash Pay Notes”) and 11.00% / 11.75% Senior Toggle Notes due 2016 (the “Senior
Toggle Notes” and together with the Senior Cash Pay Notes, the “Notes”);

          WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the
Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the
“Guarantee”); and

          WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.

          NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree
for the equal and ratable benefit of the Holders of the Notes as follows:

          (1) Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.

          (2) Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an
unconditional Guarantee on the terms and subject to the conditions set forth in the Indenture
including but not limited to Articles 10 and 11 thereof.

          (3) No Recourse Against Others. No past, present or future director, officer,
employee, incorporator, member, partner or stockholder of the Guaranteeing Subsidiary or any of its
direct or indirect parent companies shall have any liability for any obligations of the Issuer or
the Guarantors (including the Guaranteeing Subsidiary) under the Notes, any Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder by accepting Notes waives and releases all such
liability. The waiver and release are part of the consideration for issuance of the Notes.

          (4) Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

D-1

 

          (5) Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement.

          (6) Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

          (7) The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made solely by the Guaranteeing
Subsidiary.

          (8) Subrogation. The Guaranteeing Subsidiary shall be subrogated to all rights of
Holders of Notes against the Issuer in respect of any amounts paid by the Guaranteeing Subsidiary
pursuant to the provisions of Section 2 hereof and Section 10.01 of the Indenture; provided
that, if an Event of Default has occurred and is continuing, the Guaranteeing Subsidiary shall not
be entitled to enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Issuer under the Indenture or the Notes
shall have been paid in full.

          (9) Benefits Acknowledged. The Guaranteeing Subsidiary’s Guarantee is subject to the
terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it
will receive direct and indirect benefits from the financing arrangements contemplated by the
Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to
this Guarantee are knowingly made in contemplation of such benefits.

          (10) Successors. All agreements of the Guaranteeing Subsidiary in this Supplemental
Indenture shall bind its Successors, except as otherwise provided in the Indenture or in this
Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind
its successors.

D-2

 

          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed, all as of the date first above written.

	 	 	 	 	 
	 	[GUARANTEEING SUBSIDIARY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LAW DEBENTURE TRUST COMPANY OF NEW YORK, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

D-3

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