Exhibit 10.29
MEMORANDUM OF AGREEMENT
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This Memorandum of Agreement ("MOA") is entered into on February 19, 1997,
by and between Evergreen Media Corporation, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxxx (the "Executive").
RECITALS
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A. The Company is entering into an Agreement and Plan of Merger with
Chancellor Broadcasting Company and Chancellor Radio Broadcasting Company
(collectively, "Chancellor"), dated the date hereof (the "Merger Agreement"),
pursuant to which Chancellor will merge with and into Evergreen upon the terms
and subject to the conditions set forth in the Merger Agreement (the "Merger").
The Board of Directors of the Company has determined unanimously that the Merger
is in the best interests of the Company and its shareholders and the Board of
Directors of Chancellor has determined unanimously that the Merger is in the
best interests of Chancellor and its shareholders.
B. In connection with the Merger, the Company and Chancellor have
concluded that it is highly desirable to extend the term of employment of
Executive with the Company in order to provide for continuity and stability of
management of the surviving corporation and to reflect certain other agreements
and understandings of the Company and Chancellor related to the Merger.
C. Executive is willing to extend the term of his employment with the
Company, and to agree to other modifications necessary or desirable in
connection with the Merger, upon and subject to the terms outlined below.
NOW, THEREFORE, the parties agree as follows:
1. Modifications to Employment Agreement. Executive's employment
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agreement with the Company will be modified to reflect the agreements set forth
below and such other provisions as are necessary or desirable in connection
therewith or as are otherwise mutually acceptable to the Company, Chancellor and
Executive. Company, Chancellor and Executive shall work together in good faith
to prepare and execute a definitive employment agreement containing such terms
(the "Definitive Agreement") as soon as practicable after the date hereof
(provided, however, that the modifications set forth below shall take effect
commencing upon the consummation of the Merger). Notwithstanding any failure to
execute such a Definitive Agreement, the modifications to the terms of
Executive's employment with the Company set forth below are intended to be, and
shall be, binding on the Company and Executive.
2. Term of Employment. The term of Executive's employment with the
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Company shall be extended so as not to expire or terminate until the fifth
anniversary of the consummation of the Merger (the "Initial Termination Date"),
provided that Executive shall have the right, upon notice to the Company no less
than sixty days prior to the Initial Termination Date, to extend the
term of his employment for an additional five year term (the "Option Term")
expiring on the tenth anniversary of the consummation of the Merger. During the
term of employment, Executive shall serve as President and Chief Executive
Officer and as a member of the Company's board of directors.
3. Base Compensation. During the term of Executive's employment,
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Executive's base compensation shall be $1,000,000 for the first year following
consummation of the Merger, escalated each year thereafter by a percentage equal
to the percentage change in the consumer price index during the preceding year.
4. Bonus Compensation. Executive shall be entitled to an annual bonus of
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up to $3 million, the amount of such bonus to be determined on a mutually
agreeable basis consistent with the provisions outlined in this Section 4.
Executive's bonus compensation shall be based upon two calculations:
(a) Executive shall receive a bonus based on the relationship of
achieved pro forma cash flow ("APCF") for each calendar year to budgeted cash
flow ("BCF") for that year, as follows:
(i) if APCF is less than 85% of BCF in any calendar year, no
bonus will be awarded;
(ii) if APCF meets or exceeds 85% of BCF but is less than 100%
of BCF, a bonus of $100,000 per percentage point (in excess of 84%) of APCF to
BCF (e.g., if APCF is 90% of BCF, a bonus of $600,000 would be awarded);
(iii) if APCF meets or exceeds 100% of BCF, a bonus of (x) $
1,500,000 pursuant to clause (ii) above, plus (y) $40,000 per percentage point
(in excess of 99%) of APCF to BCF will be awarded (e.g., if APCF is 105% of BCF,
a total bonus of $1,740,000 will be awarded);
(iv) to the extent that APCF exceeds 115% of BCF, no additional
bonus shall be awarded in excess of the amounts set forth above (i.e., the
maximum bonus awarded under this Section 4(a) shall be $2,140,000).
(b) Executive shall also receive as a bonus 7.5% of pro forma cash
flow in each contract year in excess of the pro forma cash flow in the prior
contract year (adjusted for changes in the consumer price index), up to a
maximum bonus of $2,000,000.
(c) Executive's annual bonus shall be the sum of the calculations
under Paragraphs 4(a) and (b) hereof, provided, however, that the total bonus
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shall not exceed $3,000,000 in any contract year.
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5. Stock Options. During the employment term, Executive shall receive
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options to purchase One Hundred Thousand (100,000) shares per year of the
Company's common stock. In the event that the employment agreement is
terminated prior to the Initial Termination Date (except for "cause" or
termination by Executive for other than "good reason"), Executive shall receive
on the date on which the employment agreement is terminated (the "Early
Termination Date") a number of options equal to Five Hundred Thousand (500,000)
less the number of options received by Executive prior to the Early Termination
Date. All options granted to executive in accordance with this Section 5 shall
be exercisable for ten years from the date of grant at a price equal to the
market price of the Company's common stock on the date of grant. If Executive
exercises his option to renew his employment agreement for a second term, the
award of further stock options in addition to those earned during the first
employment term shall be at the discretion of the Company's compensation
committee.
6. Other Benefits. Executive shall be entitled to participate in other
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employment benefit programs of the Company, and to receive other miscellaneous
benefits, on the basis set forth in his current employment agreement with the
Company.
7. Rights Upon Termination. Upon termination of Executive's employment
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by the Company for any reason other than "cause" (to be defined in a mutually
acceptable manner in the Definitive Agreement), or upon Executive's termination
of employment for "good reason" (to be defined in a mutually acceptable manner
in the Definitive Agreement), Executive shall be entitled to receive a one-time
cash payment in a gross amount such that the net payments retained by Executive
after payment of any excise tax imposed by Section 4999 of the Internal Revenue
Code shall equal $20 million, payable at the time at which Executive is
terminated without "cause" (or in the event Executive terminates the agreement
for "good reason," payable within 30 days thereafter). Any such payment shall
be in complete satisfaction of all other rights of Executive (other than in
respect of capital stock or stock options and other than any post-employment
benefits under the Company's benefit programs described in Section 6 above) or
obligations of the Company.
8. Registration Rights. Executive shall have registration rights with
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respect to all common stock of the surviving Company owned by Executive at the
effective time of the Merger and any stock thereafter acquired by Executive.
9. Disputes. Any disputes under this MOA will be subject to arbitration
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in the manner set forth in Section 15 of Executive's existing employment
agreement with the Company.
10. Governing Law. This MOA shall be governed by and construed and
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enforced in accordance with the laws of the State of New York, without regard to
conflict of law principles.
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IN WITNESS WHEREOF, the parties have executed and delivered this MOA as of
the date first written above.
EVERGREEN MEDIA CORPORATION
By: __________________________________
Title: _______________________________
XXXXX X. XXXXXXXX
_______________________________________
Acknowledged and agreed:
CHANCELLOR BROADCASTING COMPANY
By:_____________________________________
Title:__________________________________
CHANCELLOR RADIO BROADCASTING COMPANY
By:_____________________________________
Title:__________________________________
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